How long after a new issue is registered for sale will it be shown on the Nasdaq system?
a. On the effective date
b. 10 days after the effective date
c. 30 days after the effective date
d. 45 days after the effective date
D
A new issue will appear on the Nasdaq system on the effective date of the issue. The effective date, which is determined by the SEC upon completion of the registration process, is the first date that the securities may be sold to the public. (12-2)
The 5% markup policy applies when a member is acting as:
a. An investment banker
b. A mutual fund underwriter
c. A broker-dealer in the OTC market
d. A specialist on the floor of the NYSE
C
A broker is an agent acting for another party and receives a commission when a trade is executed. A dealer is a principal acting for his own account and adds a markup on a purchase. In both cases, they must conform to the 5% markup policy which is a gui
A customer wishes to buy stock in a closely held corporation with a small amount of outstanding shares. The registered representative should advise him:
a. That it is a good investment
b. That he will receive a greater percentage ownership and it is a goo
C
The registered representative should inform the customer of the risks involved in buying "thin" issues because of the probability of wide price fluctuations (volatility) and because of the small amount of the shares outstanding. (12-20)
According to the MSRB rules, which of the following would cause a broker-dealer to reject the delivery of municipal bonds?
a. A legal opinion is attached to, rather than imprinted on, the bonds.
b. Registered bonds are expected and delivered with proper e
D
Good delivery for municipal bonds, unless otherwise specified, requires delivery of bonds not subject to a partial call and an imprinted or attached legal opinion. (Partially called bonds are not considered good delivery.) The bonds may be in bearer or
All of the following are Bond Buyer Indexes EXCEPT:
a. The average yield on 25 revenue bonds with 30-year maturities
b. The average yield on 20 selected municipal bonds with 20-year maturities
c. The average yield on 11 selected municipal bonds with 20-ye
D
The Bond Buyer computes and publishes a number of indexes which include the 20-Bond Index (choice B), the 11-Bond Index (choice C), and the Revenue Bond Index (choice A). Choice D is not an index, but is the Visible Supply. (12-27)
REVENUE BOND INDEX (S
Which of the following best represents the placement ratio?
a. Total par value of new issues sold during previous week divided by Total par value of new issues issued during previous month
b. Total par value of new issues sold during upcoming month divide
C
The placement ratio is published weekly by the Bond Buyer. It expresses the amount of bonds sold by new issue syndicates as a percentage of the total amount of new issues brought to market during that week. (12-26)
PLACEMENT RATIO (S7) : A statistic pub
A municipal broker's broker can:
I. Deal with broker-dealers
II. Deal with dealer-banks
III. Underwrite new issues
IV. Trade from its own inventory
a. I and II only
b. I and III only
c. II, III, and IV only
d. I, II, III, and IV
A
A municipal broker's broker is a broker (agent) that deals only with other municipal securities brokers or dealers. The broker's broker would never deal with individual investors, establish an inventory position, or be involved in the underwriting of a
The 30-day visible supply of municipal securities refers to new municipal bonds that:
a. Will be sold in the next 30 days through competitive and negotiated sales of general obligation and revenue bonds
b. Have been sold through a negotiated sale in the p
A
The 30-day visible supply of municipal securities refers to the face amount of new municipal bonds that will be sold in the next 30 days through competitive and negotiated sales of general obligation and revenue bonds. It is an indication of expected su
A brokerage firm's research department has issued a buy recommendation for XYZ Corporation's common stock. The report must contain all of the following information EXCEPT:
a. The firm was the managing underwriter in a recent public offering of the stock
b
B
The report must contain all of the items listed except the number of shares the firm owns of the stock. The firm does need to disclose that it owns shares of the stock, but not the actual number. (12-16)
The third market is concerned with:
a. OTC securities only
b. Listed securities only
c. NYSE-listed securities traded in the OTC market
d. U.S. government securities traded OTC
C
The "third market" is the term used to describe a situation where a security listed on the NYSE is traded in the OTC market. (12-7)
Which of the following can be traded in the over-the-counter market?
I. Municipal bonds
II. Treasury bonds
III. Treasury bills
IV. Corporate bonds
a. I and II only
b. II and III only
c. I and IV only
d. I, II, III, and IV
D
All of the securities listed can be traded in the over-the-counter market. (12-1)
All of the following would be a good delivery in the sale of 500 shares of common stock EXCEPT:
a. One five-hundred-share certificate
b. Five one-hundred-share certificates
c. Ten fifty-share certificates
d. Four fifty-share certificates and ten thirty-sh
D
Delivery must be made in 100-share certificates, multiples of 100, or any combination which adds up to 100 shares. In choice (D), four certificates of fifty shares would be acceptable, but 10 thirty-share certificates would not be, since 30-share certif
For secondary market transactions, a municipal securities broker-dealer may use a broker's broker to:
I. Disseminate the availability of the securities
II. Sell securities but remain anonymous
III. Increase the market price of the securities
IV. Guarantee
A
A municipal securities broker-dealer may use a broker's broker to help sell bonds. Using a broker's broker will allow for good exposure to the market for the bonds. The broker's broker also keeps the identity of its client confidential. A broker's broke
Which of the following would NOT be allowed under MSRB rules?
a. A gift of basketball tickets to a customer valued at $100
b. A business dinner with a client costing $135
c. Reserving a hotel room for a client at a municipal bond seminar costing $150
d. A
D
MSRB rules prohibit gifts in excess of $100 per year to a person other than an employee or partner of the gifting individual, if such payments or services are in relation to the municipal securities activities of the employer, of the recipient, of the p
An investor purchased T-bonds that mature January 1, 2012. He purchased the T-bonds on Friday, February 20, for regular-way settlement. How many days of accrued interest did the investor owe?
a. 51
b. 53
c. 54
d. 55
B
Accrued interest is calculated from the last interest payment date up to but not including settlement date. The last interest payment was made January 1st (since maturity is January 1, 2012, interest payments are every January 1st and July 1st). The set
A registered representative has established a discretionary municipal bond account for Mr. Smith. Which of the following may the registered representative purchase for Mr. Smith's account?
a. General obligation bonds only
b. Bonds rated Baa or higher only
D
A registered representative must be sure that the bonds purchased are suitable. (12-30)
According to MSRB rules, which of the following must be disclosed to a customer in a negotiated sale of municipal bonds?
I. The amount of the underwriting spread
II. The initial offering of each maturity
III. Any fee received as agent for the issuer
IV. T
C
According to the MSRB rules, in a negotiated sale of municipal bonds, the customer must be informed of the amount of the underwriting spread, the initial offering of each maturity, and any fee received as agent for the issuer. (12-28)
Which of the following statements regarding the opening of a new municipal account are TRUE according to MSRB rules?
