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Question 1 of 10
1. Question
Under the disclosure document requirements of the National Futures Association, which of the following is correct in disclosing the distribution of profits and taxation?
Correct
In disclosing the distribution of profits and taxations, the federal income tax effects of payments for a participant including the federal income tax discussions shall be stated. The document must also disclose the pool’s policies with respect to payment of distributions from profits or capital and the frequency of such payments. The Commodity Pool Operator is required to explain the objectives and the manner in which the related risks will be achieved if the pool is specifically structured to accomplish certain federal income tax objectives. In reporting, the document must state all participants with either monthly or quarterly statements of accounts as well as a certified annual report.
Incorrect
In disclosing the distribution of profits and taxations, the federal income tax effects of payments for a participant including the federal income tax discussions shall be stated. The document must also disclose the pool’s policies with respect to payment of distributions from profits or capital and the frequency of such payments. The Commodity Pool Operator is required to explain the objectives and the manner in which the related risks will be achieved if the pool is specifically structured to accomplish certain federal income tax objectives. In reporting, the document must state all participants with either monthly or quarterly statements of accounts as well as a certified annual report.
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Question 2 of 10
2. Question
What shall be disclosed if the Commodity Pool Operator or the major Commodity Trading Advisor receives office space or other soft dollar benefits from a Futures Merchant Commission?
Correct
The document must disclose that the arrangement may dispose of them to trade more actively if the Commodity Pool Operator or major Commodity Trading Advisor receives office space or other soft dollar benefits from the Futures Commission Merchant, RFED, or IB. The document must disclose that an incentive has been given to trade the account actively to increase the compensation that the employer will receive if the CPO or major CTA is an Associated Person of the Futures Commission Merchant. In its description, the conflicts whereby a person may directly or indirectly benefit shall be included from the maintenance of the pool’s account.
Incorrect
The document must disclose that the arrangement may dispose of them to trade more actively if the Commodity Pool Operator or major Commodity Trading Advisor receives office space or other soft dollar benefits from the Futures Commission Merchant, RFED, or IB. The document must disclose that an incentive has been given to trade the account actively to increase the compensation that the employer will receive if the CPO or major CTA is an Associated Person of the Futures Commission Merchant. In its description, the conflicts whereby a person may directly or indirectly benefit shall be included from the maintenance of the pool’s account.
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Question 3 of 10
3. Question
Under the diligence in opening accounts of security futures, which of the following information must be obtained by the members with respect to security futures customers?
I. Information includes the estimated net worth
II. Estimated annual income from all sources must be obtained by the member
III. The date of the complaint is recognized
IV. The member must obtain the marital status and number of dependentsCorrect
The following information must be seen in a shared account of all participants. Some information that is included in the employment status of the member if he/she is self-employed or retired, the member’s projected liquid net worth, his or her age, and the investment experience and familiarity of the member. Lastly, the objectives of investment such as income, growth, trading profits, and principal’s safety must be obtained by the member.
Incorrect
The following information must be seen in a shared account of all participants. Some information that is included in the employment status of the member if he/she is self-employed or retired, the member’s projected liquid net worth, his or her age, and the investment experience and familiarity of the member. Lastly, the objectives of investment such as income, growth, trading profits, and principal’s safety must be obtained by the member.
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Question 4 of 10
4. Question
If applicable, which of the following information must be in an account record of a customer?
I. Sources of background and financial information concerning the customer
II. The name of the registered representative
III. The identification of the complainant
IV. The estimated net worthCorrect
In addition, with the information that is needed in the diligence of opening accounts, account records of customers shall include the stated information above. Agreement of discretionary authorization on file, name, affiliation to the customer, and knowledge of person holding trading authority must be included. Additional information also includes the date disclosure document equipped to the customer, name of the principal approving account, dates of approval, and authentication of currency of account information.
Incorrect
In addition, with the information that is needed in the diligence of opening accounts, account records of customers shall include the stated information above. Agreement of discretionary authorization on file, name, affiliation to the customer, and knowledge of person holding trading authority must be included. Additional information also includes the date disclosure document equipped to the customer, name of the principal approving account, dates of approval, and authentication of currency of account information.
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Question 5 of 10
5. Question
Under the Security Futures Account Agreement, which of the following must be obtained by a member of the customer?
I. A written agreement that the customer is fully aware of
II. A separate central log must be obtained
III. A copy of the current security futures risk disclosure statement is received by the customer
IV. The date the complaint was receivedCorrect
Under the Security Futures in Opening of Accounts, specifically in the agreement of accounts, within 15 days after the account of the customer has been approved, the member shall obtain the following from the customer. The written agreement also includes that the customer agrees to be certain by the FINRA rules regarding the security futures trading. The customer shall also specify on the written agreement that the customer agrees not to breach security futures position limits.
Incorrect
Under the Security Futures in Opening of Accounts, specifically in the agreement of accounts, within 15 days after the account of the customer has been approved, the member shall obtain the following from the customer. The written agreement also includes that the customer agrees to be certain by the FINRA rules regarding the security futures trading. The customer shall also specify on the written agreement that the customer agrees not to breach security futures position limits.
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Question 6 of 10
6. Question
Under the Security Futures, how many days the background and financial information shall be sent to a customer for verification?
Correct
The background and financial data of every natural person whose account has been accepted for security futures must receive verification within 15 days after the account of the customer has been approved for trading of security futures. However, it shall not apply if the information and background are included in the account agreement of the customer or if the data of the customer has been confirmed by the member in connection with an options account.
