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Question 1 of 10
1. Question
In connection with trading, which of the following shall be included in a disclosure document?
I. Operating activities with the use of pool assets
II. Description of trading and investment programs and policies
III. The fact that trading is the importation or exportation of goods if happened within the United States
IV. Material restrictions and limitations on tradingCorrect
In a disclosure document, the description of trading and investment programs, including the policies, and the material restrictions and limitations on trading shall be included. This shall also indicate an explanation of the systems used in selecting Commodity Trading Advisors, investee pools, and the types of investment activities regarding the pool assets to be committed.
Incorrect
In a disclosure document, the description of trading and investment programs, including the policies, and the material restrictions and limitations on trading shall be included. This shall also indicate an explanation of the systems used in selecting Commodity Trading Advisors, investee pools, and the types of investment activities regarding the pool assets to be committed.
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Question 2 of 10
2. Question
Which of the following best describes a major commodity trading advisor?
Correct
Each major Commodity Trading Advisors shall be identified by name. The major CTAs shall currently allocate 10% or more of the pool’s assets or in the future. Aside from the name of the major Commodity Trading Advisors, the names of all principals of these major CTAs shall also be disclosed. It must also be identified that those principals will make trading decisions for the pool.
Incorrect
Each major Commodity Trading Advisors shall be identified by name. The major CTAs shall currently allocate 10% or more of the pool’s assets or in the future. Aside from the name of the major Commodity Trading Advisors, the names of all principals of these major CTAs shall also be disclosed. It must also be identified that those principals will make trading decisions for the pool.
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Question 3 of 10
3. Question
What is required to be disclosed if the pool will fulfill its margin requirements other than cash deposits?
Correct
The nature of the deposits must be disclosed if the pool will fulfill its margin requirements other than cash deposits. It shall also be disclosed if assets deposited by the pool as margin or as a security deposit generate income. It shall be stated whom the income generated from these assets will be paid. The document shall be disclosed in a manner in which the pool fulfills its margin requirements and a certain percentage of the pool’s assets.
Incorrect
The nature of the deposits must be disclosed if the pool will fulfill its margin requirements other than cash deposits. It shall also be disclosed if assets deposited by the pool as margin or as a security deposit generate income. It shall be stated whom the income generated from these assets will be paid. The document shall be disclosed in a manner in which the pool fulfills its margin requirements and a certain percentage of the pool’s assets.
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Question 4 of 10
4. Question
Which of the following best describes a major investor pool?
Correct
A pool in which 10% or more of the offered pool’s net asset value is invested is called a major investee pool. Each major investee pool and its CPO shall be identified by name. Included in the disclosure are all principals of the CPO of the investee pools. It shall also indicate the principals who will make trading decisions for the pool.
Incorrect
A pool in which 10% or more of the offered pool’s net asset value is invested is called a major investee pool. Each major investee pool and its CPO shall be identified by name. Included in the disclosure are all principals of the CPO of the investee pools. It shall also indicate the principals who will make trading decisions for the pool.
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Question 5 of 10
5. Question
How shall be the principal risk factors be discussed?
Correct
In the discussion of the disclosure document, the principal risk factors of participation in the offered pool shall be included. This includes the risks relating to volatility, liquidity, and counterparty creditworthiness. Trading structures to be employed and investment activities are expected to be engaged with the offered pool.
Incorrect
In the discussion of the disclosure document, the principal risk factors of participation in the offered pool shall be included. This includes the risks relating to volatility, liquidity, and counterparty creditworthiness. Trading structures to be employed and investment activities are expected to be engaged with the offered pool.
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Question 6 of 10
6. Question
What shall be explained in a disclosure document regarding the risks?
Correct
Associated with the unique features of engaging in virtual currency derivatives are the risks to be disclosed. Its impact shall be explained regarding the pool’s performance. The rules on designated contract markets may include restrictions on market participant’s ability to exit a position during high volatility.