I. An employee of a municipal securities firm can open a new account with another municipal securities firm without the employer being not
D
MSRB rules only place restrictions on opening an account for an employee of another MSRB member firm. When opening an account for an employee of another MSRB member firm, the employer must be notified and duplicate confirmations of all trades must be se
All of the following should be taken into consideration by an over-the-counter dealer when determining the commission to charge in an agency transaction EXCEPT:
a. The costs involved in executing the trade
b. The dollar value of the security
c. The cost p
C
All of the choices given should be taken into consideration by an over-the-counter dealer when determining the commission to charge in an agency transaction except the cost price of securities held in inventory by the dealer. The price charged should be
A client is notified by his broker-dealer that certain trades may be executed by an Electronic Communication Network (ECN). Which two of the following are risks of using this type of system?
I. Trades are not subject to SRO regulations
II. Limited ability
C
Some broker-dealers use ECNs to execute customer orders. ECNs act as matching systems to execute orders from subscribers. Some broker-dealers will use a market maker during normal business hours and an ECN to execute trades after normal business hours (
A FINRA member subscribing to CQS, calls a market maker displaying a quote on the system and executes a trade. This transaction would be considered to have occurred in the:
a. Primary market
b. Private market
c. Third market
d. Fourth market
C
CQS displays quotations by members for NYSE and AMEX listed securities. Transactions in listed securities between FINRA members in the over-the-counter market are considered third market transactions. Although executed in the over-the-counter market, su
Joseph Carlyle is a customer of a municipal securities firm. Based on his existing account documentation, he is clearly unsuitable for any securities with a speculative credit rating. However, he has entered an order to purchase a bond that is rated BB by
B
According to recent interpretations of the MSRB's suitability rule, Bob should process the customer's order as long as he takes the time to explain to Mr. Carlyle why he believes the investment is unsuitable for him. (12-30)
An employee of a municipal securities firm would like to open an account with another municipal securities firm. All of the following statements regarding the employee and the account are TRUEEXCEPT:
a. The employer must receive duplicate copies of all tr
D
All of the statements listed regarding the employee and the account are true except the employer must approve each transaction before the execution of the transaction. This statement is not true because prior approval is not required. (12-30)
A municipal securities principal must approve:
I. Memos in response to customer complaints
II. The opening of accounts
III. Advertisements to be used for a seminar
IV. Correspondence to customers
a. II only
b. II and III only
c. I, II, and IV only
d. I, I
D
MSRB rules require a municipal securities principal to approve all the choices given. In addition, the principal must approve all transactions and must frequently review all discretionary accounts. (12-29, 12-32, 12-33)
Which of the following is NOT a characteristic of an electronic communication network (ECN)?
a. ECNs will act as market makers.
b. ECNs permit trading electronically.
c. ECNs permit trading anonymously.
d. ECNs permit trading after-hours.
A
Electronic communications networks allow market participants to display quotes and execute transactions. These participants are referred to as subscribers and pay a fee to the ECN in order to trade electronically through the system. ECNs allow subscribe
An over-the-counter trader, when talking about the spread, is referring to:
a. The difference between the bid and asked price of a stock at the current market
b. The difference between his cost price and his selling price
c. The amount of his markup from
A
The over-the-counter trader, when referring to the spread, is referring to the difference between the current bid and asked price of a stock. (12-3)
SPREAD (S7) :
(1) The difference between the bid and offer price of a security.
(2) The difference betwe
According to SEC rules, a stock that sells for $5 or less, that is not on the Nasdaq system or listed on an exchange, is known as a(n):
a. Restricted security
b. Control stock
c. Penny stock
d. Exempt security
C
A penny stock, according to SEC rules, is a stock that sells for $5 or less, that is not on the Nasdaq system or listed on an exchange. (12-20)
Municipal bearer bonds that are in default of interest trade:
a. With unpaid coupons attached
b. Without unpaid coupons attached
c. In registered form only
d. Without a legal opinion attached
A
Municipal bonds that are in default, trade flat (without accrued interest) and must be delivered with all unpaid coupons attached. If the bonds begin paying interest, the present holder is entitled to the past interest payments. (12-29)
What is a fidelity bond?
a. A noncallable municipal bond
b. A nonconvertible corporate bond
c. Insurance purchased by broker-dealers to protect them against fraud
d. Insurance protecting customers in the event of a broker-dealer bankruptcy
C
Every broker-dealer is required to have a fidelity bond which provides insurance in the event of a fraud judgement against the broker-dealer. (12-13)
FIDELITY BOND (S7) : An insurance policy required of every broker-dealer to provide protection for the
All of the following would be considered of material value by FINRA if given by a mutual fund underwriter to a registered representative EXCEPT:
a. A gift of $100
b. A gift of $200
c. "Overrides" in excess of commissions as stated in the prospectus
d. A g
A
According to industry rules, a gift of more than $100 would be considered substantial or of material value. (12-17)
All of the following are TRUE of quotes for municipal bonds EXCEPT:
a. They can be nominal quotes
b. They can be subject quotes
c. They can be firm quotes
d. They must be written quotes
D
All of the choices given about municipal bond quotes are true except they must be written quotes. MSRB rules relate to quotes which are communicated or published in any manner. (12-31)
All of the following must appear on a confirmation to a customer in a municipal trade EXCEPT:
a. The capacity in which the broker-dealer acted
b. The par value of the bonds
c. A description of the bond
d. The bond rating
D
MSRB rules require that a customer confirmation contains the par value and complete description of the bonds including coupon, maturity, and pertinent call features. The principal amount, accrued interest, and total amount must also be included. The fir
A municipal dealer may guarantee a customer against a loss:
a. If the dealer has discretion over the account
b. If the account is a cash account
c. If the account is a margin account
d. Under no circumstances
D
A municipal dealer may not guarantee a customer against a loss under any circumstances. (12-30)
According to MSRB rules, a municipal bond dealer may not consider which of the following factors when determining a markup?
a. Expenses
b. Profit
c. Coupon
d. Total dollar amount of the transaction
C
All of the choices given would affect the markup except the coupon rate of the securities. (12-30)
A municipal bond would be accepted for delivery without a legal opinion if it were identified as:
a. In default
b. Registered
c. Mutilated
d. Ex-legal
D
A municipal bond is expected to be delivered with a legal opinion unless the bond was identified as ex-legal at the time of the purchase. (12-29)
An investor purchases a U.S. Treasury bond in the secondary market. When is settlement?
