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Question 1 of 10
1. Question
Which of the following statements is true regarding Broker-Dealer Agent supervision?
I. A broker-dealer, which is a person or company engaged in the buying and selling of securities, is responsible for the conduct and actions of its agents
II. The agents of a broker-dealer include all associated persons who are not engaged in securities transactions
III. The agents of a broker-dealer can include independent contractors and not merely employees
IV. This supervision requires written policies and procedures pertaining to the opening and maintenance of customer accountsCorrect
Broker-Dealer Agent supervision
A broker-dealer, which is a person or company engaged in the buying and selling of securities, is responsible for the conduct and actions of its agents and must accordingly exercise due diligence in monitoring them. The agents of a broker-dealer include all associated persons engaged in securities transactions, and thus can include independent contractors and not merely employees. This supervision requires written policies and procedures pertaining to the opening and maintenance of customer accounts; the solicitation and execution of securities transactions, especially including orders involving discretionary authority; the handling of customer grievances; and other matters.Incorrect
Broker-Dealer Agent supervision
A broker-dealer, which is a person or company engaged in the buying and selling of securities, is responsible for the conduct and actions of its agents and must accordingly exercise due diligence in monitoring them. The agents of a broker-dealer include all associated persons engaged in securities transactions, and thus can include independent contractors and not merely employees. This supervision requires written policies and procedures pertaining to the opening and maintenance of customer accounts; the solicitation and execution of securities transactions, especially including orders involving discretionary authority; the handling of customer grievances; and other matters. -
Question 2 of 10
2. Question
Which of the following statements is true regarding provisions governing clients temporarily in other states?
I. If a broker-dealer or investment adviser is registered in one state, it may conduct business with its clients that are residents of that state even when those clients are traveling outside of the stat
II. This provision of the Uniform Securities Act prevents broker-dealers and investment advisers to provide continual service to their client base while their clients travel outside of their home stat
III. With this provision, broker-dealers and investment advisers would have to be registered in every state their clients may visit
IV. Where a broker-dealer or investment adviser’s existing client relocates to a state in which it is not registered, the broker-dealer or investment adviser may continue to serve this existing client for thirty daysCorrect
Provisions governing clients temporarily in other states
If a broker-dealer or investment adviser is registered in one state, it may conduct business with its clients that are residents of that state even when those clients are traveling outside of the state. This provision of the Uniform Securities Act enables broker-dealers and investment advisers to provide continual service to their client base while their clients travel outside of their home state. Without this provision, broker-dealers and investment advisers would have to be registered in every state their clients may visit. In addition, in instances where a broker-dealer or investment adviser’s existing client relocates to a state in which the broker-dealer or investment adviser is not registered, the broker-dealer or investment adviser may continue to serve this existing client for thirty days.Incorrect
Provisions governing clients temporarily in other states
If a broker-dealer or investment adviser is registered in one state, it may conduct business with its clients that are residents of that state even when those clients are traveling outside of the state. This provision of the Uniform Securities Act enables broker-dealers and investment advisers to provide continual service to their client base while their clients travel outside of their home state. Without this provision, broker-dealers and investment advisers would have to be registered in every state their clients may visit. In addition, in instances where a broker-dealer or investment adviser’s existing client relocates to a state in which the broker-dealer or investment adviser is not registered, the broker-dealer or investment adviser may continue to serve this existing client for thirty days. -
Question 3 of 10
3. Question
Which of the following statements is true regarding conducting business in a state without being registered?
I. Investment advisers must generally be registered with either the SEC or with each state in which they conduct business
II. There is an exception in some instances when the investment adviser does not have a place of business within the state and is registered in another state
