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Question 1 of 10
1. Question
Which of the following relates to the practice of a registered individual benefitting from the knowledge of a customer or multiple customers’ placing a block order that may affect the price of the security:
Correct
Front-running is the practice of a registered individual benefitting from the knowledge of a customer or multiple customers’ placing a block order that may affect the price of the security in question by placing trades on the underlying security in their own accounts. This is unethical in every situation
Incorrect
Front-running is the practice of a registered individual benefitting from the knowledge of a customer or multiple customers’ placing a block order that may affect the price of the security in question by placing trades on the underlying security in their own accounts. This is unethical in every situation
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Question 2 of 10
2. Question
Which of the following is true regarding making the untrue statements of material fact, or to omit to state a material fact with knowledge or reasonable grounds to believe that the statement is such:
Correct
Fraud and misrepresentation (Rule 15c1-2) – it is prohibited to make untrue statements of material fact, or to omit to state a material fact with knowledge or reasonable grounds to believe that the statement is such.
Incorrect
Fraud and misrepresentation (Rule 15c1-2) – it is prohibited to make untrue statements of material fact, or to omit to state a material fact with knowledge or reasonable grounds to believe that the statement is such.
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Question 3 of 10
3. Question
A person is deemed to be involved in material nonpublic information in insider trading when he is aware of the information unless which of the following:
I. He became aware of the information after entering into an agreement to transact;
II. He instructed another to transact prior to becoming aware of the information
III. He became aware of the information at the time of agreement or transaction
IV. He adopted a written plan for trading securities before becoming aware of the information.Correct
Trading “on the basis of” material nonpublic information in insider trading ( SEA Rule 10b5-1) – a
person is deemed to be trading on the basis of material nonpublic information if the person was
aware of the information at the time of the transaction unless:
A. he became aware of the information after entering into an agreement to transact;
B. he instructed another to transact prior to becoming aware of the information;
C. he adopted a written plan for trading securities before becoming aware of the information.Incorrect
Trading “on the basis of” material nonpublic information in insider trading ( SEA Rule 10b5-1) – a
person is deemed to be trading on the basis of material nonpublic information if the person was
aware of the information at the time of the transaction unless:
A. he became aware of the information after entering into an agreement to transact;
B. he instructed another to transact prior to becoming aware of the information;
C. he adopted a written plan for trading securities before becoming aware of the information. -
Question 4 of 10
4. Question
Regulation SHO has been able to accomplish some of major goals, which of the following are not true in this regards:
I. Uniformity for pricing the securities
II. Standard procedure for the removal of short sale price tests
III. Uniformity among delivery requirements
IV. Uniform marking requirements for all equity securitiesCorrect
Regulation SHO accomplished three specific goals. First, it created uniformity among delivery requirements. Second, Regulation SHO created uniform marking requirements for all equity securities. Regulation SHO created a standard procedure for the removal of short sale price tests and restrictions when these provisions become unnecessary
Incorrect
Regulation SHO accomplished three specific goals. First, it created uniformity among delivery requirements. Second, Regulation SHO created uniform marking requirements for all equity securities. Regulation SHO created a standard procedure for the removal of short sale price tests and restrictions when these provisions become unnecessary
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Question 5 of 10
5. Question
Under the FINRA Rule 3240, borrowing from or lending to customers is prohibited unless:
I. The member maintains written procedures for such transactions
II. The customer is a registered person with the same member firm
III. The lending arrangement is based on a personal relationship with the customer
IV. The lending arrangement is based on a business relationship outside of the broker-customer relationship.Correct
As stated in FINRA Rule 3240, borrowing from or lending to customers is prohibited unless:
1. The member maintains written procedures for such transactions
3. The customer is a registered person with the same member firm
4. The lending arrangement is based on a personal relationship with the customer
5. The lending arrangement is based on a business relationship outside of the broker-customer
relationship.Incorrect
As stated in FINRA Rule 3240, borrowing from or lending to customers is prohibited unless:
1. The member maintains written procedures for such transactions
3. The customer is a registered person with the same member firm
4. The lending arrangement is based on a personal relationship with the customer
5. The lending arrangement is based on a business relationship outside of the broker-customer
relationship. -
Question 6 of 10
6. Question
Which of the following statement is true regarding the disclosure of control relationship with issuer:
I. If common control exists between a member firm and the issuer of a security, it must be disclosed to the customer
II. If a firm has a financial interest in any security in primary or secondary distribution, it must be disclosed
III. All underwriting terms and agreements between the member firm and the issuer of the security must be disclosed
IV. If there are any private securities transactions between the member firm and issuer, they must be disclosedCorrect
Rule 2262 states that if common control exists between a member firm and the issuer of a security, the firm must disclose the relationship in writing to any customer wanting to buy or sell said security.
Rule 2269 states that if a firm is participating in or has a financial interest in any security either in primary or secondary distribution, this has to be disclosed in writing to the customer
Incorrect
Rule 2262 states that if common control exists between a member firm and the issuer of a security, the firm must disclose the relationship in writing to any customer wanting to buy or sell said security.
Rule 2269 states that if a firm is participating in or has a financial interest in any security either in primary or secondary distribution, this has to be disclosed in writing to the customer
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Question 7 of 10
7. Question
FINRA Rule 5130 established a list of persons prohibited from buying new issues. Which of the following is not a part of the list:
Correct
This list includes members of FINRA and their employees, representatives of the underwriters that underwrote the new issue, a shareholder that owns more the 10 percent of a FINRA member firm, portfolio managers, and immediate family members of the preceding.
Incorrect
This list includes members of FINRA and their employees, representatives of the underwriters that underwrote the new issue, a shareholder that owns more the 10 percent of a FINRA member firm, portfolio managers, and immediate family members of the preceding.
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Question 8 of 10
8. Question
FINRA Rule 5190 outlines the required notifications for which of the following matter:
Correct
FINRA Rule 5190 outlines the required notifications for new public offerings. It provides requirements for securities subject to a restricted period under SEC Regulation M as well as actively traded securities
Incorrect
FINRA Rule 5190 outlines the required notifications for new public offerings. It provides requirements for securities subject to a restricted period under SEC Regulation M as well as actively traded securities
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Question 9 of 10
9. Question
______ is a person who directly or indirectly controls or is under common control with the specified person.
Correct
Affiliate – a person who directly or indirectly controls or is under common control with the specified person.
Incorrect
Affiliate – a person who directly or indirectly controls or is under common control with the specified person.
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Question 10 of 10
10. Question
Which of the following relates to an order to purchase a security at the most advantageous price:
Correct
Market order – an order to purchase a security at the most advantageous price.
Incorrect
Market order – an order to purchase a security at the most advantageous price.