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Question 1 of 10
1. Question
Which of the following must be included in the customer account information that needs to be maintained by each member?
I. Member’s policies and procedures for acceptance of accounts with the partner’s signature.
II. Name and contact information of a trusted person on a legal age who will be contacted regarding the customer’s account.
III. For institutional account, customer’s tax identification or Social Security number
IV. For institutional account, occupation of the employer and address of the customerCorrect
Under the FINRA Rule 4512, each account “other than institutional account” must maintain information containing the policies and procedures for acceptance of accounts, name and contact information of a trusted person, customer’s tax identification number, occupation of the customer, and name and address of an employer. Reasonable efforts must be obtained in the settlement of the initial transaction of the account.
Incorrect
Under the FINRA Rule 4512, each account “other than institutional account” must maintain information containing the policies and procedures for acceptance of accounts, name and contact information of a trusted person, customer’s tax identification number, occupation of the customer, and name and address of an employer. Reasonable efforts must be obtained in the settlement of the initial transaction of the account.
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Question 2 of 10
2. Question
In relation to customer account information retention periods under FINRA Rule 4512, which of the following records must be preserved?
Correct
Every customer account information shall be preserved if it has subsequently been updated for at least six years after the date that such information is updated. If no updates have been provided, a member shall preserve the last update of customer account information or its original record.
Incorrect
Every customer account information shall be preserved if it has subsequently been updated for at least six years after the date that such information is updated. If no updates have been provided, a member shall preserve the last update of customer account information or its original record.
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Question 3 of 10
3. Question
Which of the following statements are true in relation to approval and documentation of changes in account name or designation?
I. An order form must contain the name or designation of the account for which such order is to be executed.
II. No changes shall be made in the account unless authorized to do so.
III. Essential facts must be documented in writing and preserved for the period of time regarding the changes in the account.
IV. Investment advisers are allowed to accept orders and make allocation on their orders for customers on their behalf, only if there is more than one customer in a particular order.Correct
All statements indicated above are correct in relation to FINRA Rule 4515 “Approval and Documentation of Changes in Account Name or Designation”. Before the execution of orders, the order form must be thoroughly checked to avoid any changes in such account for changes are needed to be authorized by a qualified and registered principal designated by the member.
Incorrect
All statements indicated above are correct in relation to FINRA Rule 4515 “Approval and Documentation of Changes in Account Name or Designation”. Before the execution of orders, the order form must be thoroughly checked to avoid any changes in such account for changes are needed to be authorized by a qualified and registered principal designated by the member.
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Question 4 of 10
4. Question
Under FINRA Rule 4530, which of the following are required to be reported by the firms?
I. Reports on specified events
II. Annual statistical information regarding customer complaints
III. Summary of quarterly statistical information regarding customer complaints
IV. Copies of specified criminal and civil actionsCorrect
Reports required by the firms must contain specified events, a summary of quarterly statistical information regarding customer complaints, and copies of criminal and civil actions. The specified events are electronically submitted through the FINRA Firm Gateway. They can also use this to file an online application.
Incorrect
Reports required by the firms must contain specified events, a summary of quarterly statistical information regarding customer complaints, and copies of criminal and civil actions. The specified events are electronically submitted through the FINRA Firm Gateway. They can also use this to file an online application.
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Question 5 of 10
5. Question
Which of the following information shall be provided in submitting a disclosure event report?
I. Discovery date
II. Allegation activity period
III. “Related To” box must be left blank
IV. Contact Name and Phone NumberCorrect
In submitting a disclosure event report under FINRA Rule 4530, the contact name and phone number, event, allegation activity period, discovery date, and details of disclosure event shall be provided. Instead of leaving the “related to” box blank, it must be checked. Disclosures may be filed using Form U4, or File Transfer Protocol, aside from FINRA Firm Gateway.
Incorrect
In submitting a disclosure event report under FINRA Rule 4530, the contact name and phone number, event, allegation activity period, discovery date, and details of disclosure event shall be provided. Instead of leaving the “related to” box blank, it must be checked. Disclosures may be filed using Form U4, or File Transfer Protocol, aside from FINRA Firm Gateway.
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Question 6 of 10
6. Question
Which of the following forms is filed by a broker or dealer which consists of organizational, policy, and legal information together with the financial statements consisting of its line items report?
