31%of Test Understanding Trading Customer Accounts And Prohibited Activities Flashcards
- Which of the following are available to participants in a 401(k) plan that are not available to IRA holders
Hardship withdrawals
Loans against the vested balance
- Generally before borrowing from or lending to a customer a registered rep must advise the firm in writing and receive written permission which of the following would be an exception to the written notice and approval requirements?
The customer is in immediate family member of the RR
- Which the following are not three-year or six year records?
Minutes of directors meetings
And
Customer complaints
- All of the following are valid terms describing stock splits except
Odd splits
Even split ratio has the number one
To the left or right
2:1, 3:1, 1:2, 1:4 and so on
Uneven splits do not have the number one in either place left or right
5:4, 2:3 and so on
A reverse split reduces
The number of outstanding shares
A forward split increases
The number of outstanding shares
- Which of the following is an acceptable investment for an IRA?
A mutual fund specializing in speculative bonds
Investments in an IRA are limited to cash and securities
- A party wishing to solicit proxy authority to vote a particular stockholders shares must register with
The securities and exchange commission
- The customer has given permission for securities in an investment account to be used for the purpose of other customers who want to borrow them in order to sell those securities short. This would have entailed the customer signing
A loan consent form
- Which of the following are associated with manipulative and deceptive or fraudulent devices?
Breakpoint sale
And
Capping
Stop orders become WHAT once triggered?
Market orders
Stop limit orders become WHAT once triggered?
Orders to sell at the specified limit
- In order for a registered rep of a member firm to receive any form of compensation such as commissions after terminating employment all the following statements are correct except
Earnings from referred business from existing clients would be eligible for payment
- Customer wanting to open a margin account was told that this securities will be held and street name this means that the securities will be registered in?
The name of the broker dealer
- A GTC order is left unexecuted at the end of the trading day on the last business day of April which of the following is true
The order will be automatically canceled
- Of the following which would not be considered institutional communications with the public
And internal memo promoting a new product that will be offered to your phones institutional customers only
Institutional communications specifically exclude internal communications such as memos
- To meet a regulation T margin call a customer would have how long?
Settlement +2 additional business days
- For the risk disclosure is found in the options disclosure document all of the following would be accurate disclosures except
If a maintenance call is not met the customer must direct which securities to sell
When a maintenance call is not meant it is the broker dealer who determines which securities to sell not the customer
- A partnership account wants to trade on margin when would this be permitted
Only if it is not restricted from doing so in the partnership resolution
- Which of the following records must be kept for the life of a broker dealer firm
Stock certificate books
- Under regulation SP non-public personal information would not include a customers
Home address
- Corporate accounts may trade on margin
Only if it is not listed as being restricted from doing so in the corporate charter
- What are the two basic types of return on investment
Capital gains and income
- Insecurities are bought and sold ownership changes hands between the buyer and the seller
On the settlement date of the transaction
- Investor who has a short position and 500 shares of JKH common stock would eliminate that position by
Entering a closing purchase order for 500 shares of JKH
- The customer wants to save some money for his grandson’s college education in an IRA account which of the following regarding a Coverdel education savings account is true?
The funds must be distributed by the time the grand child attains age30 unless they are rolled over
Roth IRA‘s
Have no minimum required distributions at any age
&
Can be contributed to in the same year as a traditional IRA
Short stock is a what type of position?
Bearish position
The USA patriot act’s required customer identification program is designed chiefly to prevent?
Funding of terrorist activities
&
Money laundering
The conduct rules permit specific types of lending arrangements between RR’s and their firms and customers. Which arrangement would not be permitted??
The firm lends the customers securities without a consent agreement
This is not included in a notice of corporate action regarding a stock dividend
The Stocks issue date
If a margin deposit is late, an extension request made by the broker dealer
Is not required but can be made, and may or may not be granted
Interest and Dividends are what type of income?
Investment income
Salary or Bonuses are what type of income?
Earned income
What happens to the contents of a custodial account in the event of the death of the beneficial owner (minor child)?
The custodians fiduciary responsibility ceases
&
The account passes to the minor’s estate
And investor owning 400 shares of stock receives notice that the stock will be split. When the split is complete, the customer owns 1200 shares of stock. The split must have been
A forward, even split
And investor notice is that a bond originally bought at 95 some years ago is now trading at a price of 88. The investor sells the bond, then buys it back the next day for88.5 with the intention of declaring a loss from the original purchase and sale on this year‘s tax return. This would be known as??
A wash sale, and taking the loss is prohibited
Corporate accounts may trade on margin true or false?
True, only if it is not listed as being restricted from doing so in the corporate charter
An investor who has a short position in 500 shares of JKH common stock would eliminate that position by??
Entering a closing purchase order for 500 shares of JKH
Any activity in an account-transactions, dividends and interest, stock splits or dividends will trigger what?
The requirement to send a monthly statement
Monthly statements need not be sent if the only account activity is the receipt of interest or dividends true or false?
FALSE
To ensure that their information obtained from each new customer is accurate, firms most funnest to each customer a copy of the account record within how many days of opening the account?
30 days