a. Next business day
b. 3 business days
c. 5 calendar days
d. 5 business days
A
Transactions for Treasury securities will settle on the next business day. (12-24)
The Bond Buyer's 30-day visible supply includes:
I. Competitive municipal bond issues
II. Negotiated municipal bond issues
III. Treasury bill issues
IV. Corporate bond issues
a. I and II only
b. I and III only
c. II and IV only
d. I, II, III, and IV
A
The Bond Buyer's 30-day visible supply is an indication used to reflect the amount of new offerings coming to the marketplace in the next 30 days. It carries figures for both competitive and negotiated municipal bond issues and notes maturing in 13 mont
A municipal dealer would violate MSRB rules if it gave a quote which was:
a. Specified as AON
b. Bona fide
c. Nominal and not specified as such
d. Identified as a subject quote
C
MSRB rules require that any quote be bona fide (firm at the time given). Nominal or subject quotes are permitted if they are identified as such at the time given. (12-31)
A charge to a customer for the collection of dividends, holding of securities, and other services must be:
a. Reasonably fair and not discriminate between customers
b. No more than 1/2 of 1% of the customer's free credit balance
c. No more than 5% of the
A
Under industry rules, a brokerage firm is allowed to charge a customer for collection of dividends, holding of securities, and other services. Most brokerage firms do not charge for these services, but if they do charge, the amount must be reasonably fa
An OTC market maker would justify the amount of his markup based on all of the following EXCEPT:
a. Current price
b. Dollar value of the trade
c. His cost
d. Availability of the securities
A
The amount of markup should be based on the current market price of the security, not the market maker's cost. (12-3)
A transaction occurs between two dealers for a Nasdaq stock. The trade must be reported by:
a. The buyer within 30 seconds
b. The seller within 30 seconds
c. Both within 30 seconds
d. Both by the end of the day
B
Transactions in Nasdaq stocks must be reported to FINRA by the seller within 30 seconds of the trade. (12-8)
A municipal dealer gives another dealer a firm quote of par for a block of municipal bonds. The dealer that gave the quote:
a. Must do the trade at par
b. Must give the other dealer ten minutes to accept the quote
c. Has given a nominal quote to the other
A
The dealer that gave the firm quote must do the trade at par. (12-31)
Which of the following is an indicator of the demand for municipal bonds in the primary market?
a. The Wilshire Index
b. The Visible Supply
c. The Placement Ratio
d. The Bond Buyer Index
A
The Placement Ratio is published weekly in the Bond Buyer and Credit Markets. It shows the percentage of new competitive issues that have been placed (sold) to investors for the week. It is considered to be an indicator of demand in the new issue market
A registered representative that previously was the CEO of a cosmetics company wants to send a report to clients. She will include detailed information concerning individual equity securities of cosmetics companies she feels are good investments. Although
B
A registered representative does not need to hold the title of research analyst in order for the report to be considered a research report. If the report provides sufficient information concerning individual equity securities for a client to make an inv
A broker-dealer appears on the Nasdaq system as a market maker for DCIR common stock. An employee of the firm responsible for maintaining the firm's inventory in DCIR is known as a:
a. Specialist
b. Floor broker
c. Compliance director
d. Position trader
D
A position trader is responsible for maintaining a broker-dealer's inventory as well as trading the firm's account. (12-1)
According to MSRB rules, each broker-dealer engaging in municipal securities activities must have a municipal securities principal promptly review and/or approve in writing:
I. Each customer account for trading in municipal securities
II. Every transactio
D
A municipal securities principal is responsible for supervising activities relating to municipal securities transactions. Included in his responsibilities are the review and/or approval of all the choices given. (12-33)
A securities firm is permitted to charge customers a fee for:
I. Collecting dividends and/or interest
II. Appraisal of securities
III. Holding securities in safekeeping
IV. Transfers and/or exchanges
a. II and III only
b. II and IV only
c. I, III, and IV
D
Securities firms may charge customers for all services it provides as long as the charge is fair and reasonable. (12-4)
A block of bonds is offered firm by Dealer A to Dealer B for one hour with a five minute recall. Dealer A calls Dealer B and says "fill or kill." Dealer B:
a. Has five minutes to take the bonds
b. Must take the bonds if he does not call Dealer A back with
A
When bonds are offered firm for one hour with a five minute recall, the offering Dealer A cannot sell the bonds to anyone but Dealer B without giving Dealer B the first opportunity to take the bonds. When Dealer A called Dealer B and said "fill or kill,
A woman wishes to open an account at a municipal securities firm. She identifies herself as the spouse of a trader at another municipal securities firm. Which of the following is (are) correct?
I. The rep must follow all instructions from the trader's emp
C
MSRB rules require that when opening an account for an employee of another municipal firm, a municipal registered representative must:
1. Notify the employer and follow all instructions (interpretation is to get the employer's permission)
2. Send duplic
All of the following are taken into consideration when determining the markup on a municipal securities transaction EXCEPT:
a. The dollar amount of the trade
b. The best judgement of the dealer
c. The fact that the dealer is entitled to make a profit
d. T
D
All of the choices given must be taken into consideration except the financial condition of the customer. (12-30)
According to the Telephone Consumer Protection Act, the recipient of a telephone solicitation must be:
I. Told the identity of the broker-dealer on whose behalf the call is made
II. Included on the caller's do-not-call list upon request
III. Sent the brok
D
The Telephone Consumer Protection Act requires that the recipient of a telephone solicitation be told the name of the caller and the firm on whose behalf the call is being made. Those who do not wish to be called in the future must be included on a do-n
Which best describes the Revenue Bond Index?
a. Average yield on a list of bonds with 30 year maturities
b. Average yield on a list of 11 bonds
c. Average yield on a list of 20 bonds
d. Average yield on a list of new revenue issues
D
The Bond Buyer publishes different indexes. They include:
1. The 20-Bond Index -- The average yield-to-maturity on a particular day of 20 specific GO bonds with 20-year maturities.
2. The 11-Bond Index -- The average yield-to-maturity on a particular da
MSRB rules state that a dealer must try to obtain all the following information from a customer EXCEPT the customer's:
a. Financial condition
b. Investment history
c. Investment objectives
d. Date of birth
D
MSRB rules specifically state that a dealer should make every effort to obtain all of the information listed except the customer's date of birth. The dealer should determine that the customer is not a minor, but not specifically his date of birth. (12-2
The 5% policy applies to which of the following?
a. Shares of a mutual fund purchased with a sales charge
b. A registered secondary distribution requiring a prospectus
c. Securities found on Nasdaq
d. Municipal securities
C
The 5% policy does not apply when a security is being issued with a prospectus or for municipal securities. In this example, a prospectus would be required for a primary distribution as well as a registered secondary distribution. Securities traded on N
The 5% markup policy would apply to:
a. Mutual funds
b. New issues
c. Municipal bonds
d. Nonexempt securities
D
The 5% markup policy does not relate to transactions requiring a prospectus (new issues, mutual funds, and registered secondaries) or transactions in certain exempt securities (such as municipal securities). (12-4)
A registered representative finds that most of his customers are reluctant to buy stocks due to extreme market volatility. Until the volatility subsides, which of the following would NOT be a suitable strategy to recommend to these nervous clients?
