FINRA Series 31 - Quiz 3 - Pauline.new
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Question 1 of 10
1. Question
Under the Customer Margin Balance Reporting and Margin Statistics which of the following are included in the Customer Margin Balance Form?
I. Half of all debit balances are included
II. All free credit balances in all-cash accounts are shown in this form
III. It contains the total of all debit balances in this account
IV. It shows the settlement date basis as of the last business day of the monthCorrect
As stated in the FINRA Rule 4521, it requires members of the firms that carry customer margin accounts to submit a Customer Margin Balance Form. The following information that must be contained in this form such as the total of all debit balances regarding the securities margin accounts, the overall credit balances in all cash accounts, and all of the securities margin accounts depending on the settlement date basis which is the last business day of the month. After collecting the data needed in this form, FINRA will display it in an aggregate form on their Margin Statistics page.
Incorrect
As stated in the FINRA Rule 4521, it requires members of the firms that carry customer margin accounts to submit a Customer Margin Balance Form. The following information that must be contained in this form such as the total of all debit balances regarding the securities margin accounts, the overall credit balances in all cash accounts, and all of the securities margin accounts depending on the settlement date basis which is the last business day of the month. After collecting the data needed in this form, FINRA will display it in an aggregate form on their Margin Statistics page.
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Question 2 of 10
2. Question
Which of the following must an individual know in a Portfolio Margin?
I. The method of calculation shall be included in a Portfolio Margin
II. The eligible products must be considered
III. The establishing account and eligible positions must be contained in this Portfolio Margin
IV. The customer margin is also included in the Portfolio MarginCorrect
As stated in the Portfolio Margin, this margin is an alternative to the “strategy-based” margin requirements set forth. An individual must know the following information such as definitions to be remembered, monitoring of the risk of portfolio margin accounts, the approved theoretical pricing models, opening of accounts, opening of accounts, how to establish an account, the required margin, method of calculation, and eligible participants, positions and products are also included in the Portfolio Margin.
Incorrect
As stated in the Portfolio Margin, this margin is an alternative to the “strategy-based” margin requirements set forth. An individual must know the following information such as definitions to be remembered, monitoring of the risk of portfolio margin accounts, the approved theoretical pricing models, opening of accounts, opening of accounts, how to establish an account, the required margin, method of calculation, and eligible participants, positions and products are also included in the Portfolio Margin.
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Question 3 of 10
3. Question
Which of the following are the specifications of a Security Futures Contract?
I. One specification of this contract is the Contract Size
II. It includes the contract expiration and delivery
III. The manner of settlement is also included in this contract
IV. The margin and leverage are involved in the said documentCorrect
Security Futures Contract is an agreement where binding together two parties to buy or sell a quantity of shares. Under the Security Futures Contracts, there are certain specifications that an individual must know. The following specifications include the contract size where one single stock futures contract will signify a hundred shares, the contract month when the contract will expire, the last trading day where it shows the when the contract will trade, and lastly, the manner of settlement either physical delivery or cash settlement.
Incorrect
Security Futures Contract is an agreement where binding together two parties to buy or sell a quantity of shares. Under the Security Futures Contracts, there are certain specifications that an individual must know. The following specifications include the contract size where one single stock futures contract will signify a hundred shares, the contract month when the contract will expire, the last trading day where it shows the when the contract will trade, and lastly, the manner of settlement either physical delivery or cash settlement.
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Question 4 of 10
4. Question
Which of the following describes a futures contract?
I. It is an agreement to purchase or sell a commodity
II. The prices are not determined in the contract
III. Two parties fulfill the contract at the specified price
IV. It may be either delivery or by offsetCorrect
A futures contract is an agreement binding two parties to buy or sell a commodity for possible delivery in the future. Specific prices are determined at the initiation of the said contract. It also obligates each party to fulfill it at a specific price. It may also be used to assume or in the shift of risk, and lastly, it may be either satisfied by delivery or by offset.
Incorrect
A futures contract is an agreement binding two parties to buy or sell a commodity for possible delivery in the future. Specific prices are determined at the initiation of the said contract. It also obligates each party to fulfill it at a specific price. It may also be used to assume or in the shift of risk, and lastly, it may be either satisfied by delivery or by offset.
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Question 5 of 10
5. Question
What are the primary or common order types that can save time and money?
I. One of the common order types is the Trailing Stop Limit
II. Immediate or cancel is one of the common order types
III. A Limit Order falls in one of the most common order types
IV. One of the primary order types is the Market OrderCorrect
There are order types that can help an individual to understand how to save time and money. There are common order types and they fall into three primary categories – the Market Order, Limit Order, and Stop Order. Information about the Market Order is that an individual has this assurance that his order will be executed. Next, Limit Order, it is stated that a buy limit order and sell limit order can be executed only at or below the limit price and above the limit price, respectively. Lastly, the Stop Order is an order that pertains to buying or selling security once the price reaches its specified price.
Incorrect
There are order types that can help an individual to understand how to save time and money. There are common order types and they fall into three primary categories – the Market Order, Limit Order, and Stop Order. Information about the Market Order is that an individual has this assurance that his order will be executed. Next, Limit Order, it is stated that a buy limit order and sell limit order can be executed only at or below the limit price and above the limit price, respectively. Lastly, the Stop Order is an order that pertains to buying or selling security once the price reaches its specified price.
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Question 6 of 10
6. Question
In the options market, there are several terms that are unfamiliar, which of the following are the basics in the options market?
