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Question 1 of 10
1. Question
Under which rule a person associated with a member may be exempt from registration with the NASD?
Correct
NASD Rule 1060 provides for four circumstances under which a person associated with a member may be exempt from registration with the NASD, as follows: Persons associated with a member whose functions are solely and exclusively clerical or ministerial; Persons associated with a member who are not actively engaged in the investment banking or securities business; Persons associated with a member whose functions are related solely and exclusively to the member’s need for nominal corporate officers or for capital participation; and Persons associated with a member whose functions are related solely and exclusively to (i) effecting transactions on the floor of a national securities exchange and who are registered as floor members with such exchange, (ii) transactions in municipal securities, (iii) transactions in commodities, or (iv) transactions in security futures, provided that any such person is registered with a registered futures association.
Incorrect
NASD Rule 1060 provides for four circumstances under which a person associated with a member may be exempt from registration with the NASD, as follows: Persons associated with a member whose functions are solely and exclusively clerical or ministerial; Persons associated with a member who are not actively engaged in the investment banking or securities business; Persons associated with a member whose functions are related solely and exclusively to the member’s need for nominal corporate officers or for capital participation; and Persons associated with a member whose functions are related solely and exclusively to (i) effecting transactions on the floor of a national securities exchange and who are registered as floor members with such exchange, (ii) transactions in municipal securities, (iii) transactions in commodities, or (iv) transactions in security futures, provided that any such person is registered with a registered futures association.
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Question 2 of 10
2. Question
What is the text of NASD Rule 1080?
Correct
The Qualification Examinations are confidential. An exam is not to be removed from the examination center, and any reproduction, disclosure, or receipt of any portion of the exam is prohibited.
Incorrect
The Qualification Examinations are confidential. An exam is not to be removed from the examination center, and any reproduction, disclosure, or receipt of any portion of the exam is prohibited.
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Question 3 of 10
3. Question
In which case a person is required to retake Qualification Examination for Representatives corresponding to his registration?
Correct
Pursuant to Registration requirements (NASD Rule 1031), the person is required to retake a Qualification Examination for Representatives corresponding to his registration if their registration has lapsed for two or more years.
Incorrect
Pursuant to Registration requirements (NASD Rule 1031), the person is required to retake a Qualification Examination for Representatives corresponding to his registration if their registration has lapsed for two or more years.
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Question 4 of 10
4. Question
What is NASD’s mission regarding the Qualification Examinations?
Correct
The NASD takes confidentiality of the exams very seriously as it is critically important to their mission of protecting investors and maintaining a secure and efficient securities market to have knowledgeable and competent representatives throughout the securities industry who are well versed in the rules and regulations surrounding their actions. Any violation of the confidentiality of the exams threatens to undermine the quality and efficacy of this regulation.
Incorrect
The NASD takes confidentiality of the exams very seriously as it is critically important to their mission of protecting investors and maintaining a secure and efficient securities market to have knowledgeable and competent representatives throughout the securities industry who are well versed in the rules and regulations surrounding their actions. Any violation of the confidentiality of the exams threatens to undermine the quality and efficacy of this regulation.
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Question 5 of 10
5. Question
How many times must each registered representative and registered principal take part in a meeting to discuss relevant compliance matters?
Correct
According to NASD Rule 3010 Supervision, each registered person must be assigned to a registered representative or principal who will be responsible for supervising that person’s activities, the member firm must make reasonable efforts to ensure that all supervisory personnel are qualified to carry out their duties, and each registered representative and registered principal must take part in a meeting to discuss relevant compliance matters at least once annually.
Incorrect
According to NASD Rule 3010 Supervision, each registered person must be assigned to a registered representative or principal who will be responsible for supervising that person’s activities, the member firm must make reasonable efforts to ensure that all supervisory personnel are qualified to carry out their duties, and each registered representative and registered principal must take part in a meeting to discuss relevant compliance matters at least once annually.
