Quiz-summary
0 of 10 questions completed
Questions:
- 1
- 2
- 3
- 4
- 5
- 6
- 7
- 8
- 9
- 10
Information
Certdemy free practice questions
You have already completed the quiz before. Hence you can not start it again.
Quiz is loading...
You must sign in or sign up to start the quiz.
You have to finish following quiz, to start this quiz:
Results
0 of 10 questions answered correctly
Your time:
Time has elapsed
You have reached 0 of 0 points, (0)
Categories
- Not categorized 0%
- 1
- 2
- 3
- 4
- 5
- 6
- 7
- 8
- 9
- 10
- Answered
- Review
-
Question 1 of 10
1. Question
Which of the following statements is true regarding FINRA Rule 2010 Standards of Commercial Honor and Principles of Trade?
Correct
FINRA Rule 2010 Standards of Commercial Honor and Principles of Trade states that “a member, in the conduct of its business, shall observe high standards of commercial honor and just and equitable principles of trade.” Broadly speaking, this rule encourages members to be just and equitable in their dealings, although no real specific guidance is provided.
Incorrect
FINRA Rule 2010 Standards of Commercial Honor and Principles of Trade states that “a member, in the conduct of its business, shall observe high standards of commercial honor and just and equitable principles of trade.” Broadly speaking, this rule encourages members to be just and equitable in their dealings, although no real specific guidance is provided.
-
Question 2 of 10
2. Question
What is the importance of FINRA Rule 2090-Know Your Customer?
Correct
The importance of this rule in is ensuring that each investor’s account is handled in accordance with the investor’s wishes and in accordance with all rules and laws. This provides peace of mind to the investor that his account is being maintained and serviced properly not only at the account opening, but throughout the entire length of the relationship that the investor maintains with that adviser.
Incorrect
The importance of this rule in is ensuring that each investor’s account is handled in accordance with the investor’s wishes and in accordance with all rules and laws. This provides peace of mind to the investor that his account is being maintained and serviced properly not only at the account opening, but throughout the entire length of the relationship that the investor maintains with that adviser.
-
Question 3 of 10
3. Question
According to FINRA Rule 2010- Know Your Customer, who is responsible for operating accounts in accordance with all of the applicable rules and regulations?
Correct
This responsibility lies with the broker or adviser, who are the experts in these rules and regulations, and not with the individual investor, who likely is not familiar with these rules or does not have time to constantly monitor and ensure compliance.
Incorrect
This responsibility lies with the broker or adviser, who are the experts in these rules and regulations, and not with the individual investor, who likely is not familiar with these rules or does not have time to constantly monitor and ensure compliance.
-
Question 4 of 10
4. Question
How does the new FINRA Rule 2111 expand upon the previous NASD Rule 2310?
Correct
The new FINRA Rule 2111 expands upon the previous NASD Rule 2310 by specifying the factors to be considered in developing the investment profile,
including an investor’s age, other investments, financial situation and needs, tax status, investment objectives, investment experience, investment time horizon, liquidity needs, risk tolerance, and any other information disclosed by the investor.Incorrect
The new FINRA Rule 2111 expands upon the previous NASD Rule 2310 by specifying the factors to be considered in developing the investment profile,
including an investor’s age, other investments, financial situation and needs, tax status, investment objectives, investment experience, investment time horizon, liquidity needs, risk tolerance, and any other information disclosed by the investor. -
Question 5 of 10
5. Question
Why are an investor’s age and time horizon typically closely linked and both are important in suitability?
Correct
An investor’s age and time horizon are typically closely linked and both are important in determining suitability because a younger investor will typically have a longer time horizon than an older investor, and will thus be able to take more risk than an older investor with a shorter time horizon.
Incorrect
An investor’s age and time horizon are typically closely linked and both are important in determining suitability because a younger investor will typically have a longer time horizon than an older investor, and will thus be able to take more risk than an older investor with a shorter time horizon.
-
Question 6 of 10
6. Question
Which of the following statements is true regarding the new Rule 2111?
Correct
The new Rule 2111 also provides that, while the rule applies to all recommended investment strategies and the term strategy is meant to be applied broadly, the rule does not cover general educational materials that firms may produce, as FINRA believes this educational material to be important to creating an educated investing public. This educational material is exempt from the rule so long as it does not include any specific recommendations of particular securities.
