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Question 1 of 10
1. Question
Which of the following refers to the right to the economic benefits of a security?
Correct
FINRA Rule 5121. Public Offerings of Securities With Conflicts of Interest
Beneficial Ownership
The term “beneficial ownership” means the right to the economic benefits of a security.
Incorrect
FINRA Rule 5121. Public Offerings of Securities With Conflicts of Interest
Beneficial Ownership
The term “beneficial ownership” means the right to the economic benefits of a security.
Question 2 of 10
2. Question
Which of the following correctly describe the the term “control”?
I. Beneficial ownership of 20 percent or more of the outstanding common equity of an entity, including any right to receive such securities within 60 days of the member’s participation in the public offering
II. The right to 10 percent or more of the distributable profits or losses of an entity that is a partnership, including any right to receive an interest in such distributable profits or losses within 60 days of the member’s participation in the public offering
III. Beneficial ownership of 10 percent or more of the outstanding preferred equity of an entity, including any right to receive such preferred equity within 60 days of the member’s participation in the public offering
IV. The power to direct or cause the direction of the management or policies of an entity
Correct
FINRA Rule 5121. Public Offerings of Securities With Conflicts of Interest
(6) Control
(A) The term “control” means:
(i) beneficial ownership of 10 percent or more of the outstanding common equity of an entity, including any right to receive such securities within 60 days of the member’s participation in the public offering;
(ii) the right to 10 percent or more of the distributable profits or losses of an entity that is a partnership, including any right to receive an interest in such distributable profits or losses within 60 days of the member’s participation in the public offering;
(iii) beneficial ownership of 10 percent or more of the outstanding preferred equity of an entity, including any right to receive such preferred equity within 60 days of the member’s participation in the public offering; or
(iv) the power to direct or cause the direction of the management or policies of an entity.
Incorrect
FINRA Rule 5121. Public Offerings of Securities With Conflicts of Interest
(6) Control
(A) The term “control” means:
(i) beneficial ownership of 10 percent or more of the outstanding common equity of an entity, including any right to receive such securities within 60 days of the member’s participation in the public offering;
(ii) the right to 10 percent or more of the distributable profits or losses of an entity that is a partnership, including any right to receive an interest in such distributable profits or losses within 60 days of the member’s participation in the public offering;
(iii) beneficial ownership of 10 percent or more of the outstanding preferred equity of an entity, including any right to receive such preferred equity within 60 days of the member’s participation in the public offering; or
(iv) the power to direct or cause the direction of the management or policies of an entity.
Question 3 of 10
3. Question
A member’s registration as an ADF Market Participant shall not become effective until:
I. The member has received a notice of approval from FINRA in the designated security types specified in the member’s application pursuant to specifies whether the member is seeking registration in Nasdaq and/or CQS securities
II. The member has executed the Certification Record pursuant to execute the Certification Record, as defined in Rule 6220
III. FINRA and the member have executed execute a Participant Agreement with FINRA at least six months (or such other shorter time period as may be designated by FINRA) prior to quoting or reporting trades on the ADF
IV. Certifies the member’s good standing with FINRA
Correct
FINRA Alternative Display Facility (ADF) Rule 6200 Series
6271. Registration as an ADF Market Maker or ADF ECN
(b) A member’s registration as an ADF Market Participant shall not become effective until:
(1) the member has received a notice of approval from FINRA in the designated security types specified in the member’s application pursuant to paragraph (a)(1)(A);
(2) the member has executed the Certification Record pursuant to paragraph (a)(2); and
(3) FINRA and the member have executed:
(A) the application pursuant to paragraph (a)(1); and
(B) the Participant Agreement pursuant to paragraph (a)(3).
Incorrect
FINRA Alternative Display Facility (ADF) Rule 6200 Series
6271. Registration as an ADF Market Maker or ADF ECN
(b) A member’s registration as an ADF Market Participant shall not become effective until:
(1) the member has received a notice of approval from FINRA in the designated security types specified in the member’s application pursuant to paragraph (a)(1)(A);
(2) the member has executed the Certification Record pursuant to paragraph (a)(2); and
(3) FINRA and the member have executed:
(A) the application pursuant to paragraph (a)(1); and
(B) the Participant Agreement pursuant to paragraph (a)(3).
Question 4 of 10
4. Question
Indirect Beneficial Owners. For the purposes of Rule 5131(b), a member may rely upon a written representation obtained within the prior 12 months from a person authorized to represent an account that does not look through to the beneficial owners of any unaffiliated private fund invested in the account, except for beneficial owners that are control persons of the investment adviser to such private fund, that such unaffiliated private fund:
I. is managed by an investment adviser
II. has assets greater than $50 million
III. owns less than 25% of the account and is not a fund in which a single investor has a beneficial interest of 25% or more
IV. was not formed for the specific purpose of investing in the account
Correct
FINRA Rule 5131 — New Issue Allocations and Distributions
5131. New Issue Allocations and Distributions
Indirect Beneficial Owners. For the purposes of Rule 5131(b), a member may rely upon a written representation obtained within the prior 12 months from a person authorized to represent an account that does not look through to the beneficial owners of any unaffiliated private fund invested in the account, except for beneficial owners that are control persons of the investment adviser to such private fund, that such unaffiliated private fund:
(1) is managed by an investment adviser;
(2) has assets greater than $50 million;
(3) owns less than 25% of the account and is not a fund in which a single investor has a beneficial interest of 25% or more; and
(4) was not formed for the specific purpose of investing in the account.
