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Question 1 of 10
1. Question
How should the accrued interest be computed “when, as and if issued” or “when, as and if distributed”?
Correct
Under the FINRA Rule 11130, “when, as and if issued/distributed” contracts of accrued interests must be measured through the expired portion of coupon current at the time of settlement. In addition to this fact, all due and past-due coupons must be detached.
Incorrect
Under the FINRA Rule 11130, “when, as and if issued/distributed” contracts of accrued interests must be measured through the expired portion of coupon current at the time of settlement. In addition to this fact, all due and past-due coupons must be detached.
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Question 2 of 10
2. Question
Under the FINRA Rule 11160, which of the following requirements must be met by all transactions in excluding cash transactions in stocks, bonds, or similar evidence of indebtedness?
Correct
It is stated in the FINRA Rule 11160, all transactions shall be “ex” liquidating payment in accordance with the formulas under Rule 11140 and 11150. These include transactions in securities “ex-dividend”, “ex-rights”, or “ex-warrants”.
Incorrect
It is stated in the FINRA Rule 11160, all transactions shall be “ex” liquidating payment in accordance with the formulas under Rule 11140 and 11150. These include transactions in securities “ex-dividend”, “ex-rights”, or “ex-warrants”.
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Question 3 of 10
3. Question
According to the FINRA Rule 11310, which of the following best describes a “depository eligible security”?
I. It is issued security eligible for deposit at a securities depository.
II. It is a transaction eligible for book-entry transfer at the time of its settlement.
III. It is an issued transaction eligible for security haircuts.
IV. It is a transaction to comply with the net capital requirements of a broker-dealer.Correct
A depository eligible security is a security issued eligible for deposit at a securities depository. It is also eligible for book-entry transfer at the time of the settlement of the transaction. Its eligibility is measured upon its capability to deposit through a depository trust company.
Incorrect
A depository eligible security is a security issued eligible for deposit at a securities depository. It is also eligible for book-entry transfer at the time of the settlement of the transaction. Its eligibility is measured upon its capability to deposit through a depository trust company.
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Question 4 of 10
4. Question
For cash transactions, when must the delivery of securities be due?
Correct
The delivery of securities for cash transactions must be made on the day of the transaction at the purchaser’s office. If the transaction is in a regular way, and not on a cash-basis, the delivery shall be made on the second business day following the date of the transaction at the purchaser’s office.
Incorrect
The delivery of securities for cash transactions must be made on the day of the transaction at the purchaser’s office. If the transaction is in a regular way, and not on a cash-basis, the delivery shall be made on the second business day following the date of the transaction at the purchaser’s office.
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Question 5 of 10
5. Question
What would happen on contracts due on holidays or Saturdays in relation to the delivery of securities?
Correct
If a contract regarding the delivery of securities is due on holidays or Saturdays, it must not be forfeited. Yet, it shall mature on the next business day. In order to avoid delayed delivery, a security must be delivered at the office of the purchaser on the agreed date and time of the transaction.
Incorrect
If a contract regarding the delivery of securities is due on holidays or Saturdays, it must not be forfeited. Yet, it shall mature on the next business day. In order to avoid delayed delivery, a security must be delivered at the office of the purchaser on the agreed date and time of the transaction.
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Question 6 of 10
6. Question
Which of the following securities are delivered only by the agreement of both parties regarding its units?
I. Unit investment trust securities
II. Bonds
III. Stocks
IV. Certificates of deposit for bondsCorrect
It is stated in the FINRA Rules 11362 and 11364 that bonds and certificates of deposit for bonds must be delivered upon agreement of its units by both parties. On the other hand, unit investment trust securities are delivered by a single unit only. Stock deliveries have many factors to be considered in choosing their units of delivery.
Incorrect
It is stated in the FINRA Rules 11362 and 11364 that bonds and certificates of deposit for bonds must be delivered upon agreement of its units by both parties. On the other hand, unit investment trust securities are delivered by a single unit only. Stock deliveries have many factors to be considered in choosing their units of delivery.
