Question #1 of 28Question ID: 1345712
The Uniform Securities Act (USA) provides a legal framework for the registration of
B)
Explanation
The USA provides a legal framework for the state registration of securities. It may be adopted by individual states and adapted to their needs.
Question #2 of 28Question ID: 1269495
Which of the following must be a member of the Securities Investor Protection Corporation (SIPC)?
C)
Explanation
The Securities Investor Protection Act, which established SIPC, was passed in 1970 to protect persons with brokerage accounts from loss due to failure of their broker-dealer. Firms with such accounts are required to join, with the exception of dealers exclusively in government and municipal bonds and those involved only with investment company securities.
Question #3 of 28Question ID: 1269490
The Federal Reserve Board (FRB) does all of the following except
B)
Explanation
The FRB determines monetary policy (not fiscal) and takes actions to implement its policies, including but not limited to regulating the U.S. money supply and supervising the printing of currency.
Question #4 of 28Question ID: 1269504
Under the Uniform Securities Act (USA), registrations must be renewed how frequently?
A)
Explanation
State laws require that registrations must be renewed annually for broker-dealers with an office in the state or those who direct calls into the state or receive calls from the state.
Question #5 of 28Question ID: 1280026
If a married couple have a joint account with a market value of $1 million and a debit balance of $600,000, all of which is in securities, how much coverage would this account have?
C)
Explanation
A joint account has a maximum coverage of $500,000; however, in a margin account only the equity is covered, so the debit balance is subtracted from the market value, leaving $400,000 equity.
Question #6 of 28Question ID: 1280029
What is the name for the legal framework of state laws for broker-dealers, registered representatives, investment advisors and investment advisor representatives?
B)
Explanation
The Uniform Securities Act is a template for state securities laws in the United States.
Question #7 of 28Question ID: 1269491
Which of the following regarding monetary or fiscal policy is true?
Explanation
B)
Monetary policy is what the FRB engages in when it attempts to influence the money supply. Fiscal policy refers to governmental budget decisions enacted by the president and Congress to regulate federal spending and taxation, and those decisions impacting deficits and surpluses.
Question #8 of 28Question ID: 1269485
A broker-dealer and its associated persons may be subjected to sanctions for violations of the Financial Industry Regulatory Authority (FINRA) and the Securities and Exchange Commission (SEC) rules. Which of the following penalties can be levied against the associated persons?
A)Loss of Securities Investor Protection Corporation (SIPC) coverage
B)Censure
C)Limits placed on research activities
D)Imprisonment
B)
Explanation
There are many ways a firm and its associated persons can be sanctioned by FINRA including censure. However, imprisonment and forced withdrawal from SIPC are not approved disciplinary actions.
Question #9 of 28Question ID: 1269484
Broker-dealers that transact securities business with customers or other broker-dealers must apply and be approved for registration with
B)
Explanation
The SEC is the securities industry's primary regulatory body. Broker-dealers that transact securities business with customers or with other broker-dealers must apply and be approved for registration with the SEC.
Question #10 of 28Question ID: 1269494
An investor opens an account with BNZ Government Securities, a broker-dealer limiting its transactions exclusively to securities issued by the U.S. government. The account holds $250,000 of Treasury bonds, $250,000 of Treasury notes, and $50,000 in cash. If BNZ's broker-dealer business should fail, the investor would receive Securities Investor Protection Corporation (SIPC) protection in the amount of
B)
Explanation
Although the vast majority of broker-dealers are required to be members of SIPC, those who deal exclusively in U.S. government securities are exempt.
Question #11 of 28Question ID: 1280027
SIPC coverage is best described by which of the following?
D)
Explanation
The maximum coverage is up to $500,000 in cash and securities but no more than $250,000 in cash.
Question #12 of 28Question ID: 1269493
Broker-dealers and registered representatives may be subject to each of the following administrative and regulatory bodies except
D)
Explanation
Depending on their lines of business, broker-dealers are subject to a variety of regulatory bodies, such as FINRA, the New York Stock Exchange (NYSE), the Chicago Board Options Exchange (CBOE), state administrators, and others. Those broker-dealers that have a municipal securities line of business must comply with Municipal Securities Rule Board (MSRB) rules which are enforced by FINRA. However, SIPC is not a regulatory body; rather it provides insurance protection for investors of failed broker-dealers.
Question #13 of 28Question ID: 1269488
Broker-dealers who transact securities business with other broker-dealers or customers must be registered with
B)
Explanation
Any entity such as a broker-dealer intending to do business with other broker-dealers or customers involving securities must be registered with the SEC.
Question #14 of 28Question ID: 1269492
A customer has a significant amount of money in bank deposit accounts: $225,000 in a savings account titled in the customer's name; $240,000 in a checking account titled jointly with a spouse; and $100,000 in an account where the customer is custodian for a grandchild. Should that bank fail, the Federal Deposit Insurance Corporation (FDIC) insurance would cover
A)the entire $565,000.
B)$250,000 for the savings and checking accounts and $100,000 for the custodial account.
C)a total of $250,000, divided proportionately among the three accounts.
D)$225,000 for the savings account, $100,000 for the custodial account, and nothing for the checking account.
