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Question 1 of 10
1. Question
According to ‘ Prohibition Against Trading Ahead of Customer Orders’ (FINRA Rule 5320), when can members calculate a current inside spread by contacting and obtaining priced quotations from at least two unaffiliated dealers and using the highest bid and lowest offer obtained in calculating the current inside spread?
Correct
According to ‘ Prohibition Against Trading Ahead of Customer Orders’ (FINRA Rule 5320), members may calculate a current inside spread by contacting and obtaining priced quotations from at least two unaffiliated dealers and using the highest bid and lowest offer obtained in calculating the current inside spread for purposes of determining the minimum price improvement standards for customer limit orders in OTC equity securities priced below $1.00 where there is no published current inside spread.
Incorrect
According to ‘ Prohibition Against Trading Ahead of Customer Orders’ (FINRA Rule 5320), members may calculate a current inside spread by contacting and obtaining priced quotations from at least two unaffiliated dealers and using the highest bid and lowest offer obtained in calculating the current inside spread for purposes of determining the minimum price improvement standards for customer limit orders in OTC equity securities priced below $1.00 where there is no published current inside spread.
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Question 2 of 10
2. Question
According to ‘ Prohibition Against Trading Ahead of Customer Orders’ (FINRA Rule 5320), what should the members do where there is only a one-sided quote in an OTC equity security priced below $1.00?
Correct
According to ‘ Prohibition Against Trading Ahead of Customer Orders’ (FINRA Rule 5320), by contacting and obtaining priced quotations from at least TWO unaffiliated dealers and using the best price obtained on the other side of the quote, members may calculate the current inside spread where there is only a one-sided quote in an OTC equity security priced below $1.00, . Members must also document the following:
-the name of each dealer contacted; and
-the quotations received for purposes of determining the current inside spreadIncorrect
According to ‘ Prohibition Against Trading Ahead of Customer Orders’ (FINRA Rule 5320), by contacting and obtaining priced quotations from at least TWO unaffiliated dealers and using the best price obtained on the other side of the quote, members may calculate the current inside spread where there is only a one-sided quote in an OTC equity security priced below $1.00, . Members must also document the following:
-the name of each dealer contacted; and
-the quotations received for purposes of determining the current inside spread -
Question 3 of 10
3. Question
According to ‘ Prohibition Against Trading Ahead of Customer Orders’ (FINRA Rule 5320), what is the period of the normal market hours when members generally may limit the life of a customer order?
Correct
According to ‘ Prohibition Against Trading Ahead of Customer Orders’ (FINRA Rule 5320), when trading outside normal market hours, members generally may limit the life of a customer order to the period of normal market hours of 9:30 a.m. to 4:00 p.m. Eastern Time.
Incorrect
According to ‘ Prohibition Against Trading Ahead of Customer Orders’ (FINRA Rule 5320), when trading outside normal market hours, members generally may limit the life of a customer order to the period of normal market hours of 9:30 a.m. to 4:00 p.m. Eastern Time.
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Question 4 of 10
4. Question
According to ‘Front Running of Block Transactions’ (FINRA Rule 5270), in the context of equity securities what kind of a transaction is generally NOT deemed to be a block transaction?
Correct
According to ‘Front Running of Block Transactions’ (FINRA Rule 5270), for a transaction to be deemed as a blocked transaction in the context of equity securities, it must be:
-a transaction involving 10,000 shares or more of a security
-an underlying security
-a related financial instrument overlying such number of sharesHowever, a transaction of fewer than 10,000 shares could be considered a block transaction.
Incorrect
According to ‘Front Running of Block Transactions’ (FINRA Rule 5270), for a transaction to be deemed as a blocked transaction in the context of equity securities, it must be:
-a transaction involving 10,000 shares or more of a security
-an underlying security
-a related financial instrument overlying such number of sharesHowever, a transaction of fewer than 10,000 shares could be considered a block transaction.
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Question 5 of 10
5. Question
According to ‘Front Running of Block Transactions’ (FINRA Rule 5270), which of the following is NOT an example of permitted transactions?
