ECN 212 TEST PAPER 2026
COMPLETE QUESTIONS AND
VERIFIED ANSWERS GRADED A+
◉ In a secondary offering, a member who acted as manager or co-
manager CANNOT issue a research report on that company within how
many days following the effective date?
Correct Answer A. 3 calendar days
Incorrect Answer B. 5 calendar days
C. 10 calendar days
D. 25 calendar days. Answer: In a secondary offering, a member who
acted as manager or co-manager CANNOT issue a research report on
that company within how many days following the effective date?
Correct Answer A. 3 calendar days
Incorrect Answer B. 5 calendar days
C. 10 calendar days
D. 25 calendar days
◉ A member firm receives a large block order to buy 100,000 shares of
XYZ stock, which is not actively traded. Which customer(s) of the firm
can buy XYZ stock prior to the filling of the block trade?
,A. The registered representative who received the order
Correct Answer B. Other customers of the firm who place buy orders, if
the firm has information barriers in place
Incorrect Answer C. Any customer of the firm who places an
unsolicited order
D. No customer can buy the stock until the block order to buy is filled.
Answer: The best answer is B. In its "front running" rule, FINRA gives
an exception to the prohibition on a member firm placing orders to trade
a stock prior to the filling of a large block order if the firm has
information barriers in place. If this is the case, the front running
prohibition only falls on the people at the firm who know about the
existence of the large block order. Persons placing orders to buy XYZ
stock at the firm who have no knowledge of the impending block
purchase are exempted from the "front running" rule because, with
effective information barriers in place, they could not have known about
the large trade that is about to be placed.
◉ I-Shares allow investors to invest in stock indexes based on all of the
following EXCEPT:
A. Industry sector
Correct Answer B. Industry performance
Incorrect Answer C. Country
, D. Market capitalization. Answer: Exchange traded funds based on
indexes by industry sector, country, or market capitalization, are known
as "I-Shares," as in "Index Shares."
Exchange traded funds based on indexes by industry sector, country, or
market capitalization, are known as "I-Shares," as in "Index Shares."
◉ On Wednesday, June 8th, 2017, a customer buys 5 XYZ 10%
convertible debentures M' 8-01-39 at 89 5/8 plus accrued interest in a
regular way trade. On January 9th, 2018, the customer sells the bonds at
90 3/8 plus accrued interest in a regular way trade. For tax year 2017,
the customer's reported interest income is:
Correct Answer A. $66.67
B. $183.33
Incorrect Answer C. $250.00
D. $433.33. Answer: The best answer is A.
For tax purposes, interest is reported as it is received on a cash basis.
Thus, only interest payments actually made by the issuer in tax year
2017 are included. The customer bought the bonds on Wednesday, June
8th, 2017. The customer receives the August 1st interest payment in
2017. The next payment will be made on February 1st, 2018, so only
one interest payment is reported for 2017.
COMPLETE QUESTIONS AND
VERIFIED ANSWERS GRADED A+
◉ In a secondary offering, a member who acted as manager or co-
manager CANNOT issue a research report on that company within how
many days following the effective date?
Correct Answer A. 3 calendar days
Incorrect Answer B. 5 calendar days
C. 10 calendar days
D. 25 calendar days. Answer: In a secondary offering, a member who
acted as manager or co-manager CANNOT issue a research report on
that company within how many days following the effective date?
Correct Answer A. 3 calendar days
Incorrect Answer B. 5 calendar days
C. 10 calendar days
D. 25 calendar days
◉ A member firm receives a large block order to buy 100,000 shares of
XYZ stock, which is not actively traded. Which customer(s) of the firm
can buy XYZ stock prior to the filling of the block trade?
,A. The registered representative who received the order
Correct Answer B. Other customers of the firm who place buy orders, if
the firm has information barriers in place
Incorrect Answer C. Any customer of the firm who places an
unsolicited order
D. No customer can buy the stock until the block order to buy is filled.
Answer: The best answer is B. In its "front running" rule, FINRA gives
an exception to the prohibition on a member firm placing orders to trade
a stock prior to the filling of a large block order if the firm has
information barriers in place. If this is the case, the front running
prohibition only falls on the people at the firm who know about the
existence of the large block order. Persons placing orders to buy XYZ
stock at the firm who have no knowledge of the impending block
purchase are exempted from the "front running" rule because, with
effective information barriers in place, they could not have known about
the large trade that is about to be placed.
◉ I-Shares allow investors to invest in stock indexes based on all of the
following EXCEPT:
A. Industry sector
Correct Answer B. Industry performance
Incorrect Answer C. Country
, D. Market capitalization. Answer: Exchange traded funds based on
indexes by industry sector, country, or market capitalization, are known
as "I-Shares," as in "Index Shares."
Exchange traded funds based on indexes by industry sector, country, or
market capitalization, are known as "I-Shares," as in "Index Shares."
◉ On Wednesday, June 8th, 2017, a customer buys 5 XYZ 10%
convertible debentures M' 8-01-39 at 89 5/8 plus accrued interest in a
regular way trade. On January 9th, 2018, the customer sells the bonds at
90 3/8 plus accrued interest in a regular way trade. For tax year 2017,
the customer's reported interest income is:
Correct Answer A. $66.67
B. $183.33
Incorrect Answer C. $250.00
D. $433.33. Answer: The best answer is A.
For tax purposes, interest is reported as it is received on a cash basis.
Thus, only interest payments actually made by the issuer in tax year
2017 are included. The customer bought the bonds on Wednesday, June
8th, 2017. The customer receives the August 1st interest payment in
2017. The next payment will be made on February 1st, 2018, so only
one interest payment is reported for 2017.
