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 statements is/are true regarding foreign sovereign debt security?
I. Sovereign bonds can be denominated in a foreign currency or the government’s domestic currency
II. Because of default risk, sovereign bonds tend to be offered at NO discount
III. The government of a country with an unstable economy tends to denominate its bonds in the currency of a country with a stable economy
IV. The default risk of a sovereign bond is assessed by international debt marketsCorrect
Rule no 4210. Margin Requirements
The term “highly rated foreign sovereign debt securities” means any debt securities (including major foreign sovereign debt securities) issued or guaranteed by the government of a foreign country, its provinces, state or cities, or a supranational entity, if at the time of the extension of credit the issue, the issuer or guarantor, or any other outstanding obligation of the issuer or guarantor ranked junior to or on a parity with the issue or the guarantee is assigned a rating (implicitly or explicitly) in one of the top two rating categories by at least one nationally recognized statistical rating organization.Incorrect
Rule no 4210. Margin Requirements
The term “highly rated foreign sovereign debt securities” means any debt securities (including major foreign sovereign debt securities) issued or guaranteed by the government of a foreign country, its provinces, state or cities, or a supranational entity, if at the time of the extension of credit the issue, the issuer or guarantor, or any other outstanding obligation of the issuer or guarantor ranked junior to or on a parity with the issue or the guarantee is assigned a rating (implicitly or explicitly) in one of the top two rating categories by at least one nationally recognized statistical rating organization. -
Question 2 of 10
2. Question
Which of the following statement is/are true regarding investment grade debt securities?
I. Investment grade refers to the quality of a company’s credit
II. To be considered an investment grade issue, the company must be rated at ‘BBB’ or lesser
III. Anything below this ‘BBB’ rating is considered non-investment grade
IV. If the company or bond is rated ‘BB’ or lower it is known as junk gradeCorrect
Rule no 4210. Margin Requirements
The term “investment grade debt securities” means any debt securities (including those issued by the government of a foreign country, its provinces, states or cities, or a supranational entity), if at the time of the extension of credit the issue, the issuer or guarantor, or any other outstanding obligation of the issuer or guarantor ranked junior to or on a parity with the issue or the guarantee is assigned a rating (implicitly or explicitly) in one of the top four rating categories by at least one nationally recognized statistical rating organization.Incorrect
Rule no 4210. Margin Requirements
The term “investment grade debt securities” means any debt securities (including those issued by the government of a foreign country, its provinces, states or cities, or a supranational entity), if at the time of the extension of credit the issue, the issuer or guarantor, or any other outstanding obligation of the issuer or guarantor ranked junior to or on a parity with the issue or the guarantee is assigned a rating (implicitly or explicitly) in one of the top four rating categories by at least one nationally recognized statistical rating organization. -
Question 3 of 10
3. Question
The term “listed non securities” means?
I. Securities listed under Bank Secrecy Act
II. Securities listed on national security exchange
III. Have unlisted trading privileges on a national securities exchange
IV. Securities listed under Sarbanes Oxley ActCorrect
Rule no 4210. Margin Requirements
The term “non-equity securities” means any securities other than equity securities as defined in Section 3(a)(11) of the Exchange Act.
The term “listed non-equity securities” means any non-equity securities that: (A) are listed on a national securities exchange; or (B) have unlisted trading privileges on a national securities exchange.Incorrect
Rule no 4210. Margin Requirements
The term “non-equity securities” means any securities other than equity securities as defined in Section 3(a)(11) of the Exchange Act.
The term “listed non-equity securities” means any non-equity securities that: (A) are listed on a national securities exchange; or (B) have unlisted trading privileges on a national securities exchange. -
Question 4 of 10
4. Question
Which of the following statement is/are true regarding “other margin-able non-equity securities”?