a. Inv
C
Industry rules prohibit registered representatives from guaranteeing customers against a loss. During times of uncertainty and extreme volatility, high quality and short-term investments are normally good recommendations for investors who are reluctant
When a market maker gives a quote for a stock without qualification, the quote is a:
a. Subject quote for 100 shares
b. Workout quote for 100 shares
c. Nominal quote for 100 shares
d. Firm quote for 100 shares
D
When a market maker gives a quote for a stock without qualification, the quote is a firm quote for 100 shares. The market maker is obligated to buy or sell 100 shares at his quoted price. Subject, workout, or nominal quotes are given for informational p
The Pink Sheets show:
a. All trades that occurred the previous day for non-Nasdaq stocks
b. The market makers for stocks not listed on the Nasdaq system
c. The specialist assigned to each stock that trades on the NYSE
d. All trades that occurred the previ
B
The Pink Sheets list market makers and their bid and asked quotations for over-the-counter stocks which are not listed on Nasdaq. These securities are also known as non-Nasdaq stocks. (12-8)
PINK SHEETS (S7) : A company that provides both electronic and
To be in good deliverable form all of the following items must be legible EXCEPT:
a. The serial numbers of the bonds
b. The coupon rate
c. The CUSIP numbers
d. The maturity date
C
If the CUSIP numbers are not legible, the bonds would still be in good deliverable form. All of the other items listed would have to be legible for a partially mutilated security to be in good deliverable form. CUSIP numbers are used to identify securit
A customer buys a premium bond that is callable. Which of the following would be least beneficial for the customer?
a. The bond is called at its par value in five years.
b. The bond is called at its par value in ten years.
c. The bond is called at its par
A
If the bonds are called in five years at par, the premium paid for the bond would be amortized over the shortest time period. This would result in the investor realizing a lower yield than if the bond were called after a longer period of time. It is imp
Which of the following would not be a violation of MSRB rules?
I. A gift of $100
II. A yearly magazine subscription worth $50
III. A gift of basketball tickets worth $75
IV. A business lunch that costs $125
a. IV only
b. I and II only
c. I, II, and III on
D
MSRB rules allow gifts of $100 or less. There is no limit on legitimate business expenses so the business lunch of $125 would not be a violation even though it is more than $100. Therefore, all of the choices listed would not violate MSRB rules. (12-33)
Which of the following must a municipal dealer disclose on a confirmation?
I. If the municipal dealer acted as a agent
II. If the municipal dealer acted as a principal
III. If the municipal dealer acted as an agent for a third party
IV. If the municipal d
B
The MSRB requires a municipal dealer to indicate to a customer through a written confirmation the capacity in which the municipal dealer acted. The municipal dealer must disclose if it acted as an agent for the customer, as a principal for its own accou
A market maker gives a firm quote of 15 - 15.50 for a stock. If the party on the other side decides to buy 800 shares, how many shares is the market maker obligated to sell at 15.50?
a. 100 shares
b. The market maker does not have to sell any shares
c. 80
A
When a market maker gives a firm quote, the market maker is obligated to buy or sell 100 shares of the stock at the price quoted. (12-1)
Relative to the 5% markup policy, which of the following is TRUE?
a. A broker-dealer must charge less than a 5% markup.
b. A broker-dealer may never charge more than a 5% markup.
c. It is an SEC rule.
d. It serves as a guideline when determining a broker-
D
The 5% markup policy is a guideline, not a ceiling. According to industry rules, commissions and markups must be reasonable and justifiable. (12-3)
A customer requests that a broker-dealer sell stock that he owns and use the proceeds of the sale to purchase a different stock. In determining the amount of markup that he will charge, the broker-dealer:
a. Must consider each transaction separately
b. Ma
C
When the proceeds of the sale of one stock are used to purchase another stock from the same broker-dealer, the transaction is called a proceeds transaction. In determining the markup the broker-dealer will charge, industry rules state that the firm shou
If a municipal bond is selling at a premium and is callable at par, how is the yield calculated?
a. As a percentage of the par value
b. By dividing the annual income by the current price
c. To the final maturity date
d. To the call date
D
The yield for a municipal bond that is selling at a premium and is callable at par is calculated to the call date.
The yield-to-call measures the yield that would be earned if the bonds were called at the call price and not held to the maturity date.
MS
All of the following must appear on a customer confirmation for a municipal bond transaction EXCEPT:
a. Existence of call features
b. If the interest paid on the bonds is subject to the alternative minimum tax
c. If the bonds are insured
d. The name of th
D
MSRB rules do not require that the name of the bond counsel be disclosed on a confirmation. The existence of call features, bond insurance, the applicability of the alternative minimum tax, or any special relationships between the issuer and the broker-
Which of the following factors would be LEAST important in an analysis of whether an RR had churned a client's account?
a. The type of securities the client traded
b. The amount of commissions the client paid
c. The amount of portfolio turnover
d. The cli
A
Churning is a prohibited practice and can occur when an RR excessively buys and sells in a client's account to generate high sales commissions.
The amount of commissions the client paid, portfolio turnover and the client's investment objectives are all
Municipal securities dealers would consider all of the following when determining a markup EXCEPT the:
a. Dollar amount involved in the transaction
b. Availability of the securities
c. Expenses incurred in doing the trade
d. 5% markup policy
D
All of the choices listed would have to be considered except the 5% markup policy. This is due to the fact that municipal bond transactions are exempt from the 5% Policy. MSRB rules require a broker-dealer to obtain a price that is fair and reasonable b
What is meant by 4.50% less 3/4 for a municipal bond selling in the secondary market?
a. $1,000 bond at 4.50 yield - $0.75
b. $1,000 bond at 4.50 yield - $7.50
c. $5,000 bond at 4.50 yield - $0.75
d. $5,000 bond at 4.50 yield - $7.75
B
Quotes for serial municipal bonds are usually per $1,000 and on a yield-to-maturity basis. The "less 3/4" represents the concession or discount offered to another dealer (3/4 point = $7.50). (12-31)
A brokerage firm accepted delivery of securities on settlement. Upon further inspection of the securities, the brokerage firm discovers a problem and wishes to return the securities to the selling dealer. The process of returning securities that have prev
B
Reclamation is the process of returning securities that were previously accepted on the settlement date. Rejection is when the brokerage firm refuses delivery of the securities on the settlement date. (12-29)
According to MSRB rules, all of the following must be included on a confirmation sent by a broker-dealer to a customer EXCEPT the:
I. Total dollars due including any accrued interest
II. Rating provided by a nationally recognized municipal securities rati
D
MSRB rules require that a confirmation be sent to a customer at or before the completion of the transaction (settlement date). The confirmation must include whether the customer purchased or sold, the par amount, and a complete description of the securi
Dealer A gives bonds firm to Dealer B with a recall. What does this mean?