III. The exception is dependent upon the number and type of clients the investment adviser serves in the state.
IV. If the investment adviser is registered in another state, the investment adviser is obligated to register in the state to conduct businessCorrect
Conducting business in a state without being registered
Investment advisers must generally be registered with either the SEC or with each state in which they conduct business; however, there is an exception in some instances when the investment adviser does not have a place of business within the state and is registered in another state. The exception is dependent upon the number and type of clients the investment adviser serves in the state. If the investment adviser’s only clients within the state are all registered broker-dealers, investment advisers, institutional investors, and/or persons whose primary residence is an another state where the investment adviser is registered, the investment adviser is not required to register in that state. In addition, if the investment adviser has no more than five clients within the state beyond the type of clients described above, and if the investment adviser is registered in another state, the investment adviser is not obligated to register in the state to conduct business.Incorrect
Conducting business in a state without being registered
Investment advisers must generally be registered with either the SEC or with each state in which they conduct business; however, there is an exception in some instances when the investment adviser does not have a place of business within the state and is registered in another state. The exception is dependent upon the number and type of clients the investment adviser serves in the state. If the investment adviser’s only clients within the state are all registered broker-dealers, investment advisers, institutional investors, and/or persons whose primary residence is an another state where the investment adviser is registered, the investment adviser is not required to register in that state. In addition, if the investment adviser has no more than five clients within the state beyond the type of clients described above, and if the investment adviser is registered in another state, the investment adviser is not obligated to register in the state to conduct business. -
Question 4 of 10
4. Question
Which of the following statements is true regarding review of business records?
I. The Uniform Securities Act gives a state Administrator the authority to review the business records belonging to the public
II. Broker-dealer and investment adviser records may be reviewed by the Administrator or by the Administrator’s representatives
III. The Administrator may designate representatives who are located inside the Administrator’s state to review the business records
IV. Refusal to make any documents requested by the Administrator available to the Administrator is a violation of the Uniform Securities ActCorrect
Review of business records
The Uniform Securities Act gives a state Administrator the authority to review the business records belonging to the broker-dealers and investment advisers registered in the state. Broker-dealer and investment adviser records may be reviewed by the Administrator or by the Administrator’s representatives. The Administrator may designate representatives who are located outside the Administrator’s state to review the business records. Such reviews may be scheduled to occur periodically or at any time the Administrator deems appropriate in order to protect investors or serve the public interest. Refusal to make any documents requested by the Administrator available to the Administrator (or the Administrator’s designated representatives) is a violation of the Uniform Securities Act.Incorrect
Review of business records
The Uniform Securities Act gives a state Administrator the authority to review the business records belonging to the broker-dealers and investment advisers registered in the state. Broker-dealer and investment adviser records may be reviewed by the Administrator or by the Administrator’s representatives. The Administrator may designate representatives who are located outside the Administrator’s state to review the business records. Such reviews may be scheduled to occur periodically or at any time the Administrator deems appropriate in order to protect investors or serve the public interest. Refusal to make any documents requested by the Administrator available to the Administrator (or the Administrator’s designated representatives) is a violation of the Uniform Securities Act. -
Question 5 of 10
5. Question
Which of the following statements is true regarding dual registration?
I. Persons that are registered as broker-dealers may also be registered as investment advisers
II. A person that wishes to be registered as a broker-dealer and as an investment adviser must submit applications and accompanying fees for bot
III. To obtain licenses in both capacities, the applicant person need not meet all of the requirements established by the Administrator for both licenses
IV. The requesting party’s broker-dealer license would be validated if the party acted as an investor adviserCorrect
Dual registration
Persons that are registered as broker-dealers may also be registered as investment advisers. A person that wishes to be registered as a broker-dealer and as an investment adviser must submit applications and accompanying fees for both. In order to obtain licenses in both capacities, the applicant person must meet all of the requirements established by the Administrator for both licenses. If the Administrator determines that a party that is seeking to register as a broker-dealer and an investment adviser is not qualified to act as an investment adviser, the Administrator may order that the broker-
dealer’s license be established only on the condition that the party refrains from operating as an investment adviser. In this instance, the requesting party’s broker-dealer license would be invalidated if the party acted as an investor adviser.Incorrect
Dual registration
Persons that are registered as broker-dealers may also be registered as investment advisers. A person that wishes to be registered as a broker-dealer and as an investment adviser must submit applications and accompanying fees for both. In order to obtain licenses in both capacities, the applicant person must meet all of the requirements established by the Administrator for both licenses. If the Administrator determines that a party that is seeking to register as a broker-dealer and an investment adviser is not qualified to act as an investment adviser, the Administrator may order that the broker-
dealer’s license be established only on the condition that the party refrains from operating as an investment adviser. In this instance, the requesting party’s broker-dealer license would be invalidated if the party acted as an investor adviser. -
Question 6 of 10
6. Question
Which of the following statements is true regarding sharing fees or commissions?
