Unit 8.6 The Securities Exchange Act of 1934 (Series 65) ||
Questions and 100% Accurate Answers.
Which of the following statements regarding discretionary accounts is TRUE?
A) A branch manager must approve discretionary orders before entry.
B) A principal must approve discretionary orders before entry.
C) An order in which an investor designates the security's name, the number of shares, and
whether to buy or sell and gives the agent discretion as to time and price only is not considered
discretionary.
D) The rules regarding churning of accounts do not apply to discretionary accounts. Correct
Answer: C
An order is discretionary only if an agent selects the size of the trade, the security, or whether to
buy or sell. Selecting only price and/or time does not constitute discretion. Churning rules apply
to discretionary accounts, and a principal must approve order tickets after the trades, not before.
Reference: 8.6.2.15 in the License Exam Manual.
The Securities Exchange Act of 1934 regulates or mandates each of the following EXCEPT:
A) creation of the SEC.
B) manipulation of the secondary market.
C) extension of credit to customers.
D) full and fair disclosure on new offerings. Correct Answer: D
The Securities Exchange Act of 1934 created the SEC and regulates the secondary market. The
Securities Exchange Act of 1934 does not address full and fair disclosure issues; the Securities
Act of 1933 addresses such issues.
Reference: 8.6 in the License Exam Manual.
Which of the following acts requires publicly traded corporations to issue annual reports?
A) Investment Company Act of 1940.
B) Securities Exchange Act of 1934.
C) Securities Act of 1933.
D) Trust Indenture Act of 1939. Correct Answer: D
,The Securities Exchange Act of 1934 mandates that public issuers file annual and quarterly
reports with the SEC.
Reference: 8.6 in the License Exam Manual.
The Securities Exchange Act of 1934 covers all of the following EXCEPT:
A) issuance of financial reports by corporations.
B) issuance of corporate securities.
C) trading on exchanges.
D) trading of corporate securities. Correct Answer: B
The Securities Exchange Act of 1934 regulates secondary trading or trading markets, including
reporting requirements. The Securities Act of 1933 regulates the issuance of new, nonexempt
securities.
Reference: 8.6 in the License Exam Manual.
Under federal law, which act regulates the activities of broker/dealers and associated persons?
A) Uniform Securities Act.
B) Securities Exchange Act of 1934.
C) Investment Company Act of 1940.
D) Trust Indenture Act of 1939. Correct Answer: B
The Securities Exchange Act of 1934 regulates the secondary market and its employees and
firms.
Reference: 8.6 in the License Exam Manual.
Which of the following is regulated by the Securities Exchange Act of 1934?
A) Exemptions of new issues from registration requirements.
B) Requirements for the provisions of a prospectus.
C) Registration of new issues of stock.
D) Regulation of exchanges. Correct Answer: D
The purpose of the Securities Exchange Act of 1934 is to regulate secondary market trading of
securities that have already been issued. It created the SEC and requires that all securities
exchanges and firms register with the SEC if they are involved in interstate commerce. It was the
, Securities Act of 1933 that dealt with registration and exemption from registration of new issues
and prospectus delivery requirements.
Reference: 8.6 in the License Exam Manual.
What is the purpose of the Securities Exchange Act of 1934?
A) It regulates the persons involved in the secondary market.
B) It provides requirements relating to new issues.
C) It provides policies relating to unethical business practices.
D) It provides standards among the states. Correct Answer: A
The Securities Exchange Act of 1934 was designed to regulate securities transactions, securities
markets, and securities firms that trade in the secondary market. The Securities Act of 1933 was
designed to provide regulation in the new issue market. Unethical business practices are covered
in NASAA's Statements of Policy on Unethical Business Practices. The Uniform Securities Act
provides a model for the states.
Reference: 8.6 in the License Exam Manual.
Under the Securities Exchange Act of 1934, SEC Commissioners
A) must not have any other business or employment besides their role with the SEC
B) must have professional experience as attorneys as well as knowledge of the securities
business
C) are appointed by FINRA and confirmed by the United States Senate
D) must not be affiliated with any political party. Correct Answer: A
SEC Commissioners may have no other business or employment other than their commission
seat. They must also refrain from any securities trading. However, experience as an attorney is
not a qualification. Commissioners are not elected but are appointed by the president and
confirmed by the senate. Political party affiliation is a consideration, since no more than 3 of the
5 Commissioners may belong to the same party.
Reference: 8.6.1 in the License Exam Manual.
When an IAR submits an order ticket to purchase securities for a client, all of the following
would appear EXCEPT:
A) the IAR's name.
