FINRA Series 54 - Pauline - Quiz 4.new
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Question 1 of 10
1. Question
Where shall the underwriter exclusion apply under the final rule for Registration of Municipal Advisors?
Correct
According to the Commission, they proposed to apply the underwriter exclusion to a broker, dealer, or municipal securities dealer serving as an underwriter in connection with the issuance of municipal securities. However, the term “municipal advisor” does not include broker, dealer, or municipal securities dealer serving as an underwriter. The Commission further proposed that the exclusion is not applicable for persons acting in a capacity other than as an underwriter. This includes advice with respect to the investment of bond proceeds or municipal derivatives.
Incorrect
According to the Commission, they proposed to apply the underwriter exclusion to a broker, dealer, or municipal securities dealer serving as an underwriter in connection with the issuance of municipal securities. However, the term “municipal advisor” does not include broker, dealer, or municipal securities dealer serving as an underwriter. The Commission further proposed that the exclusion is not applicable for persons acting in a capacity other than as an underwriter. This includes advice with respect to the investment of bond proceeds or municipal derivatives.
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Question 2 of 10
2. Question
When shall the association’s “endorsement” not be required to register as a municipal advisor?
Correct
According to the final rule for Registration of Municipal Advisors, if an endorsement of the association qualifies as “advertising” by a broker, dealer, municipal securities dealer, or municipal advisor pursuant to the Rule 15B of the Exchange Act, it is not a requirement to register as a municipal advisor. This determination would be based on certain facts and circumstances to be discussed by the persons involved. The Commission also believes that it is not appropriate to provide a blanket exemption to associations not taking advantage of the Rule for the purpose of being directly or indirectly compensated for recommending a broker, dealer, municipal advisor, or investment adviser to municipal entities.
Incorrect
According to the final rule for Registration of Municipal Advisors, if an endorsement of the association qualifies as “advertising” by a broker, dealer, municipal securities dealer, or municipal advisor pursuant to the Rule 15B of the Exchange Act, it is not a requirement to register as a municipal advisor. This determination would be based on certain facts and circumstances to be discussed by the persons involved. The Commission also believes that it is not appropriate to provide a blanket exemption to associations not taking advantage of the Rule for the purpose of being directly or indirectly compensated for recommending a broker, dealer, municipal advisor, or investment adviser to municipal entities.
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Question 3 of 10
3. Question
Which of the following is within the definition of solicitation of a municipal entity or obligated person?
Correct
The Commission has noted that the solicitation of a municipal entity or obligated person’s statutory definition provides performance for direct or indirect compensation. If a person involved in the solicitation is not compensated for this action, it would not be required to register as a municipal advisor. Compensations include non-monetary compensation, which is indirectly given.
Incorrect
The Commission has noted that the solicitation of a municipal entity or obligated person’s statutory definition provides performance for direct or indirect compensation. If a person involved in the solicitation is not compensated for this action, it would not be required to register as a municipal advisor. Compensations include non-monetary compensation, which is indirectly given.
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Question 4 of 10
4. Question
When shall engineers provide advice beyond engineering advice according to the final rule for the Registration of Municipal Advisors?
Correct
When such an independent registered municipal advisor is present without triggering the requirement to register as a municipal advisor, then engineers may provide advice beyond engineering advice. Providing exemptions for advice given to municipal entities are discussed by the Commission in circumstances where the municipal entity or obligated person is separately represented by an independent registered municipal advisor. An engineer would not be required to register as a municipal advisor if an introduction’s result did not derive from direct or indirect compensation to the engineer.
Incorrect
When such an independent registered municipal advisor is present without triggering the requirement to register as a municipal advisor, then engineers may provide advice beyond engineering advice. Providing exemptions for advice given to municipal entities are discussed by the Commission in circumstances where the municipal entity or obligated person is separately represented by an independent registered municipal advisor. An engineer would not be required to register as a municipal advisor if an introduction’s result did not derive from direct or indirect compensation to the engineer.
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Question 5 of 10
5. Question
Which of the following statements is incorrect regarding the representations of independent registered municipal advisors?