I. Dealer B has the right to sell the bonds before anyone else.
II. The price of the bonds has been set.
III. A time to sell the bonds has been set.
IV. A recall time has been estab
D
When a dealer wants to buy bonds, such as Dealer B, he asks Dealer A to make a firm offering which will hold good for a stated time. The bonds are said to be "out firm."
Dealer B has the option or right to buy the bonds from Dealer A and sell the bonds
A mutual fund buys stock from the portfolio of an insurance company. This is a trade executed in the:
a. Over-the-counter market
b. Exchange market
c. Third market
d. Fourth market
D
When a mutual fund (an institution as compared to the public) buys stock from the portfolio of an insurance company (another institution), it would be considered a trade executed in the fourth market. This is the name given to the so-called market where
A municipal securities principal must review and approve municipal transactions made with:
I. Individuals
II. Trust departments
III. Commercial bank portfolios
IV. Casualty Insurance Companies
a. I only
b. I and IV only
c. I, II, and III only
d. I, II, II
D
MSRB rules require a municipal securities principal to approve all transactions in municipal securities. (12-33)
When computing the dollar price of a municipal bond sold on a yield basis, which of the following call features would be used?
I. Sinking fund call
II. Catastrophe call
III. In-whole call
a. I only
b. II only
c. III only
d. I, II, III
C
When pricing a bond, only a call feature that allows the issuer to call the entire issue is used. (12-31)
A broker-dealer receives a confirmation for a trade that does not appear on its records. The broker-dealer should send a DK notice to the:
a. New York Stock Exchange
b. FINRA
c. Contra broker-dealer
d. Customer represented in the transaction
C
A DK notice is sent to the contra broker-dealer upon receipt of confirmation for an uncompared trade. The broker-dealer sending the DK notice states that the trade does not appear on its records and therefore denies any responsibility for settlement of
A registered representative tells a municipal bond fund manager that, in return for purchasing bonds for the fund, the representative will exclusively sell only that bond fund to clients. This arrangement is:
a. Permitted provided that it is disclosed to
D
MSRB rules prohibit a broker-dealer or registered representative from having reciprocal dealings with investment companies. A registered representative may promote the services of the firm (such as timely executions and quality research) to solicit busi
When a member firm issues a research report, it must be approved by:
a. A certified financial planner
b. A certified financial analyst
c. A supervisory analyst
d. The company's board of directors
C
When a member firm issues a research report, it must be approved by a supervisory analyst. A supervisory analyst must be registered as such with FINRA and is required to pass a separate examination. (12-16)
On a delivery of municipal securities, what could one dealer expect to receive from another dealer?
I. Bonds registered as to interest only
II. Bearer bonds with coupons attached
III. Bonds registered as to principal only
IV. Fully registered bonds
a. II
B
Prior to July 1, 1983, municipal bonds were issued in bearer form and could be registered at the option of the holder. Since July 1, 1983, all municipals (with maturities greater than one year) must be issued in fully registered form.
Good delivery prov
Under MSRB rules which of the following is FALSE regarding customer confirmations?
a. They must show commissions in an agency transaction.
b. They need not show the markup in a principal transaction.
c. They must disclose the third party to the trade in a
D
All of the choices given regarding customer confirmations are true under MSRB rules except that they need not disclose if the dealer is acting as a principal or agent in the transaction.
This is not true since the broker-dealer must disclose the capacit
An established customer has purchased penny stocks through a broker-dealer on five occasions. When making future recommendations to the customer regarding these securities, the broker-dealer must:
a. Obtain a written statement from the customer for each t
D
The account approval requirements for penny stocks under SEC Rule 15g-9 do not apply to existing customers who have maintained an account with a broker-dealer for more than one year or have previously engaged in three or more transactions involving penn
A broker-dealer may reject a delivery of municipal bonds if:
a. The bonds were called by the issuer and were identified as such
b. The market price increases after the trade date
c. The bonds are lacking a legal opinion
d. $1,000 denominations are deliver
C
A delivery of municipal bonds may be rejected if they do not meet good delivery requirements such as missing or mutilated coupons or lack of a legal opinion. A change in market price is not a reason for rejecting delivery of municipal bonds (or any othe
Which of the following would not be found on the Consolidated Quotation System (CQS)?
a. An AMEX stock
b. An AMEX warrant
c. A NYSE listed bond
d. A non-Nasdaq stock
D
The Consolidated Quotation System (CQS) displays quotations on all common stock, preferred stock, warrants, and rights which are registered on the American Stock Exchange or the New York Stock Exchange and trading in the OTC market (third market). While
Which of the following can be found on the Consolidated Quotation System?
a. Bid/asked quotations for OTC stocks not listed on Nasdaq
b. Bid/asked quotations for listed stocks reported by national exchanges and OTC third market makers
c. Indications of in
B
The Consolidated Quotation System (CQS) provides subscribers with bid/ask quotations for securities listed on national exchanges, including quotes from OTC market makers in those securities (the third market). (12-8)
The transfer of bonds from one party to another may be accomplished by an endorsement on the back of the bond certificate or through a:
a. Letter of credit
b. Letter of notification
c. Power of attorney
d. Bond power
D
A bond power may be attached to the bond certificate and used to transfer ownership in lieu of completing (endorsing) the assignment form on the back of the bond certificate. (12-13)
Which of the following is subject to the Penny Stock Rule?
a. Unsolicited orders for a non-Nasdaq stock trading at $3.00 per share
b. Solicited orders for a non-Nasdaq stock trading at $3.00 per share
c. Unsolicited orders for a Nasdaq stock trading at $3
B
Listed stocks and Nasdaq securities are not penny stocks under SEC rules. Unsolicited orders are exempt from the penny stock regulations. (12-20)
According to MSRB rules, which of the following is TRUE regarding a secondary market joint account?
a. It is a violation of the rules if it contains less than three members.
b. Its members are not permitted to disseminate more than one quote relating to t
B
Members of a secondary market joint account must publish the same offering (quote). (12-32)
According to MSRB rules, which of the following is FALSE regarding written complaints?
a. A report must be sent immediately to the MSRB
b. The complaint must be properly recorded and retained by the firm for six years
c. The firm must send a copy of the M
A
Any written complaint must be administered to by a principal and be retained for six years along with a record of what the principal did to rectify the complaint. In addition, MSRB rules mandate that an MSRB investor brochure be sent to the complainant.