Incorrect
FINRA Rule 5131 — New Issue Allocations and Distributions
5131. New Issue Allocations and Distributions
Indirect Beneficial Owners. For the purposes of Rule 5131(b), a member may rely upon a written representation obtained within the prior 12 months from a person authorized to represent an account that does not look through to the beneficial owners of any unaffiliated private fund invested in the account, except for beneficial owners that are control persons of the investment adviser to such private fund, that such unaffiliated private fund:
(1) is managed by an investment adviser;
(2) has assets greater than $50 million;
(3) owns less than 25% of the account and is not a fund in which a single investor has a beneficial interest of 25% or more; and
(4) was not formed for the specific purpose of investing in the account.
Question 5 of 10
5. Question
Which of the following refer to a member of FINRA that is an electronic communications network (“ECN”) that elects to display orders in the ADF. A member shall cease being a Registered Reporting ADF ECN when it has withdrawn or voluntarily terminated its quotations on the ADF or when its quotations have been suspended or terminated by action of FINRA?
Correct
FINRA Alternative Display Facility (ADF) Rule 6200 Series
6220. Definitions
“Registered Reporting ADF ECN” means a member of FINRA that is an electronic communications network (“ECN”) that elects to display orders in the ADF. A member shall cease being a Registered Reporting ADF ECN when it has withdrawn or voluntarily terminated its quotations on the ADF or when its quotations have been suspended or terminated by action of FINRA.
Incorrect
FINRA Alternative Display Facility (ADF) Rule 6200 Series
6220. Definitions
“Registered Reporting ADF ECN” means a member of FINRA that is an electronic communications network (“ECN”) that elects to display orders in the ADF. A member shall cease being a Registered Reporting ADF ECN when it has withdrawn or voluntarily terminated its quotations on the ADF or when its quotations have been suspended or terminated by action of FINRA.
Question 6 of 10
6. Question
No member or person associated with a member shall, directly or indirectly, hold any interest or participation in any joint account for buying or selling a designated security, unless such joint account is promptly reported to FINRA. The report should contain which of the following information for each account?
I. Name of the account, with names of all participants and their respective interests in profits and losses
II. A statement regarding the purpose of the account
III. Name of the member carrying and clearing the account
IV. A copy of any written agreement or instrument relating to the account
Correct
FINRA Rule 6140. Other Trading Practices
No member or person associated with a member shall, directly or indirectly, hold any interest or participation in any joint account for buying or selling a designated security, unless such joint account is promptly reported to FINRA. The report should contain the following information for each account:
(1) Name of the account, with names of all participants and their respective interests in profits and losses;
(2) a statement regarding the purpose of the account;
(3) name of the member carrying and clearing the account; and
(4) a copy of any written agreement or instrument relating to the account.
Incorrect
FINRA Rule 6140. Other Trading Practices
No member or person associated with a member shall, directly or indirectly, hold any interest or participation in any joint account for buying or selling a designated security, unless such joint account is promptly reported to FINRA. The report should contain the following information for each account:
(1) Name of the account, with names of all participants and their respective interests in profits and losses;
(2) a statement regarding the purpose of the account;
(3) name of the member carrying and clearing the account; and
(4) a copy of any written agreement or instrument relating to the account.
Question 7 of 10
7. Question
A member holding an open order from a customer or another broker-dealer shall, prior to executing or permitting the order to be executed, reduce, increase, or adjust the price and/or number of shares of such order by an amount equal to the dividend, payment, or distribution on the day that the security is quoted ex-dividend, ex-rights, ex-distribution, or ex-interest, except where a cash dividend or distribution is less than one cent ($0.01)
The provisions of paragraph above of this Rule shall not apply to which of the following?
I. Orders governed by the rules of a registered national securities exchange
II. Open stop orders to buy
III. Open sell orders
IV. Orders for the purchase or sale of securities where the issuer of the securities has reported a dividend, payment, or distribution pursuant to SEA Rule 10b-17
Correct
FINRA Rule 5330. Adjustment of Orders
A member holding an open order from a customer or another broker-dealer shall, prior to executing or permitting the order to be executed, reduce, increase, or adjust the price and/or number of shares of such order by an amount equal to the dividend, payment, or distribution on the day that the security is quoted ex-dividend, ex-rights, ex-distribution, or ex-interest, except where a cash dividend or distribution is less than one cent ($0.01)
The provisions of paragraph above of this Rule shall not apply to which of the following?