Incorrect
Associated with the unique features of engaging in virtual currency derivatives are the risks to be disclosed. Its impact shall be explained regarding the pool’s performance. The rules on designated contract markets may include restrictions on market participant’s ability to exit a position during high volatility.
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Question 7 of 10
7. Question
What shall be examined by the CPO in disclosing additional risk factors?
Correct
The aspects of participation in the offered pool should be examined in requiring disclosure of additional risk factors. These risk factors include, but not limited to, day trading, electronic trading issues, concentration risk, use of options, use of stops, foreign exchange risks, SFPs, EFPs, swaps, and forwards.
Incorrect
The aspects of participation in the offered pool should be examined in requiring disclosure of additional risk factors. These risk factors include, but not limited to, day trading, electronic trading issues, concentration risk, use of options, use of stops, foreign exchange risks, SFPs, EFPs, swaps, and forwards.
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Question 8 of 10
8. Question
In the NFA Compliance Rule 2-30, which of the following shall be obtained from customers?
I. For customers who are individuals, the customer’s current estimated annual income and net worth. For all other customers, the customer’s net worth or net assets and current estimated annual income, or were not available, the previous year’s annual income
II. Such other information deemed appropriate by such Member or Associate to disclose the risks of futures and/or cleared swaps trading to the customer
III. The customer’s employment status
IV. The customer’s estimated liquid net worthCorrect
The following are the information that must be obtained from customers. Additional information that must be provided is the complete true name, address, and principal occupation for the business of a customer. For individuals, the estimated age or date of birth of the customer must be provided. Lastly, the previous investment, futures, and swaps trading experience of the customer must be indicated.
Incorrect
The following are the information that must be obtained from customers. Additional information that must be provided is the complete true name, address, and principal occupation for the business of a customer. For individuals, the estimated age or date of birth of the customer must be provided. Lastly, the previous investment, futures, and swaps trading experience of the customer must be indicated.
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Question 9 of 10
9. Question
If the customer trades security futures products, which of the following information must be obtained from each customer?
I. The customer’s employment status (name of employer, self-employed, retired)
II. Customer’s approximate age or date of birth of the customer
III. Such other information used or considered to be reasonable by such Member or Associate in making recommendations to the customer
IV. Such other information deemed appropriate by such Member or Associate to disclose the risks of futures and/or cleared swaps trading to the customer.Correct
The following are additional information that must be obtained by the Members that are not also members of the Financial Industry Regulatory Authority and their Associates from an individual if a customer trades security futures products. Other information includes the account of the customer for theoretical or evading purposes and the marital status and number of dependents of a customer. The estimated liquid net worth of a customer whether it is cash, securities, and others must be provided also.
Incorrect
The following are additional information that must be obtained by the Members that are not also members of the Financial Industry Regulatory Authority and their Associates from an individual if a customer trades security futures products. Other information includes the account of the customer for theoretical or evading purposes and the marital status and number of dependents of a customer. The estimated liquid net worth of a customer whether it is cash, securities, and others must be provided also.
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Question 10 of 10
10. Question
In opening a security futures account, which of the following are the requirements for approval?
I. A member or person must be associated with a member in accepting an order from a customer
II. No member or person associated with a member shall accept an order from a customer
III. Member shall not accept an order from a customer to purchase or sell a security future
IV. Member can approve the customer’s account for the trading of security futures without furnishing a disclosure agreement made by the broker or dealerCorrect
The approval that is required under the opening of a security futures account indicates that no member or person related to a member shall accept an order from a customer when buying or selling a security future. They cannot also approve the account of the customer for the trading of security futures unless a broker or dealer provides or provided a proper security futures risk disclosure statement to the customer.
Incorrect
The approval that is required under the opening of a security futures account indicates that no member or person related to a member shall accept an order from a customer when buying or selling a security future. They cannot also approve the account of the customer for the trading of security futures unless a broker or dealer provides or provided a proper security futures risk disclosure statement to the customer.