The 5% markup policy would apply to a:
a. Municipal bond trade
b. Transaction on the NYSE
c. Proceeds transaction
d. Purchase of mutual fund shares
A
The 5% markup policy does not apply to any trade requiring a prospectus (new issues, registered secondaries, and mutual funds) or a transaction involving an exempt security (municipal bond) or transaction effected on an exchange.
The 5% policy applies t
A broker-dealer has a financial advisory relationship with an issuer of municipal securities. Under MSRB rules, which TWO of the following statements are TRUE?
I. The broker-dealer is permitted to act as a syndicate member on securities issued by this mun
C
Under MSRB rules, a financial advisory relationship exists when a municipal securities broker or dealer gives, or enters into an agreement with an issuer to give, financial advisory or consultant services regarding the issuance of municipal securities.
A registered representative wants to give a seminar regarding retirement planning. Which of the following records must be maintained by the brokerage firm regarding this seminar?
I. Documents attesting to the registered representative's expertise in the a
A
When giving a seminar, a registered representative must make a record of the date, topic, and sponsor of the seminar. The names and addresses of the attendees are not needed. (12-16)
A municipal tombstone advertisement must be approved by:
a. The MSRB
b. A Municipal Securities Principal
c. A Municipal Securities Principal and the Branch Manager
d. A Municipal Securities Financial and Operations Principal
B
MSRB rules require that an advertisement must be approved prior to its first use by a municipal securities principal. (12-32, 10-4)
Secondary market offerings of municipal bonds could be found in all of the following EXCEPT:
a. Broker's broker's list
b. Munifacts
c. Bond Buyer
d. Dealer offering list
C
The Bond Buyer is new issue oriented and would not have secondary market offerings. (12-26)
During a meeting with a customer away from the broker-dealer, a customer hands a registered representative a handwritten note that objects to the price she received when redeeming mutual fund shares. The customer believes she submitted her redemption requ
B
FINRA defines a complaint as any written statement of a customer, or any person acting on behalf of a customer, alleging a grievance involving the activities of those persons under the control of the member in connection with the solicitation or executi
Where could a broker-dealer find bidding details for a new municipal bond issue?
a. Bond Buyer New Issue Worksheets
b. OTCBB
c. Munifacts
d. Official Statement
A
The Bond Buyer New Issue Worksheets are a service of the Bond Buyer and show details of the issue and bidding requirements. The Official Statement is prepared after the issue is sold and contains a description of the issue and financial information of t
On a new municipal issue, a dealer must provide a customer with which of the following?
I. A final confirmation with the total money amount
II. A copy of the official statement, if published
III. A copy of the underwriting agreement
IV. The names of the s
A
A purchaser of a new municipal issue must be provided with a final confirmation and a copy of the Official Statement. (12-30, 10-1)
Which of the following represents the percentage of new municipal issues brought to market during a particular week that has already been sold?
a. The Bond Buyer Index
b. The Blue List
c. The Visible Supply
d. The Placement Ratio
D
The placement ratio represents the percentage of new municipal bond issues of $5,000,000 or more that has been sold in a particular week. The Bond Buyer compiles this ratio. (12-26)
Which of the following would give the best indication of current interest rates on revenue bonds?
a. Visible supply
b. Placement ratio
c. List of 20 bonds
d. List of bonds with 30 year maturities
D
The Bond Buyer computes the Revenue Bond Index which is the average yield of 25 revenue bonds with 30-year maturities. (12-27)
A customer's account does not require approval to trade penny stocks if the:
I. Trade is recommended
II. Trade is not recommended
III. Account is established
IV. Account is new
a. I and III
b. I and IV
c. II and III
d. II and IV
C
The approval of an account to trade penny stocks is not required if the account has been in existence for more than one year or if all transactions in penny stocks are non-recommended. (12-21)
A municipal securities representative does an analysis of an official statement and prepares a summary report. The report must be approved by:
I. Municipal securities principal
II. Municipal securities representative
III. Issuer
a. I only
b. II only
c. II
A
The preliminary and final official statement are not considered advertising since they are prepared by or for the issuer. However, a summary of an official statement is considered advertising since it is prepared by the municipal representative and ther
Which of the following best describes the term payment for order flow?
a. The concession paid to a member of a selling group
b. The prohibited practice of mutual fund distributors paying kickbacks to registered reps
c. The portion of a mutual fund's 12b-1
A
It is permissible for broker dealers to receive payments from a market maker in return for executing orders through that market maker. Any payments for order flow must be disclosed to customers. (12-4)
Which of the following would NOT be considered an established business relationship under the Telephone Consumer Protection Act?
a. You have executed two trades for the person called
b. You have contacted the person twice but have not yet executed a trade
B
According to the Telephone Consumer Protection Act, a business relationship exists if the consumer has made an inquiry, application, purchase, or transaction with respect to the products or services offered by your firm. Prior solicitations do not alone
ll of the following are true regarding the industry telemarketing rulesEXCEPT:
a. Broker-dealers must maintain a do-not-call list
b. Cold calls are allowed between 8:00 a.m. and 9:00 p.m. local time of the party being called
c. Unsolicited advertisements
C
The industry telemarketing rules set forth standards that must be followed by those firms soliciting business over the telephone (i.e., cold calling). Telephone solicitations may be made only between 8:00 a.m. and 9:00 p.m. local time of the party being
According to MSRB rules, all of the following must be approved by a principal prior to being sent to a customer EXCEPT:
a. An abstract of an official statement
b. A preliminary official statement
c. An advertisement regarding the firm's products and servi
B
A preliminary official statement is prepared by or for the issuer. Since the MSRB does not have the power to regulate issuers, a preliminary official statement cannot be considered advertising under MSRB rules. However, an abstract (summary) of the offi
A municipal tombstone ad shows bonds maturing serially from 2012 through 2030. The 2030 maturity is a 6.00% bond offered at a 6.75 basis. The bonds maturing in 2020 and thereafter are callable beginning in 2018 @ 102 and at 101 in 2019 and at par on any i
D
The bonds are being offered at a discount since the yield-to-maturity(6.75%) is greater than the coupon rate (6.00%). A discount bond is always priced to maturity. (12-31)
A municipal dealer purchased $100,000 face value of 6.00% bonds at a 6.00 basis. If the dealer reoffered the bonds, which of the following could be considered reasonable?
I. 101
II. 108
III. 5.80 basis
IV. 4.00 basis
a. I and II only
b. I and III only
c.
