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FINRA Series 6 > Unit 3 > Flashcards

Unit 3 Flashcards

1
Q

What is ordinary income taxes based on

A
  1. Dividends
  2. Interest
  3. Earning from employment
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2
Q

What is in place to set out fair and ethical trade practices that member firms must follow when dealing with the public?

A

Conduct Rules

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3
Q

What is in place to establish the Uniform Trade Practices, incl settlement, good delivery, ex-dates, confirmations, and other guidelines for BD’s when they do business with other member BD firms?

A

Uniform Practice Code

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4
Q

Who governs the resolution of disagreements and claims between members, RRs and the public; and addresses monetary claims?

A

Code of Arbitration Procedures

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5
Q

What describes how FINRA hears and handles member violations of the conduct rules

A

Code of Procedure (COP)

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6
Q

Who is responsible for the activities of RRs and APs housed in a branch office and within a region?

A

Office of Supervisory Jurisdiction (OSJ)

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7
Q

What is FINRAs U4 registration requirements?

A

Name, address and aliases
5 year residence history
10 yr employment history (3 years verified)
Info on any charges, arrests, convictions relating to investments

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8
Q

How long do you have to file U4 changes with the CRD?

A

no later than 30 days after the member becomes aware of the change

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9
Q

What kind of products can a Series 6 RR sell?

A

Open End Investments
New issues for Closed End Investments and
Variable products, if the hold an insurance license

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10
Q

Customer complaints on a RR must be kept for how long

A

4 years

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11
Q

Regulatory element of continuing ed must be completed within what timeframe?

A

120 days after 2nd anniversary of registration and every 3 years after

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12
Q

What is the role of the investment BANKER?

A

Help issuers raise money through the sale of securities

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13
Q

What is another name for investment BANKER?

A

Underwriter

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14
Q

What type of UW Commitment contract is the most commonly used?

A

Firm Commitment

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15
Q

What type of UW Commitment contract assumes the financial risk of incurring losses in the event they are unable to distribute all the shares to the public they purchased?

A

Firm Commitment

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16
Q

What type of UW Commitment contract unconditionally agrees to buy all shares that remain unsold in an additional issue?

A

Standby UW

17
Q

What type of UW Commitment contract they sell as much as possible, without financial liability for what remains unsold?

A

Best Efforts

18
Q

Term used for compensation paid to UWs in a new issue

A

Spread

19
Q

What act was instituted for full and fair disclosure and requiring registration statement and prospectus

A

Securities Act of 1933 (Paper Act)

20
Q

What document can be used to indicate interest in a new security?

A

Red Herring (AKA Preliminary Prospectus)

21
Q

Regulation D, under the Securities Act of 1933 allows what?

A

The offer and sale of securities to accredited investors WITHOUT registration. They are called Private Placements.

22
Q

What is the criteria for an accredited investor?

A
  1. $1 million net worth (excluding primary residence)
  2. $200,000 in adjusted gross income for last 2 years
  3. $300,000 for a married couple
    They can be an insider at the issuer, a professional, sophisticated or institutional investor
23
Q

What is another term for auction market?

A

Exchange

24
Q

Which interdealer market trades unlisted securities?

A

OTC

25
Q

Name the negotiated markets?

A

OTC, 3rd market and 4th (Institution)

26
Q

When must a customer receive confirmation of a trade?

A

No later than the settlement date.

27
Q

What was established to give the authority to maintain fair and orderly market for the investing public?

A

Securities Exchange Act of 1934 (People & Places Act)

28
Q

Funds that comply with Subchapter M (conduit theory) are know as…

A

Regulated Investment Companies (R.I.C.)

29
Q

How do you calculate a Mutual Funds current yield?

A

Divide the annual dividend by POP

30
Q

Who determines the ex-date of a Mutual Fund?

A

Board of Directors

31
Q

When is the ex-date of a Mutual Fund?

A

The business day after the record date (DREP)

32
Q

Dividends and capital gains are taxable whether reinvested or taken in cash. True/False

A

True

33
Q

The IRS always chooses what method for share distribution if the investor didn’t choose a different method?

A

FIFO

34
Q

What amount of net capital loss may be used as a deduction against ordinary income each tax year?

A

$3,000

FINRA Series 6 (6 decks)

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