FINRA Series 54 - Pauline - Quiz 5.new
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Question 1 of 10
1. Question
With respect to swaps required to be approved by the qualified independent representative, what shall be done to comply with the requirements of a special entity’s derivatives policy?
Correct
Evaluation of risks, fair pricing, and appropriateness of swap must be done by a qualified independent representative with respect to any swap required to be approved by them. The monitoring of the performance of the swap is also a duty of a qualified independent representative, but it is in line with the swap “previously” approved by the qualified independent representative. It is important to act in the best interests of the entity represented, wherein disclosing material conflicts could affect the judgment or decision making on behalf o the special entity.
Incorrect
Evaluation of risks, fair pricing, and appropriateness of swap must be done by a qualified independent representative with respect to any swap required to be approved by them. The monitoring of the performance of the swap is also a duty of a qualified independent representative, but it is in line with the swap “previously” approved by the qualified independent representative. It is important to act in the best interests of the entity represented, wherein disclosing material conflicts could affect the judgment or decision making on behalf o the special entity.
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Question 2 of 10
2. Question
According to the SEC, what shall be regulated by the Commodity Futures Trading Commission regarding the exchange trading of commodities?
Correct
According to the Regulatory Jurisdiction of Commodity Futures Trading Commission, it is admitted by the SEC that the CFTC shall regulate exchange trading of commodity options on futures contracts. The regulation of trading of commodity options on physical commodities is less clear, therefore, options on futures contracts are requested to be regulated. These commodities are also securities wherein treasury bills and bonds are commodities because future contracts are traded on them.
Incorrect
According to the Regulatory Jurisdiction of Commodity Futures Trading Commission, it is admitted by the SEC that the CFTC shall regulate exchange trading of commodity options on futures contracts. The regulation of trading of commodity options on physical commodities is less clear, therefore, options on futures contracts are requested to be regulated. These commodities are also securities wherein treasury bills and bonds are commodities because future contracts are traded on them.
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Question 3 of 10
3. Question
Which of the following is not subject to the Commodity Futures Trading Commission jurisdiction unless conducted on a board of trade?
Correct
It is stated in the Regulatory Jurisdiction of Commodity Futures Trading Commission that the exempted security transactions involving commodity futures are not subject to the jurisdiction unless conducted on a board of trade. The claim of the jurisdiction of the CFTC over commodities or exempted securities extends only to the transactions which involve commodity futures contracts which are exchange-traded.
Incorrect
It is stated in the Regulatory Jurisdiction of Commodity Futures Trading Commission that the exempted security transactions involving commodity futures are not subject to the jurisdiction unless conducted on a board of trade. The claim of the jurisdiction of the CFTC over commodities or exempted securities extends only to the transactions which involve commodity futures contracts which are exchange-traded.
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Question 4 of 10
4. Question
Under the Commodity Exchange Act of 1936, what did Congress enacted regarding put and call options for all commodities?
Correct
It is stated under the Commodity Exchange Act of 1936 that Congress enacted a total ban on put and call options for all commodities. This ban is retained by the CFTC for specifically enumerated commodities but provided for options trading on non-enumerated commodities wherein the mentioned trading did not contradict the rule, regulation, or order of the CFTC. The ninety-fifth Congress however prohibited the FTA any commodity-option transaction involving non-enumerated commodities unless there is approval from the Congress.
Incorrect
It is stated under the Commodity Exchange Act of 1936 that Congress enacted a total ban on put and call options for all commodities. This ban is retained by the CFTC for specifically enumerated commodities but provided for options trading on non-enumerated commodities wherein the mentioned trading did not contradict the rule, regulation, or order of the CFTC. The ninety-fifth Congress however prohibited the FTA any commodity-option transaction involving non-enumerated commodities unless there is approval from the Congress.
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Question 5 of 10
5. Question
Which of the following is correct regarding the claims of SEC regarding jurisdictional authority over both call and put options?
Correct
According to the SEC, a call option on security gives a right to the owner to purchase the underlying security. On the other hand, a put option gives the holder the right to sell the underlying interest. The SEC claims jurisdictional authority over both call and put option wherein they describe security as any right to purchase any enumerated security. However, under this jurisdiction, the statute does not clearly support the argument of the SEC. The general rule is to purchase or sell securities by a potential plaintiff to obtain standing in the SEC rule.
Incorrect
According to the SEC, a call option on security gives a right to the owner to purchase the underlying security. On the other hand, a put option gives the holder the right to sell the underlying interest. The SEC claims jurisdictional authority over both call and put option wherein they describe security as any right to purchase any enumerated security. However, under this jurisdiction, the statute does not clearly support the argument of the SEC. The general rule is to purchase or sell securities by a potential plaintiff to obtain standing in the SEC rule.
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Question 6 of 10
6. Question
Which of the following are requirements for each municipal advisor regarding the rules and forms designed for the need and objectives of the rules?
I. To provide the risk assessment made by the independent advisors
II. To provide basic identifying information
III. To provide the facts regarding disciplinary history and conflicts of interest
IV. To provide a description of the activities of each municipal advisorCorrect
According to the Final Rule for Registration of Municipal Advisors, the rules and forms require each municipal advisor to provide basic identifying information, a description of their activities, and all certain facts regarding disciplinary history and conflicts of interest. Providing this information will aid municipal entities in engaging in transactions with the municipal advisors where they would participate more in transactions of municipal securities offerings in which the advisors provide advisory services.