A)
Explanation
The FDIC provides deposit insurance guaranteeing the safety of a depositor's accounts in member banks up to $250,000 for each deposit ownership category in each insured bank. Each account listed (savings, checking, and custodial) is a separate ownership category under FDIC rules, so all the money in each of them is covered.
Question #15 of 28Question ID: 1269502
The law that provides the legal framework for state registration of securities is
B)
Explanation
The Uniform Securities Act provides a legal framework for the state registration of securities, as well as the registration requirements applicable to broker-dealers, investment advisers, investment adviser representatives, and registered representatives.
Question #16 of 28Question ID: 1269482
The primary regulatory body for the securities industry would be which of the following?
D)
Explanation
Created under the Securities Exchange Act of 1934, the overriding or primary securities industry regulatory body is the SEC.
Question #17 of 28Question ID: 1269483
A registered securities broker-dealer that does not comply with Financial Industry Regulatory Authority (FINRA) and Securities and Exchange Commission (SEC) rules and regulations is subject to each of the following sanctions except
A)reductions in Securities Investor Protection Corporation (SIPC) coverage.
B)censure.
C)partial or full suspension of its registration.
D)limits on activities, functions, or operations.
A)
Explanation
Broker-dealers that do not comply with SEC and FINRA rules and regulations are subject to censure, limits on activities, functions, or operations, suspension of its registration, revocation of registration, fines, and more.
Question #18 of 28Question ID: 1269496
An investor has a cash account with $300,000 in securities and $40,000 in cash. The investor also has a restricted long margin account containing securities with a market value of $220,000 and equity of $60,000. What is the extent of this investor's Securities Investor Protection Corporation (SIPC) coverage?
B)
Explanation
Coverage under SIPC may not exceed $500,000 in cash and securities, of which up to $250,000 may be cash. In the cash account, his coverage is $300,000 in securities plus $40,000 in cash. In the long margin account, the coverage is only the equity, which is $60,000. Total: $300,000 + $40,000 + $60,000 = $400,000.
Question #19 of 28Question ID: 1280024
Which of the following acts created the SEC?
D)
Explanation
The Securities Act of 1933 requires the registration of most new issues; the Securities Exchange Act of 1934 created the SEC; the Securities Investor Protection Act of 1970 created the SIPC; the Securities Market Improvement Act of 1975 created the MSRB.
Question #20 of 28Question ID: 1269498
The Federal Deposit Insurance Corporation (FDIC) protects which of the following?
C)
Explanation
The FDIC protects bank depositors in the event the bank fails. It will cover up to $250,000 for each recognized separate account.
Question #21 of 28Question ID: 1269500
Which of the following pairs are not covered by the Federal Deposit Insurance Corporation (FDIC) at any level?
B)
Explanation
Investment products that are not deposits are not covered by the FDIC. This would include life insurance policies, mutual funds, annuities, and individual securities such as stocks and bonds. At any level means neither partially nor fully.
Question #22 of 28Question ID: 1269499
Which of the following organizations was created to protect investors financially from a bank failure?
D)
Explanation
The FDIC provides deposit insurance guaranteeing the safety of a depositor's accounts in member banks up to $250,000 for each deposit ownership category in each insured bank.
Question #23 of 28Question ID: 1307671
Under the Securities Exchange Act of 1934, registration is required for
B)
Explanation
Under the Securities Exchange Act of 1934, broker-dealers and domestic exchanges are required to register with the Securities and Exchange Commission (SEC). Registration of securities and IPOs is a requirement of the Securities Act of 1933, sometimes called the Paper or New Issues Act. The SEC does not have authority over foreign exchanges.
Question #24 of 28Question ID: 1269489
All of the following are self-regulatory organizations (SROs) except
A)
Explanation
All U.S. exchanges such as the NYSE and Chicago Board Options Exchange (CBOE) are SROs. In addition, FINRA and the MSRB are SROs. The SEC is not.
Question #25 of 28Question ID: 1269497
Which of the following companies was created by an act of Congress and provides securities investors limited financial coverage in the event that the investor's servicing broker-dealer fails financially?
B)
Explanation
The Securities Investor Protection Corporation (SIPC) was created by Congress to meet customer claims in the event of a broker-dealer bankruptcy.
Question #26 of 28Question ID: 1280025
The SEC can do all of the following except
D)
Explanation
The SEC does not approve anyone: they "allow" them to become reregistered.
Question #27 of 28Question ID: 1269487
Broker-dealers must comply with Securities and Exchange Commission (SEC) rules and regulations when conducting business. A broker-dealer that does not comply may be subject to all of the following except
B)
Explanation
Broker-dealers must comply with SEC rules and regulations when conducting business. A broker-dealer that does not comply is subject to censure, limits on activities, functions, operations, suspension of its registration (or one of its associated person's license to do business), revocation of registration, and/or fines.
Question #28 of 28Question ID: 1280028
A customer has multiple accounts at a bank that also owns accounts at a broker-dealer. All of the following accounts would be covered by FDIC insurance up to the specified limits except
A)a joint savings account with a spouse.
B)both spouses' individual savings account.
C)an IRA in a five-year CD.
D)a checking account in a money market mutual fund.
D)
Explanation
A money market mutual fund is not considered a deposit of the bank; it is a security, so it is not covered by the FDIC.