B) the details of the order.
C) the current market price of the security.
Questions and 100% Accurate Answers.
Which of the following statements regarding discretionary accounts is TRUE?
A) A branch manager must approve discretionary orders before entry.
B) A principal must approve discretionary orders before entry.
C) An order in which an investor designates the security's name, the number of shares, and
whether to buy or sell and gives the agent discretion as to time and price only is not considered
discretionary.
D) The rules regarding churning of accounts do not apply to discretionary accounts. Correct
Answer: C
An order is discretionary only if an agent selects the size of the trade, the security, or whether to
buy or sell. Selecting only price and/or time does not constitute discretion. Churning rules apply
to discretionary accounts, and a principal must approve order tickets after the trades, not before.
Reference: 8.6.2.15 in the License Exam Manual.
The Securities Exchange Act of 1934 regulates or mandates each of the following EXCEPT:
A) creation of the SEC.
B) manipulation of the secondary market.
C) extension of credit to customers.
D) full and fair disclosure on new offerings. Correct Answer: D
The Securities Exchange Act of 1934 created the SEC and regulates the secondary market. The
Securities Exchange Act of 1934 does not address full and fair disclosure issues; the Securities
Act of 1933 addresses such issues.
Reference: 8.6 in the License Exam Manual.
Which of the following acts requires publicly traded corporations to issue annual reports?
A) Investment Company Act of 1940.
B) Securities Exchange Act of 1934.
C) Securities Act of 1933.
D) Trust Indenture Act of 1939. Correct Answer: D
,The Securities Exchange Act of 1934 mandates that public issuers file annual and quarterly
reports with the SEC.
Reference: 8.6 in the License Exam Manual.
The Securities Exchange Act of 1934 covers all of the following EXCEPT:
A) issuance of financial reports by corporations.
B) issuance of corporate securities.
C) trading on exchanges.
D) trading of corporate securities. Correct Answer: B
The Securities Exchange Act of 1934 regulates secondary trading or trading markets, including
reporting requirements. The Securities Act of 1933 regulates the issuance of new, nonexempt
securities.
Reference: 8.6 in the License Exam Manual.
Under federal law, which act regulates the activities of broker/dealers and associated persons?
A) Uniform Securities Act.
B) Securities Exchange Act of 1934.
C) Investment Company Act of 1940.
D) Trust Indenture Act of 1939. Correct Answer: B
The Securities Exchange Act of 1934 regulates the secondary market and its employees and
firms.
Reference: 8.6 in the License Exam Manual.
Which of the following is regulated by the Securities Exchange Act of 1934?
A) Exemptions of new issues from registration requirements.
B) Requirements for the provisions of a prospectus.
C) Registration of new issues of stock.
D) Regulation of exchanges. Correct Answer: D
The purpose of the Securities Exchange Act of 1934 is to regulate secondary market trading of
securities that have already been issued. It created the SEC and requires that all securities
exchanges and firms register with the SEC if they are involved in interstate commerce. It was the
, Securities Act of 1933 that dealt with registration and exemption from registration of new issues
and prospectus delivery requirements.
Reference: 8.6 in the License Exam Manual.
What is the purpose of the Securities Exchange Act of 1934?
A) It regulates the persons involved in the secondary market.
B) It provides requirements relating to new issues.
C) It provides policies relating to unethical business practices.
D) It provides standards among the states. Correct Answer: A
The Securities Exchange Act of 1934 was designed to regulate securities transactions, securities
markets, and securities firms that trade in the secondary market. The Securities Act of 1933 was
designed to provide regulation in the new issue market. Unethical business practices are covered
in NASAA's Statements of Policy on Unethical Business Practices. The Uniform Securities Act
provides a model for the states.
Reference: 8.6 in the License Exam Manual.
Under the Securities Exchange Act of 1934, SEC Commissioners
A) must not have any other business or employment besides their role with the SEC
B) must have professional experience as attorneys as well as knowledge of the securities
business
C) are appointed by FINRA and confirmed by the United States Senate
D) must not be affiliated with any political party. Correct Answer: A
SEC Commissioners may have no other business or employment other than their commission
seat. They must also refrain from any securities trading. However, experience as an attorney is
not a qualification. Commissioners are not elected but are appointed by the president and
confirmed by the senate. Political party affiliation is a consideration, since no more than 3 of the
5 Commissioners may belong to the same party.
Reference: 8.6.1 in the License Exam Manual.
When an IAR submits an order ticket to purchase securities for a client, all of the following
would appear EXCEPT:
A) the IAR's name.
B) the details of the order.
C) the current market price of the security.