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Question 7 of 10
7. Question
Which of the following days of interest computations is considered correct in relation to FINRA Rule 11620?
I. 29 days is from the 1st to 30th day of the same month.
II. 30 days is from the 1st to 31st of the same month.
III. February 23rd up to the 3rd of March is considered as 8 days.
IV. February 23rd up to the 3rd of March is considered as 10 days.Correct
Interest payables are computed on a basis of 360-day a year. Each month must be considered 1/12 of 360 days, in short, 30 days for each month. For the month of February which has 28 or 29 days, it must be assumed that it has 30 days. Therefore, February 23rd up to the 3rd of march is considered 10 days, and not only 8 days.
Incorrect
Interest payables are computed on a basis of 360-day a year. Each month must be considered 1/12 of 360 days, in short, 30 days for each month. For the month of February which has 28 or 29 days, it must be assumed that it has 30 days. Therefore, February 23rd up to the 3rd of march is considered 10 days, and not only 8 days.
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Question 8 of 10
8. Question
In relation to the computation of interests under FINRA Rule 11620, which of the following are figured as 30 days?
I. From the 31st of March to the 30th of April
II. From the 30th of June to the 31st of July
III. From the 31st of October to 1st of November
IV. From the 31st of January to 1st of MarchCorrect
Only the statements I and II are to be figured as 30 days because it is assumed that there are 30 days for each month for a total of 360 days in a year. From the 31st of October to 1st of November is figured as 1 day. From the 31st of January to 1st of March is considered a 1 month and 1 day regardless if February has 28 or 29 days. It must be assumed to have 30 days as an average per month.
Incorrect
Only the statements I and II are to be figured as 30 days because it is assumed that there are 30 days for each month for a total of 360 days in a year. From the 31st of October to 1st of November is figured as 1 day. From the 31st of January to 1st of March is considered a 1 month and 1 day regardless if February has 28 or 29 days. It must be assumed to have 30 days as an average per month.
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Question 9 of 10
9. Question
Which of the following statements are correct in relation to the settlement of syndicate accounts?
I. An account formed by members of the selling syndicate for purchasing and distributing corporate security is called a “syndicate account”.
II. A “syndicate operator” is in charge of maintaining the syndicate account records.
III. A “syndicate settlement date” is a date of delivery of corporate securities by the issuer.
IV. A “selling syndicate” is formed in connection with public offering regarding the distribution of corporate securities made to the public.Correct
The statements above relating to the settlement of syndicate accounts are correct, except Statement III which defines “syndicate operators” as the person in charge with the maintenance of syndicate account records. Instead of syndicate operators, “syndicate managers” are the one who is responsible for the maintenance of syndicate account records.
Incorrect
The statements above relating to the settlement of syndicate accounts are correct, except Statement III which defines “syndicate operators” as the person in charge with the maintenance of syndicate account records. Instead of syndicate operators, “syndicate managers” are the one who is responsible for the maintenance of syndicate account records.
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Question 10 of 10
10. Question
Which of the following must the party responsible for offsetting purchase or sale contracts be required to execute?
I. The party must notify the other party about offsetting contracts via electronic mail.
II. The party must deliver formal confirmation in offsetting the contract to the other party.
III. The party must deliver a copy of the confirmation to the committee.
IV. The party must notify the other party about offsetting contracts via letter as promptly as possible three days after they were made.Correct
Under the FINRA Rule 11740, a notice of offsetting purchase or sale must be notified by the responsible party via electronic mail, letter, or facsimile transmission. The responsible party must also deliver a formal confirmation to another party and to the committee. Notice of offsetting purchase or sale contracts must be made on the day in which they are made.
Incorrect
Under the FINRA Rule 11740, a notice of offsetting purchase or sale must be notified by the responsible party via electronic mail, letter, or facsimile transmission. The responsible party must also deliver a formal confirmation to another party and to the committee. Notice of offsetting purchase or sale contracts must be made on the day in which they are made.