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Question 1 of 10
1. Question
Which of the following statement is incorrect regarding the basic forbiddance in communications with the public?
Correct
The basic forbiddance in communications according to NFA RULE 2-29 with the public is listed below:
(1) It makes some claim that trading in the future is acceptable for all people.
(2) Acts as fraud or deceit.
(3) Forms part of a high-pressure approach.
Incorrect
The basic forbiddance in communications according to NFA RULE 2-29 with the public is listed below:
(1) It makes some claim that trading in the future is acceptable for all people.
(2) Acts as fraud or deceit.
(3) Forms part of a high-pressure approach.
Question 2 of 10
2. Question
No member shall use any promotional material that:
I. Includes any material error of fact or which the Member or Associate knows is omitted if the omission misleads the promotional material
II. Mention of profitability when followed by an equally prominent declaration of loss risk
III. Mislead the public
IV. Does not include any specific numerical information about the past performance of any actual accounts
Correct
Neither member or associate shall use any promotional material that:
(1) Includes any material misrepresentation of the truth or which the Member or Associate knows to omit if the omission misleads the
promotional material.
(2) Is likely to mislead the public.
(3) Mentions the possibility of profit unless accompanied by an equally prominent statement of the risk of loss.
(4) Includes any reference to actual trading income without mentioning that past results do not necessarily indicate future outcomes.
(5) It provides no relevant numerical or quantitative data on any individual account's past performance.
Incorrect
Neither member or associate shall use any promotional material that:
(1) Includes any material misrepresentation of the truth or which the Member or Associate knows to omit if the omission misleads the
promotional material.
(2) Is likely to mislead the public.
(3) Mentions the possibility of profit unless accompanied by an equally prominent statement of the risk of loss.
(4) Includes any reference to actual trading income without mentioning that past results do not necessarily indicate future outcomes.
(5) It provides no relevant numerical or quantitative data on any individual account's past performance.
Question 3 of 10
3. Question
Which of the following condition(s) for specifying the rate of return is not true keeping in mind the content of promotional material?
Correct
keeping in mind NFA RULE 2-29 the conditions required for informing the rate of return :
(1) Unless such data is and can be shown to be indicative of the actual performance of all reasonably comparable accounts for the same
time.
(2) Unless such figures are determined in compliance with CFTC Regulation 4.25(a)(7) for product pools and CFTC Regulation 4.35(a)(6), as
amended by NFA Compliance Rule 2-34(a), for figures based on separate accounts, in the case of return figures.
Incorrect
keeping in mind NFA RULE 2-29 the conditions required for informing the rate of return :
(1) Unless such data is and can be shown to be indicative of the actual performance of all reasonably comparable accounts for the same
time.
(2) Unless such figures are determined in compliance with CFTC Regulation 4.25(a)(7) for product pools and CFTC Regulation 4.35(a)(6), as
amended by NFA Compliance Rule 2-34(a), for figures based on separate accounts, in the case of return figures.
Question 4 of 10
4. Question
Which of the following factor(s) are not involved in hypothetical trading?
Correct
Hypothetical trading
Some of the few features are listed below with respect to NFA RULE 2-29:
(1) There are frequently sharp differences results and the actual results subsequently achieved by any particular trading program.
(2) No representation that all accounts will make profits or losses.
(3) The hypothetical performance results are generally prepared with the hindsight benefit.
(4) Hypothetical trading does not involve financial risk and no hypothetical trading record impact of financial risk in actual trading.
Incorrect
Hypothetical trading
Some of the few features are listed below with respect to NFA RULE 2-29:
(1) There are frequently sharp differences results and the actual results subsequently achieved by any particular trading program.
(2) No representation that all accounts will make profits or losses.
(3) The hypothetical performance results are generally prepared with the hindsight benefit.
(4) Hypothetical trading does not involve financial risk and no hypothetical trading record impact of financial risk in actual trading.
Question 5 of 10
5. Question
Which of the following is the limitation of a hypothetical composite performance record?
