Securities Industry Essentials UPDATED Actual Exam Questions and CORRECT Answers
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Securities Industry Essentials
Institution
Securities Industry Essentials
Securities Industry Essentials UPDATED
Actual Exam Questions and CORRECT
Answers
What is an SRO, list them. - CORRECT ANSWER- Self Regulated Organization
1. FINRA (Financial Industry Regulatory Authority)
2. CBOE (Chicago Board Options Exchange)
3. MSRB (Municipal Securities Rulemaking Board
Securities Industry Essentials UPDATED
Actual Exam Questions and CORRECT
Answers
What is an SRO, list them. - CORRECT ANSWER✔✔- Self Regulated Organization
1. FINRA (Financial Industry Regulatory Authority)
2. CBOE (Chicago Board Options Exchange)
3. MSRB (Municipal Securities Rulemaking Board)
Federal Reserve Board (FRB), what is its main function - CORRECT ANSWER✔✔-
Determines monetary policy . The FRB determines through its actions how much money is
available for businesses and consumers to spend.
Securities Investor Protection Corporation (SIPC) - CORRECT ANSWER✔✔- a nonprofit
corporation, created by Congress and subject to SEC and congressional oversight, that insures
customer accounts against the financial failure of a brokerage firm
Describe SIPC Coverage - CORRECT ANSWER✔✔- No more than $500,000 per separate
customer, of that $500,000 total, no more than $250,000 cash. The equity in a margin account
is covered, not the full market value.
Describe FDIC Coverage - CORRECT ANSWER✔✔- Up to $250,000 for each deposit
ownership category in each insured bank.
Institutional Investor - CORRECT ANSWER✔✔- an organization that pools contributions
from investors, clients, or depositors and uses these funds to buy stocks and other securities
Accredited Investor - CORRECT ANSWER✔✔- Has a net worth of $1 million or more; or
has had an annual income of $200,000 or more in each of the two most recent years
($300,000 jointly with a spouse) and who has a reasonable expectation of reaching the same
income level during the current year.
, Carrying Firms - CORRECT ANSWER✔✔- Also known as a clearing firm. Carries
customer accounts and accepts funds and securities from customers. They have the capability
to do trades, clear, and settle transactions, and handle all back office tasks.
They must segregate customer funds and securities from the firms'.
Introducing Firms - CORRECT ANSWER✔✔- Also known as fully disclosed. Introduces its
customers to a clearing firm. Essentially the clearing firm acts as the introducing firm's back
office.
Market Types - CORRECT ANSWER✔✔- 1. Capital Markets
2. Primary and Secondary Markets
3. Third Market
4. Fourth Market
FINRA's Objectives - CORRECT ANSWER✔✔- - Promote investment banking and
securities business
- Provide a medium for communication amongst its members and between members, govt,
and other agencies
- Adopt, administer, and enforce rules
CBOE - CORRECT ANSWER✔✔- regulates all matters related to trading standardized
options and related contracts listed on that exchange
MSRB - CORRECT ANSWER✔✔- Responsible for rule-making authority for all state and
municipal securities. this entity does not enforce any of the rules it makes.
Capital Markets - CORRECT ANSWER✔✔- The financial markets for stocks and for
intermediate- or long-term debt (one year or longer). Both public and private sectors sell
securities to raise funds.
Primary Markets - CORRECT ANSWER✔✔- markets in which corporations raise capital by
issuing new securities
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