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Question 1 of 10
1. Question
Under FINRA Rule 1240, what are the disciplinary actions to be taken by a covered person who is not eligible for a waiver and is required to retake the Regulatory Element?
I. He or she shall retake the Regulatory Element by any securities governmental agency.
II. He or she is subject to any statutory disqualification of the Exchange Act.
III. He or she is subject to suspension with a fine of $5,000 or more.
IV. He or she is subject to suspension with a fine of $10,000 or more.Correct
Under FINRA Rule 1240, a continuing education requires the covered person who is not eligible for the waiver must do certain disciplinary actions. He shall be subject to any statutory disqualification of the Exchange Act. He is also required to pay a fine of $5,000 or more together with his suspension. He shall also retake the Regulatory Elements by any securities governmental agency or self-regulatory organization.
Incorrect
Under FINRA Rule 1240, a continuing education requires the covered person who is not eligible for the waiver must do certain disciplinary actions. He shall be subject to any statutory disqualification of the Exchange Act. He is also required to pay a fine of $5,000 or more together with his suspension. He shall also retake the Regulatory Elements by any securities governmental agency or self-regulatory organization.
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Question 2 of 10
2. Question
Under FINRA Rule 2020, which of the following shall a member not purchase or make transactions with?
I. Any security by means of any manipulative device
II. Any security by means of any deceptive device
III. Any security by means of honest and trustworthy device
IV. Any security by means of other fraudulent contrivanceCorrect
Any security by means of manipulative, deceptive, and other fraudulent devices shall not take effect in transaction by any member. He shall not purchase nor sell any securities with doubtful devices. This is a requirement under the use of manipulative, deceptive, or other fraudulent devices in FINRA Rule 2020.
Incorrect
Any security by means of manipulative, deceptive, and other fraudulent devices shall not take effect in transaction by any member. He shall not purchase nor sell any securities with doubtful devices. This is a requirement under the use of manipulative, deceptive, or other fraudulent devices in FINRA Rule 2020.
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Question 3 of 10
3. Question
How do commissions take place in every transaction?
I. It shall be paid to the employees through a percentage of total sales.
II. It shall be paid to the employees through a percentage of total equities.
III. It shall be paid to the employees through a percentage of total assets.
IV. It shall be paid to the employees through a fixed price based on sales productivity.Correct
Commissions, in every transaction, work when an employee pays the employer a certain percentage of total sales. It may also be paid through a fixed price based on sales productivity, or based on the agreed amount of the employer and the employee. A commission shall be charged fair and equitable.
Incorrect
Commissions, in every transaction, work when an employee pays the employer a certain percentage of total sales. It may also be paid through a fixed price based on sales productivity, or based on the agreed amount of the employer and the employee. A commission shall be charged fair and equitable.
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Question 4 of 10
4. Question
Under FINRA Rule 2010, which of the following best describes the “5% Policy” adoption?
Correct
As compliance with FINRA Rule 2010, the “5% Policy” occurs as a mark-up guide, but not a rule. Its basis shall be on any expenses which are not excessive. If a mark-up is less than 5%, it may be considered unfair on unreasonable under the “5% Policy.” It is considered fair only if it follows the said requirement.
Incorrect
As compliance with FINRA Rule 2010, the “5% Policy” occurs as a mark-up guide, but not a rule. Its basis shall be on any expenses which are not excessive. If a mark-up is less than 5%, it may be considered unfair on unreasonable under the “5% Policy.” It is considered fair only if it follows the said requirement.
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Question 5 of 10
5. Question
Which of the following is correct in relation to the amount of money involved in a transaction?
Correct
A transaction may warrant a higher percentage of mark-up in covering the expenses if it involves a small amount of money. The amount of commission charged in an agency transaction or mark-up made in a principal transaction shall be disclosed as a requirement under FINRA Rule 2121.
Incorrect
A transaction may warrant a higher percentage of mark-up in covering the expenses if it involves a small amount of money. The amount of commission charged in an agency transaction or mark-up made in a principal transaction shall be disclosed as a requirement under FINRA Rule 2121.
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Question 6 of 10
6. Question
What are the factors to consider in identifying if a mark-up transaction follows the “5% Policy”?
I. The number of sales in a certain month
II. The mark-up pattern
III. The type of securities involved
IV. The nature of the member’s businessCorrect
The mark-up pattern, type of securities involved, and the nature of member’s business are factors to consider in determining if the mark-up price is fair under FINRA Rule 2121. It is considered fair if it is not less or more than the 5% Policy standard of FINRA.
Incorrect
The mark-up pattern, type of securities involved, and the nature of member’s business are factors to consider in determining if the mark-up price is fair under FINRA Rule 2121. It is considered fair if it is not less or more than the 5% Policy standard of FINRA.
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Question 7 of 10
7. Question
In relation to the price of the security as a factor to consider in determining a fair mark-up, which of the following is correct?
Correct
While there is no direct correlation, the mark-up or rate of commission inversely related to the price of the security as it increases. As the mark-up price or commission increases, the price of security decreases. If the amount of money is substantial, low-priced securities require more handling expenses and may warrant a wider spread.
Incorrect
While there is no direct correlation, the mark-up or rate of commission inversely related to the price of the security as it increases. As the mark-up price or commission increases, the price of security decreases. If the amount of money is substantial, low-priced securities require more handling expenses and may warrant a wider spread.
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Question 8 of 10
8. Question
Which of the following transaction applies the 5% Policy?
I. Riskless or simultaneous transactions
II. Transactions where members sell securities to a customer from inventory
III. Transactions where a member purchases securities from a customer
IV. Transactions where a member does not act as an agentCorrect
The 5% Policy generally applies to any transactions between a customer and a member provided that a member does not act as an agent. It may include transactions purchased from either a customer or a member and vice versa. Riskless and simultaneous transactions include transactions where a member buys a security to fill an order for the same security previously received from a customer.
Incorrect
The 5% Policy generally applies to any transactions between a customer and a member provided that a member does not act as an agent. It may include transactions purchased from either a customer or a member and vice versa. Riskless and simultaneous transactions include transactions where a member buys a security to fill an order for the same security previously received from a customer.
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Question 9 of 10
9. Question
In which of the following transactions does the 5% Policy is not applicable?
Correct
If the sale of securities involves offering required to be delivered and securities are sold at a specific public offering price, the 5% Policy under FINRA Rule 2121 is not applicable. It usually applies only to transactions where proceeds are utilized to pay other securities purchased about the same time.
Incorrect
If the sale of securities involves offering required to be delivered and securities are sold at a specific public offering price, the 5% Policy under FINRA Rule 2121 is not applicable. It usually applies only to transactions where proceeds are utilized to pay other securities purchased about the same time.
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Question 10 of 10
10. Question
How shall the charges for services performed be done?
Correct
Under FINRA Rule 2122, charges for the performance of services shall be fair and reasonable. Services include collection on monies due for principal, dividends, or interest, exchange or transfer of securities, appraisals, safe-keeping or custody of securities, and other miscellaneous services.
Incorrect
Under FINRA Rule 2122, charges for the performance of services shall be fair and reasonable. Services include collection on monies due for principal, dividends, or interest, exchange or transfer of securities, appraisals, safe-keeping or custody of securities, and other miscellaneous services.