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Question 1 of 10
1. Question
How many pages shall the disclosure document contain?
Correct
Generally, a disclosure document contains 30 pages or less. If the document contains more complex pools asuch as multi-advisor pools forprincipal protected pools, it may be longer than 30 pages. A disclosure document shall be manageable and easy to understand by its users. It shall not contain longer paragraphs which complicates the information.
Incorrect
Generally, a disclosure document contains 30 pages or less. If the document contains more complex pools asuch as multi-advisor pools forprincipal protected pools, it may be longer than 30 pages. A disclosure document shall be manageable and easy to understand by its users. It shall not contain longer paragraphs which complicates the information.
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Question 2 of 10
2. Question
Which of the following best describes a “trading manager”?
Correct
The trading managers have authorities in allocating pool assets to the CTAs or investee pools. The name of the trading manager shall be identified if a pool utilizes a trading manager. In addition, the business background of the trading manager shall participate in making operational and trading decisions for the pool.
Incorrect
The trading managers have authorities in allocating pool assets to the CTAs or investee pools. The name of the trading manager shall be identified if a pool utilizes a trading manager. In addition, the business background of the trading manager shall participate in making operational and trading decisions for the pool.
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Question 3 of 10
3. Question
Who of the following shall obtain information from all individual customers and any other customers who are not eligible contract participants?
Correct
In Customer Information and Risk Disclosure, each member or associate is in-charge when it comes to obtaining information from individual customers. They also need information from customers who are not qualified contract participants. Customers must be provided with cleared swaps and disclosure of the risks of trading futures by each member or associate.
Incorrect
In Customer Information and Risk Disclosure, each member or associate is in-charge when it comes to obtaining information from individual customers. They also need information from customers who are not qualified contract participants. Customers must be provided with cleared swaps and disclosure of the risks of trading futures by each member or associate.
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Question 4 of 10
4. Question
Under NFA Compliance Rule 2-30, who of the following shall establish and enforce adequate procedures?
Correct
It is stated in NFA Compliance Rule 2-30 that when it comes to establishing and enforcing adequate procedures, it must be done by each member. This will help in reviewing records made pursuant to Rule 2-30. Lastly, in supervising the activities of its Associates when it comes to obtaining and providing customer information and risk disclosure, respectively.
Incorrect
It is stated in NFA Compliance Rule 2-30 that when it comes to establishing and enforcing adequate procedures, it must be done by each member. This will help in reviewing records made pursuant to Rule 2-30. Lastly, in supervising the activities of its Associates when it comes to obtaining and providing customer information and risk disclosure, respectively.
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Question 5 of 10
5. Question
Which of the following shall be sent to each customer who is an individual for verification within fifteen days after the Member becomes aware of any material change in the customer’s financial status?
Correct
It is stated by FINRA that members that are not also members of the Financial Industry Regulatory Authority and their Associates should provide these additional requirements when it comes to accounts for customers in trading security futures products. Background and financial information shall be forwarded by a member or associate to each customer. An individual for verification within fifteen days shall receive financial information and a copy of the background on file with the Member.
Incorrect
It is stated by FINRA that members that are not also members of the Financial Industry Regulatory Authority and their Associates should provide these additional requirements when it comes to accounts for customers in trading security futures products. Background and financial information shall be forwarded by a member or associate to each customer. An individual for verification within fifteen days shall receive financial information and a copy of the background on file with the Member.
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Question 6 of 10
6. Question
Which of the following must be stated in the forepart of the document?
I. If the pool is a multi-advisor pool
II. If the pool is a principal-protected pool
III. If the pool is continuously offered
IV. If the pool is limited and exclusiveCorrect
The fact that the pool is a multi-advisor pool, a principal-protected pool, or a continuously offered pool shall be disclosed in the forepart of the document. If a pool is privately offered pursuant to the Securities Act, it shall be stated and defined in the same document. The closing date of the offering must be disclosed if the pool is not continuously offered.
Incorrect
The fact that the pool is a multi-advisor pool, a principal-protected pool, or a continuously offered pool shall be disclosed in the forepart of the document. If a pool is privately offered pursuant to the Securities Act, it shall be stated and defined in the same document. The closing date of the offering must be disclosed if the pool is not continuously offered.
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Question 7 of 10
7. Question
Which of the following shall be included in the forepart of the disclosure document?
I. Form of organization
II. Main business telephone number
III. Address of the main business office
IV. Address of the recipientCorrect
In a document, it is important to state the main business telephone number and the address of the main business. The form of organization of both the pool and the CPO shall also be indicated together with the full name of the business. To avoid complications with the delivery of the document, it shall be indicated where the books and records will be kept and made available for inspection.
Incorrect
In a document, it is important to state the main business telephone number and the address of the main business. The form of organization of both the pool and the CPO shall also be indicated together with the full name of the business. To avoid complications with the delivery of the document, it shall be indicated where the books and records will be kept and made available for inspection.
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Question 8 of 10
8. Question
Which of the following are also seen in the forepart of the disclosure document?
I. The attached financial statements with an auditor’s signature
II. The fact that it uses a generally accepted accounting principle
III. The date when the CPO first intends to use the document
IV. The break-even point per unit of initial investmentCorrect
The break-even point per unit of initial investment and the date when the CPO first intends to use the document shall be seen in the disclosure document. It is important to know that the CPO shall not exceed 12 months after the date of the document in using it. The break-even point shall be expressed in a dollar amount and a percentage of the minimum unit of the initial investment.
Incorrect
The break-even point per unit of initial investment and the date when the CPO first intends to use the document shall be seen in the disclosure document. It is important to know that the CPO shall not exceed 12 months after the date of the document in using it. The break-even point shall be expressed in a dollar amount and a percentage of the minimum unit of the initial investment.
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Question 9 of 10
9. Question
What are the roles of a principal in providing a disclosure document?
I. To make trading decisions for the pool
II. To allocate pool assets to engaged persons
III. To provide the advantages and disadvantages of a pool
IV. To supervise the engaged personsCorrect
In a disclosure document, the principals shall be clearly identified. The principal who supervises the engaged persons, allocates pool assets, and makes trading decisions shall clearly be specified. It is important to state the name of the Commodity Pool Operators and all their principals to know how the document came up with that information.
Incorrect
In a disclosure document, the principals shall be clearly identified. The principal who supervises the engaged persons, allocates pool assets, and makes trading decisions shall clearly be specified. It is important to state the name of the Commodity Pool Operators and all their principals to know how the document came up with that information.
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Question 10 of 10
10. Question
In disclosing the types of commodity interests, what shall be included in the document?
I. The extent to which interests are subject to state or federal regulations
II. The number of interests which the Commodity Trading Advisors are liable
III. The custodian or entity which will hold the interests
IV. The approximate percentage of the pool’s assets used to trade commoditiesCorrect
There are certain requirements in disclosing the types of commodity interests. These include the extent to which interests are subject to state or federal regulations. It must indicate if it is a self-regulatory organization. The custodian or entity who will hold the interest and the percentage of the pool’s assets shall also be disclosed. The document must disclose the jurisdiction in which interests will be held if pool assets are invested outside the United States.
Incorrect
There are certain requirements in disclosing the types of commodity interests. These include the extent to which interests are subject to state or federal regulations. It must indicate if it is a self-regulatory organization. The custodian or entity who will hold the interest and the percentage of the pool’s assets shall also be disclosed. The document must disclose the jurisdiction in which interests will be held if pool assets are invested outside the United States.