I. At the time of the original issue, a principal amount of not less than $25 million of the issue outstanding
II. Any debt security non traded on national securities exchange
III. At the time of the original issue, a principal amount of not less than $35 million of the issue outstanding
IV. Current reports relating to the issue of other margin-able non equity securities have been filed with the SECCorrect
Rule no 4210. Margin Requirements
The term “other marginable non-equity securities” means:
(A) Any debt securities not traded on a national securities exchange meeting all of the following requirements:
(i) At the time of the original issue, a principal amount of not less than $25 million of the issue was outstanding;
(ii) The issue was registered under Section 5 of the Securities Act and the issuer either files periodic reports pursuant to Section 13(a) or 15(d) of the Exchange Act or is an insurance company which meets all of the conditions specified in Section 12(g)(2)(G) of the Exchange Act; and
(iii) At the time of the extensions of credit, the creditor has a reasonable basis for believing that the issuer is not in default on interest or principal paymentsIncorrect
Rule no 4210. Margin Requirements
The term “other marginable non-equity securities” means:
(A) Any debt securities not traded on a national securities exchange meeting all of the following requirements:
(i) At the time of the original issue, a principal amount of not less than $25 million of the issue was outstanding;
(ii) The issue was registered under Section 5 of the Securities Act and the issuer either files periodic reports pursuant to Section 13(a) or 15(d) of the Exchange Act or is an insurance company which meets all of the conditions specified in Section 12(g)(2)(G) of the Exchange Act; and
(iii) At the time of the extensions of credit, the creditor has a reasonable basis for believing that the issuer is not in default on interest or principal payments -
Question 5 of 10
5. Question
Which of the following statement is true about “offsetting long and short position”?
Correct
Rule no 4210. Margin Requirements
When a security carried in a “long” position is exchangeable or convertible within a reasonable time, without restriction other than the payment of money, into a security carried in a “short” position for the same customer, the margin to be maintained on such positions shall be 10 percent of the current market value of the “long” securities. When the same security is carried “long” and “short” the margin to be maintained on such positions shall be 5 percent of the current market value of the “long” securities. In determining such margin requirements “short” positions shall be marked to the market.Incorrect
Rule no 4210. Margin Requirements
When a security carried in a “long” position is exchangeable or convertible within a reasonable time, without restriction other than the payment of money, into a security carried in a “short” position for the same customer, the margin to be maintained on such positions shall be 10 percent of the current market value of the “long” securities. When the same security is carried “long” and “short” the margin to be maintained on such positions shall be 5 percent of the current market value of the “long” securities. In determining such margin requirements “short” positions shall be marked to the market. -
Question 6 of 10
6. Question
Which of the following statements is/are true regarding broker dealer accounts?
I. Broker dealer accounts are registered with SEC
II. Consolidated account statements, showing brokerage positions
III. Shows mutual funds, and the position of selected annuities held at the carrier
IV. Broker dealer account are registered with Bank Secrecy ActCorrect
Rule no 4210. Margin Requirements
A member may carry the proprietary account of another broker-dealer, which is registered with the SEC, upon a margin basis which is satisfactory to both parties, provided the requirements of Regulation T and Rules 400 through 406 of SEC Customer Margin Requirements for Security Futures and Rules 41.42 through 41.49 under the CEA are adhered to and the account is not carried in a deficit equity condition. The amount of any deficiency between the equity maintained in the account and the haircut requirements pursuant to SEA Rule 15c3-1 and, if applicable, Rule 4110(a), shall be charged against the member’s net capital when computing net capital under SEA Rule 15c3-1 and Rule 4110(a). However, when computing charges against net capital for transactions in securities covered by paragraphs (e)(2)(F) and (e)(2)(G) of this Rule, absent a greater haircut requirement that may have been imposed on such securities pursuant to Rule 4110(a), the respective requirements of those paragraphs may be used, rather than the haircut requirements of SEA Rule 15c3-1.Incorrect
Rule no 4210. Margin Requirements
A member may carry the proprietary account of another broker-dealer, which is registered with the SEC, upon a margin basis which is satisfactory to both parties, provided the requirements of Regulation T and Rules 400 through 406 of SEC Customer Margin Requirements for Security Futures and Rules 41.42 through 41.49 under the CEA are adhered to and the account is not carried in a deficit equity condition. The amount of any deficiency between the equity maintained in the account and the haircut requirements pursuant to SEA Rule 15c3-1 and, if applicable, Rule 4110(a), shall be charged against the member’s net capital when computing net capital under SEA Rule 15c3-1 and Rule 4110(a). However, when computing charges against net capital for transactions in securities covered by paragraphs (e)(2)(F) and (e)(2)(G) of this Rule, absent a greater haircut requirement that may have been imposed on such securities pursuant to Rule 4110(a), the respective requirements of those paragraphs may be used, rather than the haircut requirements of SEA Rule 15c3-1. -
Question 7 of 10
7. Question
What is the information the escrow agreement usually includes?
