31%of Test Understanding Trading Customer Accounts And Prohibited Activities

Question 1

2. Which of the following are available to participants in a 401(k) plan that are not available to IRA holders

Answer 1

Hardship withdrawals

Loans against the vested balance

Question 2

3. 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?

Answer 2

The customer is in immediate family member of the RR

Question 3

5. Which the following are not three-year or six year records?

Answer 3

Minutes of directors meetings

And

Customer complaints

Question 4

6. All of the following are valid terms describing stock splits except

Answer 4

Odd splits

Question 5

Even split ratio has the number one

Answer 5

To the left or right

2:1, 3:1, 1:2, 1:4 and so on

Question 6

Uneven splits do not have the number one in either place left or right

Answer 6

5:4, 2:3 and so on

Question 7

A reverse split reduces

Answer 7

The number of outstanding shares

Question 8

A forward split increases

Answer 8

The number of outstanding shares

Question 9

7. Which of the following is an acceptable investment for an IRA?

Answer 9

A mutual fund specializing in speculative bonds

Investments in an IRA are limited to cash and securities

Question 10

12. A party wishing to solicit proxy authority to vote a particular stockholders shares must register with

Answer 10

The securities and exchange commission

Question 11

13. 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

Answer 11

A loan consent form

Question 12

20. Which of the following are associated with manipulative and deceptive or fraudulent devices?

Answer 12

Breakpoint sale

And

Capping

Question 13

Stop orders become WHAT once triggered?

Answer 13

Market orders

Question 14

Stop limit orders become WHAT once triggered?

Answer 14

Orders to sell at the specified limit

Question 15

22. 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

Answer 15

Earnings from referred business from existing clients would be eligible for payment

Question 16

30. 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?

Answer 16

The name of the broker dealer

Question 17

33. 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

Answer 17

The order will be automatically canceled

Question 18

35. Of the following which would not be considered institutional communications with the public

Answer 18

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

Question 19

39. To meet a regulation T margin call a customer would have how long?

Answer 19

Settlement +2 additional business days

Question 20

41. For the risk disclosure is found in the options disclosure document all of the following would be accurate disclosures except

Answer 20

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

Question 21

43. A partnership account wants to trade on margin when would this be permitted

Answer 21

Only if it is not restricted from doing so in the partnership resolution

Question 22

44. Which of the following records must be kept for the life of a broker dealer firm

Answer 22

Stock certificate books

Question 23

45. Under regulation SP non-public personal information would not include a customers

Answer 23

Home address

Question 24

49. Corporate accounts may trade on margin

Answer 24

Only if it is not listed as being restricted from doing so in the corporate charter

Question 25

50. What are the two basic types of return on investment

Answer 25

Capital gains and income

Question 26

51. Insecurities are bought and sold ownership changes hands between the buyer and the seller

Answer 26

On the settlement date of the transaction

Question 27

52. Investor who has a short position and 500 shares of JKH common stock would eliminate that position by

Answer 27

Entering a closing purchase order for 500 shares of JKH

Question 28

57. 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?

Answer 28

The funds must be distributed by the time the grand child attains age30 unless they are rolled over

Question 29

Roth IRA‘s

Answer 29

Have no minimum required distributions at any age

&

Can be contributed to in the same year as a traditional IRA

Question 30

Short stock is a what type of position?

Answer 30

Bearish position

Question 31

The USA patriot act’s required customer identification program is designed chiefly to prevent?

Answer 31

Funding of terrorist activities

&

Money laundering

Question 32

The conduct rules permit specific types of lending arrangements between RR’s and their firms and customers. Which arrangement would not be permitted??

Answer 32

The firm lends the customers securities without a consent agreement

Question 33

This is not included in a notice of corporate action regarding a stock dividend

Answer 33

The Stocks issue date

Question 34

If a margin deposit is late, an extension request made by the broker dealer

Answer 34

Is not required but can be made, and may or may not be granted

Question 35

Interest and Dividends are what type of income?

Answer 35

Investment income

Question 36

Salary or Bonuses are what type of income?

Answer 36

Earned income

Question 37

What happens to the contents of a custodial account in the event of the death of the beneficial owner (minor child)?

Answer 37

The custodians fiduciary responsibility ceases

&

The account passes to the minor’s estate

Question 38

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

Answer 38

A forward, even split

Question 39

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??

Answer 39

A wash sale, and taking the loss is prohibited

Question 40

Corporate accounts may trade on margin true or false?

Answer 40

True, only if it is not listed as being restricted from doing so in the corporate charter

Question 41

An investor who has a short position in 500 shares of JKH common stock would eliminate that position by??

Answer 41

Entering a closing purchase order for 500 shares of JKH

Question 42

Any activity in an account-transactions, dividends and interest, stock splits or dividends will trigger what?

Answer 42

The requirement to send a monthly statement

Question 43

Monthly statements need not be sent if the only account activity is the receipt of interest or dividends true or false?

Answer 43

FALSE

Question 44

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?

Answer 44

30 days