B
The dealer purchased the bonds at par (6% coupon at a 6.00 basis). When reoffering the bonds, the dealer's markup should be reasonable. A one point markup (101) would be considered reasonable whereas an eight point markup (108) would not. An offering of
According to MSRB rules, the delivery of a mutilated certificate would be considered a good delivery:
a. Under no circumstances
b. If the seller informs the buyer about the mutilation in writing
c. If the certificate is authenticated by the issuer or tran
C
A mutilated certificate may be authenticated by the issuer or an agent of the issuer (transfer agent or paying agent). If authenticated, it is considered a good delivery. A mutilated coupon may be guaranteed by any commercial bank as well as the issuer
A municipal securities broker-dealer has a control relationship with an issuer. When selling the bonds subject to the control relationship, the broker-dealer must disclose this relationship to customers:
I. Prior to the trade
II. In writing at or prior to
D
Customers must be informed about the existence of a control relationship regardless of the type of account (i.e., discretionary or nondiscretionary) or type of transaction (i.e., agency or principal). The customer must be told of the relationship prior
Approval by a principal is required when sending a customer all of the following EXCEPT a(n):
a. Abstract from an official statement
b. Form letter
c. Research report
d. Red herring
D
An abstract from an official statement, a form letter, and a research report are considered advertising or sales literature and must be approved. A red herring (preliminary prospectus) is used to provide a potential investor with information and is regu
A broker-dealer owns 100 shares of ABCO stock which it purchased at 28. If the stock is sold to a customer, the broker-dealer will base a markup on:
a. The inventory cost of 28
b. The highest bid on the Nasdaq system
c. The lowest offer on the Nasdaq syst
C
When selling stock to a customer, a markup should be based upon the lowest offer on the Nasdaq system, not the price the dealer paid to purchase the stock (dealer's inventory cost). (12-3)
A municipal dealer has a customer's order to purchase bonds on an agency basis. According to MSRB rules, the customer's order must be executed at:
a. The best price available
b. A price that is fair and reasonable
c. The average price obtained from all de
C
MSRB rules require that transactions be executed at a price which is fair and reasonable. (12-30)
Which of the following persons control positions in secondary market municipal bonds for a broker-dealer?
a. Underwriter
b. Trader
c. Agent
d. Principal
B
A trader is responsible for positioning (carrying inventory) secondary market municipal bonds. An underwriter is involved in new issues. (12-1, 10-1)
Charlene contacts her registered representative to buy an OTC stock. Rather than buying it directly from a market maker, Charlene's broker-dealer contacts another broker-dealer, who buys it from a market maker creating two levels of transaction fees. This
B
Interpositioning occurs when a broker-dealer, executing an order for a customer, places another broker-dealer between itself and the market. This is generally prohibited. (12-4)
INTERPOSITIONING (S7) : The placing of a third party between a broker-deale
An individual purchases $100,000 face value of a 6% municipal bond at a dollar price of 101 1/2. The bond's maturity is 7-1-17, but the issue has been called for redemption on the first call date of 7-1-05 @ par. The customer's confirmation should show th
A
Since the bond has been called, the yield to the call must be shown because the maturity is no longer of importance. Taxable equivalent yield and after tax yield are never shown since the investor's tax bracket and/or capital gains rate cannot be accura
A term bond has a mandatory sinking fund call feature. What method will be used to determine which specific bonds will be called?
a. Investors with the largest position
b. Investors with the largest coupon
c. Investors with the longest maturity
d. Random
D
Random selection is the method used to call term bonds. (12-31)
Which of the following would be a violation under industry rules concerning gifts and gratuities?
a. Taking a client to a dinner valued at $80 per person
b. Attending a concert with your client valued at $105 per ticket
c. Giving a $300 wedding gift to yo
D
Member firm personnel may not give or permit to be given a gift of material value exceeding $100 per recipient per year to personnel employed by another member firm. Exempt from the $100 limit are occasional meals, tickets to sporting and cultural event
Which of the following statements is TRUE under MSRB rules?
a. A broker-dealer is not permitted to act as a financial adviser to an issuer of municipal securities.
b. A broker-dealer is permitted to act as a financial adviser and underwriter for the same
C
Under MSRB rules, a financial advisory relationship exists when a municipal securities broker or dealer gives, or enters into an agreement with an issuer to give, financial advisory or consultant services regarding the issuance of municipal securities.
Quotes for non-Nasdaq, over-the-counter traded equities can be obtained from:
I. The third market
II. The Pink Sheets
III. Consolidated Quotation System
IV. The OTC Bulletin Board
a. I and III only
b. I and IV only
c. II and III only
d. II and IV only
D
Quotes for non-Nasdaq, over-the-counter traded equities can be found in the Pink Sheets and the OTC Bulletin Board (OTCBB). The third market refers to exchange-listed securities trading over-the-counter and the quotes can be found on the Consolidated Qu
All of the following are true relating to a secondary market joint account in municipal bonds EXCEPT:
a. Members may not publish different offering prices
b. They require a good faith deposit
c. There may be an order period
d. There may be a takedown
B
A good faith deposit is a sum of money given to the issuer of a new municipal bond issue along with a syndicate's bid. It is not involved in secondary market transactions. A secondary market joint account exists when two or more dealers form an account
All of the following must be approved by a municipal securities principal EXCEPT:
a. A research report sent to a customer regarding municipal securities
b. Each account engaging in municipal securities transactions
c. All advertising relating to municipal
D
A municipal securities principal must promptly approve (initial) all transactions for municipal securities but not municipal securities bond funds, correspondence, and advertising. Research reports are considered advertising. (12-33)
A municipal bond trader looking for the best price of a specific municipal issue in the secondary market would use:
a. The Yellow Sheets
b. The Daily Bond Buyer
c. Munifacts
d. A broker's broker
D
A broker's broker is a primary source for a quote in the secondary market and would help the trader to find the best price on a specific issue. The Yellow Sheets will show interdealer offerings in the secondary market for corporate bonds. The Daily Bond
A registered representative for ABC Brokerage has just been elected president of the Harper Valley School Board. The school district is going to float a new serial issue of general obligation bonds backed by ad valorem taxes.
ABC Brokerage's relationship
D
A control relationship exists when a brokerage firm or an employee of a firm is in a position to control or influence the issuance of securities by an issuer. (12-31)
A registered representative for ABC Brokerage has just been elected president of the Harper Valley School Board. The school district is going to float a new serial issue of general obligation bonds backed by ad valorem taxes.
