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Question 1 of 11
1. Question
What is Opening Writing Transaction mean?
Correct
According to FINRA rule 2360, The term “opening writing transaction” means an option transaction in which the seller’s (writer’s) intention is to create or increase a short position in the series of options involved in such transaction. While the term “long position” means the number of outstanding option contracts of a given series of options held by a person (purchaser) , the term “long position” means the number of outstanding option contracts of a given series of options held by a person (purchaser) and the term “option transaction” means a transaction effected by a member for the purchase or sale of an option contract, or for the closing out of a long or short position in such option.
Incorrect
According to FINRA rule 2360, The term “opening writing transaction” means an option transaction in which the seller’s (writer’s) intention is to create or increase a short position in the series of options involved in such transaction. While the term “long position” means the number of outstanding option contracts of a given series of options held by a person (purchaser) , the term “long position” means the number of outstanding option contracts of a given series of options held by a person (purchaser) and the term “option transaction” means a transaction effected by a member for the purchase or sale of an option contract, or for the closing out of a long or short position in such option.
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Question 2 of 11
2. Question
What is Unit mean?
Correct
Under FINRA rule 2360, Unit mean is the smallest interest in a particular security which can be purchased or sold, such as one share of stock, one warrant, one bond, and so forth. While the term “short position” means the number of outstanding option contracts of a given series of options with respect to which a person is obligated as a writer (seller), 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 and the term “option transaction” means a transaction effected by a member for the purchase or sale of an option contract, or for the closing out of a long or short position in such option.
Incorrect
Under FINRA rule 2360, Unit mean is the smallest interest in a particular security which can be purchased or sold, such as one share of stock, one warrant, one bond, and so forth. While the term “short position” means the number of outstanding option contracts of a given series of options with respect to which a person is obligated as a writer (seller), 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 and the term “option transaction” means a transaction effected by a member for the purchase or sale of an option contract, or for the closing out of a long or short position in such option.
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Question 3 of 11
3. Question
. What are the requirement and purposes of Rule facts “essential” to “knowing the customer”?
I. Effectively service the customer’s account
II. Act in accordance with any special handling instructions for the account
III. Understand the authority of each person acting on behalf of the customer
IV. Comply with applicable laws, regulations, and rulesCorrect
According to FINRA rule 2090 under supplementary material, the purpose of this Rule, facts “essential” to “knowing the customer” are those required to
(a) effectively service the customer’s account,
(b) act in accordance with any special handling instructions for the account,
(c) understand the authority of each person acting on behalf of the customer, and
(d) comply with applicable laws, regulations, and rules.Incorrect
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Question 4 of 11
4. Question
Which of the following are includes in customer’s investment profile?
I. The customer’s age
II. Other investments
III. Tax status
IV. Investment experienceCorrect
According to FINRA rule 2111 under suitability, a customer’s investment profile includes, but is not limited to, the customer’s age, other investments, tax status and investment objectives information the customer may disclose to the member or associated person in connection with such recommendation.
Incorrect
According to FINRA rule 2111 under suitability, a customer’s investment profile includes, but is not limited to, the customer’s age, other investments, tax status and investment objectives information the customer may disclose to the member or associated person in connection with such recommendation.
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Question 5 of 11
5. Question
Which of the following is true?
Correct
Under FINRA rule 2111 suitability, a member or an associated person must have a reasonable basis to believe that a recommended transaction or investment strategy involving a security or securities is suitable for the customer, based on the information obtained through the reasonable diligence of the member or associated person to ascertain the customer’s investment profile.
Incorrect
Under FINRA rule 2111 suitability, a member or an associated person must have a reasonable basis to believe that a recommended transaction or investment strategy involving a security or securities is suitable for the customer, based on the information obtained through the reasonable diligence of the member or associated person to ascertain the customer’s investment profile.
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Question 6 of 11
6. Question
Which phrase is to be interpreted broadly and would include, among other things, an explicit recommendation to hold a security or securities?
