New Accounts, Financial Profiles, and Investment Objectives

Question 1

Pattern Day Traders conduct at least … trades within a … -day period and need to have at least … of equities in their account

Answer 1

4 trades within a 5-day period and need to have at least $25k of equities in their account

Question 2

Prime brokers provide … and … for hedge funds

Answer 2

Custody and Financing

Question 3

DVP

Answer 3

Delivery Versus Payment - institutional investor has up to 35 calendar days to provide securities that were paid for

Question 4

JTWROS vs. JTIC

Answer 4

Joint Tenants With Rights Of Survivorship - decedent’s share goes to the surviving party
Joint Tenants In Common - decendent’s share goes to their estate or beneficiary

Question 5

When opening a customer account, required items are…

Answer 5

Picture ID, Physical Address, Principal Approval, whether the customer and/or immediate family member works at another BD Firm

Question 6

Rollover IRAs must be conducted within…

Answer 6

60 days of liquidation

Question 7

Eligibility of a pension plan

Answer 7

At least 21 years-old and at least 1,000 hours of employment

Question 8

True or False: Qualified (Retirement) Plans provide after-tax cost basis

Answer 8

False: 0 cost basis that is pre-tax
(remember: Qualified = You are good to go = start fresh!)

Question 9

True or False: Unqualified (Retirement) Plans provide after-tax cost basis

Answer 9

True

Question 10

In a Defined Benefit Plan, the … assumes the investment risk

Answer 10

Employer
(remember: the ONE PROVIDING BENEFIT assumes the liabaility)

Question 11

In a Defined Contribution Plan, the … assumes the investment risk

Answer 11

Employee
(remember: the CONTRIBUTOR assumes the liability)

Question 12

Step Up (for inheritance)

Answer 12

When someone dies, the cost basis “steps up” in cost basis

Question 13

Control Persons

Answer 13

Anyone who is able to influence decisions of corporations and their immediate family members
(ie. Officers, Directors, Principal Stock Holders)

Question 14

What kind of stock do Control Persons hold?

Answer 14

Control Stock
(remember: Control = Control)

Question 15

Principal Stock Holder needs to hold at least … of stock

Answer 15

10%

Question 16

Regulation SP

Answer 16

BDs need to make sure that they are protecting customer information
BDs require…
1) Permission from customer to solicit information
2) Required to make it easy for the customer to opt out
(remember: SP = SAFE PRACTICE!!!)

Question 17

POA

Answer 17

Power of Attorney - also known as Trading Authorization
Allows other people to make investment decisions for you

Question 18

Limited Power vs. Full Power POAs

Answer 18

Limited Power: Able to conduct Action (buy/sell), pick Assets, and state the Amount
(remember: AAA)
Full Power: Able to do all Limited Power + withdraw monies and securities

Question 19

Opening a Trust Account requires a…

Answer 19

Trust Agreement

Question 20

Opening a Corporate Account requires a…

Answer 20

Corporate Resolution
If Margin: requires Corporate Charter

Question 21

True or False: Paperwork when opening an account is required prior to the first trade after principal approval

Answer 21

True

Question 22

During KYC, best practice is to obtain the client’s…

Answer 22

(Personal) Balance Sheet
(remember: need to know your money situation before I can help you)

Question 23

Balance Sheets should include…

Answer 23

Current and LT Assets, Current and LT Liabilites, Net Worth, Current Income/Income Statement
(bonus: Look for Accredited Investor status within Net Worth and Current Income: $1MM Net Worth and/or $200k/yr for 2 years or $300k/yr for married couples filing jointly)

Question 24

True or False: You only need Principal approval when opening certain kinds of accounts

Answer 24

False: You always need Principal approval when opening any type of account

Question 25

WSP

Answer 25

Written Supervisory Procedure - procedures that state protocol and rules

Question 26

WSP states that you must close accounts when the client’s … cannot be verified

Answer 26

Identity
(remember: If you can’t be ID’d, you can’t have an account)

Question 27

To protect seniors … years and older, WSP states that senior customers must have a … on file

Answer 27

65 years and older … Trust Contact on file