Ch 1-4 Flashcards
Customers must receive a ____ notice. A consumer (anyone who has not yet established a relationship with the firm) must be provided with a ____ notice prior to disclosing any nonpublic personal information to any nonaffiliated third party.
privacy
privacy
Which of the following documents is NOT needed to open a corporate margin account? A corporate charter and resolution A new account form An hypothecation agreement A trust agreement
A trust agreement
When a corporation opens a margin account, all of the documents listed are needed except a trust agreement. A trust agreement is needed when opening an account for a retirement plan or trust account.
Exclusions from the definition of an investment adviser are given to all of the following groups, EXCEPT:
Accountants and lawyers who provide advice in a manner incidental to their profession
Publishers
Broker-dealers and their representatives
Advisers who limit advice to corporate debt only
Advisors who limit advice to corporate debt only
The Investment Advisers Act of 1940 excludes choices (a), (b), and (c). There is no exclusion from the definition for Advisers who limit advice to corporate debt only.
An employee of a FINRA member firm who wishes to open an account at another member firm must notify his firm and the executing firm, in writing, prior to opening a securities account. An exception is made if the employee effects transactions only in _____ funds, unit investment trusts, and variable annuities.
Mutual
Under industry rules, the final approval to open a new account is given by a(n): Registered representative Operations manager Partner or principal Supervisor
Partner or Principal
If a non-U.S. citizen wants to open a new account, the member firm is required to obtain certain information as part of its AML procedures under its customer identification program (CIP). For non-U.S. citizens, the firm must obtain the client’s name, address, date of birth and one of the following: passport and country of issuance, taxpayer identification number, or any other government-issued document with a photograph. Employment information and telephone number are usually obtained by the member firm but are not required.
AML procedure
If the client is out of the country, the firm may hold all correspondence for _____ months per the client’s written instructions. If traveling within the U.S., the firm may hold the correspondence for only ____ months.
3
2
The minor is responsible for all tax consequences in the account. Income is taxed as it is received, not when the minor becomes an adult.
Custodian Account
The name of the registered representative and the signature (approval) of the branch office manager must always be included on a new account form. The customer’s signature is required for a margin account but not for a ____ account. The registered representative must determine whether the customer is of legal age.
cash
Under the current tax law, all dividends received by individuals are ____ taxable.
Fully
SIPC (securities investor protection corporation) provides protection to a maximum of $______, of which $________ may be used for cash.
500,000
250,000
If SIPC does not cover in full a customer's account in a brokerage firm that has gone bankrupt, the investor is a: General creditor Secured creditor Preferred creditor Guaranteed creditor
General Creditor
If SIPC does not cover a client’s account in a brokerage firm that has gone bankrupt, the client is a general creditor. The client ranks equally with all other general creditors.
The primary purpose of _____s (e.g., the exchanges, FINRA, the MSRB) is to promote fair and equitable trading practices.
SRO (self regulatory organization)
A _____ power of attorney gives someone else the power to manage the grantor’s financial affairs if that individual becomes incapacitated.
Durable