I. Definitions for any expressions pertinent to the agreement
II. The acceptable use of funds by the escrow agent
III. The escrow agent’s fees and expenses
IV. The escrow funds and detailed conditions for the release of these fundsCorrect
Rule no 4210. Margin Requirements
he term “escrow agreement,” when used in connection with cash settled calls, puts, currency warrants, currency index warrants or stock index warrants, carried “short”, means any agreement issued in a form acceptable to FINRA under which a bank holding cash, cash equivalents, one or more qualified equity securities or a combination thereof in the case of a call or warrants, or cash, cash equivalents or a combination thereof in the case of a put or warrant is obligated (in the case of an option) to pay the creditor the exercise settlement amount in the event an option is assigned an exercise notice or, (in the case of a warrant) the sufficient funds to purchase a warrant sold “short” in the event of a buy-in.Incorrect
Rule no 4210. Margin Requirements
he term “escrow agreement,” when used in connection with cash settled calls, puts, currency warrants, currency index warrants or stock index warrants, carried “short”, means any agreement issued in a form acceptable to FINRA under which a bank holding cash, cash equivalents, one or more qualified equity securities or a combination thereof in the case of a call or warrants, or cash, cash equivalents or a combination thereof in the case of a put or warrant is obligated (in the case of an option) to pay the creditor the exercise settlement amount in the event an option is assigned an exercise notice or, (in the case of a warrant) the sufficient funds to purchase a warrant sold “short” in the event of a buy-in. -
Question 8 of 10
8. Question
The “exercise settlement amount” shall mean?
Correct
Rule no 4210. Margin Requirements
The term “exercise settlement amount” shall mean the difference between the “aggregate exercise price” and the “aggregate current index value” (as such terms are defined in the pertinent By-Laws of The Options Clearing Corporation).Incorrect
Rule no 4210. Margin Requirements
The term “exercise settlement amount” shall mean the difference between the “aggregate exercise price” and the “aggregate current index value” (as such terms are defined in the pertinent By-Laws of The Options Clearing Corporation). -
Question 9 of 10
9. Question
Which of the following statements is/are true regarding fidelity bonds?
I. Fidelity bonds can be considered part of a business’s risk management strategy
II. Fidelity bonds are trade-able in nature and can incur interest
III. Fidelity bonds are often held by insurance companies and brokerage firms
IV. Fidelity bonds required to carry protection proportional to their net capitalCorrect
Rule no 4360. Fidelity Bonds
Each member required to join the Securities Investor Protection Corporation shall maintain blanket fidelity bond coverage which provides against loss and has Insuring Agreements covering at least the following:
(A) Fidelity
(B) On Premises
(C) In Transit
(D) Forgery and Alteration
(E) Securities
(F) Counterfeit Currency
(2) The fidelity bond must include a cancellation rider providing that the insurance carrier will use its best efforts to promptly notify FINRA in the event the bond is cancelled, terminated or substantially modified.
