FINRA Series 54 - Pauline - Quiz 14.new
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Question 1 of 10
1. Question
For the purposes of MSRB Rule G-10, who is treated as a municipal advisory client?
Correct
A municipal advisory client includes a broker or dealer, such as a municipal securities dealer, municipal advisor, or investment adviser on behalf of whom the municipal advisor undertakes a solicitation of a municipal entity or obligated person. It also includes a municipal entity or obligated person for whom the municipal advisor engages in municipal advisory activities. The municipal advisory client mentioned in this rule is defined in MSRB Rule G-42.
Incorrect
A municipal advisory client includes a broker or dealer, such as a municipal securities dealer, municipal advisor, or investment adviser on behalf of whom the municipal advisor undertakes a solicitation of a municipal entity or obligated person. It also includes a municipal entity or obligated person for whom the municipal advisor engages in municipal advisory activities. The municipal advisory client mentioned in this rule is defined in MSRB Rule G-42.
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Question 2 of 10
2. Question
What happens to information relating to “when-issued” transactions which may not be available at the time a transaction is effected?
Correct
With respect to accrued interest and information relating to “when-issued” transactions which may not be available at the time a transaction is effected, as mentioned in the MSRB Rule G-8, entries setting forth such information shall be made promptly as such information becomes available. Transactions’ accrued interest shall be required to be shown only to the extent required to be included in the confirmation delivered by the broker, dealer, or municipal securities dealer.
Incorrect
With respect to accrued interest and information relating to “when-issued” transactions which may not be available at the time a transaction is effected, as mentioned in the MSRB Rule G-8, entries setting forth such information shall be made promptly as such information becomes available. Transactions’ accrued interest shall be required to be shown only to the extent required to be included in the confirmation delivered by the broker, dealer, or municipal securities dealer.
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Question 3 of 10
3. Question
Which of the following must be seen in an account record for each customer account and account of such broker, dealer, or municipal securities dealer?
Correct
In an account record for each customer account and account of such broker, dealer, or municipal securities dealer, all purchases and sales of municipal securities and the receipts and deliveries shall be reflected on such record. Other information needed to be reflected on the account records is the receipts and disbursements of cash, and all other debits and credits relating to such content. A bank dealer is not required to maintain the customer’s bank credit or bank debit balances’ record for purposes of MSRB Rule G-8.
Incorrect
In an account record for each customer account and account of such broker, dealer, or municipal securities dealer, all purchases and sales of municipal securities and the receipts and deliveries shall be reflected on such record. Other information needed to be reflected on the account records is the receipts and disbursements of cash, and all other debits and credits relating to such content. A bank dealer is not required to maintain the customer’s bank credit or bank debit balances’ record for purposes of MSRB Rule G-8.
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Question 4 of 10
4. Question
Which of the following describes securities records for each municipal security as stated in the MSRB Rule G-8?
Correct
Securities records shall show all long and short security count differences classified by the date of the physical account. With respect to securities that are received in and delivered out, no posting to such records shall be required. With respect to purchases or sales, posting to records is required either on a settlement date bais or trade date basis, consistent with the manner of posting the records of original entry of such broker.
Incorrect
Securities records shall show all long and short security count differences classified by the date of the physical account. With respect to securities that are received in and delivered out, no posting to such records shall be required. With respect to purchases or sales, posting to records is required either on a settlement date bais or trade date basis, consistent with the manner of posting the records of original entry of such broker.
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Question 5 of 10
5. Question
Which of the following is not reflected on subsidiary records?
Correct
The municipal securities transactions completed on settlement date are not reflected on subsidiary records, rather the incomplete transactions are recorded on such record. The description and the aggregate par value of the securities, the purchase price, the sale price, the name of the customer, and the date on which securities are received or delivered are seen in a subsidiary record with respect to the municipal securities transactions not completed on settlement date. Municipal securities in transfer, municipal securities borrowed or loaned, and municipal securities to be validated are all reflected on subsidiary records.
Incorrect
The municipal securities transactions completed on settlement date are not reflected on subsidiary records, rather the incomplete transactions are recorded on such record. The description and the aggregate par value of the securities, the purchase price, the sale price, the name of the customer, and the date on which securities are received or delivered are seen in a subsidiary record with respect to the municipal securities transactions not completed on settlement date. Municipal securities in transfer, municipal securities borrowed or loaned, and municipal securities to be validated are all reflected on subsidiary records.
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Question 6 of 10
6. Question
Which of the following statements are true regarding the specified first scenario of the MSRB Rule G-42?
I. This focuses on the indirect services provided by the municipal advisor to a conduit borrower.
II. This considers the applicability when an issuer hires a municipal advisor to provide advice directly to a conduit borrower.
III. If the municipal advisor is retained and compensated by the issuer, a municipal advisor may provide direct services to a conduit borrower.
IV. This simply focuses on the payment of compensation by the issuer.Correct
As stated in Section 1 “First Scenario” under the MSRB Rule G-42, the applicability when an issuer hires a municipal advisor to provide direct advice to a conduit borrower is considered. This may happen if the municipal advisor is retained and compensated by the issuer. This scenario focuses on the payment of compensation by the issuer. This compensation, its existence or non-existence, is not a factor in determining whether the municipal advisor is providing services to the issuer or to the conduit borrower.
