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Question 1 of 10
1. Question
Which of the following statements is true regarding security’s prospectus?
Correct
A security’s prospectus must include certain relevant information related to each share class’s breakpoints, rights of accumulation, combination of accounts, and letters of intent. Some funds may offer “breakpoints,” or reduced sales loads, as the size of your investment increases. The prospectus provides the investor with additional information as to whether this is available for a given share class and, if so, at what size the breakpoint would take effect.
Incorrect
A security’s prospectus must include certain relevant information related to each share class’s breakpoints, rights of accumulation, combination of accounts, and letters of intent. Some funds may offer “breakpoints,” or reduced sales loads, as the size of your investment increases. The prospectus provides the investor with additional information as to whether this is available for a given share class and, if so, at what size the breakpoint would take effect.
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Question 2 of 10
2. Question
Which of the following statements is true regarding Limitations on methods of sale?
Correct
Limitations on methods of sale
The mutual fund prospectus must provide the potential investor with necessary information on how to acquire shares of the fund. This may include through an authorized intermediary or distributor, by mail, by telephone, online, by bank wire, or by ACH. For each transaction, the prospectus will include instructions as to how to complete the transaction.Incorrect
Limitations on methods of sale
The mutual fund prospectus must provide the potential investor with necessary information on how to acquire shares of the fund. This may include through an authorized intermediary or distributor, by mail, by telephone, online, by bank wire, or by ACH. For each transaction, the prospectus will include instructions as to how to complete the transaction. -
Question 3 of 10
3. Question
Which of the following statements is true regarding Limitations on methods of redemption?
Correct
Limitations on methods of redemption
The mutual fund prospectus must provide the investor with necessary information on how to redeem shares of the fund. This may include through an authorized intermediary or distributor, by mail, by telephone, online, by bank wire, or by ACH. For each transaction, the prospectus will include instructions as to how to complete the transaction.Incorrect
Limitations on methods of redemption
The mutual fund prospectus must provide the investor with necessary information on how to redeem shares of the fund. This may include through an authorized intermediary or distributor, by mail, by telephone, online, by bank wire, or by ACH. For each transaction, the prospectus will include instructions as to how to complete the transaction. -
Question 4 of 10
4. Question
Which of the following statements is true regarding Financial statement information?
Correct
Financial statement information
A security’s prospectus must contain certain relevant information to assist an investor in his investment decision-making process. However, specific financial statement information is not required to be included in either the summary prospectus or the more detailed statutory prospectus.Incorrect
Financial statement information
A security’s prospectus must contain certain relevant information to assist an investor in his investment decision-making process. However, specific financial statement information is not required to be included in either the summary prospectus or the more detailed statutory prospectus. -
Question 5 of 10
5. Question
Which of the following statements is true regarding Sales Literature?
Correct
NASD Rule 2210 Communications with the Public provides for the following definitions:
“Sales Literature” is any written or electronic communication, other than an advertisement, independently prepared reprint, institutional sales material, and correspondence, that is generally distributed or made generally available to customers or the public, including circulars, research reports, performance reports, or summaries, form letters, telemarketing scripts, seminar texts, reprints (that are not independently prepared reprints), or excerpts of any other advertisement, sales literature, or published article and press releases concerning a member’s products or services.Incorrect
NASD Rule 2210 Communications with the Public provides for the following definitions:
“Sales Literature” is any written or electronic communication, other than an advertisement, independently prepared reprint, institutional sales material, and correspondence, that is generally distributed or made generally available to customers or the public, including circulars, research reports, performance reports, or summaries, form letters, telemarketing scripts, seminar texts, reprints (that are not independently prepared reprints), or excerpts of any other advertisement, sales literature, or published article and press releases concerning a member’s products or services. -
Question 6 of 10
6. Question
Which of the following statements is false regarding Correspondence?