(3) A member’s fidelity bond must provide for per loss coverage without an aggregate limit of liability.Incorrect
Rule no 4360. Fidelity Bonds
Each member required to join the Securities Investor Protection Corporation shall maintain blanket fidelity bond coverage which provides against loss and has Insuring Agreements covering at least the following:
(A) Fidelity
(B) On Premises
(C) In Transit
(D) Forgery and Alteration
(E) Securities
(F) Counterfeit Currency
(2) The fidelity bond must include a cancellation rider providing that the insurance carrier will use its best efforts to promptly notify FINRA in the event the bond is cancelled, terminated or substantially modified.
(3) A member’s fidelity bond must provide for per loss coverage without an aggregate limit of liability. -
Question 10 of 10
10. Question
Which of the following statement is/are true about “Joint Back Office Requirement”?
I. Participants must be registered as a broker-dealer pursuant to Section 15 of the Securities Exchange Act of 1934
II. Meet and maintain the ownership standards established by the carrying broker-dealer
III. Participants must be registered under Bank Secrecy Act
IV. Meet and maintain a minimum account equity requirement of $1,000,000 with each clearing broker-dealer where an account of the JBO Participant is carriedCorrect
Rule no 4210. Margin Requirements
An arrangement may be established between two or more registered broker-dealers pursuant to Regulation T Section 220.7, to form a joint back office (“JBO”) arrangement for carrying and clearing or carrying accounts of participating broker-dealers. Members must provide written notification to FINRA prior to establishing a JBO arrangement.
(i) A carrying and clearing, or carrying member must:
a. maintain a minimum tentative net capital (as such term is defined in SEA Rule 15c3-1) of $25 million as computed pursuant to SEA Rule 15c3-1 and, if applicable, Rule 4110(a), except that a member whose primary business consists of the clearance of options market-maker accounts may carry JBO accounts provided that it maintains a minimum net capital of $7 million as computed pursuant to SEA Rule 15c3-1 and, if applicable, Rule 4110(a). In addition, the member must include in its ratio of gross options market maker deductions to net capital required by the provisions of SEA Rule 15c3-1 and, if applicable, Rule 4110(a), gross deductions for JBO participant accounts. Clearance of option market maker accounts shall be deemed a broker-dealer’s primary business if a minimum of 60 percent of the aggregate deductions in the above ratio are options market maker deductions. In the event that a carrying and clearing, or a carrying member’s tentative net capital (as such term is defined in SEA Rule 15c3-1), or net capital, respectively, has fallen below the above requirements, the firm shall: 1. promptly notify FINRA in writing of such deficiency, 2. take appropriate action to resolve such deficiency within three consecutive business days, or not permit any new transactions to be entered into pursuant to the JBO arrangementIncorrect
Rule no 4210. Margin Requirements
An arrangement may be established between two or more registered broker-dealers pursuant to Regulation T Section 220.7, to form a joint back office (“JBO”) arrangement for carrying and clearing or carrying accounts of participating broker-dealers. Members must provide written notification to FINRA prior to establishing a JBO arrangement.
(i) A carrying and clearing, or carrying member must:
a. maintain a minimum tentative net capital (as such term is defined in SEA Rule 15c3-1) of $25 million as computed pursuant to SEA Rule 15c3-1 and, if applicable, Rule 4110(a), except that a member whose primary business consists of the clearance of options market-maker accounts may carry JBO accounts provided that it maintains a minimum net capital of $7 million as computed pursuant to SEA Rule 15c3-1 and, if applicable, Rule 4110(a). In addition, the member must include in its ratio of gross options market maker deductions to net capital required by the provisions of SEA Rule 15c3-1 and, if applicable, Rule 4110(a), gross deductions for JBO participant accounts. Clearance of option market maker accounts shall be deemed a broker-dealer’s primary business if a minimum of 60 percent of the aggregate deductions in the above ratio are options market maker deductions. In the event that a carrying and clearing, or a carrying member’s tentative net capital (as such term is defined in SEA Rule 15c3-1), or net capital, respectively, has fallen below the above requirements, the firm shall: 1. promptly notify FINRA in writing of such deficiency, 2. take appropriate action to resolve such deficiency within three consecutive business days, or not permit any new transactions to be entered into pursuant to the JBO arrangement