Quiz-summary
0 of 10 questions completed
Questions:
- 1
- 2
- 3
- 4
- 5
- 6
- 7
- 8
- 9
- 10
Information
Certdemy Free Practice Questions
You have already completed the quiz before. Hence you can not start it again.
Quiz is loading...
You must sign in or sign up to start the quiz.
You have to finish following quiz, to start this quiz:
Results
0 of 10 questions answered correctly
Your time:
Time has elapsed
You have reached 0 of 0 points, (0)
Categories
- Not categorized 0%
- 1
- 2
- 3
- 4
- 5
- 6
- 7
- 8
- 9
- 10
- Answered
- Review
-
Question 1 of 10
1. Question
Which of the following things should be given in order to protect and educate investors?
I. Finra website and address
II. Pamphlet including information about regarding finra brokercheck
III. Finra borkercheck hotline numberCorrect
FINRA rule no 2267. Investor Education and Protection
Any member whose contact with customers is limited to introducing customer accounts to be held directly at an entity other than a FINRA member and thereafter does not carry customer accounts or hold customer funds and securities may furnish a customer with the information required by paragraph (a) of this Rule at or prior to the time of the customer’s initial purchase, in lieu of once every calendar year; and
(2) any member that does not have customers or is a party to a carrying agreement where the carrying firm member complies with paragraph (a) of this Rule is exempt from the requirements of this Rule.Incorrect
FINRA rule no 2267. Investor Education and Protection
Any member whose contact with customers is limited to introducing customer accounts to be held directly at an entity other than a FINRA member and thereafter does not carry customer accounts or hold customer funds and securities may furnish a customer with the information required by paragraph (a) of this Rule at or prior to the time of the customer’s initial purchase, in lieu of once every calendar year; and
(2) any member that does not have customers or is a party to a carrying agreement where the carrying firm member complies with paragraph (a) of this Rule is exempt from the requirements of this Rule. -
Question 2 of 10
2. Question
Which of the following statement is/are TRUE about direct participation program?
I. DPPs are traded pooled investments in real estate or energy-related ventures over an extended time frame.
II. A direct participation program (DPP) is a pooled entity that offers investors access to a business venture’s cash flow and tax benefits
III. Most DPPs are managed passively and have a lifespan of five to 10 years
IV. A direct participation program is usually organized as a limited partnership, a subchapter S corporation, or a general partnership.Correct
FINRA rule no 2310. Direct Participation Programs
Direct participation program (program) — a program which provides for flow-through tax consequences regardless of the structure of the legal entity or vehicle for distribution including, but not limited to, oil and gas programs, real estate programs, agricultural programs, cattle programs, condominium securities, Subchapter S corporate offerings and all other programs of a similar nature, regardless of the industry represented by the program, or any combination thereof. A program may be composed of one or more legal entities or programs but when used herein and in any rules or regulations adopted pursuant hereto the term shall mean each of the separate entities or programs making up the overall program and/or the overall program itself. Excluded from this definition are real estate investment trusts, tax qualified pension and profit sharing plans pursuant to Sections 401 and 403(a) of the Internal Revenue Code and individual retirement plans under Section 408 of that Code, tax sheltered annuities pursuant to the provisions of Section 403(b) of the Internal Revenue Code, and any company including separate accounts, registered pursuant to the Investment Company Act.Incorrect
FINRA rule no 2310. Direct Participation Programs
Direct participation program (program) — a program which provides for flow-through tax consequences regardless of the structure of the legal entity or vehicle for distribution including, but not limited to, oil and gas programs, real estate programs, agricultural programs, cattle programs, condominium securities, Subchapter S corporate offerings and all other programs of a similar nature, regardless of the industry represented by the program, or any combination thereof. A program may be composed of one or more legal entities or programs but when used herein and in any rules or regulations adopted pursuant hereto the term shall mean each of the separate entities or programs making up the overall program and/or the overall program itself. Excluded from this definition are real estate investment trusts, tax qualified pension and profit sharing plans pursuant to Sections 401 and 403(a) of the Internal Revenue Code and individual retirement plans under Section 408 of that Code, tax sheltered annuities pursuant to the provisions of Section 403(b) of the Internal Revenue Code, and any company including separate accounts, registered pursuant to the Investment Company Act. -
Question 3 of 10
3. Question
Which of the following statements is/are true about deferred variable annuity?
