Exam (elaborations)
FINRA Series 9 Mastery and Practice Exam 120 Questions with Verified Answers,100% CORRECT
- Course
- Institution
FINRA Series 9 Mastery and Practice Exam 120 Questions with Verified Answers
[Show more]
Content preview
FINRA Series 9 Mastery and Practice Exam 120 Questionswith Verified Answers
The Characteristics and Risk of Standardized Options is the official disclosure
document that must be provided to option customers at or before account
approval. This document is designed to
1. protect investors from market risk.
2. fulfill the prospectus delivery requirements of the Securities Act of 1933.
3. disclose the risk of investing in options.
4. provide useful option strategies.
A)
III and IV
B)
I, II, III, IV
C)
I and II
D)
II and III
Explanation
The options clearing corporate disclosure document, The Characteristics and Risk
of Standardized Options, creates an exemption from the prospectus delivery
requirements of the Securities Act of 1933. Its primary purpose is to disclose the
risk of option investing. It does not protect against market risk, nor does it provide
strategies. - CORRECT ANSWER D 2 & 3
Within how many days must an options-related complaint be submitted to
FINRA?
A)
Customer complaints must be reported to FINRA within 15 days at the end of the
calendar quarter in which the complaint was discovered.
B)
Customer complaints must be reported to FINRA within 10 calendar days.
C)
Customer complaints must be reported to FINRA within 30 business days.
,D)
Customer complaints must be reported to FINRA within 15 business days.
Explanation
FINRA rules require members to file information on customer complaints,
electronically, within 15 days of the end of each calendar quarter.
LO 4.c - CORRECT ANSWER A
Regulation SHO has a circuit breaker test that when triggered prohibits short sale
orders
A)
for the security until a bona fide locate has been established.
B)
for the remainder of the trading day and the day following.
C)
until close-out requirements have been made.
D)
for a period until the price of the security rises above the triggered limit.
Explanation
Exchanges, ATSs, and trading centers have policies to restrict short selling on a
covered security that has a 10% decline in any one day. The purpose of the rule is
to prevent a piling-on effect in the marketplace. Short exempt orders may still
trade. - CORRECT ANSWER B
If an assignment notice is received on Tuesday, July 12, for a short call on a
covered write position, the stock settlement (delivery) would occur on
A)
Thursday, July 14.
B)
Wednesday, July 13.
C)
Friday, July 15.
D)
Monday, July 11.
Explanation
The settlement will take place on Thursday, July 14, T + 2. The assignment date
becomes the trade date for the stock, and regular-way settlement is T + 2 (trade
date plus two days).
,LO 7.d - CORRECT ANSWER A
A client of the firm is in violation of the position limit rule of 25,000 option
contracts if
A)
the client's account has 20,000 short calls and 10, 000 short puts.
B)
the client's account has 20,000 long calls and 10, 000 long puts.
C)
the client's account has 20,000 long calls and 10,000 short puts.
D)
the client's account has 20,000 short calls and 10, 000 long calls.
Explanation
The OCC limits the number of options that an individual investor can control on
the same side of the market, long calls, and short puts, or short calls and long
puts.
20,000 long calls and 10,000 short puts are both on the same side of the market
(bullish) for an aggregate position of 30,000 contracts, which is a violation.
LO 6.b - CORRECT ANSWER C
Market and marketable orders sent to the exchange nonelectronically are
required to contain all the following information except
A)
the number of contracts and strike price.
B)
the customer name and account number.
C)
the expiration month and year.
D)
buy or sell, put, or call.
Explanation
The order at least must have at least the following specific information with
respect to the order: (i) the option symbol, (ii) the expiration month, (iii) the
expiration year, (iv) the strike price, (v) buy or sell, (vi) call or put, (vii) the number
of contracts, and (viii) the Clearing Trading Permit Holder. The customer name
and account number are not required for trading floor or exchange execution.
LO 6.h - CORRECT ANSWER B
, The phrase public appearance as defined by FINRA, means participation in any of
the following except
A)
a written statement distributed to 15 institutional clients.
B)
a radio, television, or print media interview.
C)
the writing of a print media article, in which a research analyst makes a
recommendation or offers an opinion concerning an equity security.
D)
participation in a conference call, seminar, forum (including an interactive
electronic forum) or other public speaking activity before 15 or more persons.
Explanation
A written statement distributed to 15 institutional clients would be a
communication and would not be considered a public appearance.
LO 8.f - CORRECT ANSWER A
A branch manager receives an incomplete options application from a broker. The
branch manager should
A)
document the incident, return the application to the broker requesting all the
required information and possibly recommend training by the ROP.
B)
contact the customer to make sure all the information is accurate and complete.
C)
have the broker complete the rest of the application.
D)
have the broker and the ROP contact the customer for the remaining information.
Explanation
The branch manager and the ROP should not contact the customer regarding an
incomplete application. The branch manager should return the application to the
broker requesting the application be filled out completely. He should also
document the incident and possibly recommend further training by the ROP.
LO 1.f - CORRECT ANSWER A
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller paulhans. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $15.99. You're not tied to anything after your purchase.
Can Stuvia be trusted?
4.6 stars on Google & Trustpilot (+1000 reviews)
79223 documents were sold in the last 30 days
Founded in 2010, the go-to place to buy study notes for 14 years now