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Question 1 of 10
1. Question
Which of the following statements are correct regarding the market makers’ requirements under FINRA Rule 6540?
I. A market maker can not voluntarily terminate its registration.
II. A market maker can voluntarily terminate its registration by just withdrawing the quotations in the security.
III. The firm may not re-register in quoting the security.
IV. The firm may re-register in quoting the security by following the FINRA requirements.Correct
Regarding the requirements applicable for market makers under FINRA Rule 6540, a market maker can voluntarily terminate their registration as long as they would withdraw their quotation in the security. After withdrawal, they may re-register for another security quotation by complying again with the requirements of FINRA.
Incorrect
Regarding the requirements applicable for market makers under FINRA Rule 6540, a market maker can voluntarily terminate their registration as long as they would withdraw their quotation in the security. After withdrawal, they may re-register for another security quotation by complying again with the requirements of FINRA.
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Question 2 of 10
2. Question
If there is more than one trading location of a market maker, what shall be appended to the market maker’s identifier for security?
Correct
Under FINRA Rule 6540, the geographic indicator shall be appended to the market maker’s identifier for security if there is more than one trading location. FINRA established indicators and published it from time to time in the Nasdaq/CQS symbol.
Incorrect
Under FINRA Rule 6540, the geographic indicator shall be appended to the market maker’s identifier for security if there is more than one trading location. FINRA established indicators and published it from time to time in the Nasdaq/CQS symbol.
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Question 3 of 10
3. Question
In which of the following accounts of broker/dealers shall a business activity have a material impact in order to consider a person as “Material Associated Person” of a broker/dealer?
I. The broker/dealer’s net capital
II. The broker/dealer’s previous performance
III. The net capital’s liquidity
IV. The broker/dealer’s ability to finance its operationsCorrect
The broker/dealer’s net capital, its liquidity, or its ability to finance its operations shall have an impact on the financial and operational conditions of the broker/dealer to be considered as a Material Associated Person. The Material Associated Persons are responsible for recordkeeping and reporting system in covering the financial and securities activities of holding companies.
Incorrect
The broker/dealer’s net capital, its liquidity, or its ability to finance its operations shall have an impact on the financial and operational conditions of the broker/dealer to be considered as a Material Associated Person. The Material Associated Persons are responsible for recordkeeping and reporting system in covering the financial and securities activities of holding companies.
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Question 4 of 10
4. Question
Which of the following refers to any arrangement in which another party pays for the costs incurred by a broker/dealer?
Correct
An expense sharing agreement is an agreement on whom shall bear the costs incurred by the broker/dealer. It shall provide that a broker/dealer will pay monthly to the affiliated company through an agreement to be kept and performed by the parties.
Incorrect
An expense sharing agreement is an agreement on whom shall bear the costs incurred by the broker/dealer. It shall provide that a broker/dealer will pay monthly to the affiliated company through an agreement to be kept and performed by the parties.
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Question 5 of 10
5. Question
Which of the following expenses may be paid by a broker/dealer in expense sharing agreement?
I. Utility expenses
II. Rent expenses
III. All costs that would directly benefit a broker/dealer
IV. Some costs that would indirectly benefit a broker or dealer depending on another party’s responsibilityCorrect
In expense sharing agreement, the paying broker/dealer may bear for the expenses such as rent, telephone, copy services, etc. He may also pay for all costs that would directly or indirectly benefit them in carrying the responsibility of an entity who had not agreed to pay for it.
Incorrect
In expense sharing agreement, the paying broker/dealer may bear for the expenses such as rent, telephone, copy services, etc. He may also pay for all costs that would directly or indirectly benefit them in carrying the responsibility of an entity who had not agreed to pay for it.
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Question 6 of 10
6. Question
Which of the following are reported on the Schedule I of Form X-17-A-5 of the Securities and Exchange Commission?
Correct
Information in measuring certain economic and financial characteristics of the registrant shall be reported on the Schedule I of Form X-17A-5. Exempted broker/dealers in filing requirements shall still submit the balance sheet and revenue expense statement from Part IIA of and Schedule I of Form X-17A-5.
Incorrect
Information in measuring certain economic and financial characteristics of the registrant shall be reported on the Schedule I of Form X-17A-5. Exempted broker/dealers in filing requirements shall still submit the balance sheet and revenue expense statement from Part IIA of and Schedule I of Form X-17A-5.
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Question 7 of 10
7. Question
In classifying assets and liabilities as current, which of the following statements are correct?
I. Current liabilities are amounts to be paid to creditors within twelve months.
II. Current liabilities are amounts due to be received from creditors within twelve months.
III. Current assets are amounts to be paid to creditors within twelve months.
IV. Current assets are amounts due to be received from creditors within twelve months.Correct
Any amount to be received within twelve months are current assets while any amount to be paid within twelve months is current liabilities. If both current and non-current assets are added, it would result in total assets. The same formula applies to total liabilities. Current assets simply mean assets that can be converted to cash quickly.
Incorrect
Any amount to be received within twelve months are current assets while any amount to be paid within twelve months is current liabilities. If both current and non-current assets are added, it would result in total assets. The same formula applies to total liabilities. Current assets simply mean assets that can be converted to cash quickly.
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Question 8 of 10
8. Question
Which of the following assets are not included in the balance sheet?
I. Prepaid rent
II. Tax return
III. Human capital
IV. The expertise of the management teamCorrect
The expertise of the management team, loyal and creative workforce, loyal customers, brand image, human capital, and tax returns are assets that are not included in the balance sheet. The assets to be recorded in a balance sheet are cash, accounts receivables, prepaid rent, trade receivables, etc.
Incorrect
The expertise of the management team, loyal and creative workforce, loyal customers, brand image, human capital, and tax returns are assets that are not included in the balance sheet. The assets to be recorded in a balance sheet are cash, accounts receivables, prepaid rent, trade receivables, etc.
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Question 9 of 10
9. Question
Which of the following equations are correct regarding the assets, liabilities, and owner’s equity?
I. Liabilities would equal the sum of assets and owner’s equity.
II. Liabilities would equal the difference between assets and owner’s equity.
III. Assets would equal the difference between liabilities and owner’s equity.
IV. Assets would equal the sum of liabilities and owner’s equity.Correct
In getting the total amount of assets, liabilities, and owner’s equity shall be added. In the balance sheet, the total assets should equal the total liabilities and owner’s equity. If errors occur in the balance sheet, the independent public accountant shall review either the general journal or general ledger.
Incorrect
In getting the total amount of assets, liabilities, and owner’s equity shall be added. In the balance sheet, the total assets should equal the total liabilities and owner’s equity. If errors occur in the balance sheet, the independent public accountant shall review either the general journal or general ledger.
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Question 10 of 10
10. Question
What amount shall be added or deducted in the investment of owners of the business to come up with the total owner’s equity?
Correct
To compute for the total owner’s or shareholder’s equity, the revenue or all income received by the business shall be added to the investment of the owners. On the other hand, all expenses for the business shall be deducted. Withdrawals which may be made by an owner shall also be deducted from the owner’s equity.
Incorrect
To compute for the total owner’s or shareholder’s equity, the revenue or all income received by the business shall be added to the investment of the owners. On the other hand, all expenses for the business shall be deducted. Withdrawals which may be made by an owner shall also be deducted from the owner’s equity.