I. Income available to investors is dependent on the fund’s performance.
II. Variable annuities are regulated by State Insurance Departments and the SEC
III. Fixed interest rate is guaranteed for one to fifteen years
IV. Investors put their money into the stock market through fund-like structures.Correct
FINRA rule no 2330. Members’ Responsibilities Regarding Deferred Variable Annuities
This Rule applies to recommended purchases and exchanges of deferred variable annuities and recommended initial subaccount allocations. This Rule does not apply to reallocations among subaccounts made or to funds paid after the initial purchase or exchange of a deferred variable annuity. This Rule also does not apply to deferred variable annuity transactions made in connection with any tax-qualified, employer-sponsored retirement or benefit plan that either is defined as a “qualified plan” under Section 3(a)(12)(C) of the Exchange Act or meets the requirements of Internal Revenue Code Sections 403(b), 457(b), or 457(f), unless, in the case of any such plan, a member or person associated with a member makes recommendations to an individual plan participant regarding a deferred variable annuity, in which case the Rule would apply as to the individual plan participant to whom the member or person associated with the member makes such recommendations.Incorrect
FINRA rule no 2330. Members’ Responsibilities Regarding Deferred Variable Annuities
This Rule applies to recommended purchases and exchanges of deferred variable annuities and recommended initial subaccount allocations. This Rule does not apply to reallocations among subaccounts made or to funds paid after the initial purchase or exchange of a deferred variable annuity. This Rule also does not apply to deferred variable annuity transactions made in connection with any tax-qualified, employer-sponsored retirement or benefit plan that either is defined as a “qualified plan” under Section 3(a)(12)(C) of the Exchange Act or meets the requirements of Internal Revenue Code Sections 403(b), 457(b), or 457(f), unless, in the case of any such plan, a member or person associated with a member makes recommendations to an individual plan participant regarding a deferred variable annuity, in which case the Rule would apply as to the individual plan participant to whom the member or person associated with the member makes such recommendations. -
Question 4 of 10
4. Question
Which statement does not refer to breakpoint sale?
I. The purpose of breakpoint is to offer investors discounts for making shorter investments so that they could invest more
II. Break point discount begins at $25,000
III. Purchase of investment must be recorded by Letter of IntentCorrect
FINRA rule no 2342. “Breakpoint” Sales
(a) No member shall sell investment company shares in dollar amounts just below the point at which the sales charge is reduced on quantity transactions so as to share in the higher sales charges applicable on sales below the breakpoint.
(b) For purposes of determining whether a sale in dollar amounts just below a breakpoint was made in order to share in a higher sales charge, FINRA will consider the facts and circumstances, including, for example, whether a member has retained records that demonstrate that the trade was executed in accordance with a bona fide asset allocation program that the member offers to its customers.Incorrect
FINRA rule no 2342. “Breakpoint” Sales
(a) No member shall sell investment company shares in dollar amounts just below the point at which the sales charge is reduced on quantity transactions so as to share in the higher sales charges applicable on sales below the breakpoint.
(b) For purposes of determining whether a sale in dollar amounts just below a breakpoint was made in order to share in a higher sales charge, FINRA will consider the facts and circumstances, including, for example, whether a member has retained records that demonstrate that the trade was executed in accordance with a bona fide asset allocation program that the member offers to its customers. -
Question 5 of 10
5. Question
Which if the following statements is/are true about private security investment?
I. it is sold by a licensed investment representative
II. these securities are offered by government and businesses as well
III. these type of investments are not offered by the investment companies itselfCorrect
FINRA rule no 3280. Private Securities Transactions of an Associated Person
Private securities transaction” shall mean any securities transaction outside the regular course or scope of an associated person’s employment with a member, including, though not limited to, new offerings of securities which are not registered with the Commission, provided however that transactions subject to the notification requirements of Rule 3210, transactions among immediate family members (as defined in FINRA Rule 5130), for which no associated person receives any selling compensation, and personal transactions in investment company and variable annuity securities, shall be excluded.Incorrect
FINRA rule no 3280. Private Securities Transactions of an Associated Person
Private securities transaction” shall mean any securities transaction outside the regular course or scope of an associated person’s employment with a member, including, though not limited to, new offerings of securities which are not registered with the Commission, provided however that transactions subject to the notification requirements of Rule 3210, transactions among immediate family members (as defined in FINRA Rule 5130), for which no associated person receives any selling compensation, and personal transactions in investment company and variable annuity securities, shall be excluded. -
Question 6 of 10
6. Question
Which of the following statements is/are true about SIPC?
I. SIPC protects against the loss of cash and securities such as stocks and bonds held by a customer at a financially-troubled SIPC-member brokerage firm
II. SIPC does not protect the risks associated with the fluctuation in the market value
III. SIPC protection is not limited to certain rules and regulations
IV. SIPC works to restore to customers their securities and cash that are in their accounts when the brokerage firm liquidation begins.Correct
FINRA rule no 2266. SIPC Information
All members, except those members: (a) that pursuant to Section 3(a)(2)(A)(i) through (iii) of the Securities Investor Protection Act of 1970 (SIPA) are excluded from membership in the Securities Investor Protection Corporation (SIPC) and that are not SIPC members; or (b) whose business consists exclusively of the sale of investments that are ineligible for SIPC protection, shall advise all new customers, in writing, at the opening of an account, that they may obtain information about SIPC, including the SIPC brochure, by contacting SIPC, and also shall provide the Web site address and telephone number of SIPC. In addition, such members shall provide all customers with the same information, in writing, at least once each year. In cases where both an introducing firm and clearing firm service an account, the firms may assign these requirements to one of the firms.Incorrect
FINRA rule no 2266. SIPC Information
All members, except those members: (a) that pursuant to Section 3(a)(2)(A)(i) through (iii) of the Securities Investor Protection Act of 1970 (SIPA) are excluded from membership in the Securities Investor Protection Corporation (SIPC) and that are not SIPC members; or (b) whose business consists exclusively of the sale of investments that are ineligible for SIPC protection, shall advise all new customers, in writing, at the opening of an account, that they may obtain information about SIPC, including the SIPC brochure, by contacting SIPC, and also shall provide the Web site address and telephone number of SIPC. In addition, such members shall provide all customers with the same information, in writing, at least once each year. In cases where both an introducing firm and clearing firm service an account, the firms may assign these requirements to one of the firms. -
Question 7 of 10
7. Question
At what stage of money laundering money first enters the financial system?
