Quiz Notes: Series 24
What is a restricted account? - correct answer ✔Account equity is less than
50%
Are variable life insurance securities? - correct answer ✔Yes
Variable products and unit investment trusts, in which the return is tied to the
performance of a separate account, are considered securities.
Who are restricted persons? - correct answer ✔Restricted persons include
finders and fiduciaries (such as attorneys and accountants) involved in the
new issue and portfolio managers who buy and sell securities on behalf of
institutional investors.
What is Emerging Growth Company (EGC)? - correct answer ✔as having
annual revenue of less than $1 billion during the most recently completed
fiscal year.
In connection with an EGC, the ten- and three-day quiet periods restricting an
analyst's ability to publish research reports and making public appearances, is
eliminated.
The analyst may write a research on the day of the IPO, but not prior to the
effective date.
SEC: Corporate Insider Trades - correct answer ✔All trades by corporate
insiders (officers, directors, and owners of more than 10% of the corporation's
outstanding shares), regardless of size or listing status, must be reported to
the SEC by the end of the second business day following the transaction.
,SEC: Notification of Corporate Action - correct answer ✔According to the
SEC, all stock or cash dividends, rights offering, or a reverse split, must be
disclosed to FINRA 10 days prior to the record date, not the ex-date.
What is a Step Out? - correct answer ✔used by broker-dealers that have
previously executed a transaction to allocate all or part of the transaction to
another broker-dealer for clearing purposes.
Round, Odd & Mixed Lots - correct answer ✔The Nasdaq system accepts
round-lot orders (100 share increments), odd-lot orders (less than 100
shares), and mixed-lots (a round-and odd-lot order combined)
Odd lots are not displayed in the Nasdaq quote system, but are available for
execution
Who needs to be fingerprinted? - correct answer ✔SEC rules require that all
partners, directors, officers, and employees be fingerprinted.
Anyone who handles funds and/or securities must be fingerprinted.
Exceptions are granted to personnel having access to original books and
records who are not engaged in the sale of securities, and registered
representatives engaged solely in the sale of REITs.
What to do with Counterfeit securities? - correct answer ✔Report the
securities w/in 1 business day of discovery to FBI and SEC
BD must collect wire transfers info w/ $ more than? - correct answer ✔$3000
,Net Basis Capacity - correct answer ✔dealer holding a customer order to
buy, acquires the stock on a principal basis and executes the customer order
at a different price than the dealer's acquisition price.
-Req. written approval w/ order by order basis for retail clients
-Institutional customer req. oral or written consent
-Pertains to U.S. persons within or outside the United States who intend to
purchase or transfer U.S. securities and obtain credit outside the U.S.
-Dealer's markup/markdown is not disclosed to the customer.
-Confirmation of executed order is req.
-Reported as two separate transactions
Confirmations on regular-way transactions - correct answer ✔requires that
confirmations on regular-way transactions be sent to customers at, or prior to
the settlement date.
Order Reduction on Ex-date - correct answer ✔Buy limits and sell stops and,
if the market permits, sell stop limit orders.
Orders are cancelled for reverse splits on ex-date.
When is the ex-dividend date? - correct answer ✔one business day prior to
the record date.
What is a Due Bill? - correct answer ✔Evidence that a dividend is due to a
buyer of stock, but will be paid to a seller instead.
, An individual who buys stock prior to the ex-dividend date is entitled to the
dividend.
Occurs when settlement is made after record date.
Do not Reduce (DNR) - correct answer ✔means do not reduce and, if this
was attached to the order, the original order price would remain valid.
Do Not Call List - correct answer ✔BD must honor the request for DNC w/in
30 days from date of request.
List must not be more than 31 days old prior to date of any call.
The Telephone Consumer Protection Act of 1991: Telemarketer
Requirements - correct answer ✔1. Identify themselves
2. State purpose of call
3. Phone number or address
Not required:
1. CRD number
What is stopping stock? - correct answer ✔guarantee by the DMM
(specialist) order received will be executed at no worse than the contra-side
price at the time the order was stopped.
Members are required to report to their customers that the order was stopped
if both members agree to the terms.