Incorrect
The new Rule 2111 also provides that, while the rule applies to all recommended investment strategies and the term strategy is meant to be applied broadly, the rule does not cover general educational materials that firms may produce, as FINRA believes this educational material to be important to creating an educated investing public. This educational material is exempt from the rule so long as it does not include any specific recommendations of particular securities.
-
Question 7 of 10
7. Question
Which of the following statements is true regarding a variable annuity?
Correct
The fixed annuity will provide the investor with certain guarantees as to minimum rates and charges, so that an investor can plan a minimum benefit distribution. A variable annuity, however, is only guaranteed with respect to maximum charges. It does not, however, provide any type of guarantee of investment performance, since that is controlled by the investor and a function of the investment allocation he adopts. Without the investment performance guarantees, the variable annuity is significantly riskier than a fixed annuity and is better suited for an investor with a longer time horizon or flexible liquidity needs so as to manage peaks and troughs in performance.
Incorrect
The fixed annuity will provide the investor with certain guarantees as to minimum rates and charges, so that an investor can plan a minimum benefit distribution. A variable annuity, however, is only guaranteed with respect to maximum charges. It does not, however, provide any type of guarantee of investment performance, since that is controlled by the investor and a function of the investment allocation he adopts. Without the investment performance guarantees, the variable annuity is significantly riskier than a fixed annuity and is better suited for an investor with a longer time horizon or flexible liquidity needs so as to manage peaks and troughs in performance.
-
Question 8 of 10
8. Question
What is a type of annuity which the initial contribution is converted into accumulation units, which are not paid out until some specified period of time?
Correct
In a deferred annuity, the initial contribution is converted into accumulation units, which are not paid out until some specified period of time and continue to increase or decrease in value, depending upon investment performance.
Incorrect
In a deferred annuity, the initial contribution is converted into accumulation units, which are not paid out until some specified period of time and continue to increase or decrease in value, depending upon investment performance.
-
Question 9 of 10
9. Question
Which of the following is not one of variable annuities’ features?
Correct
The four key features of a variable annuity contract are tax-deferred accumulation, ownership interests, voting rights, and distribution options. Contract values within a variable annuity contract grow on a tax-deferred basis, meaning that more funds remain invested to reap the benefits of compound interest right up until such time as it is paid out. Variable annuities provide a mortality guarantee, which
specifies a minimum death benefit that will be paid to the investor’s beneficiary if he should die before he begins receiving payments from the contract. Additionally, a variable annuity also specifies the maximum charges that the issuing company can impose within the contract. These minimum guaranteed expenses are important for investors to consider given the long-term nature of investments in variable annuities. Variable annuities provide for a death benefit that is payable to the contract holder’s beneficiary before he begins receiving the benefit distributions. As mentioned above, the death benefit will be guaranteed to be at or equal to a given level, but may also be higher depending on the investment performance of the contract. Finally, a variable annuity also has a surrender value equal to the contributions into the contract plus investment earnings less expenses and charges.Incorrect
The four key features of a variable annuity contract are tax-deferred accumulation, ownership interests, voting rights, and distribution options. Contract values within a variable annuity contract grow on a tax-deferred basis, meaning that more funds remain invested to reap the benefits of compound interest right up until such time as it is paid out. Variable annuities provide a mortality guarantee, which
specifies a minimum death benefit that will be paid to the investor’s beneficiary if he should die before he begins receiving payments from the contract. Additionally, a variable annuity also specifies the maximum charges that the issuing company can impose within the contract. These minimum guaranteed expenses are important for investors to consider given the long-term nature of investments in variable annuities. Variable annuities provide for a death benefit that is payable to the contract holder’s beneficiary before he begins receiving the benefit distributions. As mentioned above, the death benefit will be guaranteed to be at or equal to a given level, but may also be higher depending on the investment performance of the contract. Finally, a variable annuity also has a surrender value equal to the contributions into the contract plus investment earnings less expenses and charges. -
Question 10 of 10
10. Question
What is one way for contract holders in a variable annuity contract to ensure that they invest similar amounts in both up and down markets?
Correct
Dollar cost averaging is one way for contract holders in a variable annuity contract to ensure that they invest similar amounts in both up and down markets, which means that more units are purchased in down markets and fewer units in up markets.
Incorrect
Dollar cost averaging is one way for contract holders in a variable annuity contract to ensure that they invest similar amounts in both up and down markets, which means that more units are purchased in down markets and fewer units in up markets.