Correct
3310. Anti-Money Laundering Compliance Program
There are three stages involved in money laundering; placement, layering and integration.
Placement –This is the movement of cash from its source. On occasion the source can be easily disguised or misrepresented. This is followed by placing it into circulation through financial institutions, casinos, shops, bureau de change and other businesses, both local and abroad.
Layering – The purpose of this stage is to make it more difficult to detect and uncover a laundering activity.
Integration – This is the movement of previously laundered money into the economy mainly through the banking system and thus such monies appear to be normal business earnings.Incorrect
3310. Anti-Money Laundering Compliance Program
There are three stages involved in money laundering; placement, layering and integration.
Placement –This is the movement of cash from its source. On occasion the source can be easily disguised or misrepresented. This is followed by placing it into circulation through financial institutions, casinos, shops, bureau de change and other businesses, both local and abroad.
Layering – The purpose of this stage is to make it more difficult to detect and uncover a laundering activity.
Integration – This is the movement of previously laundered money into the economy mainly through the banking system and thus such monies appear to be normal business earnings. -
Question 8 of 10
8. Question
Which if the following statement is not true regarding equity securities?
Correct
FINRA rule no 2251. Processing and Forwarding of Proxy and Other Issuer-Related Materials
An equity security represents ownership interest held by shareholders in an entity (a company, partnership or trust), realized in the form of shares of capital stock, which includes shares of both common and preferred stock. Holders of equity securities are typically not entitled to regular payments.Equity securities do entitle the holder to some control of the company on a pro rata basis, via voting rights
For an equity security, the member, subject to paragraph (e) of this Rule and applicable SEC rules, shall process and forward:
(A) all proxy material, as provided in paragraph (c) of this Rule, that is furnished to the member by the issuer of the securities or a stockholder of such issuer; and
(B) all annual reports, information statements and other material sent to stockholders that are furnished to the member by the issuer of the securities.Incorrect
FINRA rule no 2251. Processing and Forwarding of Proxy and Other Issuer-Related Materials
An equity security represents ownership interest held by shareholders in an entity (a company, partnership or trust), realized in the form of shares of capital stock, which includes shares of both common and preferred stock. Holders of equity securities are typically not entitled to regular payments.Equity securities do entitle the holder to some control of the company on a pro rata basis, via voting rights
For an equity security, the member, subject to paragraph (e) of this Rule and applicable SEC rules, shall process and forward:
(A) all proxy material, as provided in paragraph (c) of this Rule, that is furnished to the member by the issuer of the securities or a stockholder of such issuer; and
(B) all annual reports, information statements and other material sent to stockholders that are furnished to the member by the issuer of the securities. -
Question 9 of 10
9. Question
What is a ‘proxy?’
Correct
2251. Processing and Forwarding of Proxy and Other Issuer-Related Materials
Charges for Proxy Follow-Up Material
For each set of follow-up material, a Processing Unit Fee of 40 cents per account, except for those relating to an issuer’s annual meeting for the election of directors, for which the Processing Unit Fee shall be 20 cents per account.Incorrect
2251. Processing and Forwarding of Proxy and Other Issuer-Related Materials
Charges for Proxy Follow-Up Material
For each set of follow-up material, a Processing Unit Fee of 40 cents per account, except for those relating to an issuer’s annual meeting for the election of directors, for which the Processing Unit Fee shall be 20 cents per account. -
Question 10 of 10
10. Question
Which of the following statement is necessary factors regarding the terms of debt securities?
I. The size of the money borrowed
II. Maturity or renewal date
III. Only the amount of interest rate is considered necessary
IV. Size of loan and interest rateCorrect
2251. Processing and Forwarding of Proxy and Other Issuer-Related Materials
A debt security represents money that is borrowed and must be repaid, with terms that stipulates the size of the loan, interest rate, and maturity or renewal date. Debt securities, which include government and corporate bonds, certificates of deposit (CDs) and collateralized securities (such as CDOs and CMOs), generally entitle their holder to the regular payment of interest and repayment of principal (regardless of the issuer’s performance), along with any other stipulated contractual rights (which do not include voting rights)Incorrect
2251. Processing and Forwarding of Proxy and Other Issuer-Related Materials
A debt security represents money that is borrowed and must be repaid, with terms that stipulates the size of the loan, interest rate, and maturity or renewal date. Debt securities, which include government and corporate bonds, certificates of deposit (CDs) and collateralized securities (such as CDOs and CMOs), generally entitle their holder to the regular payment of interest and repayment of principal (regardless of the issuer’s performance), along with any other stipulated contractual rights (which do not include voting rights)