In a proxy contest, a member firm holding securities in street name for clients who are beneficial owners must:
A) send the proxy material to the beneficial owners at the member firm's expense.
B) send a list of the beneficial owners' names and addresses
Your answer, send the proxy material to the beneficial owners at the member firm's expense., was incorrect. The correct answer was: send the proxy material to the beneficial owners at the issuing company's expense.
A securities firm that is a member of FI
If an order is executed for a customer and the registered representative (RR) later notices that he entered the wrong account number on the order ticket, what action must he take?
A) Contact that account's owner and ask if he wants to buy the stock.
B) Tr
Your answer, Inform a principal, who will take or direct any action needed to correct the error., was correct!.
The representative should report the mistake and not take any action to remedy the mistake without the approval of a principal.
Reference: 9.1.
A municipal bond in default is in good delivery form if
past-due coupons are attached.
currently due coupons are attached.
subsequently due coupons are attached.
the issuer files a default guarantee letter with the MSRB.
A) I, II and III.
B) III and IV.
C
Your answer, I, II and III., was correct!.
To be in good delivery form, a municipal bond must be accompanied by all unpaid coupons: past due, currently due, and subsequently due.
Reference: 9.2.1.5 in the License Exam Manual.
Your customer owns 100 shares of ABC Corporation being held in street name. What procedure will apply regarding your customer's proxy?
A) The customer is required to sign one proxy card for his 100 shares.
B) ABC Corporation must send a proxy to your cust
Your answer, The brokerage firm must forward the proxy to your customer., was correct!.
The broker/dealer must forward the proxy to the beneficial owner.
Reference: 9.1.3.3 in the License Exam Manual.
If a broker/dealer erroneously reports the purchase of 100 shares of ALF at 28.65 on a market order, and the firm later finds the actual price paid at execution was 29, what price does the customer pay for the shares?
A) He has the option of canceling the
Your answer, He has the option of canceling the order., was incorrect. The correct answer was: 29.
If the actual price was 29, the customer must accept the trade at that price even though the trade was confirmed erroneously at a different price. Note that
Regular way settlement of the following transactions must settle on the third business day after the trade date EXCEPT:
A) for a broker/dealer buying a corporate bond from another dealer.
B) for a broker/dealer buying a Treasury bond for its own account.
Your answer, for a broker/dealer buying a Treasury bond for its own account., was correct!.
Regular way settlement for U.S. government bonds occurs on the business day after the trade date. Corporate bonds and closed-end funds fall under the SEC's settlem
Regular way settlement for U.S. government bonds is:
A) next business day.
B) same day.
C) three business days.
D) two business days.
Your answer, next business day., was correct!.Regular way settlement of government bonds occurs on the next business day.
Reference: 9.1.2.1 in the License Exam Manual.
A stock or bond power is a(n):
A) authorization delegating voting power to another person.
B) document delegating discretion to purchase or sell securities to another party.
C) document that can be attached to a stock certificate, authorizing transfer of
Your answer, document that can be attached to a stock certificate, authorizing transfer of ownership to another party., was correct!.
A stock or bond power is an instrument separate from the stock certificate by which an owner indicates the intent to tran
Sell order tickets must be:
A) executed in accordance with the appropriate rules, but not necessarily marked.
B) marked as either long or short.
C) marked only if they are short sales.
D) marked only if they are long sales.
Your answer, marked as either long or short., was correct!.
Every sell order must be marked as either a long sale or a short sale.
Reference: 9.1.1.2 in the License Exam Manual.
For a dealer who has sold municipal securities to another dealer, all of the following are possible reasons for failing to deliver the bonds EXCEPT:
A) lack of legal opinion.
B) lack of proper endorsement on a registered bond.
C) a change in the market pr
Your answer, a change in the market price of the bonds., was correct!.
The MSRB requires delivery regardless of subsequent price changes. The price was fixed at the time of trade.
Reference: 9.2.5 in the License Exam Manual.
Government agency securities settle:
A) the next business day.
B) the third business day.
C) the seventh calendar day.
D) in 2 business days.
Your answer, the next business day., was incorrect. The correct answer was: the third business day.
Most government agencies are treated as a corporate issue. Trades of corporate securities settle regular way (in 3 business days).
Reference: 9.1.2.1 in th
After receiving securities from another firm, a broker/dealer discovers that the securities received were not in good deliverable form. His recourse is to:
A) buy in.
B) cancel the trade and file a complaint.
C) sell out.
D) file a reclamation.
Your answer, file a reclamation., was correct!.
After receiving the securities, the broker/dealer can file a reclamation and demand good delivery.
Reference: 9.2.6 in the License Exam Manual.
Which of the following items appears on the confirmation statement for a when-issued trade of municipal bonds?
A) Principal or agency trade.
B) Total contract price.
C) Accrued interest.
D) Settlement date.
Your answer, Principal or agency trade., was correct!.