ABC must disclose this relati
D
If a control relationship exists, the broker-dealer must disclose the relationship to all customers purchasing the issuer's securities in all situations. (12-31)
Prior to first use, a municipal securities principal must approve a(n):
I. Official Statement
II. Abstract of an official statement
III. Red Herring
IV. Research Report
a. IV only
b. I and II only
c. II and IV only
d. I, II, III, and IV
C
Advertising must be approved prior to first use by a municipal securities principal. An official statement or preliminary official statement is not considered advertising. However, a dealer prepared summary or abstract of the official statement is consi
Which of the following statements is true concerning Electronic Communication Networks (ECNs)?
a. They can only be used by retail investors.
b. They can be used to obtain automatic execution.
c. They can only be used by institutional investors.
d. They ca
C
Electronic communication networks or ECNs are trading systems designed to match buyers with sellers of securities. They can be used by both institutional and retail investors. One of the benefits of their use is immediate automatic execution if a matchi
Munifacts could contain:
I. The fed funds rate
II. Information about an upcoming municipal issue
III. The amount of a new issue that is yet unsold (new issue balance)
IV. Dealer to dealer availability of municipal bonds in the secondary market
a. I and II
C
Munifacts is a wire service to which many firms subscribe. It provides information about specific new issues as well as general financial information. There are also secondary market offerings of municipal bonds on Munifacts. (12-28)
MUNIFACTS (S7) : Th
A municipal securities broker's broker will complete transactions for a:
I. Retail customer
II. Dealer bank
III. Municipality
IV. Municipal broker-dealer
a. I and II only
b. I and III only
c. II and III only
d. II and IV only
D
A broker's broker works only for other professionals in the industry, executing trades for dealer banks or other broker-dealers, but not for retail customers or municipalities. The purpose of a broker's broker is to provide anonymity to market participa
A Nasdaq market maker is quoting a stock as follows: Bid 23.50, Offer 23.70, 10 x 5. This means that the market maker will:
a. Buy 1,000 shares at 23.50 and sell 500 shares at 23.70
b. Buy 1,000 shares at 23.70 and sell 500 shares at 23.50
c. Sell 1,000 s
A
The bid is the highest price at which a market maker is willing to buy stock, and the offer is the lowest price at which a market maker is willing sell stock. The client, therefore, would buy at the market maker's offer price and sell to the market make
A registered representative is permitted to cold call a prospective new client during the hours of:
a. 7:00 a.m. until 8:00 p.m. based on the time of the person making the call
b. 7:00 a.m. until 8:00 p.m. based on the time of the person receiving the cal
D
The Telephone Consumer Protection Act of 1991 governs the rights of people who receive solicitations by phone, including calls from registered representatives. Under this Act, telephone solicitations may be placed only between 8:00 a.m. and 9:00 p.m. lo
If a customer places an order to buy bonds at 104 net, it indicates that the customer:
a. Is short the bonds and is placing a stop order
b. Will buy at 104 plus be charged a commission
c. Will buy at 104 plus be charged a markup
d. Wants to pay a maximum
D
An order to buy at 104 net indicates the customer wants to pay a total of 104 including any markup or commission. (12-4)
All of the following statements are TRUE concerning approval by a supervisory person EXCEPT:
a. All sales literature must be preapproved by a principal
b. All advertisements must be preapproved by a principal
c. All written correspondence to a customer mu
C
All sales literature and advertisements must be preapproved by a principal. Research reports must be preapproved by a supervisory analyst. Correspondence sent to a customer does not need to be preapproved by a principal. It is, however, subject to a rev
A client purchased 1,500 shares of stock from a broker-dealer, a registered market maker in this stock. The broker-dealer acted in a(n):
a. Principal capacity and charged the client a markup
b. Agency capacity and charged the client a commission
c. Princi
A
A broker-dealer that is always willing to buy and/or sell shares of stock is considered a market maker. A market maker will normally act in a principal capacity and charge the client a markup or markdown. When acting in an agency capacity the broker-dea
A registered representative is approached by an accountant who wants to receive a finder's fee for introducing her clients to the RR. Which of the following statements is TRUE?
a. The RR is not permitted to pay a finder's fee to the accountant.
b. The RR
A
A broker-dealer is not permitted to compensate nonregistered persons in exchange for introducing clients to an RR or based on the amount of commissions or fees generated by the account. This would prohibit a firm from paying a finder's fee, rebate, or b
A research analyst at a broker-dealer is preparing a research report recommending ABC common stock. All the following situations must be disclosed in the report EXCEPT:
a. ABC Corp is an investment banking client of the broker-dealer
b. The broker-dealer
C
The broker-dealer is required to make certain disclosures in its research reports, such as whether the firm has an investment banking relationship or makes a market in the common stock of ABC. It must also disclose its ownership in a subject security if
What information would NOT need to be disclosed by a broker-dealer in a research report?
a. The broker-dealer received compensation for assisting the company in an acquisition.
b. The analyst provided a target price for the company.
c. The analyst is a di
C
A broker-dealer is required to make certain disclosures in its research reports. Any investment banking compensation paid during the last 12 months, the anticipated price target, and the fact that the analyst is a director of the company are all require
When telemarketing, a registered representative is NOT required to provide a prospect with:
a. His identity and the name of his firm
b. The firm's telephone number
c. The purpose of the call
d. How he obtained the prospect's home number
C
Registered representatives, when telemarketing, are not required to tell prospects how their names were obtained. However, an RR must disclose his name, contact information, and the purpose of the call. (12-21)
Municipal securities Dealer A quotes a price for a block of bonds to Dealer B for one hour with a five-minute recall. This means:
a. Dealer A may recall Dealer B within the one-hour period and demand a decision of Dealer B in five minutes
b. Dealer B may
A
When municipal bonds are offered on a firm basis to Dealer B for one hour with a five-minute recall, the offering dealer, Dealer A, may not offer the bonds to anyone but Dealer B without giving Dealer B the first opportunity to take the bonds. Since the
Regulation NMS would apply to which TWO of the following choices?
I. Listed equity trades
II. Listed debt trades
III. Quotes available for manual execution
IV. Quotes available for electronic execution
a. I and III
b. I and IV
c. II and III
d. II and IV
B
One of the provisions of Regulation NMS (National Market System) requires a broker-dealer to provide its clients with the best price available for listed equity trades available for electronic execution.
The best price is defined as the highest bid or l
Regulation NMS modernized the U.S. markets for trading equity securities and prohibited:
a. Trading exchange-listed securities over-the-counter
b. A broker-dealer from selling a security to a customer from its own inventory
c. The execution of a buy order
C
Regulation NMS modernized the U.S. markets for trading equity securities. Among other rules, Regulation NMS prohibits a trade-through of a protected quote. A protected quote is the highest bid and lowest offer (the inside market) in a market center that
A Web site is being designed for a registered representative of a member firm. Which TWO of the following statements are TRUE regarding the design of this Web site?
I. The FINRA logo must be displayed.
II. The registered representative's firm name must be
C
Care should be taken in the design of Web sites. The name of the member firm with whom the registered representative is associated must be displayed. While the use of the FINRA logo is NOT permitted, the registered representative's association with a FI