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Question 1 of 10
1. Question
Which of the following statement(s) is(are) true about FINRA 5 percent mark-up rule?
I. FINRA 5 percent mark-up rule protect customers from excessive charges by brokerage firms.
II. FINRA Mark- up Policy states you should not charge more than 5 percent commission per transaction.
III. The FINRA 5 percent mark-up rule is mandatory.
IV. FINRA 5 percent mark-up rule was enacted to protect consumers from obtrusive sales calls.Correct
This is called the FINRA Mark- up Policy, which states you should not charge more than 5 percent commission per transaction. The FINRA 5 percent mark-up rule is a guideline only and not mandatory.
Incorrect
This is called the FINRA Mark- up Policy, which states you should not charge more than 5 percent commission per transaction. The FINRA 5 percent mark-up rule is a guideline only and not mandatory.
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Question 2 of 10
2. Question
Trades that are regulated by the FINRA 5 percent rule include
I. Inventory transactions
II. Broker transactions
III. Simultaneous transactions
IV. Proceed transactionsCorrect
Trades that are regulated by the FINRA 5 percent rule include:
•Inventory transactions
•Broker transactions
•Simultaneous (riskless) transactions
•Proceed transactionsIncorrect
Trades that are regulated by the FINRA 5 percent rule include:
•Inventory transactions
•Broker transactions
•Simultaneous (riskless) transactions
•Proceed transactions -
Question 3 of 10
3. Question
Which of the following step(s) is(are) not included in money laundering?
I. Placement
II. Layering
III. Transaction
IV. IntegrationCorrect
The three steps of money laundering:
1.Placement
2.Layering
3.IntegrationIncorrect
The three steps of money laundering:
1.Placement
2.Layering
3.Integration -
Question 4 of 10
4. Question
Which of the following customer information does registered representatives must keep on the file to comply with the Patriot Act of 2001?
Correct
In 2001, the Patriot Act was created to protect the country against terrorist activity. Broker/dealers now must keep records of customer identification and check customer names against the U.S. Treasury list of known terrorists. Check with your firm on procedures on opening accounts.
Incorrect
In 2001, the Patriot Act was created to protect the country against terrorist activity. Broker/dealers now must keep records of customer identification and check customer names against the U.S. Treasury list of known terrorists. Check with your firm on procedures on opening accounts.
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Question 5 of 10
5. Question
Which of the following statement(s) is(are) true about margin account?
I. Margin accounts are credit lines with a broker.
II. Margin accounts allow an investor to buy and sell more securities than they otherwise might be able to afford.
III. Margin accounts come with no risk.
IV. Margin accounts are heavily regulated.Correct
Margin accounts are credit lines with a broker. These accounts allow an investor to buy and sell more securities than they otherwise might be able to afford. Margin accounts come with a lot of risk because they are created to buy and sell on credit — should the market go a different way than the investor speculates, losses can be great. Because of this high risk, margin accounts are heavily regulated.
Incorrect
Margin accounts are credit lines with a broker. These accounts allow an investor to buy and sell more securities than they otherwise might be able to afford. Margin accounts come with a lot of risk because they are created to buy and sell on credit — should the market go a different way than the investor speculates, losses can be great. Because of this high risk, margin accounts are heavily regulated.
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Question 6 of 10
6. Question
Which of the following statement(s) is(are) true about long margin account?
I. In long margin account, a customer wants to buy securities but does not have all the funds to do so, he or she puts down a certain percentage and borrows the rest from the broker.
II. Long margin account holders are bullish.
III. Long margin account holders are bearish.
IV. Long margin account holders speculate the market will go up so they can collect on the increase in market price.Correct
When a customer wants to buy securities but does not have all the funds to do so, he or she puts down a certain percentage and borrows the rest from the broker. This is a long margin account. Long margin account holders are bullish: they speculate the market will go up so they can collect on the in- crease in market price.
Incorrect
When a customer wants to buy securities but does not have all the funds to do so, he or she puts down a certain percentage and borrows the rest from the broker. This is a long margin account. Long margin account holders are bullish: they speculate the market will go up so they can collect on the in- crease in market price.
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Question 7 of 10
7. Question
Regulation T (Reg. T) states a customer must back their account with a minimum –
Correct
Regulation T (Reg. T) states a customer must back their account with a minimum 50 percent deposit of the total value of the securities they intend to buy or sell;
Incorrect
Regulation T (Reg. T) states a customer must back their account with a minimum 50 percent deposit of the total value of the securities they intend to buy or sell;
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Question 8 of 10
8. Question
When an investor buys securities with cash, there is a window of up to-
Correct
When an investor buys securities with cash, there is a window of up to five days during which this investor can pay for the securities bought.
Incorrect
When an investor buys securities with cash, there is a window of up to five days during which this investor can pay for the securities bought.
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Question 9 of 10
9. Question
John Brown wants to buy $3,000 worth of XYZ stock and he is opening a margin account. Which of the following statement(s) is (are) true?
I. According to Reg. T, he would have to deposit 50 percent of the purchase price, in this case $1,500.
II. FINRA require a de- posit of $2,000.
III. NYSE require a de- posit of $2,000.
IV. He would have to make an initial deposit of $2,000 to create a margin account.Correct
John Brown wants to buy $3,000 worth of XYZ stock and he is opening a margin account. According to Reg. T, he would have to deposit 50 percent of the purchase price, in this case $1,500. FINRA and NYSE require a de- posit of $2,000, which is greater. He would have to make an initial deposit of $2,000 to create a margin account.
Incorrect
John Brown wants to buy $3,000 worth of XYZ stock and he is opening a margin account. According to Reg. T, he would have to deposit 50 percent of the purchase price, in this case $1,500. FINRA and NYSE require a de- posit of $2,000, which is greater. He would have to make an initial deposit of $2,000 to create a margin account.
-
Question 10 of 10
10. Question
Which of the following is the correct formula to calculate equity for long margin accounts?
Correct
Equity (EQ) = long market value (LMV) – debit balance (DR)
Incorrect
Equity (EQ) = long market value (LMV) – debit balance (DR)