Incorrect
As stated in Section 1 “First Scenario” under the MSRB Rule G-42, the applicability when an issuer hires a municipal advisor to provide direct advice to a conduit borrower is considered. This may happen if the municipal advisor is retained and compensated by the issuer. This scenario focuses on the payment of compensation by the issuer. This compensation, its existence or non-existence, is not a factor in determining whether the municipal advisor is providing services to the issuer or to the conduit borrower.
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Question 7 of 10
7. Question
Which of the following is specified by Rule G-42 as “not a factor in determining if the municipal advisor is a municipal advisor to the conduit borrower”?
I. The non-existence or existence of compensation by the issuer.
II. The fact that the municipal advisor is paid compensation by a third party.
III. The size of activities rendered by the municipal advisor.
IV. The scope of activities rendered by the municipal advisor.Correct
It is specified in the MSRB Rule G-42 that the following are not factors in determining if the municipal advisor is a municipal advisor to the conduit borrower: (1) the non-existence or existence of compensation by the issuer, and (2) the fact that the municipal advisor is paid compensation by a third party. However, it is the focus of the First Scenario in this Rule that there is paid compensation between the issuer and the municipal advisor.
Incorrect
It is specified in the MSRB Rule G-42 that the following are not factors in determining if the municipal advisor is a municipal advisor to the conduit borrower: (1) the non-existence or existence of compensation by the issuer, and (2) the fact that the municipal advisor is paid compensation by a third party. However, it is the focus of the First Scenario in this Rule that there is paid compensation between the issuer and the municipal advisor.
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Question 8 of 10
8. Question
Which of the following statements are correct regarding disclosures of conflicts under the First Scenario of the MSRB Rule G-42?
I. The compensation paid by the issuer may present a material conflict of interest and requires it to be disclosed fully and fairly.
II. Disclosing material conflicts are limited to actual material conflicts only.
III. This rule requires a municipal advisor to disclose all material conflicts under Rule G-42.
IV. The requirement to disclose material conflicts are not limited to actual material conflicts of interest.Correct
In disclosing conflicts of interest, it must be disclosed fully and fairly especially the compensation paid by the issuer. This rule requires the disclosure of all material conflicts, but not limited to actual material conflicts of interest. The municipal advisor must also disclose the potential material conflicts of interest that the municipal advisor becomes aware of after reasonable inquiry, that could be anticipated to impair their ability to provide advice with the duty of care and the duty of loyalty.
Incorrect
In disclosing conflicts of interest, it must be disclosed fully and fairly especially the compensation paid by the issuer. This rule requires the disclosure of all material conflicts, but not limited to actual material conflicts of interest. The municipal advisor must also disclose the potential material conflicts of interest that the municipal advisor becomes aware of after reasonable inquiry, that could be anticipated to impair their ability to provide advice with the duty of care and the duty of loyalty.
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Question 9 of 10
9. Question
Which of the following is not prohibited in an advertisement prediction or project performance implying past performances making an unwarranted claim, opinions, or forecasts?
I. A graphical and tabular illustration projecting the performance of a municipal financial product.
II. A hypothetical illustration of mathematical principles provided that it does not predict the performance of the municipal financial products.
III. An oral presentation of the prediction of the municipal financial products.
IV. An investment analysis tool or a written report produced by an investment analysis tool.Correct
It is stated in the MSRB Rule G-40 that an advertisement may not predict nor project performance, imply the past performance will recur, or make claims, opinions, or forecasts which are exaggerated provided that it does not prohibit the following: (1) a hypothetical illustrating of mathematical principles provided that it does not predict the performance of the municipal financial products, and (2) an investment analysis tool or a written report produced by an investment analysis tool. It is also stated that a municipal advisor shall not publish advertisements to any testimonial of any kind concerning the report rendered by the municipal advisor.
Incorrect
It is stated in the MSRB Rule G-40 that an advertisement may not predict nor project performance, imply the past performance will recur, or make claims, opinions, or forecasts which are exaggerated provided that it does not prohibit the following: (1) a hypothetical illustrating of mathematical principles provided that it does not predict the performance of the municipal financial products, and (2) an investment analysis tool or a written report produced by an investment analysis tool. It is also stated that a municipal advisor shall not publish advertisements to any testimonial of any kind concerning the report rendered by the municipal advisor.
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Question 10 of 10
10. Question
Which of the following is within the definition of a municipal advisory client as stated under the MSRB Rule G-40?
I. A municipal entity performing municipal advisory activities.
II. A municipal entity or an obligated person who engages in providing advice to the third parties.
III. A municipal entity or obligated person for whom the municipal advisor engages in municipal advisory activities.
IV. A broker, dealer, municipal securities dealer, municipal advisor, or investment adviser on behalf of whom the municipal advisor undertakes a solicitation of a municipal entity or obligated person.Correct
A municipal advisory client, for the purposes of the MSRB Rule G-40, includes either of the following: (1) a municipal entity for whom the municipal advisor renders municipal advisory activities, and (2) a broker, dealer, municipal securities dealer, municipal advisor, or investment adviser on behalf of whom the municipal advisor renders municipal advisory activities. These are the persons whom the municipal advisor provides services for complying with all the rules and standards set by the MSRB.
Incorrect
A municipal advisory client, for the purposes of the MSRB Rule G-40, includes either of the following: (1) a municipal entity for whom the municipal advisor renders municipal advisory activities, and (2) a broker, dealer, municipal securities dealer, municipal advisor, or investment adviser on behalf of whom the municipal advisor renders municipal advisory activities. These are the persons whom the municipal advisor provides services for complying with all the rules and standards set by the MSRB.