The Ultimate Business Knowledge Test
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- 1.Prior employer permission would be required for a registered representative to give public: Speeches Seminars Lectures
- A.
Arbitration
- B.
The SEC
- C.
The MSRB
- D.
FINRA
- 2.To apply for a securities license, a previously unregistered individual must: Complete Form U5 Complete Form U4 File the necessary form with FINRA File the necessary form with the SEC
- A.
Appealable
- B.
Not binding if either party contests the decision
- C.
Binding upon all parties to the arbitration
- D.
Not binding if both parties agree not to accept the decision
- 3.The primary purpose of a self-regulatory organization (SRO) is to:
- A.
The registered representative is fined
- B.
The registered representative is sentenced to two years in prison
- C.
The registered representative settles the complaint agreeing to a censure
- D.
The registered representative is suspended from associating with a member firm for 90 days and appeals the decision
- 4.Exclusions from the definition of an investment adviser are given to which of the following?
- A.
Press civil charges in regard to violations of securities law
- B.
Press criminal charges in regard to violations of securities law
- C.
Promote fair and equitable trading practices
- D.
Insure the solvency of broker-dealers and other market participants
- 5.Concerning arbitration, all of the following are TRUE EXCEPT:
- A.
Accountants and lawyers who provide advice in a manner incidental to their profession
- B.
Publishers
- C.
Broker-dealers and their representatives
- D.
All of the above
- 6.Which of the following are TRUE regarding the Code of Arbitration? Disputes between members must be submitted to arbitration. Arbitration decisions are binding and may not be appealed. A client cannot be forced to submit to arbitration. Arbitration is more cost-effective than litigating the matter in court.
- A.
Disputes between members must go to arbitration
- B.
Decisions may be appealed to FINRA
- C.
Decisions are binding
- D.
A customer having a dispute with a broker-dealer may use the arbitration procedure
- 7.Lazlo Toth, a registered representative with UAI Broker-Dealer, has a dispute with his firm over compensation. This dispute will be resolved by:
- A.
The rep will be placed in inactive status.
- B.
The broker-dealer must request an extension from an SRO.
- C.
The rep will be suspended.
- D.
The rep has 30 days to complete the requirement.
- 8.An employee of a member firm opens an option account with another member firm. Which of the following statements are true? The employee needs written permission from his employer prior to opening the account. Duplicate confirmations must be sent to his employer. The employee needs permission from his employer each time a trade is executed.
- A.
A federal court
- B.
The SEC
- C.
The National Adjudicatory Council
- D.
An arbitration panel
- 9.Persons who meet the definition of an investment adviser but are exempt from the registration requirements of the Investment Advisers Act of 1940 are:
- A.
Part-time employment as a bartender
- B.
Participation as a silent partner in a relative's business
- C.
Acting as the manager of a sporting goods store on the weekends
- D.
Operating an Internet business from home as a sole proprietor
- 10.A customer contends that his registered representative made unauthorized trades in his account, and will take this matter to an arbitration panel. Regarding the makeup of this panel, which of the following statements is TRUE?
- A.
Subject to the antifraud provisions of the Act
- B.
Only subject to the antifraud provisions of the Act if they maintain custody of client funds and securities
- C.
Only subject to the antifraud provisions of the Act if they do not meet certain experience and financial requirements
- D.
Not subject to the antifraud provisions of the Act
- 11.A registered representative who wishes to have outside employment must notify and receive permission from the:
- A.
A majority of the arbitration panel must come from outside the securities industry.
- B.
A majority of the arbitration panel will come from within the securities industry.
- C.
All arbitrators must come from inside the securities industry or must be attorneys.
- D.
All arbitrators must come from outside the securities industry.
- 12.To whom may a registered representative appeal a finding by a Hearing Panel?
- A.
FINRA
- B.
SEC
- C.
MSRB
- D.
Representative's firm
- 13.Which of the following best describes a wrap account?
- A.
The National Adjudicatory Council
- B.
The SEC
- C.
A federal appeals court
- D.