I. The Uniform Securities Act permits registered agents for a broker-dealer to share their fees with other registered agents and to split commissions with other registered agents under some circumstances
II. In order for such sharing to be permissible, each agent must be registered with the state Administrator
III. Each of the agents involved in the transaction must either be representatives for the same broker-dealer or be representatives for broker-dealers that are all controlled and/or owned by the same entity
IV. If the individuals in question are not registered agents, the Uniform Securities Act allows the agents to share their fees with each other or to split any commissions between themselvesCorrect
Sharing fees or commissions
The Uniform Securities Act permits registered agents for a broker-dealer to share their fees with other registered agents and to split commissions with other registered agents under some circumstances. In order for such sharing to be permissible, each agent must be registered with the state Administrator. In addition, each of the agents involved in the transaction must either be representatives for the same broker-dealer or be representatives for broker-dealers that are all controlled and/or owned by the same entity. If the individuals in question are not registered agents or do not represent registered broker- dealers that are associated with each other, the Uniform Securities Act prohibits the agents to share their fees with each other or to split any commissions between themselves.Incorrect
Sharing fees or commissions
The Uniform Securities Act permits registered agents for a broker-dealer to share their fees with other registered agents and to split commissions with other registered agents under some circumstances. In order for such sharing to be permissible, each agent must be registered with the state Administrator. In addition, each of the agents involved in the transaction must either be representatives for the same broker-dealer or be representatives for broker-dealers that are all controlled and/or owned by the same entity. If the individuals in question are not registered agents or do not represent registered broker- dealers that are associated with each other, the Uniform Securities Act prohibits the agents to share their fees with each other or to split any commissions between themselves. -
Question 7 of 10
7. Question
Which of the following statements is true regarding impact of exempt securities on registration requirements?
I. If an issuer only deals with exempt securities, the representatives of that agency are agents and need be registered as agents with the Administrator as long as there is no compensation associated with the transaction
II. If an issuer has both registered securities and exempt securities, any representatives for the issuer that deal with the registered securities must be registered agents
III. An exempt security is a security that has to be registered
IV. A variety of securities are considered exemptCorrect
Impact of exempt securities on registration requirements
An exempt security is a security that does not have to be registered. If an issuer only deals with exempt securities, the representatives of that agency are not agents and need not be registered as agents with the Administrator as long as there is no compensation associated with the transaction. However, if an issuer has both registered securities and exempt securities, any representatives for the issuer that deal with the registered securities must be registered agents. A variety of securities are considered exempt. Examples of exempt securities include federal and municipal securities; securities for domestic banks, savings and loan institutions, and trust companies; and securities associated with the investment contracts for various employee investments such as employee pension plans and employee stock purchases.Incorrect
Impact of exempt securities on registration requirements
An exempt security is a security that does not have to be registered. If an issuer only deals with exempt securities, the representatives of that agency are not agents and need not be registered as agents with the Administrator as long as there is no compensation associated with the transaction. However, if an issuer has both registered securities and exempt securities, any representatives for the issuer that deal with the registered securities must be registered agents. A variety of securities are considered exempt. Examples of exempt securities include federal and municipal securities; securities for domestic banks, savings and loan institutions, and trust companies; and securities associated with the investment contracts for various employee investments such as employee pension plans and employee stock purchases. -
Question 8 of 10
8. Question
Which of the following statements is true regarding requirements for request to register security with state Administrator?
