FINRA Series 31 - Quiz 5 - Pauline.new
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Question 1 of 10
1. Question
Who of the following on how they should report its positions where FINRA firms that currently report options positions to the OCC should file their delta hedging file?
Correct
Under the Reporting Conventional Options Positions, it is mentioned that a firm uses delta hedging with conventional options as part of its position. For OCC Members, it is stated that firms in FINRA that report their options positions to the OCC shall file their delta hedging exception reports to the OCC delta hedging file even if that position contains or is encompassed of conventional options.
Incorrect
Under the Reporting Conventional Options Positions, it is mentioned that a firm uses delta hedging with conventional options as part of its position. For OCC Members, it is stated that firms in FINRA that report their options positions to the OCC shall file their delta hedging exception reports to the OCC delta hedging file even if that position contains or is encompassed of conventional options.
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Question 2 of 10
2. Question
Which of the following is the term that describes an equity options position that has been fully hedged?
Correct
Under the Options, various terms were mentioned. One of the terms is the Delta Neutral that describes an equity or a stock options positions that have been fully hedged, in accordance with an approved pricing model by the Securities and Exchange Commission which is a Permitted Pricing Model that has a portfolio of instruments that relates to another underlying security to offset such risk with the value of equity options positions will change.
Incorrect
Under the Options, various terms were mentioned. One of the terms is the Delta Neutral that describes an equity or a stock options positions that have been fully hedged, in accordance with an approved pricing model by the Securities and Exchange Commission which is a Permitted Pricing Model that has a portfolio of instruments that relates to another underlying security to offset such risk with the value of equity options positions will change.
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Question 3 of 10
3. Question
Which of the following terms means that the number of shares that must be maintained to offset the risk that the value of an equity options position will change?
Correct
Under Options, there are terms that an individual must know. The term Net Delta shows the information regarding that the number of shares must be maintained always by an individual, it can either be long or short, especially in offsetting the risk regarding the value of an equity or stock options position because it will have changed in the price specified in the price of stock security primarily in the options positions.
Incorrect
Under Options, there are terms that an individual must know. The term Net Delta shows the information regarding that the number of shares must be maintained always by an individual, it can either be long or short, especially in offsetting the risk regarding the value of an equity or stock options position because it will have changed in the price specified in the price of stock security primarily in the options positions.
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Question 4 of 10
4. Question
Under the basic yield concepts, which of the following shows the annual interest rate established when the bond is issued?
Correct
Under the Bond Yield and Return, there are basic yield concepts that an individual must know. One of the basic yield concepts is the Coupon Yield, this shows the annual interest rate established when bonds are issued. This term is the same as the couple rate and it also shows the amount of income an individual will collect on a bond and it is expressed in the percentage of an individual’s original investment.
Incorrect
Under the Bond Yield and Return, there are basic yield concepts that an individual must know. One of the basic yield concepts is the Coupon Yield, this shows the annual interest rate established when bonds are issued. This term is the same as the couple rate and it also shows the amount of income an individual will collect on a bond and it is expressed in the percentage of an individual’s original investment.
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Question 5 of 10
5. Question
Under the Bond Yield and Return, which of the following terms is the overall interest rate earned by an investor who buys a bond at the market price and holds it until maturity?
Correct
Under the Bond Yield and Return, the Yield to Maturity is mentioned. This shows when an investor earned an overall interest rate and he or she purchased bonds at the market price and holds its maturity. Precisely, it shows the discount rate which the sum of all future cash flows, either from coupons or principal repayment, equals the price of the bond. In the Yield to Maturity, it assumes that couple and principal payments are paid on time. It does not require reinvestment of dividends. Lastly, taxes paid are not considered by an investor or brokerage costs related to the purchase.
Incorrect
Under the Bond Yield and Return, the Yield to Maturity is mentioned. This shows when an investor earned an overall interest rate and he or she purchased bonds at the market price and holds its maturity. Precisely, it shows the discount rate which the sum of all future cash flows, either from coupons or principal repayment, equals the price of the bond. In the Yield to Maturity, it assumes that couple and principal payments are paid on time. It does not require reinvestment of dividends. Lastly, taxes paid are not considered by an investor or brokerage costs related to the purchase.
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Question 6 of 10
6. Question
Under the rule regarding the Marking to the Market in FINRA, which of the following information is needed to be remembered by an individual?
I. An individual must know the Contract Closure
II. The Notice of Offsetting Purchase or Sale must also be remembered
III. An individual must know the consequences of failure to comply with deposit or refund
IV. An individual must know the number of outstanding contracts in the marketCorrect
Under this rule, the “Marking-to-Market” also known as the Marking to the Market, shows the information needed that an individual must know. The following information in this rule is an individual must know the demand regarding the deposit, which party may assign the contract, the demand regarding the refund to any deposits, the delivery of demand when it comes to deposit or refund, the consequences of failure to comply with the said demand, regarding the closure of the contract, and lastly, such notice regarding the offsetting of purchase or sale.
Incorrect
Under this rule, the “Marking-to-Market” also known as the Marking to the Market, shows the information needed that an individual must know. The following information in this rule is an individual must know the demand regarding the deposit, which party may assign the contract, the demand regarding the refund to any deposits, the delivery of demand when it comes to deposit or refund, the consequences of failure to comply with the said demand, regarding the closure of the contract, and lastly, such notice regarding the offsetting of purchase or sale.
