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| Section | Weight | Objectives |
|---|---|---|
| Topic 1: Obtains and Verifies Customers’ Purchase and Sales Instructions; Processes, Completes and Confirms Transactions | 11% | - Regulatory requirements for transaction processing - Order types and execution procedures - Trade settlement and confirmation rules |
| Topic 2: Seeks Business for the Broker-Dealer from Customers and Potential Customers | 7% | - Standards for advertising and public communications - Product-specific disclosures and regulatory requirements - Customer communication and solicitation rules |
| Topic 3: Provides Customers with Information about Investments, Makes Suitable Recommendations, Transfers Assets and Maintains Appropriate Records | 73% | - Options and derivative products - Municipal securities - Recordkeeping and regulatory reporting - Equity securities - Direct participation programs - Debt securities and government obligations - Investment companies, ETFs, and variable annuities - Margin accounts and taxation |
| Topic 4: Opens Accounts after Obtaining and Evaluating Customers’ Financial Profile and Investment Objectives | 9% | - Account types and documentation requirements - Suitability rules and regulatory compliance - Financial profile, risk tolerance, and investment objectives |
1. Bubba Corporation has a profit sharing plan. The company president, Bubba, is receiving the maximum
plan contribution amount. The corporation has one other employee, who is eligible for the plan. If this
person earns $12,000 per year, how much must be deposited in the plan for the employee?
A) $6,000
B) $12,000
C) $3,000
D) $1,800
2. Approval for a registered investment company to change is investment objective from income to growth is
required from which of the following?
A) the SEC
B) a majority of the shareholders
C) all of the above
D) the FINRA
3. In regard to discretionary accounts, which of the following statements is correct?
A) the customer must approve each transaction in writing before the order is entered
B) the customer must grant written authorization to the member firm to exercise discretion in the account
C) both B and C
D) the account must be accepted in writing by an officer of the member firm
4. Bubba has several accounts at a brokerage firm. Which of the following is not covered by SIPC?
A) commodities account in Bubba's name only
B) joint account of Bubba and his wife
C) individual account in Bubba's name only
D) joint account of Bubba and his son, Bubba, Jr.
5. What is the name for the rate of discount from the list price that is paid to a municipal securities
underwriting group member for its sales participation?
A) spread
B) takedown
C) concession
D) commission
Solutions:
| Question # 1 Answer: C | Question # 2 Answer: B | Question # 3 Answer: C | Question # 4 Answer: A | Question # 5 Answer: B |
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