Correct
Form 17-H is required to be filed by a broker or dealer for risk assessment recordkeeping. This form consists of organizational, policy, and legal information with supporting financial statements. A separate form must be filed in an event where the broker or dealer is associated with other registered brokers or dealers.
Incorrect
Form 17-H is required to be filed by a broker or dealer for risk assessment recordkeeping. This form consists of organizational, policy, and legal information with supporting financial statements. A separate form must be filed in an event where the broker or dealer is associated with other registered brokers or dealers.
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Question 7 of 10
7. Question
According to generally accepted accounting principles (GAAP), which of the following is the fourth step in revenue recognition?
Correct
Revenue recognition is a general accounting requirement. The fourth step in this method is to allocate the transaction price to the performance obligation before recognizing the revenue when/as performance obligations are satisfied. This requirement is under Financial Accounting Standards Board (FASB) statements.
Incorrect
Revenue recognition is a general accounting requirement. The fourth step in this method is to allocate the transaction price to the performance obligation before recognizing the revenue when/as performance obligations are satisfied. This requirement is under Financial Accounting Standards Board (FASB) statements.
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Question 8 of 10
8. Question
Which of the following statements are correct in relation to clearing and carrying broker-dealers?
I. A carrying broker-dealers hold customer securities and funds.
II. A clearing broker-dealers clears transactions as members of security exchanges.
III. Clearing broker-dealer may not be a carrying broker-dealer.
IV. Some carrying broker-dealers only clear their own transactions and do not hold customer securities and funds.Correct
The statements above are correct in relation to carrying and clearing broker-dealers, except for the third statement because many clearing broker-dealer is also a carrying broker-dealer, but some of them do not hold customer securities and funds. Broker-dealers vary depending on their size, business activities, and the complexity of their operations.
Incorrect
The statements above are correct in relation to carrying and clearing broker-dealers, except for the third statement because many clearing broker-dealer is also a carrying broker-dealer, but some of them do not hold customer securities and funds. Broker-dealers vary depending on their size, business activities, and the complexity of their operations.
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Question 9 of 10
9. Question
Which of the following statements are correct in relation to “introducing” and “non-carrying” broker-dealers?
I. Non-carrying broker-dealers shall not accept orders to a carrying broker-dealer that is in charge of holding the customers’ securities and funds.
II. Introducing broker-dealers may use carrying broker-dealers in clearing the firm’s proprietary trades and securities.
III. Introducing broker-dealers may act as finders by referring to the issuers a prospective purchaser of securities.
IV. Non-carrying broker-dealer executes orders of the customers of introducing broker-dealer.Correct
An introducing broker-dealers may act as finders to refer a purchaser of securities to the issuers and may use the carrying broker-dealers in clearing the firm’s trades and securities. On the other hand, a non-carrying broker-dealers may accept orders to a carrying broker-dealer that is in charge of customers’ securities. These non-carrying broker-dealers include “introducing” brokers.
Incorrect
An introducing broker-dealers may act as finders to refer a purchaser of securities to the issuers and may use the carrying broker-dealers in clearing the firm’s trades and securities. On the other hand, a non-carrying broker-dealers may accept orders to a carrying broker-dealer that is in charge of customers’ securities. These non-carrying broker-dealers include “introducing” brokers.
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Question 10 of 10
10. Question
Which of the following statements best describes SEC Form X-17A-5?
I. It is a form filed by broker-dealers who are registered under the U.S. Securities and Exchange Commission.
II. A broker-dealer who files this form must have a cleared transaction or carries a customer’s accounts.
III. A monthly filing of this form is a requirement by the New York Stock Exchange.
IV. This form consists of four parts to be filed by a certified public accountant.Correct
The statements above in relation to this form are correct, except for the fourth statement. SEC Form X-17A-5 consists of three parts. Part I contains general information about operational capital charge items designed for the registrant’s economic and financial characteristics, Part II contains the annual audit, and Part III is for the identification of the registrant and the accountant.
Incorrect
The statements above in relation to this form are correct, except for the fourth statement. SEC Form X-17A-5 consists of three parts. Part I contains general information about operational capital charge items designed for the registrant’s economic and financial characteristics, Part II contains the annual audit, and Part III is for the identification of the registrant and the accountant.