What is a restricted account? - correct answer ✔Account equity is less than
50%
Are variable life insurance securities? - correct answer ✔Yes
Variable products and unit investment trusts, in which the return is tied to the
performance of a separate account, are considered securities.
Who are restricted persons? - correct answer ✔Restricted persons include
finders and fiduciaries (such as attorneys and accountants) involved in the
new issue and portfolio managers who buy and sell securities on behalf of
institutional investors.
What is Emerging Growth Company (EGC)? - correct answer ✔as having
annual revenue of less than $1 billion during the most recently completed
fiscal year.
In connection with an EGC, the ten- and three-day quiet periods restricting an
analyst's ability to publish research reports and making public appearances, is
eliminated.
The analyst may write a research on the day of the IPO, but not prior to the
effective date.
SEC: Corporate Insider Trades - correct answer ✔All trades by corporate
insiders (officers, directors, and owners of more than 10% of the corporation's
outstanding shares), regardless of size or listing status, must be reported to
the SEC by the end of the second business day following the transaction.
,SEC: Notification of Corporate Action - correct answer ✔According to the
SEC, all stock or cash dividends, rights offering, or a reverse split, must be
disclosed to FINRA 10 days prior to the record date, not the ex-date.
What is a Step Out? - correct answer ✔used by broker-dealers that have
previously executed a transaction to allocate all or part of the transaction to
another broker-dealer for clearing purposes.
Round, Odd & Mixed Lots - correct answer ✔The Nasdaq system accepts
round-lot orders (100 share increments), odd-lot orders (less than 100
shares), and mixed-lots (a round-and odd-lot order combined)
Odd lots are not displayed in the Nasdaq quote system, but are available for
execution
Who needs to be fingerprinted? - correct answer ✔SEC rules require that all
partners, directors, officers, and employees be fingerprinted.
Anyone who handles funds and/or securities must be fingerprinted.
Exceptions are granted to personnel having access to original books and
records who are not engaged in the sale of securities, and registered
representatives engaged solely in the sale of REITs.
What to do with Counterfeit securities? - correct answer ✔Report the
securities w/in 1 business day of discovery to FBI and SEC
BD must collect wire transfers info w/ $ more than? - correct answer ✔$3000
,Net Basis Capacity - correct answer ✔dealer holding a customer order to
buy, acquires the stock on a principal basis and executes the customer order
at a different price than the dealer's acquisition price.
-Req. written approval w/ order by order basis for retail clients
-Institutional customer req. oral or written consent
-Pertains to U.S. persons within or outside the United States who intend to
purchase or transfer U.S. securities and obtain credit outside the U.S.
-Dealer's markup/markdown is not disclosed to the customer.
-Confirmation of executed order is req.
-Reported as two separate transactions
Confirmations on regular-way transactions - correct answer ✔requires that
confirmations on regular-way transactions be sent to customers at, or prior to
the settlement date.
Order Reduction on Ex-date - correct answer ✔Buy limits and sell stops and,
if the market permits, sell stop limit orders.
Orders are cancelled for reverse splits on ex-date.
When is the ex-dividend date? - correct answer ✔one business day prior to
the record date.
What is a Due Bill? - correct answer ✔Evidence that a dividend is due to a
buyer of stock, but will be paid to a seller instead.
, An individual who buys stock prior to the ex-dividend date is entitled to the
dividend.
Occurs when settlement is made after record date.
Do not Reduce (DNR) - correct answer ✔means do not reduce and, if this
was attached to the order, the original order price would remain valid.
Do Not Call List - correct answer ✔BD must honor the request for DNC w/in
30 days from date of request.
List must not be more than 31 days old prior to date of any call.
The Telephone Consumer Protection Act of 1991: Telemarketer
Requirements - correct answer ✔1. Identify themselves
2. State purpose of call
3. Phone number or address
Not required:
1. CRD number
What is stopping stock? - correct answer ✔guarantee by the DMM
(specialist) order received will be executed at no worse than the contra-side
price at the time the order was stopped.
Members are required to report to their customers that the order was stopped
if both members agree to the terms.
