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Question 1 of 9
1. Question
Which of the following security underlying option has not 1,000,000 contracts for position limit?
Correct
According to FINRA rule 2360, the following security underlying option has position limit of 1,000,000 contract : The iShares Russell 2000 ETF (IWM), he iShares MSCI Emerging Markets ETF (EEM) and iShares China Large-Cap ETF (FXI). While the PowerShares QQQ Trust (QQQ) has 1,800,000 contracts.
Incorrect
According to FINRA rule 2360, the following security underlying option has position limit of 1,000,000 contract : The iShares Russell 2000 ETF (IWM), he iShares MSCI Emerging Markets ETF (EEM) and iShares China Large-Cap ETF (FXI). While the PowerShares QQQ Trust (QQQ) has 1,800,000 contracts.
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Question 2 of 9
2. Question
Which of the following are designate and identify to FINRA?
I. By name
II. By title
III. By house lot number
IV. By Email AddressCorrect
According to FINRA rule 3310 the following are designate and identify to FINRA:
(a) By name
(b) By title
(c) By email addressIncorrect
According to FINRA rule 3310 the following are designate and identify to FINRA:
(a) By name
(b) By title
(c) By email address -
Question 3 of 9
3. Question
What type of portfolio is +/- 10% of Up / Down Market Move (High & Low Valuation Points) ?
Correct
According to FINRA rule 4210 the type of portfolio that has +/- 10% of Up / Down Market Move (High & Low Valuation Points) is Non-High Capitalization, Broad-based Market Index3
Incorrect
According to FINRA rule 4210 the type of portfolio that has +/- 10% of Up / Down Market Move (High & Low Valuation Points) is Non-High Capitalization, Broad-based Market Index3
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Question 4 of 9
4. Question
Which of the following is true in Coversions?
Correct
Incorrect
Under FINRA rule 2360, Conversions is a short call position accompanied by a long-put position where the short call expires with the long put, and the strike price of the short call and long put is equal, and where each short call and long put position is hedged with 100 shares. On the given choices b, c and d is not correct.
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Question 5 of 9
5. Question
Which of the following requirement does disclosure documents?
I. General explanatory information relating to the mechanics of buying
II. Writing and exercising options
III. Exercise price of an option contract multiplied by the number of units
IV. The holder of the option has the rightCorrect
Incorrect
According to FINRA rule 2360, following are the requirements for disclosure documents
(a) General explanatory information relating to the mechanics of buying
(b) Writing and exercising options -
Question 6 of 9
6. Question
Who are the following can conduct the annual independent testing compliance?
I. Member personnel
II. Qualified outside party unless the member does not execute transactions for customers
III. Police personnel
IV. Bank PersonnelCorrect
According to FINRA rule 2360, the following can conduct the annual independent testing compliance
(a) Member personnel
(b) Qualified outside party unless the member does not execute transactions for customersIncorrect
According to FINRA rule 2360, the following can conduct the annual independent testing compliance
(a) Member personnel
(b) Qualified outside party unless the member does not execute transactions for customers -
Question 7 of 9
7. Question
What is Uncovered mean in respect of a short position in an option contract?
Correct
Under FINRA rule 2360, The term “uncovered” in respect of a short position in an option contract means the short position is not covered. While the term “underlying index” means an index underlying a Standardized Index Option or a Conventional Index Option, the term “type of option” means the classification of an option contract as either a put or a call and the term “series of options” means all option contracts of the same class of options having the same exercise price and expiration date and which cover the same number of units of the underlying security or index.
Incorrect
Under FINRA rule 2360, The term “uncovered” in respect of a short position in an option contract means the short position is not covered. While the term “underlying index” means an index underlying a Standardized Index Option or a Conventional Index Option, the term “type of option” means the classification of an option contract as either a put or a call and the term “series of options” means all option contracts of the same class of options having the same exercise price and expiration date and which cover the same number of units of the underlying security or index.
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Question 8 of 9
8. Question
What is the Options Contract Equivalent of the Net Delta mean?
Correct
Options Contract Equivalent of the Net Delta
Under FINRA rule 2360, the Options Contract Equivalent of the Net Delta is the net delta divided by the number of shares underlying the options contract. While the term “outstanding” in respect of an option contract means an option contract which has neither been the subject of a closing sale transaction nor has been exercised nor reached its expiration date, Net Delta is the number of shares that must be held (either long or short) to mitigate the possibility that the value of the equity options position will change with gradual adjustments in the security price underpinning the option position and the term “type of option” is the classification of an option contract as either a put or a call.Incorrect
Options Contract Equivalent of the Net Delta
Under FINRA rule 2360, the Options Contract Equivalent of the Net Delta is the net delta divided by the number of shares underlying the options contract. While the term “outstanding” in respect of an option contract means an option contract which has neither been the subject of a closing sale transaction nor has been exercised nor reached its expiration date, Net Delta is the number of shares that must be held (either long or short) to mitigate the possibility that the value of the equity options position will change with gradual adjustments in the security price underpinning the option position and the term “type of option” is the classification of an option contract as either a put or a call. -
Question 9 of 9
9. Question
What is the Class of Options Mean?
Correct
Incorrect
Class of Options Mean
According to FINRA rule 2360, the meaning of Class of Options Mean is All option contracts of the same type of option covering the same underlying security or index. While the term “aggregate exercise price” means the exercise price of an option contract multiplied by the number of units of the underlying security covered by such option contract, the term “closing sale transaction” means an option transaction in which the seller’s intention is to reduce or eliminate a long position in the series of options involved in such transaction and the term “conventional index option” is any options contract not issued, or subject to issuance, by The Options Clearing Corporation, or an OCC Cleared OTC Option, that, as of the trade date, overlies a basket or index of securities.