Incorrect
According to the Final Rule for Registration of Municipal Advisors, the rules and forms require each municipal advisor to provide basic identifying information, a description of their activities, and all certain facts regarding disciplinary history and conflicts of interest. Providing this information will aid municipal entities in engaging in transactions with the municipal advisors where they would participate more in transactions of municipal securities offerings in which the advisors provide advisory services.
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Question 7 of 10
7. Question
Which of the following statements are true regarding the “small business” under the Final Rule for the Registration of Municipal Securities?
I. A small business is defined for the purposes of entities that provide financial investments and related activities.
II. A small business has annual receipts of less than $7 million during the preceding fiscal year with no affiliation with any person that is not a small business.
III. A small business is the same as a small business concern under the Small Business Act unless an agency establishes one or more definitions of this term.
IV. The small business and small organization are defined for purposes of municipal advisors.Correct
A small business is defined for the purposes of entities that provide financial investments and related activities. These organizations had annual receipts of less than $7 million during the preceding fiscal year. They are not affiliated with any person that is not a small business or small organization. A small business is not defined for the purposes of municipal advisors. A small business is also referred to as a small organization performing operating activities and other financial-related activities.
Incorrect
A small business is defined for the purposes of entities that provide financial investments and related activities. These organizations had annual receipts of less than $7 million during the preceding fiscal year. They are not affiliated with any person that is not a small business or small organization. A small business is not defined for the purposes of municipal advisors. A small business is also referred to as a small organization performing operating activities and other financial-related activities.
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Question 8 of 10
8. Question
Which of the following statements are correct regarding the reporting, recordkeeping, and other compliance requirements under the Final Rule for the Registration of Municipal Advisors?
I. The Form MA-I must be filed by a third party other than a municipal advisor on their behalf.
II. A municipal advisor is required to complete Form MA and file the form electronically with the Commission.
III. A person applying as a municipal advisor must complete Form MA-I with respect to each natural person associated with the municipal advisor.
IV. Each Form MA is considered filed after submitting it to the associated municipal advisor.Correct
Under the Final Rule for the Registration of Municipal Advisors, a municipal advisor is required to complete the Form MA and file it electronically with the Commission. An applicant must complete the Form MA-I with respect to each natural person associated with the municipal advisor and engages in municipal advisory activities on its behalf. The Form MA-I must also be filed electronically with the Commission. It would be considered filed upon the acceptance of the Commission of the required documents including Form MA and Form MA-I.
Incorrect
Under the Final Rule for the Registration of Municipal Advisors, a municipal advisor is required to complete the Form MA and file it electronically with the Commission. An applicant must complete the Form MA-I with respect to each natural person associated with the municipal advisor and engages in municipal advisory activities on its behalf. The Form MA-I must also be filed electronically with the Commission. It would be considered filed upon the acceptance of the Commission of the required documents including Form MA and Form MA-I.
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Question 9 of 10
9. Question
Which of the following are alternatives in considering whether to adopt the final rules and forms by the Commission?
I. The establishment of differing compliance or reporting requirements or timetables that take into account the resources available to small municipal advisors.
II. The use of performance rather than design standards.
III. The clarification, consolidation, or simplification of compliance and reporting requirements under the rules for such small advisors.
IV. The non-exempted coverage of the rules for such small advisors.Correct
According to the Final Rule for the Registration of Municipal Advisors, the following are the alternatives in considering whether to adopt the final rules and forms: (1) the establishment of differing compliance, reporting requirements, or timetables taking into account the resources available to municipal advisors, (2) clarification, consolidation, or simplification of compliance and reporting requirements, (3) the use of performance rather than design standards, and (3) an exemption from coverage of the rules. Specifying different requirements for small advisors under the final rules and forms would be inconsistent, therefore, this must apply equally to clients of both large and small municipal advisory firms.
Incorrect
According to the Final Rule for the Registration of Municipal Advisors, the following are the alternatives in considering whether to adopt the final rules and forms: (1) the establishment of differing compliance, reporting requirements, or timetables taking into account the resources available to municipal advisors, (2) clarification, consolidation, or simplification of compliance and reporting requirements, (3) the use of performance rather than design standards, and (3) an exemption from coverage of the rules. Specifying different requirements for small advisors under the final rules and forms would be inconsistent, therefore, this must apply equally to clients of both large and small municipal advisory firms.
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Question 10 of 10
10. Question
Which of the following are required documents enumerated under the Final Rule for the Registration of Municipal Advisors?
I. Any documents relating to criminal actions, as specified under the Form MA and Form MA-I with other supporting documentation.
II. A manually-signed Form MA-NR for each resident for whom such form is required.
III. A manually-signed Form MA-NR for each non-resident for whom such form is required.
IV. Any written document authorizing a signatory to sign a Form MA-NR.Correct
According to the Final Rule for the Registration of Municipal Advisors, the following are required to be submitted to the Commission: (1) the documents regarding criminal actions, (2) manually-signed Form MA-NR for each non-resident, (3) any written document authorizing a signatory to sign a Form MA-NR, (4) any written contractual agreements, and (5) the required option of counsel for non-resident municipal advisory firms. In completing certain items in Form MA and Form MA-I, the Commission provided general instructions and explanations for this.
Incorrect
According to the Final Rule for the Registration of Municipal Advisors, the following are required to be submitted to the Commission: (1) the documents regarding criminal actions, (2) manually-signed Form MA-NR for each non-resident, (3) any written document authorizing a signatory to sign a Form MA-NR, (4) any written contractual agreements, and (5) the required option of counsel for non-resident municipal advisory firms. In completing certain items in Form MA and Form MA-I, the Commission provided general instructions and explanations for this.