There is no appeal allowed
- 14.When is the regulatory element of continuing education required to be completed by a registered rep? On the second anniversary of initial registration On the third anniversary of initial registration Every two years thereafter Every three years thereafter
- A.
A personal, joint, and IRA account with one account number
- B.
A managed account in which advisory and transaction charges are included in one comprehensive fee
- C.
A consolidated account in which the investor can buy or sell options, equities, or bonds
- D.
An investment club account with no more than 99 investors
- 15.Relative to a custodian account, which of the following are TRUE? The minor is responsible for tax consequences. The custodian is responsible for tax consequences. Income generated in the account is taxed as it is received. Income generated in the account is taxed when the minor becomes an adult.
- A.
Partnership account signed by a general partner
- B.
Corporate account signed by an authorized officer
- C.
Custodial account signed by the custodian
- D.
Executor signing for an estate
- 16.A registered rep holding limited discretionary authority over a customer's account may:
- A.
When the custodian releases the account
- B.
When the donor approves the transaction
- C.
When the minor reaches the age of majority
- D.
At the time of the execution of the order
- 17.An investor is interested in investing in a stock with growth potential. He instructs his broker to use the firm's research and buy $10,000 worth of a stock of the broker's choosing. Which of the following statements is correct?
- A.
Buy or sell securities in the account without consulting the customer
- B.
Withdraw money from the account
- C.
Receive a fee for using his discretion in trading the account
- D.
Borrow assets from the customer's account
- 18.A registered representative opens a joint options account for three brothers. According to the rules of the options exchanges, the registered representative would be required to obtain background and financial information from:
- A.
The broker can buy the stock for the customer with approval from a manager.
- B.
The broker can buy the stock for the customer since it is a stock the firm recommends.
- C.
The broker can buy the stock for the customer provided that the broker has first obtained a written power of attorney from the customer.
- D.
The broker can buy the stock for the customer based on the verbal authorization.
- 19.An account executive has limited discretion over a customer's account. The account executive can:
- A.
One of the brothers
- B.
A majority of the brothers
- C.
All of the brothers
- D.
The Options Clearing Corporation
- 20.All of the following are true regarding discretionary accounts EXCEPT:
- A.
Ajax Corporation
- B.
John and Mary Doe
- C.
John Doe
- D.
ABC Partnership
- 21.An aunt wishes to give her niece some securities as a gift. The niece's parents have recently died and a court has appointed a guardian other than the aunt. The aunt:
- A.
The brother with the larger contribution to the account
- B.
The brother with the smaller contribution to the account
- C.
Either brother
- D.
Both brothers
- 22.A client's wife calls and wants to purchase 200 shares of XYZ in her husband's personal account. The registered representative handling the account knows that a favorable earnings report is about to be issued. The registered representative:
- A.
Must register the securities in the guardian's name
- B.
May give the securities without the permission of the guardian
- C.
May give the securities only if they would qualify under the State's legal list requirements
- D.
May give the securities only if the guardian is also appointed the custodian
- 23.Which of the following persons cannot delegate power of attorney to a third party for the purpose of making securities transactions?
- A.
Cannot accept the order because the wife does not have trading authorization to enter orders for the husband's personal account
- B.
Can enter the order because the husband had previously mentioned he would like to establish a position in XYZ
- C.
Can enter the order in the husband's account if the wife also has a joint account with her husband
- D.
Cannot enter the order because the earnings report has not been released
- 24.A husband and wife have a joint account. If the husband instructed his RR to sell securities and send a check, the check could be made payable to:
- A.
I only
- B.
I and II only
- C.
I, II, and III only
- D.
I, II, III, and IV
- 25.All of the following are TRUE about discretionary accounts EXCEPT:
- A.
Accounts must be approved by a Principal
- B.
Orders must be reviewed on the day they are entered
- C.
Written power of attorney signed by the customer must be kept on file by the firm
- D.
Orders must be confirmed with the customer before being entered
Questions: 25 | Attempts: 33991 | Last updated: Nov 7, 2021
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