Correct
According to NFA RULE 2-29 the limitations of hypothetical composite performance record:
(1) Decisions concerning the choice of trading consultants and the distribution of capital among those trading consultants are made on the
basis of the historical return rates of the selected trading consultants.
(2) The composite performance record may be misleading as the asset allocation changes from time to time and the composite does not reflect
these adjustments.
(3) Invariably, cumulative quality records show high return rates. Another inherent drawback of these findings is that the allocation
decisions reflected in the performance record were not made under actual market conditions and can not thus fully account for the
effect of the financial risk in actual trading.
Incorrect
According to NFA RULE 2-29 the limitations of hypothetical composite performance record:
(1) Decisions concerning the choice of trading consultants and the distribution of capital among those trading consultants are made on the
basis of the historical return rates of the selected trading consultants.
(2) The composite performance record may be misleading as the asset allocation changes from time to time and the composite does not reflect
these adjustments.
(3) Invariably, cumulative quality records show high return rates. Another inherent drawback of these findings is that the allocation
decisions reflected in the performance record were not made under actual market conditions and can not thus fully account for the
effect of the financial risk in actual trading.
Question 6 of 10
6. Question
Identify the false condition that any Member or Associate who uses promotional material shall include in the comparable information.
Correct
According to NFA RULE 2-29 any Member or associate previously employed shall provide comparable details in the promotional material concerning:
(1) Past performance of all customer accounts managed by a Member in accordance with an attorney's power over at least the last five years
or over the entire performance history, if less than five years.
(2) Where the Member has less than one year's experience in managing customer accounts, past performance outcomes of the Member's
proprietary trading over the last five years or over the entire performance record if less than five years.
Incorrect
According to NFA RULE 2-29 any Member or associate previously employed shall provide comparable details in the promotional material concerning:
(1) Past performance of all customer accounts managed by a Member in accordance with an attorney's power over at least the last five years
or over the entire performance history, if less than five years.
(2) Where the Member has less than one year's experience in managing customer accounts, past performance outcomes of the Member's
proprietary trading over the last five years or over the entire performance record if less than five years.
Question 7 of 10
7. Question
What is the duration required for a member to use promotional material that might have been accomplished if a specific Associate trading system was used in the past?
Correct
According to NFA RULE 2-29:
No Member may use promotional material that might have been accomplished if a specific Associate trading system was used in the past if the Member or Associate has three months of actual trading results for that system.
Incorrect
According to NFA RULE 2-29:
No Member may use promotional material that might have been accomplished if a specific Associate trading system was used in the past if the Member or Associate has three months of actual trading results for that system.
Question 8 of 10
8. Question
According to which CFTC Regulation the restrictions on the use of hypothetical trading results shall not apply to what type of promotional material?
Correct
These restrictions on the use of hypothetical trading results shall not apply to promotional material intended solely for persons who meet the standards set out in CFTC Regulation 4.7 of a “Qualified Eligible Person.”
Incorrect
These restrictions on the use of hypothetical trading results shall not apply to promotional material intended solely for persons who meet the standards set out in CFTC Regulation 4.7 of a “Qualified Eligible Person.”
Question 9 of 10
9. Question
What is the necessary condition(s) for the statements of opinion included in promotional material?
Correct
According to NFA RULE 2-29:
Opinion statements included in promotional material must be clearly identifiable as such and must, in fact, have a reasonable basis.
Incorrect
According to NFA RULE 2-29:
Opinion statements included in promotional material must be clearly identifiable as such and must, in fact, have a reasonable basis.
Question 10 of 10
10. Question
Select the suitable person(s) involved in reviewing and approving each promotional material.
Correct
According to NFA RULE 2-29:
Each promotional material shall be reviewed and approved in writing prior to its first use by an agent, general partner, sole proprietor, branch office manager or another supervisory employee other than the person who prepared that material.
Incorrect
According to NFA RULE 2-29:
Each promotional material shall be reviewed and approved in writing prior to its first use by an agent, general partner, sole proprietor, branch office manager or another supervisory employee other than the person who prepared that material.
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