Correct
Under FINRA rule 2111 suitability under recommend strategies, the phrase “investment strategy involving a security or securities” used in this Rule is to be interpreted broadly and would include, among other things, an explicit recommendation to hold a security or securities. Not implicit in all member and associated person relationships, fair dealing and is intended to promote ethical sales and practices and high standards of professional conduct.
Incorrect
Under FINRA rule 2111 suitability under recommend strategies, the phrase “investment strategy involving a security or securities” used in this Rule is to be interpreted broadly and would include, among other things, an explicit recommendation to hold a security or securities. Not implicit in all member and associated person relationships, fair dealing and is intended to promote ethical sales and practices and high standards of professional conduct.
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Question 7 of 11
7. Question
What are the particular recommendation in general financial and investment information?
I. Basic investment concepts
II. Historic differences in the return of asset classes
III. Effects of inflation
IV. Assessment of a customer’s investment profileCorrect
Under FINRA rule 2111 suitability under recommend strategies, general financial and investment information
(a) Basic investment concepts
(b) Historic differences in the return of asset classes
(c) Effects of inflation
(d) Assessment of a customer’s investment profileIncorrect
Under FINRA rule 2111 suitability under recommend strategies, general financial and investment information
(a) Basic investment concepts
(b) Historic differences in the return of asset classes
(c) Effects of inflation
(d) Assessment of a customer’s investment profile -
Question 8 of 11
8. Question
Which of the following are the main obligations of components suitability?
I. Reasonable-basis suitability
II. Customer-specific suitability
III. Quantitative suitability
IV. Profile suitabilityCorrect
Under FINRA rule 2111 the following are the components of suitability main obligations
(a) Reasonable-basis suitability
(b) Customer-specific suitability
(c) Quantitative suitabilityIncorrect
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Question 9 of 11
9. Question
Which of the following are prohibited under FINRA rule 2111 in customer’s financial ability?
I) A member or associated person from recommending a transaction or investment strategy involving a security
II) A member or associated person has a reasonable not basis to believe that the customer has the financial ability to meet such a commitment
III) A member or associated person from recommending a transaction or investment strategy involving a security
IV) A non-member or non-associated person has a reasonable basis to believe that the customer has the financial ability to meet such a commitmentCorrect
The following are prohibited under FINRA rule 2111 in customer’s financial ability:
(a) A member or associated person from recommending a transaction or investment strategy involving a security
(b) A member or associated person has a reasonable not basis to believe that the customer has the financial ability to meet such a commitmentIncorrect
The following are prohibited under FINRA rule 2111 in customer’s financial ability:
(a) A member or associated person from recommending a transaction or investment strategy involving a security
(b) A member or associated person has a reasonable not basis to believe that the customer has the financial ability to meet such a commitment -
Question 10 of 11
10. Question
Which of the following factor are delineated in Rule 2111
I. Regarding a customer’s investment profile generally are relevant to a determination.
II. A recommendation is suitable for a particular customer
III. Each factor may vary depending on the facts and circumstances of the particular case
IV. Firms can test the modifications to support the factor reporting requirements.Correct
According to FINRA rule 2111, the following factor are delineated to this rule:
(a) Regarding a customer’s investment profile generally are relevant to a determination.
(b) A recommendation is suitable for a particular customer
(c) Each factor may vary depending on the facts and circumstances of the particular caseIncorrect
According to FINRA rule 2111, the following factor are delineated to this rule:
(a) Regarding a customer’s investment profile generally are relevant to a determination.
(b) A recommendation is suitable for a particular customer
(c) Each factor may vary depending on the facts and circumstances of the particular case -
Question 11 of 11
11. Question
Which of the following factor are delineated in Rule 2111
I. Regarding a customer’s investment profile generally are relevant to a determination.
II. A recommendation is suitable for a particular customer
III. Each factor may vary depending on the facts and circumstances of the particular case
IV. Firms can test the modifications to support the factor reporting requirements.Correct
Incorrect
According to FINRA rule 2111, the following factor are delineated to this rule:
a). Regarding a customer’s investment profile generally are relevant to a determination.
b). A recommendation is suitable for a particular customer
c). Each factor may vary depending on the facts and circumstances of the particular case