31%of Test Understanding Trading Customer Accounts And Prohibited Activities Flashcards Preview

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Flashcards in 31%of Test Understanding Trading Customer Accounts And Prohibited Activities Deck (44)
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1
Q
  1. Which of the following are available to participants in a 401(k) plan that are not available to IRA holders
A

Hardship withdrawals

Loans against the vested balance

2
Q
  1. Generally before borrowing from or lending to a customer a registered rep must advise the firm in writing and receive written permission which of the following would be an exception to the written notice and approval requirements?
A

The customer is in immediate family member of the RR

3
Q
  1. Which the following are not three-year or six year records?
A

Minutes of directors meetings

And

Customer complaints

4
Q
  1. All of the following are valid terms describing stock splits except
A

Odd splits

5
Q

Even split ratio has the number one

A

To the left or right

2:1, 3:1, 1:2, 1:4 and so on

6
Q

Uneven splits do not have the number one in either place left or right

A

5:4, 2:3 and so on

7
Q

A reverse split reduces

A

The number of outstanding shares

8
Q

A forward split increases

A

The number of outstanding shares

9
Q
  1. Which of the following is an acceptable investment for an IRA?
A

A mutual fund specializing in speculative bonds

Investments in an IRA are limited to cash and securities

10
Q
  1. A party wishing to solicit proxy authority to vote a particular stockholders shares must register with
A

The securities and exchange commission

11
Q
  1. The customer has given permission for securities in an investment account to be used for the purpose of other customers who want to borrow them in order to sell those securities short. This would have entailed the customer signing
A

A loan consent form

12
Q
  1. Which of the following are associated with manipulative and deceptive or fraudulent devices?
A

Breakpoint sale

And

Capping

13
Q

Stop orders become WHAT once triggered?

A

Market orders

14
Q

Stop limit orders become WHAT once triggered?

A

Orders to sell at the specified limit

15
Q
  1. In order for a registered rep of a member firm to receive any form of compensation such as commissions after terminating employment all the following statements are correct except
A

Earnings from referred business from existing clients would be eligible for payment

16
Q
  1. Customer wanting to open a margin account was told that this securities will be held and street name this means that the securities will be registered in?
A

The name of the broker dealer

17
Q
  1. A GTC order is left unexecuted at the end of the trading day on the last business day of April which of the following is true
A

The order will be automatically canceled

18
Q
  1. Of the following which would not be considered institutional communications with the public
A

And internal memo promoting a new product that will be offered to your phones institutional customers only

Institutional communications specifically exclude internal communications such as memos

19
Q
  1. To meet a regulation T margin call a customer would have how long?
A

Settlement +2 additional business days

20
Q
  1. For the risk disclosure is found in the options disclosure document all of the following would be accurate disclosures except
A

If a maintenance call is not met the customer must direct which securities to sell

When a maintenance call is not meant it is the broker dealer who determines which securities to sell not the customer

21
Q
  1. A partnership account wants to trade on margin when would this be permitted
A

Only if it is not restricted from doing so in the partnership resolution

22
Q
  1. Which of the following records must be kept for the life of a broker dealer firm
A

Stock certificate books

23
Q
  1. Under regulation SP non-public personal information would not include a customers
A

Home address

24
Q
  1. Corporate accounts may trade on margin
A

Only if it is not listed as being restricted from doing so in the corporate charter

25
Q
  1. What are the two basic types of return on investment
A

Capital gains and income

26
Q
  1. Insecurities are bought and sold ownership changes hands between the buyer and the seller
A

On the settlement date of the transaction

27
Q
  1. Investor who has a short position and 500 shares of JKH common stock would eliminate that position by
A

Entering a closing purchase order for 500 shares of JKH

28
Q
  1. The customer wants to save some money for his grandson’s college education in an IRA account which of the following regarding a Coverdel education savings account is true?
A

The funds must be distributed by the time the grand child attains age30 unless they are rolled over

29
Q

Roth IRA‘s

A

Have no minimum required distributions at any age

&

Can be contributed to in the same year as a traditional IRA

30
Q

Short stock is a what type of position?

A

Bearish position

31
Q

The USA patriot act’s required customer identification program is designed chiefly to prevent?

A

Funding of terrorist activities

&

Money laundering

32
Q

The conduct rules permit specific types of lending arrangements between RR’s and their firms and customers. Which arrangement would not be permitted??

A

The firm lends the customers securities without a consent agreement

33
Q

This is not included in a notice of corporate action regarding a stock dividend

A

The Stocks issue date

34
Q

If a margin deposit is late, an extension request made by the broker dealer

A

Is not required but can be made, and may or may not be granted

35
Q

Interest and Dividends are what type of income?

A

Investment income

36
Q

Salary or Bonuses are what type of income?

A

Earned income

37
Q

What happens to the contents of a custodial account in the event of the death of the beneficial owner (minor child)?

A

The custodians fiduciary responsibility ceases

&

The account passes to the minor’s estate

38
Q

And investor owning 400 shares of stock receives notice that the stock will be split. When the split is complete, the customer owns 1200 shares of stock. The split must have been

A

A forward, even split

39
Q

And investor notice is that a bond originally bought at 95 some years ago is now trading at a price of 88. The investor sells the bond, then buys it back the next day for88.5 with the intention of declaring a loss from the original purchase and sale on this year‘s tax return. This would be known as??

A

A wash sale, and taking the loss is prohibited

40
Q

Corporate accounts may trade on margin true or false?

A

True, only if it is not listed as being restricted from doing so in the corporate charter

41
Q

An investor who has a short position in 500 shares of JKH common stock would eliminate that position by??

A

Entering a closing purchase order for 500 shares of JKH

42
Q

Any activity in an account-transactions, dividends and interest, stock splits or dividends will trigger what?

A

The requirement to send a monthly statement

43
Q

Monthly statements need not be sent if the only account activity is the receipt of interest or dividends true or false?

A

FALSE

44
Q

To ensure that their information obtained from each new customer is accurate, firms most funnest to each customer a copy of the account record within how many days of opening the account?

A

30 days