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Question 1 of 10
1. Question
Which of the following statements are correct under the deceptive and misleading communications with the public as stated under the rules of the National Futures Association?
Correct
Deceptive and misleading communication is prohibited in communications with the public. The day-to-day communications and promotional material are included in communications with the public. A communication may either be deceptive or misleading even if no customer or potential customer is actually deceived. This depends on the content and the overall impression regardless if it is a day-to-day communication or promotional material. There are certain standards in identifying the two types of communication. These standards are held by the member or associated person responsible for those statements. Day-to-day communications which are generally deceptive are also deceptive in promotional material.
Incorrect
Deceptive and misleading communication is prohibited in communications with the public. The day-to-day communications and promotional material are included in communications with the public. A communication may either be deceptive or misleading even if no customer or potential customer is actually deceived. This depends on the content and the overall impression regardless if it is a day-to-day communication or promotional material. There are certain standards in identifying the two types of communication. These standards are held by the member or associated person responsible for those statements. Day-to-day communications which are generally deceptive are also deceptive in promotional material.
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Question 2 of 10
2. Question
According to the National Futures Association, which of the following are within the definition of promotional material?
I. Promotional materials may say or imply that commodity interest trading is appropriate for everyone.
II. Promotional materials include deceptive or misleading communications with the public.
III. Promotional materials are standardized oral presentation which is disseminated or directed to the public concerning a commodity interest transaction.
IV. Promotional materials are standardized forms of a report, letter, electronic communication which is directed to the public concerning a commodity interest agreement.Correct
Promotional materials are any written material disseminated or directed to the public for the purpose of soliciting a commodity interest transaction, agreement, or account. These are the standardized forms of a letter, reports, electronic communications, circular, memorandum, presentation, or publication which purposely disseminates and directs to the public concerning a commodity interest account, agreement, or transaction. This can also be formed through any standardized oral presentation or any communication for publication in any newspaper, magazine, or similar medium. It may also be for broadcast over television, radio, internet, as long as it disseminates or directs the public a commodity interest account, agreement, or transaction.
Incorrect
Promotional materials are any written material disseminated or directed to the public for the purpose of soliciting a commodity interest transaction, agreement, or account. These are the standardized forms of a letter, reports, electronic communications, circular, memorandum, presentation, or publication which purposely disseminates and directs to the public concerning a commodity interest account, agreement, or transaction. This can also be formed through any standardized oral presentation or any communication for publication in any newspaper, magazine, or similar medium. It may also be for broadcast over television, radio, internet, as long as it disseminates or directs the public a commodity interest account, agreement, or transaction.
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Question 3 of 10
3. Question
Under the guide to communications with the public provided by the National Futures Association, which of the following are the general standards?
I. Under its provision, communications with the public must involve high-pressure sales tactics.
II. Under its provision, communications with the public may not be deceptive or misleading.
III. Under its provision, communications with the public may not imply that commodity interest trading, which includes forex trading, is appropriate for everyone.
IV. Under its provision, communications with the public may not be part of the high-pressure approach.Correct
The guide for communications with the public is provided by the National Futures Association to avoid having miscommunications with the third parties and customers involved in the transaction. Communications shall not be deceptive or misleading for it will cause misunderstanding for transactions, poor customer service, and be considered as irresponsible service. It must also not use any high-pressure sales tactics such as rushing and pressuring the customer to purchase, sell, or trade the product. This will make the entity look desperate and cheaper in selling the products. It shall also not be a part of a high-pressure approach. This communication with the public and promotional material must not say or imply that commodity interest trading, which includes forex trading, is appropriate to everyone.
Incorrect
The guide for communications with the public is provided by the National Futures Association to avoid having miscommunications with the third parties and customers involved in the transaction. Communications shall not be deceptive or misleading for it will cause misunderstanding for transactions, poor customer service, and be considered as irresponsible service. It must also not use any high-pressure sales tactics such as rushing and pressuring the customer to purchase, sell, or trade the product. This will make the entity look desperate and cheaper in selling the products. It shall also not be a part of a high-pressure approach. This communication with the public and promotional material must not say or imply that commodity interest trading, which includes forex trading, is appropriate to everyone.
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Question 4 of 10
4. Question
Under the guide for communications with public and promotional material provided by the National Futures Association, which of the following are examples of promotional material?
I. An unprepared sales script, whether actually followed in making sales presentations or training purposes
II. Sales or educational literature distributed to the public
III. Seminar presentations and any advertising designed to discourage attendance at such seminars
IV. Newsletters, reports, and hotlines for guiding the public with information and factsCorrect
The seminar presentations and advertising encouraging the public to attend the seminar, the prepared sales script in making sales presentations or for training purposes, and the newsletters, reports, and hotlines are examples of promotional material dedicated to the public. This includes sales or educational literature distributed to the public prepared either by the member, employees, or other NFA members or non-members. This also includes the standardized phone solicitations including the cold calls. Promotional materials use the internets, such as websites, social media, podcasts, videos, forums, and ranking services.
Incorrect
The seminar presentations and advertising encouraging the public to attend the seminar, the prepared sales script in making sales presentations or for training purposes, and the newsletters, reports, and hotlines are examples of promotional material dedicated to the public. This includes sales or educational literature distributed to the public prepared either by the member, employees, or other NFA members or non-members. This also includes the standardized phone solicitations including the cold calls. Promotional materials use the internets, such as websites, social media, podcasts, videos, forums, and ranking services.
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Question 5 of 10
5. Question
What shall accompany the possibility of profit under the guide for communications with the public provided by the National Futures Association?
Correct
An equally prominent discussion of the risk of loss must accompany the possibility of profit. The statements of opinion must be identifiable as opinions and must have a reasonable basis in fact. The factual statements must be true and must be able to support the accuracy of each factual statements by the members. On the other hand, the actual past trading profits must be accompanied by a statement that past results that are not necessarily indicative of future results.
