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Question 1 of 10
1. Question
As the definitions of Research Analysts and Research Reports, which one of the following is true about “Public appearance”?
Correct
2241. Research Analysts and Research Reports
Definitions
“Public appearance” means any participation in a conference call, seminar, forum (including an interactive electronic forum) or other public speaking activity before 15 or more persons or before one or more representatives of the media, a radio, television or print media interview, or the writing of a print media article, in which a research analyst makes a recommendation or offers an opinion concerning an equity security. This term does not include a password protected Webcast, conference call or similar event with 15 or more existing customers, provided that all of the event participants previously received the most current research report or other documentation that contains the required applicable disclosures, and that the research analyst appearing at the event corrects and updates during the event any disclosures in the research report that are inaccurate, misleading or no longer applicable.Incorrect
2241. Research Analysts and Research Reports
Definitions
“Public appearance” means any participation in a conference call, seminar, forum (including an interactive electronic forum) or other public speaking activity before 15 or more persons or before one or more representatives of the media, a radio, television or print media interview, or the writing of a print media article, in which a research analyst makes a recommendation or offers an opinion concerning an equity security. This term does not include a password protected Webcast, conference call or similar event with 15 or more existing customers, provided that all of the event participants previously received the most current research report or other documentation that contains the required applicable disclosures, and that the research analyst appearing at the event corrects and updates during the event any disclosures in the research report that are inaccurate, misleading or no longer applicable. -
Question 2 of 10
2. Question
Regarding the Definitions of Research Analysts and Research Reports, which one of the following is untrue?
Correct
2241. Research Analysts and Research Reports
Definitions
“Research analyst” means an associated person who is primarily responsible for, and any associated person who reports directly or indirectly to a research analyst in connection with, the preparation of the substance of a research report, whether or not any such person has the job title of “research analyst.”Incorrect
2241. Research Analysts and Research Reports
Definitions
“Research analyst” means an associated person who is primarily responsible for, and any associated person who reports directly or indirectly to a research analyst in connection with, the preparation of the substance of a research report, whether or not any such person has the job title of “research analyst.” -
Question 3 of 10
3. Question
Which one of the following is untrue about the meaning of “Research analyst account”?
Correct
2241. Research Analysts and Research Reports
Definitions
“Research analyst account” means any account in which a research analyst or member of the research analyst’s household has a financial interest, or over which such analyst has discretion or control. This term shall not include an investment company registered under the Investment Company Act over which the research analyst or a member of the research analyst’s household has discretion or control, provided that the research analyst or member of the research analyst’s household has no financial interest in such investment company, other than a performance or management fee. The term also shall not include a “blind trust” account that is controlled by a person other than the research analyst or member of the research analyst’s household where neither the research analyst nor a member of the research analyst’s household knows of the account’s investments or investment transactions.Incorrect
2241. Research Analysts and Research Reports
Definitions
“Research analyst account” means any account in which a research analyst or member of the research analyst’s household has a financial interest, or over which such analyst has discretion or control. This term shall not include an investment company registered under the Investment Company Act over which the research analyst or a member of the research analyst’s household has discretion or control, provided that the research analyst or member of the research analyst’s household has no financial interest in such investment company, other than a performance or management fee. The term also shall not include a “blind trust” account that is controlled by a person other than the research analyst or member of the research analyst’s household where neither the research analyst nor a member of the research analyst’s household knows of the account’s investments or investment transactions. -
Question 4 of 10
4. Question
Which one of the following is incorrect regarding the meaning of The term “Research report”?
