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Question 1 of 10
1. Question
What must be stamped on each page of an annual report that is in a format that is consistent with Form X-17A-5, which must be reviewed by, but not limited to, officials or employees of the United States?
Correct
An annual report must be stamped “confidential” if it is made in the format of Form X-17A-5. Confidential annual reports may be reviewed by the officials or employees of the United States. A report on annual general assessment must be filed in a format determined by SIPC and is approved by the Commission.
Incorrect
An annual report must be stamped “confidential” if it is made in the format of Form X-17A-5. Confidential annual reports may be reviewed by the officials or employees of the United States. A report on annual general assessment must be filed in a format determined by SIPC and is approved by the Commission.
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Question 2 of 10
2. Question
Which of the following assessment forms are ruled and approved by the Securities Investor Protection Act of 1970 (SIPA)?
I. General Assessment of Financial Report
II. General Assessment of Income Tax Report
III. General Assessment Payment Form
IV. General Assessment Reconciliation FormCorrect
An annual general assessment of the Payment Form and Reconciliation form must be filed by a broker or dealer under the SIPC-6/7. The Payment Form must be filed for the first half of the fiscal year. On the other hand, the Reconciliation Form must be filed at the end of the fiscal year.
Incorrect
An annual general assessment of the Payment Form and Reconciliation form must be filed by a broker or dealer under the SIPC-6/7. The Payment Form must be filed for the first half of the fiscal year. On the other hand, the Reconciliation Form must be filed at the end of the fiscal year.
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Question 3 of 10
3. Question
Under the FINRA Rule 1017, which of the following events requires the approval of an application filed by the member in relation to the ownership, control, or business operations?
Correct
Under the FINRA Rule 1017, if a member or entity is part of New York Stock Exchange Inc., its application would not need approval in changes to its ownership, control, or business operations. However, a material change in business operations must require an application.
Incorrect
Under the FINRA Rule 1017, if a member or entity is part of New York Stock Exchange Inc., its application would not need approval in changes to its ownership, control, or business operations. However, a material change in business operations must require an application.
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Question 4 of 10
4. Question
What action must be given by the FINRA regarding the withdrawal of application for approval of a change in ownership, control, or business operations?
Correct
Under the FINRA Rule 1017, FINRA shall refund the application fee less the $500 processing fee to the applicant whose withdrawal of application occurred within 30 days after its filing. If an applicant wishes to submit a new application, fees may still vary.
Incorrect
Under the FINRA Rule 1017, FINRA shall refund the application fee less the $500 processing fee to the applicant whose withdrawal of application occurred within 30 days after its filing. If an applicant wishes to submit a new application, fees may still vary.
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Question 5 of 10
5. Question
In relation to subordinated loans, notes collateralized by securities, and capital borrowing, which of the following documents may be required?
I. Notes to financial statements regarding the subordinated loans
II. Audited financial statements signed and approved by the auditor
III. A signed copy of loan agreement with at least 12-month duration
IV. A signed copy of loan agreement which provides non-recourse to the assets of the memberCorrect
Under FINRA Rule 4110, subordinated loans, notes collateralized by securities, and capital borrowings must contain a signed copy of a loan agreement with at least a 12-month duration, and which provides non-recourse to the assets of the member. Additional documents may be required depending on the status of the lender.
Incorrect
Under FINRA Rule 4110, subordinated loans, notes collateralized by securities, and capital borrowings must contain a signed copy of a loan agreement with at least a 12-month duration, and which provides non-recourse to the assets of the member. Additional documents may be required depending on the status of the lender.
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Question 6 of 10
6. Question
Which of the following is a standard of subordinated loans or notes collateralized by securities in accordance with the FINRA Rule 4110?
Correct
Under the FINRA Rule 4110, a standard to ensure the stability and capability of financing and operating activities must be met by all subordinated loans or notes collateralized by securities. A subordination agreement which contains the standards of subordinated loans is clearly specified in the SEA Rule 15c3 Appendix D.
Incorrect
Under the FINRA Rule 4110, a standard to ensure the stability and capability of financing and operating activities must be met by all subordinated loans or notes collateralized by securities. A subordination agreement which contains the standards of subordinated loans is clearly specified in the SEA Rule 15c3 Appendix D.
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Question 7 of 10
7. Question
Which of the following situations must be considered in giving FINRA a prior written notice in relation to guarantees by, or flow-through benefits for, members?
I. If any member guarantees the obligations or liabilities of another person
II. If any member directly endorses the obligations or liabilities of another person
III. If any member rejects the obligations or liabilities of another person
IV. If any member indirectly assumes the obligations or liabilities of another personCorrect
Under the FINRA Rule 4150, FINRA must receive prior written notice if any member guarantees and directly or indirectly endorses the obligations or liabilities of another person. This written approval must also be obtained if the member receives flow through capital benefits.
Incorrect
Under the FINRA Rule 4150, FINRA must receive prior written notice if any member guarantees and directly or indirectly endorses the obligations or liabilities of another person. This written approval must also be obtained if the member receives flow through capital benefits.
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Question 8 of 10
8. Question
Which of the following information must contain a report of a member’s carrying margin accounts for customers in accordance with the FINRA Rule 4521?
I. Total of debit balances in securities margin accounts
II. Total of debit balances in all “cash” accounts
III. Total credit balances in all “cash” accounts
IV. Total credit balances in securities margin accountsCorrect
Under the FINRA Rule 4521, a member which carries margin accounts for customers shall submit reports of total debit balances in securities margin accounts and total credit balances in both the cash and securities margin accounts. However, only “free” credit balances in both the cash and securities margin accounts must be included in the member’s report.
Incorrect
Under the FINRA Rule 4521, a member which carries margin accounts for customers shall submit reports of total debit balances in securities margin accounts and total credit balances in both the cash and securities margin accounts. However, only “free” credit balances in both the cash and securities margin accounts must be included in the member’s report.
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Question 9 of 10
9. Question
Which of the following securities are treated as separate positions for undue concentration purposes?
I. Securities of the same issue with different coupon rates but with the same maturity
II. Securities of the same issue with different maturities but with same coupon rates
III. Securities of the same issue with different coupon rates but with different maturity
IV. Securities of the same issue with same coupon rates but with the same maturityCorrect
Under the SEA Rule 15c31, securities must be treated as separate positions for undue concentration purposes if the securities have the same maturity but with different coupon rates or same coupon rates with different maturity. This is a requirement under a single class or series of securities haircuts.
Incorrect
Under the SEA Rule 15c31, securities must be treated as separate positions for undue concentration purposes if the securities have the same maturity but with different coupon rates or same coupon rates with different maturity. This is a requirement under a single class or series of securities haircuts.
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Question 10 of 10
10. Question
What kind of certificate must a broker-dealer have in signing a written agreement which acknowledges the client that the broker-dealer will have no obligation for the failure of any party in completing the transaction with its terms?
Correct
Under the SEA Rule 15c3-1, one of the minimum requirements of brokers or dealers is a certificate of deposit issued by a bank to acknowledge the client that the broker or dealer will have no obligation for failure in completing the transaction. This certificate must be under the name of the customer.
Incorrect
Under the SEA Rule 15c3-1, one of the minimum requirements of brokers or dealers is a certificate of deposit issued by a bank to acknowledge the client that the broker or dealer will have no obligation for failure in completing the transaction. This certificate must be under the name of the customer.