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Question 1 of 10
1. Question
What is allowed to hold positions as if it were a single trader under the speculative limits of the Commodity Futures Trading Commission?
Correct
A pool comprised of many traders can hold positions as if it were a single trader only. The Commission treats accounts that are not otherwise related as a single aggregated position for purposes of applying the limits. Narrow exemptions to the aggregation rules exist for limited partners and pool which do not have control over the positions of the pool. The commodity pool operators or commodity trading advisors with commonly-owned but independently-controlled market positions are also exempted from the aggregation requirements.
Incorrect
A pool comprised of many traders can hold positions as if it were a single trader only. The Commission treats accounts that are not otherwise related as a single aggregated position for purposes of applying the limits. Narrow exemptions to the aggregation rules exist for limited partners and pool which do not have control over the positions of the pool. The commodity pool operators or commodity trading advisors with commonly-owned but independently-controlled market positions are also exempted from the aggregation requirements.
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Question 2 of 10
2. Question
Which of the following are included in the requirements of live advertisements?
I. A summary of the advertisement submitted fifteen days before it would be broadcasted.
II. A script or detailed outline to be submitted to National Futures Association at least ten days prior to the broadcast.
III. All persons in charge of the advertisement including the ratings of the viewers on its first day of broadcasting.
IV. A recording of the actual advertisement to be submitted to the National Futures Association immediately after broadcasting.Correct
Reviewing the promotional material by the member is not a substitute for submission of promotional materials for the National Futures Association for review as it is their own responsibility. In promotional material, live advertisements could be one. The live advertisements would likewise require pre-approval with the following requirements: (1) The submission of a script or detailed outline to the National Futures Association at least ten days prior to the broadcast, ad (2) the submission of the recording of the actual advertisement immediately after the broadcasting.
Incorrect
Reviewing the promotional material by the member is not a substitute for submission of promotional materials for the National Futures Association for review as it is their own responsibility. In promotional material, live advertisements could be one. The live advertisements would likewise require pre-approval with the following requirements: (1) The submission of a script or detailed outline to the National Futures Association at least ten days prior to the broadcast, ad (2) the submission of the recording of the actual advertisement immediately after the broadcasting.
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Question 3 of 10
3. Question
Which of the following must be done in hedges under the speculative limits of the Commodity Futures Trading Commission?
I. Hedges must exclude purchases of future deliveries that do not exceed its physical exposure in the hedger’s term.
II. Hedges must arise from a change in the value of the hedger’s current or anticipated assets or liabilities.
III. Hedges must arise from a change in the value of the hedger’s assets or liabilities
IV. Hedges must reduce the risk for a commercial enterpriseCorrect
To reduce the risk for a commercial enterprise and arise from a change in the value of the assets or liabilities, whether current or anticipated, shall be done through hedges. This includes a short hedge for future deliveries that do not exceed its physical exposure in the commodity in terms of inventory, fixed-price purchases, and anticipated produced over the next 12 months. Included in the purchases of future delivery are long hedges that do not exceed its physical exposure in the commodity in terms of the hedger’s fixed-price sales and 12 months unfilled requirements fo processing or manufacturing.
Incorrect
To reduce the risk for a commercial enterprise and arise from a change in the value of the assets or liabilities, whether current or anticipated, shall be done through hedges. This includes a short hedge for future deliveries that do not exceed its physical exposure in the commodity in terms of inventory, fixed-price purchases, and anticipated produced over the next 12 months. Included in the purchases of future delivery are long hedges that do not exceed its physical exposure in the commodity in terms of the hedger’s fixed-price sales and 12 months unfilled requirements fo processing or manufacturing.
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Question 4 of 10
4. Question
In discretionary accounts for security futures, what shall be furnished to a customer regarding such accounts?
Correct
Under the security futures programs of discretionary accounts, they practice such programs that have a systematic use of one or more strategies of security futures. These programs can be used in identifying what are the best security futures strategies. It is also stated in these programs that a customer shall be equipped with a well-written explanation regarding nature and risks that can be gathered from such programs that are used in security futures.
Incorrect
Under the security futures programs of discretionary accounts, they practice such programs that have a systematic use of one or more strategies of security futures. These programs can be used in identifying what are the best security futures strategies. It is also stated in these programs that a customer shall be equipped with a well-written explanation regarding nature and risks that can be gathered from such programs that are used in security futures.
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Question 5 of 10
5. Question
In the suitability of security futures, which of the following shall not be recommended by a member to a customer regarding the buying or selling of security futures?
Correct
Under the suitability of security, futures stated that no member or any person related to another member shall recommend any transaction or any trading strategies. But there may be exemptions regarding this matter. Lastly, that member or person related to a member shall not mention such trading strategies especially when it comes to buying or selling such security futures.
Incorrect
Under the suitability of security, futures stated that no member or any person related to another member shall recommend any transaction or any trading strategies. But there may be exemptions regarding this matter. Lastly, that member or person related to a member shall not mention such trading strategies especially when it comes to buying or selling such security futures.
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Question 6 of 10
6. Question
Under the security futures transactions and reports by market makers in listed securities, specifically transactions involving 50 or more contracts, who of the following will have a benefit regarding this matter?