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Question 6 of 10
6. Question
NASD Rule 3010 defines an Office of Supervisory Jurisdiction, or OSJ, as:
Correct
NASD Rule 3010 defines an Office of Supervisory Jurisdiction, or OSJ, as “any office of a member at which any one or more of the following functions take place:
a. Order execution and/or market making
b. Structuring of public offerings or private placements
c. Maintaining custody of customers’ funds and/or securities
d. Final acceptance (approval) of new accounts on behalf of the member
e. Review and endorsement of customer orders, pursuant to paragraph (d) above
f. Final approval of retail communications for use by persons associated with the member, pursuant to FINRA Rule 2210(b)(1), except for an office that solely conducts final approval of research reports
g. Responsibility for supervising the activities of persons associated with the member at one or more other branch offices of the member”Incorrect
NASD Rule 3010 defines an Office of Supervisory Jurisdiction, or OSJ, as “any office of a member at which any one or more of the following functions take place:
a. Order execution and/or market making
b. Structuring of public offerings or private placements
c. Maintaining custody of customers’ funds and/or securities
d. Final acceptance (approval) of new accounts on behalf of the member
e. Review and endorsement of customer orders, pursuant to paragraph (d) above
f. Final approval of retail communications for use by persons associated with the member, pursuant to FINRA Rule 2210(b)(1), except for an office that solely conducts final approval of research reports
g. Responsibility for supervising the activities of persons associated with the member at one or more other branch offices of the member” -
Question 7 of 10
7. Question
Each member shall conduct a review, at least annually, of the businesses in which it engages, pursuant to which NASD Rule?
Correct
Pursuant to NASD Rule 3010 Supervision, “Each member shall conduct a review, at least annually, of the businesses in which it engages, which review shall be reasonably designed to assist in detecting and preventing violations of, and achieving compliance with, applicable securities laws and regulations, and with applicable NASD rules.”
Incorrect
Pursuant to NASD Rule 3010 Supervision, “Each member shall conduct a review, at least annually, of the businesses in which it engages, which review shall be reasonably designed to assist in detecting and preventing violations of, and achieving compliance with, applicable securities laws and regulations, and with applicable NASD rules.”
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Question 8 of 10
8. Question
Which office is an exception from a final approval of retail communications for use by persons associated with the member?
Correct
According to NASD Rule 3010’s definition of Office of Supervisory Jurisdiction, or OSJ, Final approval of retail communications for use by persons associated with the member takes place in the OSJ, pursuant to FINRA Rule 2210(b)(1), except for an office that solely conducts final approval of research reportsAn office that solely conducts final approval of research reports.
Incorrect
According to NASD Rule 3010’s definition of Office of Supervisory Jurisdiction, or OSJ, Final approval of retail communications for use by persons associated with the member takes place in the OSJ, pursuant to FINRA Rule 2210(b)(1), except for an office that solely conducts final approval of research reportsAn office that solely conducts final approval of research reports.
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Question 9 of 10
9. Question
The presentation of performance information could be an example of…
Correct
One example of an omission of a material fact could be in the presentation of performance information. For instance, an investment company’s past returns could have been primarily driven by one investment in a small-cap company that significantly outperformed the rest of the market. Without that security, the fund may have significantly underperformed its peers and this needs to be communicated to potential investors to provide accurate information from which to make an informed decision.
Incorrect
One example of an omission of a material fact could be in the presentation of performance information. For instance, an investment company’s past returns could have been primarily driven by one investment in a small-cap company that significantly outperformed the rest of the market. Without that security, the fund may have significantly underperformed its peers and this needs to be communicated to potential investors to provide accurate information from which to make an informed decision.
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Question 10 of 10
10. Question
In which way of the following could an investment company utilize a misleading name?
Correct
A misleading investment company name would be one that implies that it has been guaranteed by a bank or other depository institution, such as the “ABC Bank Guaranteed Interest Fund.”
Incorrect
A misleading investment company name would be one that implies that it has been guaranteed by a bank or other depository institution, such as the “ABC Bank Guaranteed Interest Fund.”