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Question 1 of 10
1. Question
Which of the following is the definition of the ex-dividend date?
Correct
Ex-dividend date: This is the date at which point the seller of the security will be entitled to the dividend payment. Thus, if an investor purchased the security after the ex-dividend date, the seller, not the buyer, would be entitled to the dividend and the security is said to trade ex-dividend.
Incorrect
Ex-dividend date: This is the date at which point the seller of the security will be entitled to the dividend payment. Thus, if an investor purchased the security after the ex-dividend date, the seller, not the buyer, would be entitled to the dividend and the security is said to trade ex-dividend.
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Question 2 of 10
2. Question
Which of the following is one of the information required to be disclosed before the sale of a security?
Correct
Under Rule 10b-10 of the Securities Exchange Act of 1934, a broker or dealer is required, at or before the sale of a security, to disclose the following information:
1.The date and time of the transaction (or that such information will be provided upon completion of the transaction)
2.The identity, price, and number of shares or units of each security sold or purchased
3.The name of the person from whom the security was purchased, or to whom it was sold, or the fact that this information will be provided upon the customer’s written request
4.The amount of any remuneration received by the broker from the transaction, unless governed by a previously written agreement with the customer on a basis other than transactional
5.Whether the customer paid any odd-lot fees in connection with the transaction.Incorrect
Under Rule 10b-10 of the Securities Exchange Act of 1934, a broker or dealer is required, at or before the sale of a security, to disclose the following information:
1.The date and time of the transaction (or that such information will be provided upon completion of the transaction)
2.The identity, price, and number of shares or units of each security sold or purchased
3.The name of the person from whom the security was purchased, or to whom it was sold, or the fact that this information will be provided upon the customer’s written request
4.The amount of any remuneration received by the broker from the transaction, unless governed by a previously written agreement with the customer on a basis other than transactional
5.Whether the customer paid any odd-lot fees in connection with the transaction. -
Question 3 of 10
3. Question
Which of the following statements is true regarding late trading?
Correct
Late trading involves purchasing mutual fund shares after the market has closed for the day but still obtaining that day’s closing price, not the next day’s price. This practice is illegal.
Incorrect
Late trading involves purchasing mutual fund shares after the market has closed for the day but still obtaining that day’s closing price, not the next day’s price. This practice is illegal.
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Question 4 of 10
4. Question
Which of the following statements is true regarding frozen accounts?
Correct
When an account is frozen, all open orders must be canceled. No further transactions may take place in the account. No money may be withdrawn from or deposited to the account. The assets may not be moved to another account. No action at all may be taken with the account. This is to prevent fraudulent activity from occurring in the owners account. These accounts are especially easy targets, as there is no one to report suspicious activity.
Incorrect
When an account is frozen, all open orders must be canceled. No further transactions may take place in the account. No money may be withdrawn from or deposited to the account. The assets may not be moved to another account. No action at all may be taken with the account. This is to prevent fraudulent activity from occurring in the owners account. These accounts are especially easy targets, as there is no one to report suspicious activity.
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Question 5 of 10
5. Question
What is the case in which obtaining negotiable instruments from customers is permitted?
Correct
Generally speaking, FINRA Rule 4514 prohibits a member or associated person from obtaining checks drafts or other negotiable instruments from customers. However, in the case where the customer has provided express written authorization, this may be permitted. The same record keeping requirements do not apply if the authorization is provided directly on the negotiable instrument.
Incorrect
Generally speaking, FINRA Rule 4514 prohibits a member or associated person from obtaining checks drafts or other negotiable instruments from customers. However, in the case where the customer has provided express written authorization, this may be permitted. The same record keeping requirements do not apply if the authorization is provided directly on the negotiable instrument.
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Question 6 of 10
6. Question
What is the effect of FINRA Rule 4514?
Correct
Generally speaking, FINRA Rule 4514 prohibits a member or associated person from obtaining checks drafts or other negotiable instruments from customers. However, in the case where the customer has provided express written authorization, this may be permitted. The written authorization may be included on the instrument itself, or may be provided separately.
Incorrect
Generally speaking, FINRA Rule 4514 prohibits a member or associated person from obtaining checks drafts or other negotiable instruments from customers. However, in the case where the customer has provided express written authorization, this may be permitted. The written authorization may be included on the instrument itself, or may be provided separately.
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Question 7 of 10
7. Question
Which of the following statements is true regarding FINRA rule 4515?
Correct
FINRA rule 4515 sets forth clear guidelines with respect to the approval and documentation required in order to change the name or designation of an account. In order for the change in name or designation to be executed, a qualified registered principal of the member must authorize the change.
Incorrect
FINRA rule 4515 sets forth clear guidelines with respect to the approval and documentation required in order to change the name or designation of an account. In order for the change in name or designation to be executed, a qualified registered principal of the member must authorize the change.
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Question 8 of 10
8. Question
Which rule is concerned about best execution and interpositioning?
Correct
Best execution and interpositioning (Rule 5310) – a member must use due diligence in ensuring that the transaction is made on the market best for the security so the price to the customer is favorable. Additionally, a member cannot put a 3rd party between himself and the best market, unless there is an acceptable circumstance.
Incorrect
Best execution and interpositioning (Rule 5310) – a member must use due diligence in ensuring that the transaction is made on the market best for the security so the price to the customer is favorable. Additionally, a member cannot put a 3rd party between himself and the best market, unless there is an acceptable circumstance.
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Question 9 of 10
9. Question
Which of the following is one of the information required for recording of quotation?
Correct
Recording of quotation information (Rule 6430) – any OTC market maker that displays real-time quotes must keep record of certain information including the submitting firm, inter-dealer quotation system, trade date, time quote displayed, security name and symbol, bid and bid quote size, offer and offer quote size, prevailing inside bid, and prevailing inside offer.
Incorrect
Recording of quotation information (Rule 6430) – any OTC market maker that displays real-time quotes must keep record of certain information including the submitting firm, inter-dealer quotation system, trade date, time quote displayed, security name and symbol, bid and bid quote size, offer and offer quote size, prevailing inside bid, and prevailing inside offer.
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Question 10 of 10
10. Question
Which rule prohibits cash on delivery transactions?
Correct
FINRA Rule 11860 prohibits cash on delivery transactions for securities unless the transaction adheres to a strict set of rules. Before the transaction is entered into, the FINRA member must be aware that the transaction will be cash on delivery, the transaction should be marked as such, and the customer must receive a confirmation of the transaction by the end of the next business day.
Incorrect
FINRA Rule 11860 prohibits cash on delivery transactions for securities unless the transaction adheres to a strict set of rules. Before the transaction is entered into, the FINRA member must be aware that the transaction will be cash on delivery, the transaction should be marked as such, and the customer must receive a confirmation of the transaction by the end of the next business day.