I. Orders governed by the rules of a registered national securities exchange
II. Open stop orders to buy
III. Open sell orders
IV. Orders for the purchase or sale of securities where the issuer of the securities has not reported a dividend, payment, or distribution pursuant to SEA Rule 10b-17
Incorrect
FINRA Rule 5330. Adjustment of Orders
A member holding an open order from a customer or another broker-dealer shall, prior to executing or permitting the order to be executed, reduce, increase, or adjust the price and/or number of shares of such order by an amount equal to the dividend, payment, or distribution on the day that the security is quoted ex-dividend, ex-rights, ex-distribution, or ex-interest, except where a cash dividend or distribution is less than one cent ($0.01)
The provisions of paragraph above of this Rule shall not apply to which of the following?
I. Orders governed by the rules of a registered national securities exchange
II. Open stop orders to buy
III. Open sell orders
IV. Orders for the purchase or sale of securities where the issuer of the securities has not reported a dividend, payment, or distribution pursuant to SEA Rule 10b-17
Question 8 of 10
8. Question
Which of the following about “Defined Limit” is correct?
I. The minimum quotation increment for quotations of $1.00 or above in all ADF-eligible securities shall be $0.01
II. 9.5% for Designated Stocks (except that between 9:30 a.m. and 9:45 a.m. and between 3:35 p.m. and the close of trading, the Defined Limit for Designated Stocks shall be 21.5%)
III. 29.5% for Other NMS Stocks with a price equal to or greater than $1
IV. 31.5% for Other NMS Stocks with a price less than $1.
Correct
FINRA Rule 6272. Character of Quotations
The “Defined Limit” shall be:
(i) 9.5% for Designated Stocks (except that between 9:30 a.m. and 9:45 a.m. and between 3:35 p.m. and the close of trading, the Defined Limit for Designated Stocks shall be 21.5%);
(ii) 29.5% for Other NMS Stocks with a price equal to or greater than $1; and
(iii) 31.5% for Other NMS Stocks with a price less than $1.
Incorrect
FINRA Rule 6272. Character of Quotations
The “Defined Limit” shall be:
(i) 9.5% for Designated Stocks (except that between 9:30 a.m. and 9:45 a.m. and between 3:35 p.m. and the close of trading, the Defined Limit for Designated Stocks shall be 21.5%);
(ii) 29.5% for Other NMS Stocks with a price equal to or greater than $1; and
(iii) 31.5% for Other NMS Stocks with a price less than $1.
Question 9 of 10
9. Question
Unless otherwise indicated, which of the following order information must be recorded under this Rule when an order is received or originated? For purposes of this Rule, the order origination or receipt time is the time the order is received from the customer.
I. Handling fees, specified by FINRA for purposes of this Rule
II. Any limit or stop price prescribed in the order;
III. The date on which the order expires, and, if the time in force is less than one day, the time when the order expires
IV. The time limit during which the order is in force
Correct
FINRA Rule 7440. Recording of Order Information
Unless otherwise indicated, the following order information must be recorded under this Rule when an order is received or originated. For purposes of this Rule, the order origination or receipt time is the time the order is received from the customer.
I. Any limit or stop price prescribed in the order;
II. The date on which the order expires, and, if the time in force is less than one day, the time when the order expires
III. The time limit during which the order is in force
Incorrect
FINRA Rule 7440. Recording of Order Information
Unless otherwise indicated, the following order information must be recorded under this Rule when an order is received or originated. For purposes of this Rule, the order origination or receipt time is the time the order is received from the customer.
I. Any limit or stop price prescribed in the order;
II. The date on which the order expires, and, if the time in force is less than one day, the time when the order expires
III. The time limit during which the order is in force
Question 10 of 10
10. Question
What are the factors which the Board believes that members and the Association’s committees should take into consideration in determining the fairness of a mark-up?
I. The Type of Security Involved
II. The Amount of Money Involved in a Transaction
III. The Pattern of Mark-Ups
IV. The Nature of the Member’s Business
Correct
2120. Commissions, Mark Ups and Charges
2121. Fair Prices and Commissions
(b) Relevant Factors
Some of the factors which the Board believes that members and the Association’s committees should take into consideration in determining the fairness of a mark-up are as follow:
I. The Type of Security Involved
II. The Amount of Money Involved in a Transaction
III. The Pattern of Mark-Ups
IV. The Nature of the Member’s Business
Incorrect
2120. Commissions, Mark Ups and Charges
2121. Fair Prices and Commissions
(b) Relevant Factors
Some of the factors which the Board believes that members and the Association’s committees should take into consideration in determining the fairness of a mark-up are as follow:
I. The Type of Security Involved
II. The Amount of Money Involved in a Transaction
III. The Pattern of Mark-Ups
IV. The Nature of the Member’s Business
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