Correct
2241. Research Analysts and Research Reports
Definitions
“Research report” means any written (including electronic) communication that includes an analysis of equity securities of individual companies or industries (other than an open-end registered investment company that is not listed or traded on an exchange) and that provides information reasonably sufficient upon which to base an investment decision. This term does not include:
(A) communications that are limited to the following:
(i) discussions of broad-based indices;
(ii) commentaries on economic, political or market conditions;
(iii) technical analyses concerning the demand and supply for a sector, index or industry based on trading volume and price;
(iv) statistical summaries of multiple companies’ financial data, including listings of current ratings;
(v) recommendations regarding increasing or decreasing holdings in particular industries or sectors;Incorrect
2241. Research Analysts and Research Reports
Definitions
“Research report” means any written (including electronic) communication that includes an analysis of equity securities of individual companies or industries (other than an open-end registered investment company that is not listed or traded on an exchange) and that provides information reasonably sufficient upon which to base an investment decision. This term does not include:
(A) communications that are limited to the following:
(i) discussions of broad-based indices;
(ii) commentaries on economic, political or market conditions;
(iii) technical analyses concerning the demand and supply for a sector, index or industry based on trading volume and price;
(iv) statistical summaries of multiple companies’ financial data, including listings of current ratings;
(v) recommendations regarding increasing or decreasing holdings in particular industries or sectors; -
Question 5 of 10
5. Question
Which one of the following is not related to a member must establish, maintain and enforce written policies and procedures reasonably designed to identify and effectively manage conflicts of interest?
Correct
2241. Research Analysts and Research Reports
Identifying and Managing Conflicts of Interest
(1) A member must establish, maintain and enforce written policies and procedures reasonably designed to identify and effectively manage conflicts of interest related to:
(A) the preparation, content and distribution of research reports;
(B) public appearances by research analysts; and
(C) the interaction between research analysts and those outside of the research department, including investment banking and sales and trading personnel, subject companies and customers.Incorrect
2241. Research Analysts and Research Reports
Identifying and Managing Conflicts of Interest
(1) A member must establish, maintain and enforce written policies and procedures reasonably designed to identify and effectively manage conflicts of interest related to:
(A) the preparation, content and distribution of research reports;
(B) public appearances by research analysts; and
(C) the interaction between research analysts and those outside of the research department, including investment banking and sales and trading personnel, subject companies and customers. -
Question 6 of 10
6. Question
Regarding Identifying and Managing Conflicts of Interest, which of the following statement(s) is/are true?
Correct
2241. Research Analysts and Research Reports
Identifying and Managing Conflicts of Interest
A member’s written policies and procedures must be reasonably designed to promote objective and reliable research that reflects the truly held opinions of research analysts and to prevent the use of research reports or research analysts to manipulate or condition the market or favor the interests of the member or a current or prospective customer or class of customers.Incorrect
2241. Research Analysts and Research Reports
Identifying and Managing Conflicts of Interest
A member’s written policies and procedures must be reasonably designed to promote objective and reliable research that reflects the truly held opinions of research analysts and to prevent the use of research reports or research analysts to manipulate or condition the market or favor the interests of the member or a current or prospective customer or class of customers. -
Question 7 of 10
7. Question
Find the correct answer from the following statement(s) about a member’s written policies and procedures.
Correct
2241. Research Analysts and Research Reports
Identifying and Managing Conflicts of Interest
A member’s written policies and procedures must be reasonably designed to promote objective and reliable research that reflects the truly held opinions of research analysts and to prevent the use of research reports or research analysts to manipulate or condition the market or favor the interests of the member or a current or prospective customer or class of customers. Such policies and procedures must:
(A) prohibit prepublication review, clearance or approval of research reports by persons engaged in investment banking services activities and restrict or prohibit such review, clearance or approval by other persons not directly responsible for the preparation, content and distribution of research reports, other than legal and compliance personnel;
(B) restrict or limit input by the investment banking department into research coverage decisions to ensure that research management independently makes all final decisions regarding the research coverage plan;
(C) prohibit persons engaged in investment banking activities from supervision or control of research analysts, including influence or control over research analyst compensation evaluation and determination;
(D) limit determination of the research department budget to senior management, excluding senior management engaged in investment banking services activities;
(E) prohibit compensation based upon specific investment banking services transactions or contributions to a member’s investment banking services activities;Incorrect
2241. Research Analysts and Research Reports
Identifying and Managing Conflicts of Interest
A member’s written policies and procedures must be reasonably designed to promote objective and reliable research that reflects the truly held opinions of research analysts and to prevent the use of research reports or research analysts to manipulate or condition the market or favor the interests of the member or a current or prospective customer or class of customers. Such policies and procedures must:
(A) prohibit prepublication review, clearance or approval of research reports by persons engaged in investment banking services activities and restrict or prohibit such review, clearance or approval by other persons not directly responsible for the preparation, content and distribution of research reports, other than legal and compliance personnel;
(B) restrict or limit input by the investment banking department into research coverage decisions to ensure that research management independently makes all final decisions regarding the research coverage plan;
(C) prohibit persons engaged in investment banking activities from supervision or control of research analysts, including influence or control over research analyst compensation evaluation and determination;
(D) limit determination of the research department budget to senior management, excluding senior management engaged in investment banking services activities;
(E) prohibit compensation based upon specific investment banking services transactions or contributions to a member’s investment banking services activities; -
Question 8 of 10
8. Question
Regarding Identifying and Managing Conflicts of Interest, which of the following factors must be untrue about a member’s written policies and procedures when reviewing a research analyst’s compensation?
