Sales Practice

  1. All of the following may be considered retail communication EXCEPt
    A statement of additional information is prepared by a mutual fund, not a FINRA member firm. (SAI)
  2. a money market fund must
    money market funds must state that the fund is not guaranteed by the U.S. Government. Money market funds must also print effective yield and current yield in the same size type to ensure the information does not mislead the reader.
  3. A registered representative would be permitted to share commissions with
    Only with registered personnel of our firm or an affiliate of our firm. A Series 11 (assistant representative) cannot receive commissions for any transaction.
  4. A mutual fund advertisement must be filed by new broker-dealers
    Any advertising must be filed by first-year broker-dealers 10 days before the material’s first use.
  5. All of the following are factors in a bond fund's volatility rating EXCEPT:
    the size of the fund's portfolio.

    A bond fund's volatility rating must be based on objective factors that affect relative price changes with time. The mere size of the portfolio represents a difference in scale, not volatility.
  6. Front Running Def.
    Taking a position in a security in advance of a block trade is known as front running.
  7. Free riding
    attempting to buy a security and then sell it at a higher price and use the proceeds of the sale to pay for the purchase.
  8. are required to execute orders in a customer's discretionary account?
    1. Trades must be in accordance with the account holder's investment objectives.

    2. Prices for nonexempt securities must be the best available
  9. Why a VA
    Having a supplemental income stream for retirement and keeping pace with inflation should be the reasons to consider a VA as suitable,
  10. Violations of the Conduct Rules
    Short-term trading of Class A mutual fund shares under discretionary authority would be improper; the customer would lose the sales charge with each trade. Loaded funds should be sold as long-term investments, not as trading vehicles. Switching between funds is also rarely in the customer's interest, for the same reason.
  11. mutual funds is likely to carry the greatest credit risk in its portfolio?
    High-yield bonds are the riskiest of the debt securities given and carry the most credit risk.
  12. discretionary Authorization
    a registered representative must choose the action (buy or sell), the security, and/or the amount (number of shares).

    Action, Amount Security - ASS Discretionary
  13. Conduct Rules
    The main goal of the rules is to protect customers by preventing fraud, market manipulation, and unreasonable charges and commissions.
  14. FDIC Disclosures
    FINRA rules require both oral and written disclosure of the risks and the lack of FDIC coverage. members must make a reasonable effort to obtain written acknowledgment.
  15. A no-load fund charging a 12b-1 fee presents investment performance results in an advertisement.
    A fund that imposes 12b-1 fees may not advertise itself as a no-load fund, unless the 12b-1 fee is 25 or fewer basis points.
  16. Static content?
    content that remains posted until it is changed by the firm or individual who established the account.
  17. interactive Content
    Generally real-time communications
  18. Generic Advertisement
    may not refer to a specific security. However, it may describe investment company securities in general and the services offered in connection with ownership.
  19. Sales literature that contains false information or omits material information is considered misleading.
  20. mutual fund's ranking
    there is no need to disclose the length of time the current investment advisor has been managing the fuND
  21. a principal must review all discretionary accounts:
  22. Retail Communication
    it is available to more than 25 retail investors within a 30 calendar-day period.
  23. Dividend Re investments
    Automatic reinvestment is always at NAV.
  24. Solicitation
    Sending a newspaper article to a prospect is considered a solicitation. Thats a violation unless you send them a prospectus as well.
  25. Advertisements
    Communications with the public (including advertisements) must be presented with a high degree of clarity. To bury material information in a footnote does not meet this requirement.
  26. The Investment Company Act of 1940
    requires disclosure when all or part of the dividend payment comes from a source other than current income or accumulated undistributed net income.
  27. has sent out 27 different emails to 27 different customers this afternoon. His communications are classified as
    Individual emails to individual customers are classified as correspondence.
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Sales Practice
Sales Practice