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Question 1 of 10
1. Question
The net asset value (NAV) of open-end mutual fund shares is recalculated
Correct
The net asset value (NAV) of open-end mutual fund shares is recalculated at the end of each trading day
Incorrect
The net asset value (NAV) of open-end mutual fund shares is recalculated at the end of each trading day
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Question 2 of 10
2. Question
Which of the following account is the most common types of brokerage accounts?
Correct
Cash accounts are the most common types of brokerage accounts.
Incorrect
Cash accounts are the most common types of brokerage accounts.
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Question 3 of 10
3. Question
Which of the following statement(s) is(are) true when an account is frozen?
When an account is frozen-
I. All open orders must be canceled.
II. No further transactions may take place in the account.
III. No money may be withdrawn from or deposited to the account.
IV. No action at all may be taken with the account.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 No money may be withdrawn from or deposited to the account.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.
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 No money may be withdrawn from or deposited to the account.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.
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Question 4 of 10
4. Question
Which of the following statement(s) is(are) not true about trading restricted accounts?
I. The trading restriction on the account is usually due to improper documentation on file.
II. In trading restricted account, cash may be withdrawn.
III. In trading restricted account, assets may be transferred,
IV. In trading restricted account, transactions may not occur in the account.Correct
There are different levels of restricted accounts. The most common type of restriction is a trading restriction on the account. In this case, cash may still be withdrawn and usually assets may be transferred, but transactions may not occur in the account. This is usually due to improper documentation on file. Once the documentation is resolved, the restriction is removed.
Incorrect
There are different levels of restricted accounts. The most common type of restriction is a trading restriction on the account. In this case, cash may still be withdrawn and usually assets may be transferred, but transactions may not occur in the account. This is usually due to improper documentation on file. Once the documentation is resolved, the restriction is removed.
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Question 5 of 10
5. Question
Which of the following FINRA Rule prohibits a member or associated person from obtaining checks drafts or other negotiable instruments from customers?
Correct
FINRA Rule 4514 prohibits a member or associated person from obtaining checks drafts or other negotiable instruments from customers.
Incorrect
FINRA Rule 4514 prohibits a member or associated person from obtaining checks drafts or other negotiable instruments from customers.
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Question 6 of 10
6. Question
Which of the following statement(s) is(are) true about Changing an account’s name?
I. FINRA rule 4516 sets forth clear guidelines with respect to the approval and documentation required in order to change the name or designation of an account.
II. In order for the change in name or designation to be executed, a qualified registered principal of the member must authorize the change.
III. It is incumbent upon that qualified registered principal to be informed of all facts relative to the change and to record his approval either on the order itself or on some other documentation to be included in the file.
IV. All of the facts surrounding the change must be documented in writing and maintained in accordance with the rules regarding time and accessibility set forth in SEA Rule 17a-4(b).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. Additionally, it is incumbent upon that qualified registered principal to be informed of all facts relative to the change and to record his approval either on the order itself or on some other documentation to be included in the file. All of the facts surrounding the change must be documented in writing and maintained in accordance with the rules regarding time and accessibility set forth in SEA Rule 17a-4(b).
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. Additionally, it is incumbent upon that qualified registered principal to be informed of all facts relative to the change and to record his approval either on the order itself or on some other documentation to be included in the file. All of the facts surrounding the change must be documented in writing and maintained in accordance with the rules regarding time and accessibility set forth in SEA Rule 17a-4(b).
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Question 7 of 10
7. Question
Which of the following statement(s) is(are) true about Mediation ground rules (Rule 14109)?
I. Mediation is voluntary, and a party may withdrawal.
II. The mediator is to be a neutral 3rd party and have authority to make decisions.
III. All parties are to initially meet with the mediator to determine to course of the proceedings. The parties agree in good faith to come to a settlement.
IV. Mediation is private and confidential.Correct
Mediation ground rules (Rule 14109) – mediation is voluntary, and a party may withdrawal. The mediator is to be a neutral 3rd party and does not have authority to make decisions. All parties are to initially meet with the mediator to determine to course of the proceedings. The parties agree in good faith to come to a settlement. Mediation is private and confidential.