I. This is for the benefit of a member
II. This may benefit for an employee
III. Commodity pool operators can also benefit from this matter
IV. It may be directly for the benefit of a director of the memberCorrect
As stated in the transactions of security futures and reports by market makers in listed securities, a member that is an off-board market maker shall report to FINRA regarding procedures that are agreed by the Board of Governors. 50 or more security futures contract transactions that directly for the benefit of a member, employee, officer, and the member’s director is involved in buying or selling of any underlying security for the proprietary account(s) of a firm. This applied to all transactions for security futures which also includes the executed on an exchange that a member may belong to.
Incorrect
As stated in the transactions of security futures and reports by market makers in listed securities, a member that is an off-board market maker shall report to FINRA regarding procedures that are agreed by the Board of Governors. 50 or more security futures contract transactions that directly for the benefit of a member, employee, officer, and the member’s director is involved in buying or selling of any underlying security for the proprietary account(s) of a firm. This applied to all transactions for security futures which also includes the executed on an exchange that a member may belong to.
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Question 7 of 10
7. Question
In trading ahead of customer orders in security futures, which of the following must be exercised and required by/for every member?
I. A member shall exercise due care
II. A member shall take all orders without due care
III. The member can lack knowledge regarding the order prior to transmission of the customer
IV. The member has gained knowledge of the customer’s order transmissionCorrect
As stated in the trading ahead of customer orders for security futures, members shall exercise or must know due to care to avoid trading ahead of the security futures order of a customer. When the member must gain knowledge regarding the prior transmission to a securities exchange of the order of the member for a proprietary account or any account that any associated person is concerned indirectly or directly.
Incorrect
As stated in the trading ahead of customer orders for security futures, members shall exercise or must know due to care to avoid trading ahead of the security futures order of a customer. When the member must gain knowledge regarding the prior transmission to a securities exchange of the order of the member for a proprietary account or any account that any associated person is concerned indirectly or directly.
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Question 8 of 10
8. Question
Which of the following, whether in opening a new account or guidelines, are needed in Security Futures?
I. The Delivery of Security Futures Risk Disclosure Statement to a customer
II. How will the customer receive the statement of accounts
III. Knowing the aggregation of accounts
IV. Further understanding of the aggregation of positionsCorrect
There are requirements needed for Security Futures. Based on the Security Futures, some things that an individual, member, or associated person must know are the Statement of Accounts, Opening of Accounts, Maintenance of Records, Discretionary Accounts, Suitability, Violations, and some restrictions. The following may help them to gain knowledge about Security Futures, how it works, and how it will help an individual.
Incorrect
There are requirements needed for Security Futures. Based on the Security Futures, some things that an individual, member, or associated person must know are the Statement of Accounts, Opening of Accounts, Maintenance of Records, Discretionary Accounts, Suitability, Violations, and some restrictions. The following may help them to gain knowledge about Security Futures, how it works, and how it will help an individual.
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Question 9 of 10
9. Question
Which of the following are requirements in a member’s supervisory procedures for the use of electronic communications?
I. It shall specify the risk relating to the use of electronic communications in supervisory procedures.
II. It shall identify, by title or position, the person responsible for reviewing electronic communications.
III. It shall specify how and with what frequency will be used in reviewing electronic communications and how it would be documented.
IV. It shall categorize the type of electronic communications subject for pre-review or post-review.Correct
In a member’s supervisory procedures for the use of electronic communications, the National Futures Association requires the following: (1) It must be in writing, (2) it must identify the person responsible for reviewing electronic communications by title or by position, (3) it shall specify how and with what frequency electronic communication will be reviewed and the process of its review, (3) it shall categorize the type of electronic communications that will be pre-reviewed and post-reviewed, and (4) it shall specify the process in maintaining how electronic communications and made available upon request by National Futures Association and the Commodity Futures Trading Commission.
Incorrect
In a member’s supervisory procedures for the use of electronic communications, the National Futures Association requires the following: (1) It must be in writing, (2) it must identify the person responsible for reviewing electronic communications by title or by position, (3) it shall specify how and with what frequency electronic communication will be reviewed and the process of its review, (3) it shall categorize the type of electronic communications that will be pre-reviewed and post-reviewed, and (4) it shall specify the process in maintaining how electronic communications and made available upon request by National Futures Association and the Commodity Futures Trading Commission.
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Question 10 of 10
10. Question
Which of the following issues should be considered in the procedures for reviewing electronic communication?
I. The training and background of the member’s employees and agents shall be considered in its process.
II. The electronic communications shall include the relative sophistication of the recipients in the review process.
III. The electronic communication review shall address the nature of the communication as an addition to its procedure.
IV. The duty of the member to supervise the use of commodity-interest related electronic communications shall be considered.Correct
In the procedures for reviewing electronic communications, it should be developed based on the size, structure, and nature of a firm’s business operations. The following issues must be considered as part of its process: (1) The nature of the communication, (2) the relative sophistication of the recipients, (3) the training and background of the member’s employees and agents. A firm might choose to sample a relatively small but representative amount of electronic correspondence if it deals with sophisticated or institutional customers.
Incorrect
In the procedures for reviewing electronic communications, it should be developed based on the size, structure, and nature of a firm’s business operations. The following issues must be considered as part of its process: (1) The nature of the communication, (2) the relative sophistication of the recipients, (3) the training and background of the member’s employees and agents. A firm might choose to sample a relatively small but representative amount of electronic correspondence if it deals with sophisticated or institutional customers.