Correct
2241. Research Analysts and Research Reports
Identifying and Managing Conflicts of Interest
A member’s written policies and procedures must require that the compensation of a research analyst who is primarily responsible for preparation of the substance of a research report be reviewed and approved at least annually by a committee that reports to a member’s board of directors, or if the member has no board of directors, a senior executive officer of the member. This committee may not have representation from the member’s investment banking department and must consider the following factors when reviewing a research analyst’s compensation, if applicable:
(i) the research analyst’s individual performance, including the analyst’s productivity and the quality of the analyst’s research;
(ii) the correlation between the research analyst’s recommendations and the performance of the recommended securities; and
(iii) the overall ratings received from clients, sales force and peers independent of the member’s investment banking department, and other independent ratings services.Incorrect
2241. Research Analysts and Research Reports
Identifying and Managing Conflicts of Interest
A member’s written policies and procedures must require that the compensation of a research analyst who is primarily responsible for preparation of the substance of a research report be reviewed and approved at least annually by a committee that reports to a member’s board of directors, or if the member has no board of directors, a senior executive officer of the member. This committee may not have representation from the member’s investment banking department and must consider the following factors when reviewing a research analyst’s compensation, if applicable:
(i) the research analyst’s individual performance, including the analyst’s productivity and the quality of the analyst’s research;
(ii) the correlation between the research analyst’s recommendations and the performance of the recommended securities; and
(iii) the overall ratings received from clients, sales force and peers independent of the member’s investment banking department, and other independent ratings services. -
Question 9 of 10
9. Question
Find the correct answer from the following statements about a member’s written policies and procedures must define periods during which the member must not publish or otherwise distribute research reports, and research analysts must not make public appearances, relating to the issuer?
Correct
2241. Research Analysts and Research Reports
Identifying and Managing Conflicts of Interest
A member’s written policies and procedures must define periods during which the member must not publish or otherwise distribute research reports, and research analysts must not make public appearances, relating to the issuer:
(i) of a minimum of 10 days following the date of an initial public offering if the member has participated as an underwriter or dealer in the initial public offering; or
(ii) of a minimum of three days following the date of a secondary offering if the member has acted as a manager or co-manager of that offering.Incorrect
2241. Research Analysts and Research Reports
Identifying and Managing Conflicts of Interest
A member’s written policies and procedures must define periods during which the member must not publish or otherwise distribute research reports, and research analysts must not make public appearances, relating to the issuer:
(i) of a minimum of 10 days following the date of an initial public offering if the member has participated as an underwriter or dealer in the initial public offering; or
(ii) of a minimum of three days following the date of a secondary offering if the member has acted as a manager or co-manager of that offering. -
Question 10 of 10
10. Question
Which of the following statement is true when a member must establish, maintain and enforce written policies and procedures reasonably designed to ensure that?
Correct
2241. Research Analysts and Research Reports,
Content and Disclosure in Research Reports: A member must establish, maintain and enforce written policies and procedures reasonably designed to ensure that:
(A) purported facts in its research reports are based on reliable information; and
(B) any recommendation, rating or price target has a reasonable basis and is accompanied by a clear explanation of any valuation method used and a fair presentation of the risks that may impede achievement of the recommendation, rating or price target.Incorrect
2241. Research Analysts and Research Reports,
Content and Disclosure in Research Reports: A member must establish, maintain and enforce written policies and procedures reasonably designed to ensure that:
(A) purported facts in its research reports are based on reliable information; and
(B) any recommendation, rating or price target has a reasonable basis and is accompanied by a clear explanation of any valuation method used and a fair presentation of the risks that may impede achievement of the recommendation, rating or price target.