I. Many securities must be registered with the state Administrator
II. If a security must be registered, a registration statement shouldn’t be filed with the Administrator
III. The registration statement for the security must note the size of the security offering and the quantity offered in the Administrator’s state
IV. The appropriate filing fee must exclude the registration statement for the securityCorrect
Requirements for request to register security with state Administrator
Many securities must be registered with the state Administrator. If a security must be registered, a registration statement must be filed with the Administrator. The registration statement for the security must note the size of the security offering and the quantity offered in the Administrator’s state. The registration statement must also identify any other states in which the security will be offered. In addition, the registration statement for the security must disclose any unfavorable rulings concerning the offering made by any court, state Administrator, or other agency regulating securities in any state or federal jurisdiction. Finally, the appropriate filing fee must accompany the registration statement for the security.Incorrect
Requirements for request to register security with state Administrator
Many securities must be registered with the state Administrator. If a security must be registered, a registration statement must be filed with the Administrator. The registration statement for the security must note the size of the security offering and the quantity offered in the Administrator’s state. The registration statement must also identify any other states in which the security will be offered. In addition, the registration statement for the security must disclose any unfavorable rulings concerning the offering made by any court, state Administrator, or other agency regulating securities in any state or federal jurisdiction. Finally, the appropriate filing fee must accompany the registration statement for the security. -
Question 9 of 10
9. Question
Which of the following statements is true regarding administrative requirements for acceptable security registration statements?
I. Issues associated with the registration statement for a security may result in the suspension, revocation, or denial of registration for the security
II. The registration statement must be complete and accurate
III. Failure to submit the request for registration properly will jeopardize the security’s registration
IV. The Administrator will approve the registration of a security if the required registration fee has not been paidCorrect
Administrative requirements for acceptable security registration statements
Issues associated with the registration statement for a security may result in the suspension, revocation, or denial of registration for the security. The registration statement must be complete and accurate. The security must also be a security that is eligible for registration. If the security is ineligible, registration will not be granted. The person requesting the registration of a security must also follow the correct procedure for doing so. Failure to submit the request for registration properly will jeopardize the security’s registration. Finally, the Administrator will not approve the registration of a security if the required registration fee has not been paid. In this event, the Administrator will deny the request.Incorrect
Administrative requirements for acceptable security registration statements
Issues associated with the registration statement for a security may result in the suspension, revocation, or denial of registration for the security. The registration statement must be complete and accurate. The security must also be a security that is eligible for registration. If the security is ineligible, registration will not be granted. The person requesting the registration of a security must also follow the correct procedure for doing so. Failure to submit the request for registration properly will jeopardize the security’s registration. Finally, the Administrator will not approve the registration of a security if the required registration fee has not been paid. In this event, the Administrator will deny the request. -
Question 10 of 10
10. Question
Which of the following statements is true regarding examination of request for registration of a security?
I. One way that Administrators protect investors is by selling the registration statement for a security after allowing the security to be registered in the state
II. When evaluating the security’s registration statement, the Administrator will consider all of the promotional materials that the security’s issuer plans to use
III. This review helps the Administrator ensure that the offering won’t be presented appropriately and that the promotional materials are not misleading or unethical in any material respect
IV. The Administrator will also consider any pertinent facts relating to the registration and/or offering of the security in other jurisdictionsCorrect
Examination of request for registration of a security
Administrators have been charged with the responsibility of protecting investors. One way that Administrators protect investors is by scrutinizing the registration statement for a security before allowing the security to be registered in the state. When evaluating the security’s registration statement, the Administrator will consider all of the promotional materials that the security’s issuer plans to use. This review helps the Administrator ensure that the offering will be presented appropriately and that the promotional materials are not misleading or unethical in any material respect. The Administrator will also consider any pertinent facts relating to the registration and/or offering of the security in other jurisdictions. Finally, the Administrator will evaluate the contractual relationship between the issuer of the security and the underwriters for the security and agreements between the underwriters.Incorrect
Examination of request for registration of a security
Administrators have been charged with the responsibility of protecting investors. One way that Administrators protect investors is by scrutinizing the registration statement for a security before allowing the security to be registered in the state. When evaluating the security’s registration statement, the Administrator will consider all of the promotional materials that the security’s issuer plans to use. This review helps the Administrator ensure that the offering will be presented appropriately and that the promotional materials are not misleading or unethical in any material respect. The Administrator will also consider any pertinent facts relating to the registration and/or offering of the security in other jurisdictions. Finally, the Administrator will evaluate the contractual relationship between the issuer of the security and the underwriters for the security and agreements between the underwriters.