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Question 1 of 10
1. Question
Members that are not also members of the Financial Industry Regulatory Authority and their Associates shall adhere to the following additional requirements:
I. A Member shall exercise due diligence in learning the customer’s basic data
II. Copy of the background and financial information in the Member’s file shall also be sent to each customer for verification within 14
days after the member becomes aware of any material change in the financial status of the customer
III. Any FCM or IB Member shall recommend a trade-in security futures products to a non-institutional customer
IV. An affiliate of FCM shall propose a trade-in security futures products to a non-institutional customer
Correct
According to NFA RULE 2-30, Members who are not members of the Regulatory Authority for Financial Industry or their employees shall comply with the following additional requirements:
(1) A Member shall exercise due diligence in learning the important facts concerning the customer, including the investment goals and
the financial situation of the customer and on the basis of those facts.
(2) A copy of the background and financial information in the Member's file shall also be sent to each customer who is an individual for
verification within 15 days after the member becomes aware of any material change in the financial status of the customer.
(3) Any member or affiliate of FCM or IB shall propose a trade-in security futures products to a non-institutional customer.
Incorrect
According to NFA RULE 2-30, Members who are not members of the Regulatory Authority for Financial Industry or their employees shall comply with the following additional requirements:
(1) A Member shall exercise due diligence in learning the important facts concerning the customer, including the investment goals and
the financial situation of the customer and on the basis of those facts.
(2) A copy of the background and financial information in the Member's file shall also be sent to each customer who is an individual for
verification within 15 days after the member becomes aware of any material change in the financial status of the customer.
(3) Any member or affiliate of FCM or IB shall propose a trade-in security futures products to a non-institutional customer.
Question 2 of 10
2. Question
Any customer who is not a non-institutional customer:
I. Commodity pool operated by a registered pool operator of commodities
II. Not an investment advisor
III. Registered broker-dealer
IV. Is a stockbroker
Correct
Keeping in mind NFA RULE 2-30 Any customer who is not a non-institutional customer shall abide by the following statements:
(1) It is not in the commodity pool operated by a registered pool operator of commodities.
(2) Not an investment advisor.
(3) Not a licensed broker-dealer or commission merchant in the future.
Incorrect
Keeping in mind NFA RULE 2-30 Any customer who is not a non-institutional customer shall abide by the following statements:
(1) It is not in the commodity pool operated by a registered pool operator of commodities.
(2) Not an investment advisor.
(3) Not a licensed broker-dealer or commission merchant in the future.
Question 3 of 10
3. Question
On what basics an associate shall recommend to any customer a transaction in security futures products?
Correct
According to NFA RULE 2-30:
No FCM or IB Member or Associate shall recommend to any customer a trade-in security futures products or a specific trading strategy relating to such products without reasonable grounds to conclude that the recommendation or strategy is not unreasonable for the customer on the basis of the current investment goals, financial situation, and needs of the customer.
Incorrect
According to NFA RULE 2-30:
No FCM or IB Member or Associate shall recommend to any customer a trade-in security futures products or a specific trading strategy relating to such products without reasonable grounds to conclude that the recommendation or strategy is not unreasonable for the customer on the basis of the current investment goals, financial situation, and needs of the customer.
Question 4 of 10
4. Question
Under which acts or rules must the “Introducing Broker” be registered with?
Correct
“Introducing Broker” or “IB” means an initial broker as that term is used in the Commodity Exchange Act and must be licensed as such in compliance with the Commodity Exchange Act and Commission Rules.
Incorrect
“Introducing Broker” or “IB” means an initial broker as that term is used in the Commodity Exchange Act and must be licensed as such in compliance with the Commodity Exchange Act and Commission Rules.
Question 5 of 10
5. Question
On what basics the associate shall recommend a security futures transaction to a customer?
Correct
According to NFA RULE 2-30:
Any FCM or IB Member or Associate shall recommend a security futures transaction to a customer unless the person making the recommendation has reasonable grounds to believe, at the time of making the recommendation, that the customer has such financial knowledge and experience that the customer may reasonably be expected to be able to assess the risks.
Incorrect
According to NFA RULE 2-30:
Any FCM or IB Member or Associate shall recommend a security futures transaction to a customer unless the person making the recommendation has reasonable grounds to believe, at the time of making the recommendation, that the customer has such financial knowledge and experience that the customer may reasonably be expected to be able to assess the risks.
Question 6 of 10
6. Question
Which factor(s) are involved in exercising discretion over an account that may affect security futures transactions?
Correct
No member or associate exercising discretion over an account can affect future security transactions that are excessive in size or frequency given the investment goals and financial situation of the customer.
Incorrect
No member or associate exercising discretion over an account can affect future security transactions that are excessive in size or frequency given the investment goals and financial situation of the customer.
Question 7 of 10
7. Question
In order to register as an IB which conditions are required?
Correct
Registration is required for an IB unless the individual or organization is:
(1) Registered as and acting in the capacity of an AP.
(2) Registered as an FCM.
(3) Registered as a CPO and only operates pools.
(4) Registered as a CTA and either solely manages accounts under powers of attorney.
(5) Is a non-U.S. resident
Incorrect
Registration is required for an IB unless the individual or organization is:
(1) Registered as and acting in the capacity of an AP.
(2) Registered as an FCM.
(3) Registered as a CPO and only operates pools.
(4) Registered as a CTA and either solely manages accounts under powers of attorney.
(5) Is a non-U.S. resident
Question 8 of 10
8. Question
What comes under the responsibility of an IB(Introducing Broker)?
Correct
An (IB) is a person or company that requests or accepts orders to buy or sell futures contracts, commodity options, off-exchange retail forex contracts or swaps, but does not accept money or other resources from customers to fund these orders.
Incorrect
An (IB) is a person or company that requests or accepts orders to buy or sell futures contracts, commodity options, off-exchange retail forex contracts or swaps, but does not accept money or other resources from customers to fund these orders.
Question 9 of 10
9. Question
What are the duties of a futures commission merchant?
Correct
A futures commission merchant (FCM) is an organization that demands or accepts orders to buy or sell futures contracts, futures options, retail off-exchange forex contracts or swaps, and uses customers ‘ money or other resources to fund those orders.
Incorrect
A futures commission merchant (FCM) is an organization that demands or accepts orders to buy or sell futures contracts, futures options, retail off-exchange forex contracts or swaps, and uses customers ‘ money or other resources to fund those orders.
Question 10 of 10
10. Question
What are the responsibilities of a Commodity Trading Advisor (CTA)?
Correct
A Commodity Trading Advisor (CTA) is a person or company advising others, directly or indirectly, on the price or advisability of futures trading contracts, futures options, off-exchange retail forex contracts or swaps, for payment or benefit.
Incorrect
A Commodity Trading Advisor (CTA) is a person or company advising others, directly or indirectly, on the price or advisability of futures trading contracts, futures options, off-exchange retail forex contracts or swaps, for payment or benefit.
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