The capacity of the firm, principal or agent, must be disclosed on all confirms. The settlement date, accrued interest, and total price would not appear on a when-issued confirm.
Reference: 9.1.2.4 in
Which of the following persons must sign a stock or bond power to effect good delivery of securities sold from an account set up under the Uniform Transfer to Minors Act?
A) Donor.
B) Parent.
C) Minor.
D) Custodian.
Your answer, Custodian., was correct!.
The custodian must sign securities in a custodial account to effect good delivery.
Reference: 9.2.2.3 in the License Exam Manual.
Under FINRA rules, delivery on a seller's option can be made no sooner than the:
A) day following the trade date.
B) 4th business day following the transaction.
C) 3rd business day following the transaction.
D) 5th business day following the transaction.
Your answer, 4th business day following the transaction., was correct!.
Seller's option trades, under FINRA rules, settle no earlier than 4 business days after the trade date. If the seller could deliver any earlier, there would be no need for a contract.
If a member firm acting as a proxy solicitor for LRK Corporation is given a shareholder list by LRK, which of the following statements is TRUE?
A) The member firm cannot use the list for any purpose other than to solicit proxies.
B) The member can use the
Your answer, The member firm cannot use the list for any purpose other than to solicit proxies., was correct!.
A member given a shareholder list can use the list only to solicit proxies. It can be used for no other purpose.
Reference: 9.1.3.3 in the Licen
A confirmation of each customer trade must be given or sent:
A) before the trade date.
B) on the trade date.
C) on or before the settlement date.
D) before the settlement date.
Your answer, on or before the settlement date., was correct!.
A confirmation must be sent to a customer on or before the completion of the transaction (the settlement date).
Reference: 9.1.1.4 in the License Exam Manual.
Which of the following trades settle next business day?
U.S. government debt.
U.S. government agency debt.
Municipal bonds.
Listed options.
A) I and III.
B) II and III.
C) I and IV.
D) I and II.
Your answer, I and III., was incorrect. The correct answer was: I and IV.
U.S. government debt and listed options settle next day; government agency debt and municipal bonds are subject to regular way settlement of T + 3.
Reference: 9.1.2.1 in the License
If a customer fails to return a proxy statement to a member firm by the 10th day before the annual meeting, the member may vote the shares:
A) under no circumstances.
B) with the permission of the issuer.
C) without restriction.
D) provided the matters to
Your answer, under no circumstances., was incorrect. The correct answer was: provided the matters to be voted on are of minor importance.
If a customer signs and returns a proxy statement and fails to indicate how the shares are to be voted, the member mu
A registered representative realizes that the wrong account number was written on an order ticket. The RR should:
A) fill out an error or trade correction report only.
B) notify a principal and await further instructions.
C) fill out an error or trade cor
Documenting errors or mistakes and notifying a principal should occur immediately. Filling out an error or trade correction report would be appropriate in this case. In-house procedures for the handling of errors can then be followed once documentation an
When a customer enters a sell order and the customer is in possession of the certificates, a broker/dealer must determine all of the following EXCEPT:
A) whether the client can make delivery promptly .
B) whether the securities are in deliverable form.
C)
Your answer, whether the transfer agent has accepted the securities., was correct!.
A firm must make an affirmative determination and be reasonably sure the client can make prompt delivery. Conversely, approval of the transfer agent is not a factor when a
A member firm receives a signed proxy from a customer who failed to indicate how his shares held in street name are to be voted at the annual shareholder's meeting. Under NYSE rules, the member firm:
A) cannot vote the shares.
B) may vote the shares as it
Your answer, must vote the shares as recommended by management of the issuer., was correct!.
If the beneficial owner of street name stock returns a signed proxy statement but fails to indicate how the shares are to be voted, the member must vote the share
An order memorandum or ticket must be completed:
A) by settlement date.
B) prior to order execution.
C) by the close of business or trade date.
D) by the close of business on T + 1.
Your answer, prior to order execution., was correct!.
Order tickets must be prepared prior to order execution.
Reference: 9.1.1.2 in the License Exam Manual.
In an interdealer trade, if the seller delivers before the settlement date, which of the following statements is TRUE?
A) The buyer may accept the stock or may refuse it without prejudice.
B) The buyer must accept delivery.
C) The buyer must only accept d
Your answer, The buyer may accept the stock or may refuse it without prejudice., was correct!.
In a regular way trade, the firm is not obligated to accept securities delivered before settlement date (3 business days after the trade date) but may do so if
Which of the following statements are TRUE?
A certificate registered in the names of two joint tenants must be signed by both of the tenants before it can be transferred.
The signatures on assignments or powers of substitution must match the names on the
Your answer, II and III., was incorrect. The correct answer was: I and II.
Certificates held jointly must be signed by both parties before they can be transferred. Signatures on assignments or stock powers to transfer securities must match the names of th