Correct
It is appropriate, as the Commission believes, to allow municipal entities and obligated persons to receive as much advice and information as possible from a variety of sources if a municipal entity or obligated person is represented by and relies on an independent registered municipal advisor. This includes providers of such advice that are not subject to a fiduciary duty. The Commission would not seek for receipt of advice as long as it is represented by independent registered municipal advisors who are subject to fiduciary duties for this helps the municipal entities evaluate the advice and conflicts of interest occurred.
Incorrect
It is appropriate, as the Commission believes, to allow municipal entities and obligated persons to receive as much advice and information as possible from a variety of sources if a municipal entity or obligated person is represented by and relies on an independent registered municipal advisor. This includes providers of such advice that are not subject to a fiduciary duty. The Commission would not seek for receipt of advice as long as it is represented by independent registered municipal advisors who are subject to fiduciary duties for this helps the municipal entities evaluate the advice and conflicts of interest occurred.
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Question 6 of 10
6. Question
Which of the following statements are correct regarding advice from an independent registered municipal advisor?
I. With respect to a municipal entity, it must be disclosed that such a person is a municipal advisor and is subject to fiduciary duties.
II. The person must provide a copy of disclosures to the municipal entity’s or obligated person’s independent registered municipal advisor.
III. The person must receive from the municipal entity a representation in writing that he would rely on the advice of an independent registered municipal advisor.
IV. An independent registered municipal advisor must be providing advice concerning the same aspects of the municipal financial product or issuance of municipal securities.Correct
Exemptions from the definition of “municipal advisor” have certain requirements met regarding the independent registered municipal advisor. These are the following: (1) an independent registered municipal advisor must be providing advice with the same aspects of municipal financial products, (2) the person seeking to rely on the advice of an independent registered municipal advisor must provide certain disclosures regarding it, and (3) such a person must receive a representation in writing that it would rely on the advice of an independent registered municipal advisor. With respect to a municipal entity, it shall disclose that such a person is not a municipal advisor and is not subject to fiduciary duties.
Incorrect
Exemptions from the definition of “municipal advisor” have certain requirements met regarding the independent registered municipal advisor. These are the following: (1) an independent registered municipal advisor must be providing advice with the same aspects of municipal financial products, (2) the person seeking to rely on the advice of an independent registered municipal advisor must provide certain disclosures regarding it, and (3) such a person must receive a representation in writing that it would rely on the advice of an independent registered municipal advisor. With respect to a municipal entity, it shall disclose that such a person is not a municipal advisor and is not subject to fiduciary duties.
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Question 7 of 10
7. Question
Which of the following are subject to specified conditions provided in the final rule in exemptions from the definition of a municipal advisor?
I. Public officials and employees of municipal entities and obligated persons
II. Banks, swap dealers, and accountants
III. Persons engaging in municipal advisory activities with a municipal entity that is represented by an independent registered municipal advisor
IV. Persons who are not a respondent of RFPs or RFQsCorrect
According to the final rule for Registration of Municipal Advisors, the exemptions from the definition for the following are subject to specified conditions: (1) public officials and employees of municipal entities and obligated persons, (2) banks, swap dealers, and accountants, (3) persons engaging in municipal advisory activities with a municipal entity under the representation of an independent registered municipal advisor, and (4) persons responding to RFPs or RFQs. These exemptions have consistency in connection to the public interest, the protection of investors, and the purposes of Section 15B of the Exchange Act.
Incorrect
According to the final rule for Registration of Municipal Advisors, the exemptions from the definition for the following are subject to specified conditions: (1) public officials and employees of municipal entities and obligated persons, (2) banks, swap dealers, and accountants, (3) persons engaging in municipal advisory activities with a municipal entity under the representation of an independent registered municipal advisor, and (4) persons responding to RFPs or RFQs. These exemptions have consistency in connection to the public interest, the protection of investors, and the purposes of Section 15B of the Exchange Act.
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Question 8 of 10
8. Question
Which of the following statements are correct regarding the participation by an independent registered municipal advisor?
I. The person seeking to rely on an independent registered municipal advisor has a reasonable basis for relying on the representation.
II. An advice with respect to the same aspects of the municipal financial product or issuance of municipal securities is provided by an independent registered municipal advisor.
III. Persons providing advice with respect to investment strategies are plans or programs of municipal escrow investments.
