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Question 1 of 10
1. Question
On which of the following factors the New Net High Profits is based upon:
I. Operating expenses
II. Brokerage commissions
III. Specific management fees
IV. Net of all management fees
Correct
According to NFA Rule 2-13, New Net High Profits is the net of all management fees, brokerage commissions, and operating expenses and as such, the General Partner does not receive an incentive fee until the Fund generates trading income sufficient to offset such expenses.
Incorrect
According to NFA Rule 2-13, New Net High Profits is the net of all management fees, brokerage commissions, and operating expenses and as such, the General Partner does not receive an incentive fee until the Fund generates trading income sufficient to offset such expenses.
Question 2 of 10
2. Question
Which of the following actions are permitted by the CPOS:
I. To make direct loans
II. To make indirect loans
III. To keep loans record
IV. Make advance of pool assets
Correct
NFA Compliance Rule 2-45 prohibits CPOs from permitting a commodity pool to use any means to make a direct or indirect loan or the advance of pool assets to the CPO or any other affiliated person or entity.
Incorrect
NFA Compliance Rule 2-45 prohibits CPOs from permitting a commodity pool to use any means to make a direct or indirect loan or the advance of pool assets to the CPO or any other affiliated person or entity.
Question 3 of 10
3. Question
Within which period a CPO is required to notify NFA of these existing arrangements(that certain CPOs exempt from registration may have caused pools that they operate to make these types of loan or advance arrangements prior to the CPOs becoming NFA Members)?
Correct
According to NFA Rule 2-45, A CPO is required to notify NFA of these existing arrangements within thirty days.
Incorrect
According to NFA Rule 2-45, A CPO is required to notify NFA of these existing arrangements within thirty days.
Question 4 of 10
4. Question
Which of the following conditions of the existing arrangements(that certain CPOs exempt from registration may have caused pools that they operate to make these types of loan or advance arrangements before the CPOs becoming NFA Members) violates the NFA’s rules:
I. If a loan is not secured by marketable assets
II. If a loan is not secured by liquid assets
III. If a loan is secured by marketable assets
IV. If a loan is secured by liquid assets
Correct
According to NFA Rule 2-45, Existing arrangements also violate NFA’s rules if the loan or advance is not secured by marketable, liquid assets (e.g. a CPO participant’s pro-rata interest in the pool’s liquid assets).
Incorrect
According to NFA Rule 2-45, Existing arrangements also violate NFA’s rules if the loan or advance is not secured by marketable, liquid assets (e.g. a CPO participant’s pro-rata interest in the pool’s liquid assets).
Question 5 of 10
5. Question
What is the responsibility of a Futures Commission Merchants (“FCMs”)?
Correct
According to NFA Rule 2-4, Futures Commission Merchants (“FCMs”) may seek to develop and offer to customers sweep account programs to manage cash balances.
Incorrect
According to NFA Rule 2-4, Futures Commission Merchants (“FCMs”) may seek to develop and offer to customers sweep account programs to manage cash balances.
Question 6 of 10
6. Question
What is the flow of cash in a sweep account programs?
Correct
According to NFA Rule 2-4, Sweep account programs transfer a customer’s excess funds from a regulated commodity account (whether a customer segregated, secured account or cleared swaps customer account) to a non-regulated account for the customer at the FCM.
Incorrect
According to NFA Rule 2-4, Sweep account programs transfer a customer’s excess funds from a regulated commodity account (whether a customer segregated, secured account or cleared swaps customer account) to a non-regulated account for the customer at the FCM.
Question 7 of 10
7. Question
Which of the following transactions are not allowed to be handled by the CPOs:
I. Those associated with short securities sales
II. Those associated with cash financings
III. Those associated with guarantee obligations
IV. Those associated with non-repurchase agreements
Correct
According to NFA Rule 2-45, Those associated with short securities sales, cash financings, guarantee obligations, repurchase or reverse repurchase agreements, wholly-owned subsidiaries are not allowed to be handled by the CPOs.
Incorrect
According to NFA Rule 2-45, Those associated with short securities sales, cash financings, guarantee obligations, repurchase or reverse repurchase agreements, wholly-owned subsidiaries are not allowed to be handled by the CPOs.
Question 8 of 10
8. Question
To take a short position in security which of the following conditions must be fulfilled:
I. Locate the security that is being sold short
II. Borrow the security that is being sold short
III. Deliver it to the purchaser
IV. Deliver it to the middle man
Correct
According to NFA Rule 2-45, In order to take a short position in a security, a pool must locate and borrow the security that is being sold short and deliver it to the purchaser in order to settle the short sale.
Incorrect
According to NFA Rule 2-45, In order to take a short position in a security, a pool must locate and borrow the security that is being sold short and deliver it to the purchaser in order to settle the short sale.
Question 9 of 10
9. Question
What is the necessary condition form the following list for a pool that is selling a security short:
I. May locate and borrow the security from a pool operated by the same CPO
II. Must locate and borrow the security from a pool operated by the same CPO
III. May locate and borrow the security from a pool operated by the different CPO
IV. Must locate and borrow the security from a pool operated by the different CPO
Correct
According to NFA Rule 2-45, A pool that is selling a security short may locate and borrow the security from a pool operated by the same CPO.
Incorrect
According to NFA Rule 2-45, A pool that is selling a security short may locate and borrow the security from a pool operated by the same CPO.
Question 10 of 10
10. Question
Which of the following factors must be considered while making a disaster recovery plan?
I. Describes the protocols to be followed in the event of a major disruption of business
II. Has no information about reestablishing operations
III. Functionality that allows the continuation of the desired operation
IV. Doesn’t allow the transfer of business capabilities
Correct
According to NFA RULE 2-38, Disaster recovery plan detailing the steps to be followed in the event of an emergency or major disruption of operation. The project is structured equally to allow the member to continue operating, restart operations or transfer their company to another member with minimal disruption to their clients, other members, and commodity futures markets.
Incorrect
According to NFA RULE 2-38, Disaster recovery plan detailing the steps to be followed in the event of an emergency or major disruption of operation. The project is structured equally to allow the member to continue operating, restart operations or transfer their company to another member with minimal disruption to their clients, other members, and commodity futures markets.
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