Incorrect
Mediation ground rules (Rule 14109) – mediation is voluntary, and a party may withdrawal. The mediator is to be a neutral 3rd party and does not have authority to make decisions. All parties are to initially meet with the mediator to determine to course of the proceedings. The parties agree in good faith to come to a settlement. Mediation is private and confidential.
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Question 8 of 10
8. Question
Which of the following statement(s) is(are) true about Authorized shares?
I. The maximum number of shares a corporation may issue, authorized shares is first set in a corporation’s Articles of Incorporation.
II. They may be changed only by shareholder vote.
III. Authorized shares govern the distribution of Common stock.
IV. The number of issued shares will be an amount up to the number of authorized shares.Correct
Authorized shares. The maximum number of shares a corporation may issue, authorized shares is first set in a corporation’s Articles of Incorporation. They may be changed only by shareholder vote. Authorized shares govern the distribution of Common stock. Issued shares are Common shares that are actually held collectively by the shareholders, either through purchase directly from the company or on the open market, or through the company’s issuance of shares as compensation to insiders. The number of issued shares will be an amount up to the number of authorized shares.
Incorrect
Authorized shares. The maximum number of shares a corporation may issue, authorized shares is first set in a corporation’s Articles of Incorporation. They may be changed only by shareholder vote. Authorized shares govern the distribution of Common stock. Issued shares are Common shares that are actually held collectively by the shareholders, either through purchase directly from the company or on the open market, or through the company’s issuance of shares as compensation to insiders. The number of issued shares will be an amount up to the number of authorized shares.
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Question 9 of 10
9. Question
Which of the following statement(s) is(are) true about Convertible Preferred stock?
I. Convertible Preferred stock can be exchanged for Common stock.
II. One share of Convertible Preferred is generally worth multiple shares of Common stock and the exchange rate is expressed using a ratio.
III. Convertible Preferred stock can be repurchased by the issuing corporation at a set date and at a set price.
IV. Convertible Preferred stocks can earn a dividend higher than the rate listed on the stock certificate at the approval of the board of directors.Correct
Convertible Preferred stock can be exchanged for Common stock. One share of Convertible Preferred is generally worth multiple shares of Common stock and the exchange rate is expressed using a ratio. Callable Preferred stock can be repurchased by the issuing corporation at a set date and at a set price. Participating Preferred shares can earn a dividend higher than the rate listed on the stock certificate at the approval of the board of directors. Adjustable Preferred does not have a fixed rate of return; the rate of return changes with an independent economic indicator such as the T-bill rate.
Incorrect
Convertible Preferred stock can be exchanged for Common stock. One share of Convertible Preferred is generally worth multiple shares of Common stock and the exchange rate is expressed using a ratio. Callable Preferred stock can be repurchased by the issuing corporation at a set date and at a set price. Participating Preferred shares can earn a dividend higher than the rate listed on the stock certificate at the approval of the board of directors. Adjustable Preferred does not have a fixed rate of return; the rate of return changes with an independent economic indicator such as the T-bill rate.
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Question 10 of 10
10. Question
Which of the following statement(s) is(are) true about T-bills?
I. There is no coupon rate and no interest installments associated with T-bills.
II. When investors purchase T-bills, they are seeking the largest discount possible off the face amount.
III. T-bills are purchased at a discount and paid at face value upon maturity.
IV. There is no interest payment, but because the par value is increased every year, the investor receives more than he paid.Correct
There is no coupon rate and no interest installments associated with T-bills. When investors purchase T-bills, they are seeking the largest discount possible off the face amount. Treasury receipts, which are similar to treasury strips, are purchased at a discount and paid at face value upon maturity. There is no interest payment, but because the par value is increased every year, the investor receives more than he paid.
Incorrect
There is no coupon rate and no interest installments associated with T-bills. When investors purchase T-bills, they are seeking the largest discount possible off the face amount. Treasury receipts, which are similar to treasury strips, are purchased at a discount and paid at face value upon maturity. There is no interest payment, but because the par value is increased every year, the investor receives more than he paid.