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Question 1 of 10
1. Question
Regarding termination of coverage, which of the following statement(s) is/are true?
Correct
Rule: 2241
Termination of Coverage
A member must promptly notify its customers if it intends to terminate coverage of a subject company. Such notice must be made using the member’s ordinary means to disseminate research reports on the subject company to its various customers. The notice must be accompanied by a final research report, comparable in scope and detail to prior research reports, and include a final recommendation or rating. If impracticable to provide a final research report, recommendation or rating, a member must disclose to its customers its reason for terminating coverage.Incorrect
Rule: 2241
Termination of Coverage
A member must promptly notify its customers if it intends to terminate coverage of a subject company. Such notice must be made using the member’s ordinary means to disseminate research reports on the subject company to its various customers. The notice must be accompanied by a final research report, comparable in scope and detail to prior research reports, and include a final recommendation or rating. If impracticable to provide a final research report, recommendation or rating, a member must disclose to its customers its reason for terminating coverage. -
Question 2 of 10
2. Question
Regarding debt research analysts and debt research reports, which of the following definitions is/are correct?
Correct
2242. Debt Research Analysts and Debt Research Reports
Definitions. For purposes of this Rule, the following terms shall be defined as provided.
(1) “Debt research analyst” means an associated person who is primarily responsible for, and any associated person who reports directly or indirectly to a debt research analyst in connection with, the preparation of the substance of a debt research report, whether or not any such person has the job title of “research analyst.”
(2) “Debt research analyst account” means any account in which a debt research analyst or member of the debt 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 debt research analyst or a member of the debt research analyst’s household has discretion or control, provided that the debt research analyst or member of a debt 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 debt research analyst or member of the debt research analyst’s household where neither the debt research analyst nor a member of the debt research analyst’s household knows of the account’s investments or investment transactions.
(3) “Debt research report” means any written (including electronic) communication that includes an analysis of a debt security or an issuer of a debt security and that provides information reasonably sufficient upon which to base an investment decision, excluding communications that solely constitute an equity research report as defined in Rule 2241(a)(11).Incorrect
2242. Debt Research Analysts and Debt Research Reports
Definitions. For purposes of this Rule, the following terms shall be defined as provided.
(1) “Debt research analyst” means an associated person who is primarily responsible for, and any associated person who reports directly or indirectly to a debt research analyst in connection with, the preparation of the substance of a debt research report, whether or not any such person has the job title of “research analyst.”
(2) “Debt research analyst account” means any account in which a debt research analyst or member of the debt 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 debt research analyst or a member of the debt research analyst’s household has discretion or control, provided that the debt research analyst or member of a debt 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 debt research analyst or member of the debt research analyst’s household where neither the debt research analyst nor a member of the debt research analyst’s household knows of the account’s investments or investment transactions.
(3) “Debt research report” means any written (including electronic) communication that includes an analysis of a debt security or an issuer of a debt security and that provides information reasonably sufficient upon which to base an investment decision, excluding communications that solely constitute an equity research report as defined in Rule 2241(a)(11). -
Question 3 of 10
3. Question
Which one of the following statements is true regarding “Debt research report”?