Incorrect
An equally prominent discussion of the risk of loss must accompany the possibility of profit. The statements of opinion must be identifiable as opinions and must have a reasonable basis in fact. The factual statements must be true and must be able to support the accuracy of each factual statements by the members. On the other hand, the actual past trading profits must be accompanied by a statement that past results that are not necessarily indicative of future results.
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Question 6 of 10
6. Question
Which of the following is correct regarding the appropriateness of trading as stated by the National Futures Association?
Correct
In the appropriateness of trading, it shall not be implied by the communications with the public or promotional material that the commodity interest trading is appropriate for everyone. National Futures Association has discovered that using testimonials from customers which are unsophisticated, stating “anyone can do it, my mother can do it,” and calling trades “no-brainers” is a violation in the provision of the National Futures Association.
Incorrect
In the appropriateness of trading, it shall not be implied by the communications with the public or promotional material that the commodity interest trading is appropriate for everyone. National Futures Association has discovered that using testimonials from customers which are unsophisticated, stating “anyone can do it, my mother can do it,” and calling trades “no-brainers” is a violation in the provision of the National Futures Association.
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Question 7 of 10
7. Question
In preparing for content of communication with the public, which of the following discussion regarding the profits shall take many forms?
I. The statements or images which do not infer profits are included in the discussion of profits.
II. The discussion of opportunity is included in the discussion of profits.
III. The graphs depicting the growth of an account are included in the discussion of the profits.
IV. The statements or images that imply or infer their profit is included in the discussion of the profits.Correct
In the content of the communication, a balance profit potential with the risk of loss shall be indicated. A discussion of profit may take many forms including the discussion of opportunity, past performance results, graphs depicting the growth of an account, and statements or images that imply or infer profit. To analyze the overall piece, evaluating balance is a requirement for a member. In addition, if members and associated persons solicit customers to trade forex, they may not solicit with the basis of leverage available unless they could balance the discussion regarding leverage by closely preceding or following it with an equally prominent disclosure that increased leverage increases risk.
Incorrect
In the content of the communication, a balance profit potential with the risk of loss shall be indicated. A discussion of profit may take many forms including the discussion of opportunity, past performance results, graphs depicting the growth of an account, and statements or images that imply or infer profit. To analyze the overall piece, evaluating balance is a requirement for a member. In addition, if members and associated persons solicit customers to trade forex, they may not solicit with the basis of leverage available unless they could balance the discussion regarding leverage by closely preceding or following it with an equally prominent disclosure that increased leverage increases risk.
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Question 8 of 10
8. Question
Which of the following are included in the guidelines for hypothetical results?
I. The promotional material is intended only for the specific audiences.
II. If the member has less than three years of experience in directing customer accounts, the past performance of the member’s proprietary trading must be in the material.
III. In hypothetical results, comparable information must be included regarding the past performance of all customer accounts.
IV. The hypothetical results cannot be presented for any trading program that has at least three months of the actual client or proprietary trading results.Correct
In the hypothetical results, it cannot be presented for any trading program that has a least three months of the actual client or proprietary trading results. It must also include comparable information regarding the past performance of all customer accounts directed by the member. It shall indicate a power of attorney or letter of direction over the past five years. There are circumstances in excluding the performance of actual customer accounts that would cause the material to be misleading. However, client performance would still be shown regardless of the intended audience.
Incorrect
In the hypothetical results, it cannot be presented for any trading program that has a least three months of the actual client or proprietary trading results. It must also include comparable information regarding the past performance of all customer accounts directed by the member. It shall indicate a power of attorney or letter of direction over the past five years. There are circumstances in excluding the performance of actual customer accounts that would cause the material to be misleading. However, client performance would still be shown regardless of the intended audience.
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Question 9 of 10
9. Question
Which of the following is within the guidelines which should be considered when using leverage examples?
Correct
In demonstrating the leverage that is available in commodity interest trading, many members and associated persons use examples. This promotional material utilizes the term “leverage” through a discussion of the relationship between margin and the product being traded. There are certain guidelines for using leverage examples. When using option-related leverage examples to promote long options, when a member or associated person’s customer base does not routinely exercise options, is misleading. Using leverage examples that suggest that prospective customers do not support a claim regarding their likeliness to earn a profit is considered misleading.
Incorrect
In demonstrating the leverage that is available in commodity interest trading, many members and associated persons use examples. This promotional material utilizes the term “leverage” through a discussion of the relationship between margin and the product being traded. There are certain guidelines for using leverage examples. When using option-related leverage examples to promote long options, when a member or associated person’s customer base does not routinely exercise options, is misleading. Using leverage examples that suggest that prospective customers do not support a claim regarding their likeliness to earn a profit is considered misleading.
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Question 10 of 10
10. Question
Which of the following statements is considered deceptive under the profit projections?
Correct
If the tremendous profits are being highlighted that will result from projected price movements, such price movements would be dramatic and be considered deceptive or misleading. Statements such as “turn $1,000 into $4,000” are misleading provided that the member or associated person can demonstrate to National Futures Association that this is representative of its overall customer performance. For leverage examples, there are also certain guidelines in determining whether an action is deceptive and misleading which violates the provision of the National Futures Association.
Incorrect
If the tremendous profits are being highlighted that will result from projected price movements, such price movements would be dramatic and be considered deceptive or misleading. Statements such as “turn $1,000 into $4,000” are misleading provided that the member or associated person can demonstrate to National Futures Association that this is representative of its overall customer performance. For leverage examples, there are also certain guidelines in determining whether an action is deceptive and misleading which violates the provision of the National Futures Association.