Correct
‘Front Running of Block Transactions’ (FINRA Rule 5270) does not preclude transactions that the member can demonstrate are unrelated to the material, non-public market information received in connection with the customer order. These types of transactions may include the following:
(1) transactions where the member has information barriers established to prevent internal disclosure of such information;
(2) transactions in the same security related to a prior customer order in that security;
(3) transactions to correct bona fide errors; or
(4) transactions to offset odd-lot orders.Incorrect
‘Front Running of Block Transactions’ (FINRA Rule 5270) does not preclude transactions that the member can demonstrate are unrelated to the material, non-public market information received in connection with the customer order. These types of transactions may include the following:
(1) transactions where the member has information barriers established to prevent internal disclosure of such information;
(2) transactions in the same security related to a prior customer order in that security;
(3) transactions to correct bona fide errors; or
(4) transactions to offset odd-lot orders. -
Question 6 of 10
6. Question
According to ‘Customer Confirmations’ (FINRA Rule 2232), what is the name of a transaction that was conducted through a competitive process in which non-affiliate firms could also participate, and where the affiliate relationship did not influence the price paid or proceeds received by the member?
Correct
For the purposes of Customer Confirmations’ (FINRA Rule 2232), “arms-length transaction” shall mean a transaction:
-that was conducted through a competitive process in which non-affiliate firms could also participate, and;
-where the affiliate relationship did not influence the price paid or proceeds received by the memberIncorrect
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Question 7 of 10
7. Question
According to ‘Customer Confirmations’ (FINRA Rule 2232), which of the following shall mean a “corporate debt security”?
Correct
According to ‘Customer Confirmations’ (FINRA Rule 2232), a debt security that is United States (“U.S.”) dollar-denominated and issued by a U.S. or foreign private issuer and, if a “restricted security” sold pursuant to Securities Act Rule 144A, but does not include a Money Market Instrument shall mean a “corporate debt security”
Incorrect
According to ‘Customer Confirmations’ (FINRA Rule 2232), a debt security that is United States (“U.S.”) dollar-denominated and issued by a U.S. or foreign private issuer and, if a “restricted security” sold pursuant to Securities Act Rule 144A, but does not include a Money Market Instrument shall mean a “corporate debt security”
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Question 8 of 10
8. Question
According to ‘Short Sale Delivery Requirements’ (FINRA Rule 4320), when shall the participant immediately thereafter close out the fail to deliver position by purchasing securities of like kind and quantity?
Correct
According to ‘Short Sale Delivery Requirements’ (FINRA Rule 4320), if a participant of a registered clearing agency fails to deliver position at a registered clearing agency in a non-reporting threshold security for 13 CONSECUTIVE SETTLEMENT DAYS, the participant shall immediately thereafter close out the fail to deliver position by purchasing securities of like kind and quantity.
Incorrect
According to ‘Short Sale Delivery Requirements’ (FINRA Rule 4320), if a participant of a registered clearing agency fails to deliver position at a registered clearing agency in a non-reporting threshold security for 13 CONSECUTIVE SETTLEMENT DAYS, the participant shall immediately thereafter close out the fail to deliver position by purchasing securities of like kind and quantity.
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Question 9 of 10
9. Question
What is any business day on which deliveries of securities and payments of money may be made through the facilities of a registered clearing agency called?
Correct
In the context of ‘Short Sale Delivery Requirements’ (FINRA Rule 4320), the term “settlement day” is usually defined as any business day on which deliveries of securities and payments of money may be made through the facilities of a registered clearing agency.
Incorrect
In the context of ‘Short Sale Delivery Requirements’ (FINRA Rule 4320), the term “settlement day” is usually defined as any business day on which deliveries of securities and payments of money may be made through the facilities of a registered clearing agency.
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Question 10 of 10
10. Question
According to ‘Transaction Reporting’ (FINRA Rule 6380A), what kind of transactions shall be designated as late?
Correct
According to ‘Transaction Reporting’ (FINRA Rule 6380A), late transactions are those that are not reported within 10 seconds after execution.
Incorrect
According to ‘Transaction Reporting’ (FINRA Rule 6380A), late transactions are those that are not reported within 10 seconds after execution.