Correct
2242. Debt Research Analysts and Debt Research Reports
“Debt research report” means any written (including electronic) communication that includes an analysis of a debt security or an issuer of a debt security and that provides information reasonably sufficient upon which to base an investment decision, excluding communications that solely constitute an equity research report as defined in Rule 2241(a)(11). In general, this term shall not include:
(A) communications that are limited to the following, if they do not include an analysis of, or recommend or rate, individual debt securities or issuers:
(i) discussions of broad-based indices;
(ii) commentaries on economic, political or market conditions;
(iii) commentaries on or analyses of particular types of debt securities or characteristics of debt securities;
(iv) technical analyses concerning the demand and supply for a sector, index or industry based on trading volume and price;
(v) recommendations regarding increasing or decreasing holdings in particular industries or sectors or types of debt securities; or
(vi) notices of ratings or price target changes, provided that the member simultaneously directs the readers of the notice to the most recent debt research report on the subject company that includes all current applicable disclosures required by this Rule and that such debt research report does not contain materially misleading disclosure, including disclosures that are outdated or no longer applicable;Incorrect
2242. Debt Research Analysts and Debt Research Reports
“Debt research report” means any written (including electronic) communication that includes an analysis of a debt security or an issuer of a debt security and that provides information reasonably sufficient upon which to base an investment decision, excluding communications that solely constitute an equity research report as defined in Rule 2241(a)(11). In general, this term shall not include:
(A) communications that are limited to the following, if they do not include an analysis of, or recommend or rate, individual debt securities or issuers:
(i) discussions of broad-based indices;
(ii) commentaries on economic, political or market conditions;
(iii) commentaries on or analyses of particular types of debt securities or characteristics of debt securities;
(iv) technical analyses concerning the demand and supply for a sector, index or industry based on trading volume and price;
(v) recommendations regarding increasing or decreasing holdings in particular industries or sectors or types of debt securities; or
(vi) notices of ratings or price target changes, provided that the member simultaneously directs the readers of the notice to the most recent debt research report on the subject company that includes all current applicable disclosures required by this Rule and that such debt research report does not contain materially misleading disclosure, including disclosures that are outdated or no longer applicable; -
Question 4 of 10
4. Question
Which one of the following statements may be correct regarding the definition of “Debt research analyst account”?
Correct
2242. Debt Research Analysts and Debt Research Reports
“Debt research analyst account” means any account in which a debt research analyst or member of the debt 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 debt research analyst or a member of the debt research analyst’s household has discretion or control, provided that the debt research analyst or member of a debt 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 debt research analyst or member of the debt research analyst’s household where neither the debt research analyst nor a member of the debt research analyst’s household knows of the account’s investments or investment transactions.Incorrect
2242. Debt Research Analysts and Debt Research Reports
“Debt research analyst account” means any account in which a debt research analyst or member of the debt 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 debt research analyst or a member of the debt research analyst’s household has discretion or control, provided that the debt research analyst or member of a debt 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 debt research analyst or member of the debt research analyst’s household where neither the debt research analyst nor a member of the debt research analyst’s household knows of the account’s investments or investment transactions. -
Question 5 of 10
5. Question
How many representative(s) of the media should be present while public appearance?
Correct
2242. Debt Research Analysts and Debt Research Reports
“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 debt research analyst makes a recommendation or offers an opinion concerning a debt security or an issuer of a debt security.Incorrect
2242. Debt Research Analysts and Debt Research Reports
“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 debt research analyst makes a recommendation or offers an opinion concerning a debt security or an issuer of a debt security. -
Question 6 of 10
6. Question
While identifying and managing conflicts of interest, which of the following statements is true regarding written policies and procedures? They are reasonably designed to identify and effectively manage conflicts of interest related to …
Correct
2242. Debt Research Analysts and Debt 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 debt research reports;
(B) public appearances by debt research analysts; and
(C) the interaction between debt research analysts and those outside of the research department, including investment banking department personnel, sales and trading personnel, principal trading personnel, subject companies and customers;Incorrect
2242. Debt Research Analysts and Debt 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 debt research reports;
(B) public appearances by debt research analysts; and
(C) the interaction between debt research analysts and those outside of the research department, including investment banking department personnel, sales and trading personnel, principal trading personnel, subject companies and customers; -
Question 7 of 10
7. Question
While identifying and managing conflicts of interest, which one of the following statements is incorrect regarding a member’s written policies and procedures?
