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Series 7 > Chapter 2 > Flashcards

Chapter 2 Flashcards

1
Q

When must RRs complete the Regulatory Element of Continuing Education?

A

On the 2-year anniversary of their registration and every 3 years thereafter.

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2
Q

True or False: Firm Element Continuing Education requires BDs to update employees on job and product-related subjects.

A

True

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3
Q

To apply for a securities license, one must file Form _____ with FINRA.

A

U4

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4
Q

Gifts exceeding $_____ are considered excessive.

A

$100

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5
Q

__________________________ expenses are not subject to the Gift Rule.

A

Entertainment/business expenses

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6
Q

In the process of opening an account for an employee of another firm, what must be done by the carrying firm?

A

Provide written notification to the employer

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7
Q

For accounts opened for employees of another member firm, what is provided to the individual’s employer upon request?

A

Duplicate confirmations and statements

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8
Q

True or False: FINRA regulates accounts of member firm employees opened at another firm.

A

True. Also spouse and children

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9
Q

A BD must file Form U5 with FINRA when a person’s association with that firm ______________.

A

ends/ceases

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10
Q

What are the justifiable reasons for denying an individual’s registration?

A

Conviction for any felony or securities-related misdemeanor within the last 10 years

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11
Q

How often must a BD’s Firm Element Continuing Education program be reevaluated?

A

annually

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12
Q

Do all outside activities of an RR require notification to an employer?

A

No. Notification is only required for employment activities, not hobbies.

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13
Q

What is the industry policy regarding an RR who sets up an outside business that involves paid public speaking?

A

This is considered employment and the RR must receive employer approval.

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14
Q

Which department of a broker-dealer makes recommendations to investors?

A

Sales

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15
Q

Which department of a broker-dealer executes securities transactions?

A

Trading

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16
Q

What is the role of a broker-dealer’s operations department?

A

To process paperwork, handle funds and securities transfers, and settle and confirm transactions

17
Q

The Maloney Act of 1938 is credited with creating which SRO?

A

The NASD. In 2007, the regulatory units of the NASD and NYSE merged to create FINRA.

18
Q

What is the purpose of the Trust Indenture Act of 1939?

A

To provide security for corporate bond investors

19
Q

True or False: The Investment Company Act of 1940 requires mutual fund managers to register.

A

False. The Investment Advisers Act of 1940 is the Act that requires money managers to register.

20
Q

Which Act created SIPC?

A

Securities Investor Protection Act of 1970 (SIPA)

21
Q

List the four categories of FINRA rules.

A
  1. Conduct Rules 2. Uniform Practice Code 3. Code of Procedure 4. Code of Arbitration
22
Q

Define penny stock.

A

OTC security, less than $5

23
Q

What is the CRD?

A

The Central Registration Depository (CRD). CRD is FINRA’s database for member registrations.

24
Q

Who supervises a registered representative (RR)?

A

Principal (Supervisor)

25
Q

What is the purpose for obtaining a Series 9/10 or Series 24 registration?

A

The Series 9/10 or 24 the registrations required for supervising registered representatives.

26
Q

List the broker-dealer employees who need to be fingerprinted.

A

Salespersons, employees who handle money or securities, and anyone who deals with records of original entry

27
Q

___________ is FINRA’s tool for allowing public access to certain information found in the CRD.

A

Brokercheck

28
Q

Candidates who have failed a qualification exam once must wait ___ days before retaking the exam.

A

30

29
Q

True or False: It is acceptable to disclose the content of a qualifying exam to a co-worker.

A

False

30
Q

How often must firms conduct their compliance meeting?

A

Annually

31
Q

True or False: An RR who served in the military must retake the Series 7 when he rejoins his broker-dealer.

A

False

32
Q

True or False: A broker-dealer may pay a commission to an unregistered individual.

A

False

33
Q

Define Churning

A

Excessive trading solely for the purpose of generating commissions or fees

34
Q

True or False: RRs are always prohibited from sharing in a customer’s account.

A

False. RRs may share in a customer’s account if they have permission and sharing is proportionate to their investment.

35
Q

True or False: RRs are typically not permitted to lend money to a client.

A

True. While exceptions existing, personal loans to clients are typically prohibited.

Series 7 (25 decks)

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