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Question 1 of 10
1. Question
Which of the following is not a book or record to be made and kept current by every broker or dealer who makes business transactions in securities through the medium of any such member?
I. Blotters, all receipts and deliveries of securities, all receipts and disbursements of cash, and all other debits and credits.
II. Assets, liabilities, income, expenses, except the owner’s equity, recorded on a ledger.
III. Cash, margin, or security-based swap account of every customer which are reflected on a ledger.
IV. Ledger reflecting the dividends and interest received.Correct
All of the statements above must be kept current, except for Statement II. Capital accounts or owner’s equity must also be kept current by every broker or dealer as stated under the SEC Rule 17a-3. A ledger must consist of the records on assets, liabilities, income, expenses, and owner’s equity.
Incorrect
All of the statements above must be kept current, except for Statement II. Capital accounts or owner’s equity must also be kept current by every broker or dealer as stated under the SEC Rule 17a-3. A ledger must consist of the records on assets, liabilities, income, expenses, and owner’s equity.
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Question 2 of 10
2. Question
In which period must the records required to be made by every broker or dealer be preserved, as stated in the SEC Rule 17a-4?
Correct
Books and records in pursuant to SEC Rule 17a-3 must be preserved by every broker or dealer for a period of not less than six (6) years. Books and records for more than seven (7) years will have complications with regards to its accuracy and relevance.
Incorrect
Books and records in pursuant to SEC Rule 17a-3 must be preserved by every broker or dealer for a period of not less than six (6) years. Books and records for more than seven (7) years will have complications with regards to its accuracy and relevance.
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Question 3 of 10
3. Question
Which of the following statements must be observed and implemented under FINRA Rule 3310, Anti-Money Laundering Compliance Program?
I. To achieve compliance with the Bank Secrecy Act by establishing and implementing policies, procedures, and internal controls.
II. If a member executes transactions for customers, independent testing must be made every two years following a calendar-year basis.
III. To designate an individual to monitor the day-to-day operations and internal controls of the program.
IV. To let personnel undergo training.Correct
All of the statements above must be observed in Anti-Money Laundering Compliance Program except for Statement II. Independent testing made every two years following a calendar-year basis is only applicable to members who are not capable of executing transactions for customers or otherwise hold customer accounts.
Incorrect
All of the statements above must be observed in Anti-Money Laundering Compliance Program except for Statement II. Independent testing made every two years following a calendar-year basis is only applicable to members who are not capable of executing transactions for customers or otherwise hold customer accounts.
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Question 4 of 10
4. Question
Who must make use of information as to the ownership of securities for the purpose of soliciting purchases, sales, or exchanges except at the request and on behalf of the issuer?
Correct
Under FINRA Rule 2060, information obtained in a fiduciary capacity must only be used by a member who is in the capacity of paying agent, transfer agent, trustee, or in any other similar capacity. Members who are responsible for cash receipts and disbursements only are not in any way associated with obtaining information in a fiduciary capacity.
Incorrect
Under FINRA Rule 2060, information obtained in a fiduciary capacity must only be used by a member who is in the capacity of paying agent, transfer agent, trustee, or in any other similar capacity. Members who are responsible for cash receipts and disbursements only are not in any way associated with obtaining information in a fiduciary capacity.
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Question 5 of 10
5. Question
Under the FINRA Rule 2010, which of the following are the standards of commercial honor and principles of trade?
I. High standards of commercial honor shall be observed by the member.
II. Business complications may not be avoided by the member.
III. A member must execute professional behavior at all times, except when there is a need to confront another member for false accusations.
IV. Just and equitable principles of trade must be observed by the member.Correct
The quality of commercial honor and principles of trade is to observe high standards, just, and equitable principles of trade. In an environment where conflict arises, a member shall immediately avoid any action which is contrary to the standards of commercial honor and principles of trade.
Incorrect
The quality of commercial honor and principles of trade is to observe high standards, just, and equitable principles of trade. In an environment where conflict arises, a member shall immediately avoid any action which is contrary to the standards of commercial honor and principles of trade.
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Question 6 of 10
6. Question
Which of the following is/are not under the scope of FINRA Rule 11310, “Book-Entry Settlement”?
I. A member shall not affect a delivery-versus-payment or receipt-versus-payment transaction in a depository eligible security with a customer at all times.
II. This rule also applies to a transaction wherein a deliverer is unable to deposit the securities in a depository before its cut-off date.
III. This rule only applies to the transactions settled inside the United States.
IV. Securities depository must be registered as a clearing agency under Section 17A of the Exchange Act.Correct
Statements I and II are outside the scope of FINRA Rule 11310 “Book-Entry Settlement.” This rule does not apply to any transactions outside the United States. If there are any inconsistent requirements, it shall be superseded by the requirements of this rule.
Incorrect
Statements I and II are outside the scope of FINRA Rule 11310 “Book-Entry Settlement.” This rule does not apply to any transactions outside the United States. If there are any inconsistent requirements, it shall be superseded by the requirements of this rule.
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Question 7 of 10
7. Question
Which of the following are included in aggregate indebtedness in relation to commodity-related transactions?
I. Record of unrealized profit or loss for certain commodities transactions.
II. Advances received by broker or dealer against bill of lading issued in relation to the commodities sold.
III. General partners’ equity balances.
IV. Indebtedness from advance and non-proprietary account when it is collateralized by covered spot commodities in obtaining delivery on a contract.Correct
All of the statements are included in aggregate indebtedness in commodity-related transactions except for the record of unrealized profit or loss for certain commodities transactions. This transaction is under the net capital computation and is not related to aggregate indebtedness.
Incorrect
All of the statements are included in aggregate indebtedness in commodity-related transactions except for the record of unrealized profit or loss for certain commodities transactions. This transaction is under the net capital computation and is not related to aggregate indebtedness.
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Question 8 of 10
8. Question
How the attributed value to commodity options, which are not traded on the contract market, shall be?
Correct
Under SEC Rule 15c3-1, the difference between the market value for the physical or futures contract and the option’s strike price shall be the value attributed to any commodity option which is not traded on a contract market. On the other hand, for long commodity options, it shall be given no value.
Incorrect
Under SEC Rule 15c3-1, the difference between the market value for the physical or futures contract and the option’s strike price shall be the value attributed to any commodity option which is not traded on a contract market. On the other hand, for long commodity options, it shall be given no value.
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Question 9 of 10
9. Question
Which of the following must be deducted in computing the net capital with respect to commodity-related transactions?
I. Unrealized profits
II. Unrealized losses
III. All unsecured receivables, advances, and loans, including the receivables from foreign clearing organizations
IV. Inventories, except for readily marketable spot commoditiesCorrect
Receivables from foreign clearing organizations are an exception in deducting the receivables from the net capital. However, the unrealized profits are added in computing the net capital, instead of deducting it.
Incorrect
Receivables from foreign clearing organizations are an exception in deducting the receivables from the net capital. However, the unrealized profits are added in computing the net capital, instead of deducting it.
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Question 10 of 10
10. Question
One of the net capital requirements for brokers or dealers is to deduct the market value of all short security differences unresolved after discovery. If a difference is 25 percent, it has 7 business days period after discovery. Which of the following is correct?
Correct
Short securities differences may be extended up to 10 days if it finds that exceptional circumstances warrant an extension. An extension would only take place if the designated authority finds it significant to warrant an extension.
Incorrect
Short securities differences may be extended up to 10 days if it finds that exceptional circumstances warrant an extension. An extension would only take place if the designated authority finds it significant to warrant an extension.