Correct
NASD Rule 2210 Communications with the Public provides for the following definitions:
“Correspondence” consists of any written letter or electronic mail message and any market letter distributed by a member to: (A) one or more of its existing retail customers, and (B) fewer than 25 prospective retail customers within any 30 calendar-day period.Incorrect
NASD Rule 2210 Communications with the Public provides for the following definitions:
“Correspondence” consists of any written letter or electronic mail message and any market letter distributed by a member to: (A) one or more of its existing retail customers, and (B) fewer than 25 prospective retail customers within any 30 calendar-day period. -
Question 7 of 10
7. Question
Which of the following statements is true regarding Networking arrangements between members and financial institutions?
Correct
Networking arrangements between members and financial institutions
Networking arrangements between members and financial institutions (FINRA Rule 3160) – a member that is a part of a networking agreement under which it conducts broker-dealer services on or off the premises of a financial institution is subject to the Rule.
Setting – the member is to be clearly identified and have its services distinguished from the services of the financial institution, have its name displayed where it conducts business, and maintain its services physically separate from that of the financial institution if at all possible.Incorrect
Networking arrangements between members and financial institutions
Networking arrangements between members and financial institutions (FINRA Rule 3160) – a member that is a part of a networking agreement under which it conducts broker-dealer services on or off the premises of a financial institution is subject to the Rule.
Setting – the member is to be clearly identified and have its services distinguished from the services of the financial institution, have its name displayed where it conducts business, and maintain its services physically separate from that of the financial institution if at all possible. -
Question 8 of 10
8. Question
Which of the following statements is not included in the Telemarketing FINRA Rule 3230?
Correct
Telemarketing
FINRA Rule 3230, which sets forth guidance on telemarketing activities, states that no member or person associated with a member shall initiate any outbound telephone call to:
Any person’s residence before 8 a.m. or after 9 p.m., unless:
The member has an established business relationship with the person,
The member has received that person’s prior express invitation or permission, or
The person called is a broker or dealer.
Any person that previously has stated that he or she does not wish to receive an outbound telephone call made by or on behalf of the member, or
Any person who has registered his or her telephone number on the Federal Trade Commission’s national do-not-call registry.Incorrect
Telemarketing
FINRA Rule 3230, which sets forth guidance on telemarketing activities, states that no member or person associated with a member shall initiate any outbound telephone call to:
Any person’s residence before 8 a.m. or after 9 p.m., unless:
The member has an established business relationship with the person,
The member has received that person’s prior express invitation or permission, or
The person called is a broker or dealer.
Any person that previously has stated that he or she does not wish to receive an outbound telephone call made by or on behalf of the member, or
Any person who has registered his or her telephone number on the Federal Trade Commission’s national do-not-call registry. -
Question 9 of 10
9. Question
Which of the following statements is not included in the Rule?
Correct
The types of communications covered under FINRA Rule 3230 include:
i. Outbound calls from a member or associated person of a member to a nonbroker dealer, including to wireless telephone numbers.
ii. Outbound calls that have been outsourced to a third party.
iii. Abandoned calls, which are those not answered by someone at the member within two seconds of the person’s completed greeting.
iv. Prerecorded messages.Incorrect
The types of communications covered under FINRA Rule 3230 include:
i. Outbound calls from a member or associated person of a member to a nonbroker dealer, including to wireless telephone numbers.
ii. Outbound calls that have been outsourced to a third party.
iii. Abandoned calls, which are those not answered by someone at the member within two seconds of the person’s completed greeting.
iv. Prerecorded messages. -
Question 10 of 10
10. Question
Which of the following statements is not included in the Institutional account?
Correct
Institutional account
Under FINRA Rule 4512, an institutional account is defined as the account of:
1. A bank, savings and loan association, insurance company, or registered investment company
2. An investment adviser registered either with the SEC under Section 203 of the Investment Advisers Act or with a state securities commission (or any
agency or office performing like functions)
3. Any other person (whether a natural person, corporation, partnership, trust, or otherwise) with total assets of at least $50 millionIncorrect
Institutional account
Under FINRA Rule 4512, an institutional account is defined as the account of:
1. A bank, savings and loan association, insurance company, or registered investment company
2. An investment adviser registered either with the SEC under Section 203 of the Investment Advisers Act or with a state securities commission (or any
agency or office performing like functions)
3. Any other person (whether a natural person, corporation, partnership, trust, or otherwise) with total assets of at least $50 million