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Q&As Final Exams 1 & 2 Series 24 100% correct
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Q&As Final Exams 1 & 2 Series 24 100% correct
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Q&As Final Exams 1 & 2 Series 24A syndicate headed by BD is distributing a split offering of Steel Curtain common stock. Some of the
selling shareholders would like to purchase shares in the open market prior to the close of the deal.
Under Rule 102 of Regulation M, selling shareholders are prohibited from this activity. - correct answer
✔✔Investors who are selling stock through a distribution would have a motivation to inflate the price of
the stock, just prior to the distribution. The issuer and selling shareholders are prohibited from buying
shares in the open market prior to the closing of the new issue (defined as the restricted period).
(60727)
Money-market securities (with maturities of less than one year), U.S. Treasury securities, and securities
issued by foreign governments are NOT considered TRACE-eligible. - correct answer ✔✔Money-market
securities (with maturities of less than one year), U.S. Treasury securities, and securities issued by foreign
governments are NOT considered TRACE-eligible. (71181)
The executive representative of a member firm is:
Designated by the member to vote and act for the firm in all matters concerning FINRA. - correct answer
✔✔The executive representative appointed by the member is authorized to act for the member in all
official business concerning the member and FINRA.
Each member firm that is a party to a transaction in a TRACE-eligible security must report the
transaction. - correct answer ✔✔Both the buyer and seller must report the transaction to TRACE. For
any equity securities, only the executing firm would have a trade reporting requirement.
Short interest reports must be received by FINRA no later than:
The second business day after the reporting settlement date - correct answer ✔✔A member firm is
required to file semimonthly reports of its short positions. The reports must be received by FINRA by the
second business day after the reporting settlement date.
One of the responsibilities of a clearing firm is to submit any written complaint it receives regarding the
introducing firm or its employees to both the introducing firm and the introducing firm's DEA. - correct
,answer ✔✔The carrying agreement between the two firms must direct and authorize the clearing firm
to take this action. (99414)
A testimonial may be used If the provider has the knowledge and experience to form a valid opinion. -
correct answer ✔✔A testimonial may be used If the provider has the knowledge and experience to form
a valid opinion.
Agreements for both fully disclosed and omnibus accounts must be submitted to FINRA prior to
becoming effective. - correct answer ✔✔The carrying firm is required to submit to FINRA for prior
approval any agreement for the carrying of accounts, whether on an omnibus or fully disclosed basis,
before such agreement may become effective.
The carrying firm is also required to submit to FINRA for prior approval any material changes to an
approved carrying agreement before such changes may become effective. (82882)
Any information conveyed to a purchaser after the time of sale is not taken into account when
determining whether a prospectus included an untrue statement, or omitted to state a material fact.
(60809) - correct answer ✔✔Any information conveyed to a purchaser after the time of sale is not taken
into account when determining whether a prospectus included an untrue statement, or omitted to state
a material fact. (60809)
When FINRA issues a notice to a member regarding a disqualification, the notice must state that the
member may file a written application requesting relief on behalf of itself, or a person associated with
the member, within 10 business days after service of the notice. - correct answer ✔✔In compliance with
FINRA Rule 9522, if the member fails to file the application requesting relief within 10 business days, the
registration of the disqualified person will be revoked.
(99222)
A security may be signed by either a guardian, authorized third-party or for a corporate account a
designated officer and would be considered good delivery. A parent signature is not automatically
considered good delivery since the custodian of the account must sign for an UGMA account. (31896) -
correct answer ✔✔A security may be signed by either a guardian, authorized third-party or for a
corporate account a designated officer and would be considered good delivery. A parent signature is not
automatically considered good delivery since the custodian of the account must sign for an UGMA
account. (31896)
,A member firm receives a check from a customer made payable to an insurance company for a deferred
variable annuity. The firm may forward the check to the insurance company prior to the application
being approved. - correct answer ✔✔A member firm is permitted to receive, and then forward a check
made payable to the insurance company if certain conditions are met. The firm must have a written
agreement with the insurance company that stipulates that the insurance company agrees to segregate
the funds until notified by the member firm that a principal has approved the application for a deferred
variable annuity. In addition, the agreement must also stipulate that the customer's funds will be
returned if the application is rejected. (82855)
A Real Estate Investment Trust (REIT) in its second taxable year must meet two ownership tests. There
must be at least 100 different shareholders and 5 or fewer individuals may not own more than 50% of its
common stock during the last half of its taxable year. (71002) - correct answer ✔✔A Real Estate
Investment Trust (REIT) in its second taxable year must meet two ownership tests. There must be at least
100 different shareholders and 5 or fewer individuals may not own more than 50% of its common stock
during the last half of its taxable year. (71002)
Regarding annuity payments, a client is concerned about whether his payment will be delayed due to an
NYSE trading halt. What would you explain to the client?
He has nothing to worry about and he will still be receiving his payment at its usual time - correct answer
✔✔Regarding annuity payments, a client is concerned about whether his payment will be delayed due
to an NYSE trading halt. What would you explain to the client?
He has nothing to worry about and he will still be receiving his payment at its usual time
If a customer accepts the recommendation of a BD to purchase a security, and the BD supplies the stock
by selling it short to the customer, the BD is required to make a covering purchase promptly in order to
effect delivery to the customer. (98727) - correct answer ✔✔If a customer accepts the recommendation
of a BD to purchase a security, and the BD supplies the stock by selling it short to the customer, the BD is
required to make a covering purchase promptly in order to effect delivery to the customer. (98727)
According to Sarbanes-Oxley, the annual reports filed with the SEC by publicly traded companies are
required to contain all of the following provisions, EXCEPT:
A statement that the firm has filed the required SEC forms when it has raised capital in the public
markets. - correct answer ✔✔A firm issuer is always required to file the appropriate SEC forms when
raising capital in the public markets. (99245)
, Under portfolio margining rules, maintenance calls are due within three business days. Most firms
employ more stringent house rules when dealing with portfolio margin customers. (98696) - correct
answer ✔✔Under portfolio margining rules, maintenance calls are due within three business days. Most
firms employ more stringent house rules when dealing with portfolio margin customers. (98696)
Restricted stock may be sold if it was paid for in full and has been held for 6 months. - correct answer
✔✔The BD handling the sale under Rule 144 may do so through a broker's transaction that *DOES NOT
INVOLVE* a solicitation or a principal basis. The issuer of the securities must be current with its SEC
reporting requirements. (71021)
The Nasdaq Market Center Execution System is sometimes referred to as the Single Book. This system
was formed through the integration of Nasdaq's three separate execution platforms into a single
platform that allows for trading all Nasdaq, NYSE, and AMEX securities. (71093) - correct answer ✔✔The
Nasdaq Market Center Execution System is sometimes referred to as the Single Book. This system was
formed through the integration of Nasdaq's three separate execution platforms into a single platform
that allows for trading all Nasdaq, NYSE, and AMEX securities. (71093)
Investors must generally pass a 3-part test to be considered a QIB.
1. Only certain types of institutions are eligible, including insurance companies, registered investment
companies, pension plans, corporations, and registered investment advisers. - correct answer ✔✔2. The
buyer must be purchasing for its own account or the account of other QIBs.
3. The buyer must own and invest at least $100 million of securities of issuers not affiliated with the
buyer.
When an application for the purchase of a variable annuity is received from a registered representative,
the principal must approve or reject the application within seven business days of receipt. - correct
answer ✔✔In addition, the principal must document and sign the recommendation, whether the
application is approved or rejected. (71134)
What period(s) must be covered by performance advertising for a variable product?
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