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Question 1 of 10
1. Question
In the following lines of credit, an investor is permitted to take out more on margin if he has more equity in his margin account:
I. Portfolio margin accounts
II. Day trading accounts
III. Special memorandum accounts
IV. Credit balanceCorrect
Special memorandum accounts (SMAs) are like lines of credit, where an investor is permitted to take out more on margin if he has more equity in his margin account.
Incorrect
Special memorandum accounts (SMAs) are like lines of credit, where an investor is permitted to take out more on margin if he has more equity in his margin account.
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Question 2 of 10
2. Question
If the margin requirement is 50% (that is, if the financial institution does not raise the requirement above the minimum 50%), then what will be the buying power of Special memorandum accounts (SMA):
I. Single
II. Double
III. Triple
IV. HalfCorrect
If the margin requirement is 50% (that is, if the financial institution does not raise the requirement above the minimum 50%), then the buying power for any SMA will be double the SMA balance.
Incorrect
If the margin requirement is 50% (that is, if the financial institution does not raise the requirement above the minimum 50%), then the buying power for any SMA will be double the SMA balance.
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Question 3 of 10
3. Question
Following is the type of margin account where the initial margin requirement differs according to the particular risk of the portfolio:
I. Customer Portfolio Margin system
II. Day trading accounts
III. Portfolio margin accounts
IV. Margin callsCorrect
Portfolio margin accounts are a type of margin account where the initial margin requirement differs according to the particular risk of the portfolio.
Incorrect
Portfolio margin accounts are a type of margin account where the initial margin requirement differs according to the particular risk of the portfolio.
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Question 4 of 10
4. Question
The following type (types) of accounts are most risky margin accounts:
I. Day trading accounts
II. Customer Portfolio Margin system
III. Short sale accounts
IV. Special memorandum accountsCorrect
Day trading accounts are especially risky margin accounts used to make a very high number of trades per day, making a profit or loss off of the small upticks and downticks in the daily price.
Incorrect
Day trading accounts are especially risky margin accounts used to make a very high number of trades per day, making a profit or loss off of the small upticks and downticks in the daily price.
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Question 5 of 10
5. Question
Which of the following statements are true for credit brokerage?
I. How much has the customer borrowed from the brokerage firm?
II. How much the customer has contributed to or received in his account.
III. The practice of using stocks as collateral for loans.
IV. The current value of the stocks the investor bought on margin.Correct
The credit brokerage refers to how much the customer has contributed to or received in his account.
Incorrect
The credit brokerage refers to how much the customer has contributed to or received in his account.
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Question 6 of 10
6. Question
The difference between the margin requirement for an account and the total cost refers to the following:
I. Margin
II. Margin calls
III. Hypothecation
IV. Loan valueCorrect
Loan value is the difference between the margin requirement for an account and the total cost.
Incorrect
Loan value is the difference between the margin requirement for an account and the total cost.
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Question 7 of 10
7. Question
The brokerage house may not pledge by more than of following percent of a customer’s debit balance:
I. 140 percent
II. 145 percent
III. 150 percent
IV. 155 percentCorrect
The brokerage house may not pledge more than 140 percent of a customer’s debit balance:
Incorrect
The brokerage house may not pledge more than 140 percent of a customer’s debit balance:
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Question 8 of 10
8. Question
Which of the following is (are) prohibited activities for brokers?
I. They are not permitted to spread market rumours
II. They are not permitted to engage in front-running
III. They are not permitted to pay for referrals
IV. They are not permitted to make prearrange tradesCorrect
(i)They are not permitted to spread market rumours. (ii)They are not permitted to engage in front-running. (iii)They are not permitted to pay for referral.(iv) They are not permitted to prearrange trades
Incorrect
(i)They are not permitted to spread market rumours. (ii)They are not permitted to engage in front-running. (iii)They are not permitted to pay for referral.(iv) They are not permitted to prearrange trades
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Question 9 of 10
9. Question
TRACE is a program developed by:
I. NASDAQ
II. Rating agencies
III. FINRA
IV. EMMACorrect
It is a program developed by FINRA to facilitate the reporting of various trades by brokers.
Incorrect
It is a program developed by FINRA to facilitate the reporting of various trades by brokers.
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Question 10 of 10
10. Question
Which of the following documents are prepared by investment research teams for brokerage firms or investment banks?
I. TRACE
II. Research reports
III. Product-specific periodicals
IV. NASDAQCorrect
Research reports are documents prepared by investment research teams for brokerage firms or investment banks (or by individual analysts in such teams).
Incorrect
Research reports are documents prepared by investment research teams for brokerage firms or investment banks (or by individual analysts in such teams).