I. Open Interest is one of the basic terms in the options market
II. The term Gamma is one of the basics
III. Theta is a basic term in the options market
IV. Strike Price is an unfamiliar term but one of the basics in the options marketCorrect
In the Options Market, it may have its own language. There are several terms that are unfamiliar to some individuals. There are basic terms that are under the options market – the option holder, write, American-Style and European-Style contract, call, put, the price paid which is the premium, the expiration date, the strike price or also known as the exercise price, the implied volatility, the time value, and the term open interest. These are just some of the basic terms in the options market.
Incorrect
In the Options Market, it may have its own language. There are several terms that are unfamiliar to some individuals. There are basic terms that are under the options market – the option holder, write, American-Style and European-Style contract, call, put, the price paid which is the premium, the expiration date, the strike price or also known as the exercise price, the implied volatility, the time value, and the term open interest. These are just some of the basic terms in the options market.
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Question 7 of 10
7. Question
Which of the following are the risks in the Security Futures Risk Contract?
I. Under some market conditions, the prices of security futures may not maintain their customary or anticipated relationships to the prices of the underlying security or index.
II. Placing contingent orders, if permitted, such as “stop-loss” or “stop-limit” orders, will not necessarily limit your losses to the intended amount
III. The protection of the account of the Security Futures
IV. Trading security futures contracts may result in potentially unlimited losses that are greater than the amount you deposited with your broker.Correct
In the Security Futures Contract, there are possible risks that an individual must know. There is no trading strategy that can eliminate those risks. Aside from the risks stated, other risks include – the claims of making larger profits of an individual from trading security futures, the difficulty of hedging or liquidating a position, an individual may suffer losses due to computer system failures, and lastly, special risks may be involved because of day trading strategies involving security futures.
Incorrect
In the Security Futures Contract, there are possible risks that an individual must know. There is no trading strategy that can eliminate those risks. Aside from the risks stated, other risks include – the claims of making larger profits of an individual from trading security futures, the difficulty of hedging or liquidating a position, an individual may suffer losses due to computer system failures, and lastly, special risks may be involved because of day trading strategies involving security futures.
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Question 8 of 10
8. Question
Which of the following must an individual do when problems arise in the future account?
I. An individual will not do anything to solve the problems regarding his or her futures account
II. If an individual think there is a mistake, he or she should talk to his or her broker
III. There are no programs that can resolve the issues regarding the contract
IV. An individual can report the problem to the firm’s managementCorrect
If an individual thinks that there is a problem with his or her account, he or she should do action to resolve it. In a securities industry, they need the help of people for it to operate successfully. The steps that an individual can take are – the fastest way to resolve the problem is to talk to his or her broker. Next, if the individual and broker can’t solve the problem, he or she can report it to the compliance department or the management of the firm. Lastly, an individual can also take note of such options such as programs like regular complaint and CFTC reparations program, arbitration and meditation, and litigation.
Incorrect
If an individual thinks that there is a problem with his or her account, he or she should do action to resolve it. In a securities industry, they need the help of people for it to operate successfully. The steps that an individual can take are – the fastest way to resolve the problem is to talk to his or her broker. Next, if the individual and broker can’t solve the problem, he or she can report it to the compliance department or the management of the firm. Lastly, an individual can also take note of such options such as programs like regular complaint and CFTC reparations program, arbitration and meditation, and litigation.
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Question 9 of 10
9. Question
Under the Security Futures Account, an individual must know his or her protection regarding the account. Which of the following is true about the Security Futures Account Protection?
I. The firm cannot tell an individual regarding the security futures positions will be held in his or her account
II. An individual has the choice of which type of account to use
III. The regulatory protections may vary
IV. An individual has the decision whether to or to not understand the regulatory protectionsCorrect
In the Security Futures Account Protection, an individual and the brokerage firm has its own responsibilities to remember. The protection of an individual’s funds and positions may vary depending on whether the account is a securities or futures account. The brokerage firm’s responsibility is they must tell an individual whether his or her security futures positions will be held. An individual has the choice of which type of account will hold his or her funds and positions. Next, an individual must carefully understand the regulatory protections if the firm fails. Lastly, the regulatory protections if the firm fails will vary whether an individual is trading through a securities or futures account.
Incorrect
In the Security Futures Account Protection, an individual and the brokerage firm has its own responsibilities to remember. The protection of an individual’s funds and positions may vary depending on whether the account is a securities or futures account. The brokerage firm’s responsibility is they must tell an individual whether his or her security futures positions will be held. An individual has the choice of which type of account will hold his or her funds and positions. Next, an individual must carefully understand the regulatory protections if the firm fails. Lastly, the regulatory protections if the firm fails will vary whether an individual is trading through a securities or futures account.
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Question 10 of 10
10. Question
Which of the following must an individual know regarding the Futures Contract Expiration and Delivery?
I. The contract that hasn’t been liquidated by an offsetting transaction before its expiration date will be settled at the day’s settlement price
II. Its delivery can be either physically or by cash settlement
III. The delivery can be by cash settlement only
IV. A futures contract doesn’t have any expiration dateCorrect
In the Security Futures, any futures contract that hasn’t been settled by an offsetting transaction before its expiration date will be settled at that day’s settlement price. In terms of delivery, the contract can be settled either by physical delivery or by cash settlement. With the physical delivery that a holder of short and long positions must deliver and take delivery the underlying security, respectively. Any security futures contract that is already settled based on the settlement price, both parties have no further obligations on the contract.
Incorrect
In the Security Futures, any futures contract that hasn’t been settled by an offsetting transaction before its expiration date will be settled at that day’s settlement price. In terms of delivery, the contract can be settled either by physical delivery or by cash settlement. With the physical delivery that a holder of short and long positions must deliver and take delivery the underlying security, respectively. Any security futures contract that is already settled based on the settlement price, both parties have no further obligations on the contract.