Incorrect
The background and financial data of every natural person whose account has been accepted for security futures must receive verification within 15 days after the account of the customer has been approved for trading of security futures. However, it shall not apply if the information and background are included in the account agreement of the customer or if the data of the customer has been confirmed by the member in connection with an options account.
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Question 7 of 10
7. Question
In the maintenance of records of security futures, which of the following must be included in the central file?
I. The copy of the risk disclosure statement
II. The identification of the complainant
III. The date when the complaint was received
IV. The background and financial informationCorrect
In maintaining the records of security futures, every member shall preserve and have a separate central log, index, and files of complaints that are related to security futures. This central file must be placed at the principal place of business or principal office chosen by the member. Other information that must be included in the central file is the registered representative’s identification that is checking the account and the overall explanation of the matter complained of. Lastly, if any, the record of what action has been taken with respect to the complaint must be included.
Incorrect
In maintaining the records of security futures, every member shall preserve and have a separate central log, index, and files of complaints that are related to security futures. This central file must be placed at the principal place of business or principal office chosen by the member. Other information that must be included in the central file is the registered representative’s identification that is checking the account and the overall explanation of the matter complained of. Lastly, if any, the record of what action has been taken with respect to the complaint must be included.
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Question 8 of 10
8. Question
In maintaining records of security futures, which of the following statements is correct regarding the security futures-related complaint?
Correct
Under the maintenance of records for security futures, security futures-related complaints shall mean a written statement of a customer on behalf of a customer-related to security futures. This is acknowledged by a branch office of a member and shall be forwarded to the office. It is also stated that the central file is located not later than 30 days after the receipt by the branch office relates to the subject of the complaint. Lastly, for every security futures-related complaint, a copy must be kept at the branch office.
Incorrect
Under the maintenance of records for security futures, security futures-related complaints shall mean a written statement of a customer on behalf of a customer-related to security futures. This is acknowledged by a branch office of a member and shall be forwarded to the office. It is also stated that the central file is located not later than 30 days after the receipt by the branch office relates to the subject of the complaint. Lastly, for every security futures-related complaint, a copy must be kept at the branch office.
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Question 9 of 10
9. Question
Under the review and approval of promotional material, which of the following statements are correct as a requirement of the National Futures Association?
I. If the material is specified as security futures products, the review and approval must be done by a designated security futures principal.
II. The members must have written supervisory procedures for the production of promotional material and used by the associated persons and employees.
III. The members must document the review and approval of all promotional material in writing before it is used.
IV. The promotional material must be maintained together with a record of the review and approval of any supporting materials for any results for a period of five years.Correct
According to the National Futures Association’s requirement in review and approval of promotional material, the supervisory personnel, instead of the member, must document the review and approval of all promotional material in writing before using it by the users. The supervisory personnel is the officer, general partner, sole proprietor, branch office manager, or other supervisory employees other than the individual who prepared such material. The promotional material shall also be maintained on file for a period of five years from the date of its last use. It shall also have a readily accessible location for the convenience of its users. The members must also provide written supervisory procedures for promotional material used by the associated persons and employees.
Incorrect
According to the National Futures Association’s requirement in review and approval of promotional material, the supervisory personnel, instead of the member, must document the review and approval of all promotional material in writing before using it by the users. The supervisory personnel is the officer, general partner, sole proprietor, branch office manager, or other supervisory employees other than the individual who prepared such material. The promotional material shall also be maintained on file for a period of five years from the date of its last use. It shall also have a readily accessible location for the convenience of its users. The members must also provide written supervisory procedures for promotional material used by the associated persons and employees.
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Question 10 of 10
10. Question
Which of the following is correct regarding the use of high pressure as stated by the promotional material guide provided by the National Futures Association?
I. High-pressure sales tactics such as an associated person rushing a customer through account opening forms are prohibited.
II. High-pressure sales tactics such as an associated person inundating a customer with multiple communications as a sense of urgency to avoid missing out on predicted market movements are prohibited.
III. The use of electronic communications must specify information using bolded, capitalized, or highlighted text in an attempt to convert a false urgency to a customer.
IV. Telephone calls, emails, instant messages, and/or text messages made at unusual hours shall be prohibited for it annoys and harasses a customer into opening an account.Correct
Under the use of high pressure stated by the National Futures Association, any member or associated persons shall not use high-pressure sales tactics or make communications that are part of a high-pressure sales approach. This includes rushing a customer through account opening forms and glossing over the risk disclosure in haste to open the account. The use of electronic communications shall also be prohibited if it includes bolded, capitalized, or highlighted text or subject lines in an attempt to convey a false urgency to a customer. A member or associated person shall not threaten or intimidate a customer. One of the primary goals of the association is to protect the interest of a third person, especially the customer.
Incorrect
Under the use of high pressure stated by the National Futures Association, any member or associated persons shall not use high-pressure sales tactics or make communications that are part of a high-pressure sales approach. This includes rushing a customer through account opening forms and glossing over the risk disclosure in haste to open the account. The use of electronic communications shall also be prohibited if it includes bolded, capitalized, or highlighted text or subject lines in an attempt to convey a false urgency to a customer. A member or associated person shall not threaten or intimidate a customer. One of the primary goals of the association is to protect the interest of a third person, especially the customer.