Correct
2242. Debt Research Analysts and Debt Research Reports
Identifying and Managing Conflicts of Interest
A member’s written policies and procedures must be reasonably designed to promote objective and reliable debt research that reflects the truly held opinions of debt research analysts and to prevent the use of debt research reports or debt 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 debt research reports
(B) restrict or prohibit prepublication review, clearance or approval of debt research reports by other persons not directly responsible for the preparation, content and distribution of debt research reports, other than legal and compliance personnel;
(C) restrict or limit input by investment banking department, sales and trading and principal trading personnel into debt research coverage decisions to ensure that research management independently makes all final decisions regarding the research coverage plan;
(D) limit supervision of a debt research analyst to persons not engaged in:Incorrect
2242. Debt Research Analysts and Debt Research Reports
Identifying and Managing Conflicts of Interest
A member’s written policies and procedures must be reasonably designed to promote objective and reliable debt research that reflects the truly held opinions of debt research analysts and to prevent the use of debt research reports or debt 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 debt research reports
(B) restrict or prohibit prepublication review, clearance or approval of debt research reports by other persons not directly responsible for the preparation, content and distribution of debt research reports, other than legal and compliance personnel;
(C) restrict or limit input by investment banking department, sales and trading and principal trading personnel into debt research coverage decisions to ensure that research management independently makes all final decisions regarding the research coverage plan;
(D) limit supervision of a debt research analyst to persons not engaged in: -
Question 8 of 10
8. Question
While identifying and managing conflicts of interest, which of the following statements is false regarding a member’s written policies and procedures?
Correct
2242. Debt Research Analysts and Debt Research Reports
Identifying and Managing Conflicts of Interest
A member’s written policies and procedures limit determination of the debt research department budget to senior management, excluding senior management engaged in investment banking services or principal trading activities, and without regard to specific revenues or results derived from investment banking. Revenues and results of the firm as a whole, however, may be considered in determining the debt research department budget and allocation of debt research department expenses. Nothing in this provision shall require a member to prohibit any personnel from providing to senior management input regarding the demand for and quality of debt research, including product trends and customer interestsIncorrect
2242. Debt Research Analysts and Debt Research Reports
Identifying and Managing Conflicts of Interest
A member’s written policies and procedures limit determination of the debt research department budget to senior management, excluding senior management engaged in investment banking services or principal trading activities, and without regard to specific revenues or results derived from investment banking. Revenues and results of the firm as a whole, however, may be considered in determining the debt research department budget and allocation of debt research department expenses. Nothing in this provision shall require a member to prohibit any personnel from providing to senior management input regarding the demand for and quality of debt research, including product trends and customer interests -
Question 9 of 10
9. Question
While identifying and managing conflicts of interest, which one of the following statements is untrue regarding a member’s written policies and procedures?
Correct
2242. Debt Research Analysts and Debt Research Reports
Identifying and Managing Conflicts of Interest
A member’s written policies and procedures establish information barriers or other institutional safeguards reasonably designed to ensure that debt research analysts are insulated from the review, pressure or oversight by persons engaged in:
(i) investment banking services;
(ii) principal trading or sales and trading activities; and
(iii) other persons who might be biased in their judgment or supervision;Incorrect
2242. Debt Research Analysts and Debt Research Reports
Identifying and Managing Conflicts of Interest
A member’s written policies and procedures establish information barriers or other institutional safeguards reasonably designed to ensure that debt research analysts are insulated from the review, pressure or oversight by persons engaged in:
(i) investment banking services;
(ii) principal trading or sales and trading activities; and
(iii) other persons who might be biased in their judgment or supervision; -
Question 10 of 10
10. Question
When a member’s written policies and procedures restrict or limit activities by debt research analysts, which of the following is true?
Correct
2242. Debt Research Analysts and Debt Research Reports
Identifying and Managing Conflicts of Interest
A member’s written policies and procedures restrict or limit activities by debt research analysts that can reasonably be expected to compromise their objectivity, including prohibiting:
(i) participation in pitches and other solicitations of investment banking services transactions; and
(ii) participation in road shows and other marketing on behalf of an issuer related to an investment banking services transaction;Incorrect
2242. Debt Research Analysts and Debt Research Reports
Identifying and Managing Conflicts of Interest
A member’s written policies and procedures restrict or limit activities by debt research analysts that can reasonably be expected to compromise their objectivity, including prohibiting:
(i) participation in pitches and other solicitations of investment banking services transactions; and
(ii) participation in road shows and other marketing on behalf of an issuer related to an investment banking services transaction;