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Question 7 of 10
7. Question
In a settlement, which of the following must an individual know regarding the settlement procedure?
I. An individual must know the disciplinary proceeding with multiple respondents
II. A rejection from an offer is part of the settlement procedure
III. Contested offers of a settlement is not information needed in the settlement procedure
IV. Such settlement offer shall conform to a ruleCorrect
In a settlement, an individual must know the procedure, or the information needed. The following information regarding the settlement procedure is when an offer is allowed there is no stay of proceeding, any settlement shall follow the rule, an individual must know the content and signature requirements, a waiver, uncontested and contested offers of settlement, FINRA’s final disciplinary action, when an offer of settlement is rejected, such disciplinary proceeding with various respondents, and lastly, an offer that has been rejected will not be prejudiced.
Incorrect
In a settlement, an individual must know the procedure, or the information needed. The following information regarding the settlement procedure is when an offer is allowed there is no stay of proceeding, any settlement shall follow the rule, an individual must know the content and signature requirements, a waiver, uncontested and contested offers of settlement, FINRA’s final disciplinary action, when an offer of settlement is rejected, such disciplinary proceeding with various respondents, and lastly, an offer that has been rejected will not be prejudiced.
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Question 8 of 10
8. Question
Under the Settlement Procedure, which of the following are the content and signature requirements?
I. A proposed sanction to be imposed that is consistent with FINRA’s then-current sanction guidelines or, if inconsistent with the sanction guidelines, a detailed statement supporting the proposed sanction
II. The effective date of any sanction/s
III. A submitted waiver by a respondent
IV. The information that is under this requirement is if a settlement is contested or uncontestedCorrect
Under the Settlement Procedure, there are content and signature requirements that an individual must know. An offer of settlement shall be written and signed by a person or individual making an offer. The offer of the settlement includes the following information such as the origin of the disciplinary action, the rule that an individual has violated, a projected permanent cease and desist order concerning the content, scope, and its form, and a statement that shows the consent to such findings of facts and violations.
Incorrect
Under the Settlement Procedure, there are content and signature requirements that an individual must know. An offer of settlement shall be written and signed by a person or individual making an offer. The offer of the settlement includes the following information such as the origin of the disciplinary action, the rule that an individual has violated, a projected permanent cease and desist order concerning the content, scope, and its form, and a statement that shows the consent to such findings of facts and violations.
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Question 9 of 10
9. Question
Who of the following can reject an offer of settlement under the settlement procedure?
I. Other respondents can have a say or can reject an offer
II. The Extended Hearing Panel is one of the people that can reject such an offer
III. A group that can also reject an offer is the Review Subcommittee
IV. If applicable, the National Adjudicatory Council can reject an offerCorrect
Under the Settlement Procedure regarding the rejected offer of settlement, an offer can be rejected by a Hearing Panel. In rejecting an offer of settlement, it can be also rejected, if applicable, by an Extended Hearing Panel, the Review Subcommittee, or the National Adjudicatory Council. In line with that rejected offer, the Respondent shall not be prejudiced by the offer, where it shall not be introduced into evidence connected with the purpose of the issues involved in the pending complaint or other proceedings.
Incorrect
Under the Settlement Procedure regarding the rejected offer of settlement, an offer can be rejected by a Hearing Panel. In rejecting an offer of settlement, it can be also rejected, if applicable, by an Extended Hearing Panel, the Review Subcommittee, or the National Adjudicatory Council. In line with that rejected offer, the Respondent shall not be prejudiced by the offer, where it shall not be introduced into evidence connected with the purpose of the issues involved in the pending complaint or other proceedings.
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Question 10 of 10
10. Question
FINRA adopts rule amendments that expand the delta hedging exemptions for options positions limits, which of the following information are true under the use of Delta Hedging Exemptions?
I. A firm may use the delta hedging with the model developed by the Options Clearing Corporation
II. Certain Brokers and Dealers cannot use delta hedging
III. If an eligible non-member affiliate ceases hedge stock, he/she must provide immediate written notice to the member firm
IV. The delta hedging exemption is an alternative to the existing equity options hedge exemptionsCorrect
In using the Delta Hedging Exemptions, there is information that an individual must know. In the Delta Hedging Exemptions, under the current amendments, firms may use the model developed by the Options Clearing Corporation (OCC Model) in delta hedging. In using the OCC Model, certain broken-dealers and qualified affiliate entities may use delta hedging with a Prop Model. In accordance with such systems and models, if a qualified non-member affiliate terminates to hedge stock options positions, they must deliver the immediate written notice to the member firm. Lastly, delta hedging exemption may be a substitute to a current equity options hedge exemption, and it may be used on a stock-by-stock source.
Incorrect
In using the Delta Hedging Exemptions, there is information that an individual must know. In the Delta Hedging Exemptions, under the current amendments, firms may use the model developed by the Options Clearing Corporation (OCC Model) in delta hedging. In using the OCC Model, certain broken-dealers and qualified affiliate entities may use delta hedging with a Prop Model. In accordance with such systems and models, if a qualified non-member affiliate terminates to hedge stock options positions, they must deliver the immediate written notice to the member firm. Lastly, delta hedging exemption may be a substitute to a current equity options hedge exemption, and it may be used on a stock-by-stock source.