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FINRA Series 99 Exam 343 Questions with Verified Answers,100% CORRECT
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FINRA Series 99 Exam 343 Questions with Verified Answers
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FINRA Series 99 Exam 343 Questions with Verified AnswersWays to raise capital - CORRECT ANSWER 1. sell ownership/equity in your
company
2. issue debt securities (bonds)
share of stock - CORRECT ANSWER a percentage ownership of the company; a
unit of ownership
debit security/bond - CORRECT ANSWER "a tiny loan" to a company where the
issuer promises to pay back an amount of $ in the future + interest
capital markets - CORRECT ANSWER includes the stock market and the bond
market
stock market - CORRECT ANSWER the place where stocks are traded among
investors
bond market - CORRECT ANSWER the place where bonds are traded among
investors
hire an underwriter or investment banking firm. - CORRECT ANSWER a company
must do what to issue stock?
primary market - CORRECT ANSWER the first time a stock is sold to investors
secondary market - CORRECT ANSWER the place where a stock is traded among
investors
broker - CORRECT ANSWER 1. acts as a go-between for the buyer and seller
2. earns $ through fees for their services (i.e. commissions)
dealer - CORRECT ANSWER 1. makes trades out of their inventory of stock
2. buys at a lower "bid" price and sells it at a higher "ask" price
,3. earns $ through the differences between the ask price and the bid price
registered investment advisors - CORRECT ANSWER individuals or firms that
manage the investment portfolios of individuals, groups, or funds
RIA needs to register with SEC - CORRECT ANSWER if AUM > $110 M
RIA needs to register with the state - CORRECT ANSWER if AUM < $100 M
RIA can register with SEC or state - CORRECT ANSWER if $100 M < AUM < $110 M
The Securities Act of 1933 - CORRECT ANSWER regulates the registration of
securities that are sold to the public
The Securities Act of 1933 - CORRECT ANSWER requires that issuers disclose
material information to investors
The Securities Act of 1933 - CORRECT ANSWER a.k.a. the "Paper Act" because
corporations register their securities through a paper registration statement
The Securities Act of 1933 - CORRECT ANSWER regulates the primary market
The Securities Exchange Act of 1934 - CORRECT ANSWER regulates broker-dealers
and how existing securities are resold in the secondary market
The Securities Exchange Act of 1934 - CORRECT ANSWER a.k.a. the "People Act"
because it regulates people who work in the industry
The Securities Exchange Act of 1934 - CORRECT ANSWER contains important
trading laws, such as insider trading laws
The Securities Exchange Act of 1934 - CORRECT ANSWER introduced margin
requirements
The Securities Exchange Act of 1934 - CORRECT ANSWER created the Securities
and Exchange Commission (SEC) to interpret and enforce securities laws
,The Securities Exchange Act of 1934 - CORRECT ANSWER allows securities
exchanges and broker-dealers to regulate themselves
The Securities Exchange Act of 1934 - CORRECT ANSWER requires broker-dealers
to register with the SEC and FINRA
security - CORRECT ANSWER (1) an investment of money that (2) involves a
common enterprise (3) in which the investors expect to make a profit (4) from the
efforts of someone other than themselves
what is not a security? - CORRECT ANSWER 1. fixed annuity
2. whole life, term life, universal life, endowment policy
3. gold
4. collectibles, antiques, art
what are securities exempt under the '33 Act? - CORRECT ANSWER 1. securities
issued by the federal gov't (U.S. treasury bills, notes, and bonds)
2. municipal securities
3. securities issued/regulated by government agencies and government
sponsored entities
4. securities issued by banks and credit union
5. securities issued by non-profits
private placement - CORRECT ANSWER a private offering of debt or equity
securities to a small group of investors
exempt transaction - CORRECT ANSWER a private placement that meets the
requirements of Regulation D, and is not subject to full SEC registration
Regulation D, Rule 504 - CORRECT ANSWER 1. non-reporting issuers for small
equity offerings
2. small, under 1 million aggregated over 12 months
3. no restriction on the number or type of investors
Regulation D, Rule 505 - CORRECT ANSWER 1. open to all issuers (except sketch
ones w/ violations)
2. somewhat small, under $5M aggregated over 12 months
, 3. maximum of 35 non-accredited investors
Regulation D, Rule 506(b) - CORRECT ANSWER 1. open to all issuers (except sketch
ones w/ violations)
2. no dollar cap
3. maximum of 35 non-accredited investors, but all must be sophisticated or
represented by a "purchaser representative"
Regulation D, Rule 506(c) - CORRECT ANSWER 1. new exemption category created
under the JOBS Act
2. allows general solicitation - i.e. ads in newspapers, magazines, TV, radio
3. all investors must be accredited
accredited investor - CORRECT ANSWER a large institutional investor, or;
corporations, trusts, partnerships with > $5M in assets, or;
issuer's directors, executive officers, and general partners;
individuals with a net worth > $1M, alone or with a spouse, or;
individuals with an income of $200k within the last 2 years, or $300k with a
spouse, or;
any firm where all the owners are accredited investors (venture capital firms)
first market - CORRECT ANSWER an auction market; listed securities trade on an
exchange floor
second market - CORRECT ANSWER a negotiated market; NASDAQ Exchange and
over the counter (OTC) market where unlisted securities trade (OTCBB and Pink
Sheets)
third market - CORRECT ANSWER a negotiated market; institutional investors and
broker-dealers trade listed securities OTC - provides competition for the
exchanges.
fourth market - CORRECT ANSWER a negotiated market; listed and unlisted
securities are traded by institutional investors without a broker dealer; a.k.a the
ECN market
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