IV. Each disclosure must be made at a time designed in allowing the municipal entity to assess incentives and conflicts of interests within the municipal advisory activities.Correct
As to the required representation, statutory definition, and required disclosures regarding the independent registered municipal advisors, the following statements are correct: (1) Reasonable basis for relying on the representation must be made by a person seeking to rely on an independent registered municipal advisor’s advice, (2) the independent registered municipal advisor is the one to provide advice to the same aspects of the municipal financial product or issuance of municipal securities, and (3) each disclosure must be made at a time designed in allowing the municipal entity in assessing material incentives and conflicts of interests within the municipal advisory activities. On the other hand, persons that provide advice on certain investment strategies that are not within the plans or programs for the investment of the proceeds of municipal securities.
Incorrect
As to the required representation, statutory definition, and required disclosures regarding the independent registered municipal advisors, the following statements are correct: (1) Reasonable basis for relying on the representation must be made by a person seeking to rely on an independent registered municipal advisor’s advice, (2) the independent registered municipal advisor is the one to provide advice to the same aspects of the municipal financial product or issuance of municipal securities, and (3) each disclosure must be made at a time designed in allowing the municipal entity in assessing material incentives and conflicts of interests within the municipal advisory activities. On the other hand, persons that provide advice on certain investment strategies that are not within the plans or programs for the investment of the proceeds of municipal securities.
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Question 9 of 10
9. Question
Which of the following are qualifications for a qualified independent representative under the Commodity Futures Trading Commission?
I. It undertakes a duty to act in the best interests of the entity it represents.
II. It makes timely and appropriate disclosures to the special entity.
III. It evaluates fair pricing and transaction’s appropriateness.
IV. It is dependent on the swap dealer or major swap participant.Correct
Every swap dealer or major swap participant who makes an offer in entering into a swap with a special entity must provide a reasonable basis that the special entity has a qualified independent representative (QIR) that has the following qualifications: (1) it undertakes a duty to act in the best interests of the entity it represents, (2) timely and appropriate disclosures are made to the special entity, (3) fair pricing and appropriateness of the transaction have been evaluated, (4) it is independent on the swap dealer or major swap participant, and (5) it is not subject to statutory disqualification. The most important qualifications for a qualified independent representative is to have sufficient knowledge to evaluate the transaction and risks.
Incorrect
Every swap dealer or major swap participant who makes an offer in entering into a swap with a special entity must provide a reasonable basis that the special entity has a qualified independent representative (QIR) that has the following qualifications: (1) it undertakes a duty to act in the best interests of the entity it represents, (2) timely and appropriate disclosures are made to the special entity, (3) fair pricing and appropriateness of the transaction have been evaluated, (4) it is independent on the swap dealer or major swap participant, and (5) it is not subject to statutory disqualification. The most important qualifications for a qualified independent representative is to have sufficient knowledge to evaluate the transaction and risks.
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Question 10 of 10
10. Question
Which of the following statements treat the qualified independent representative as deemed “independent”?
I. The qualified independent representative was not an associated person of the swap dealer or major swap participant within one year.
II. Principal relationship occurs between the qualified independent representative and the swap dealer or major swap participant.
III. The qualified independent representative is not controlled directly o indirectly by the swap dealer or major swap participant.
IV. The qualified independent representative is not under common control with the swap dealer or major swap participant.Correct
The following must be met in order to treat the qualified independent representative as deemed “independent”: (1) if the qualified independent representative was not an associated person of the swap dealer or major swap participant within the one year of representing an entity, (2) if the qualified person is not controlled by, in control, or under common control with the swap dealer or major swap participant, and (3) if a principal relationship does not occur between the swap dealer or qualified independent representative. Every swap dealer or major swap participant must have a “reasonable basis” that qualified independent representatives have met certain qualifications.
Incorrect
The following must be met in order to treat the qualified independent representative as deemed “independent”: (1) if the qualified independent representative was not an associated person of the swap dealer or major swap participant within the one year of representing an entity, (2) if the qualified person is not controlled by, in control, or under common control with the swap dealer or major swap participant, and (3) if a principal relationship does not occur between the swap dealer or qualified independent representative. Every swap dealer or major swap participant must have a “reasonable basis” that qualified independent representatives have met certain qualifications.