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| Section | Weight | Objectives |
|---|---|---|
| Topic 1: Obtains and Verifies Customers’ Purchase and Sales Instructions; Processes, Completes and Confirms Transactions | 11% | - Order types and execution procedures - Regulatory requirements for transaction processing - Trade settlement and confirmation rules |
| Topic 2: Seeks Business for the Broker-Dealer from Customers and Potential Customers | 7% | - Customer communication and solicitation rules - Product-specific disclosures and regulatory requirements - Standards for advertising and public communications |
| Topic 3: 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 |
| Topic 4: Provides Customers with Information about Investments, Makes Suitable Recommendations, Transfers Assets and Maintains Appropriate Records | 73% | - Direct participation programs - Investment companies, ETFs, and variable annuities - Equity securities - Options and derivative products - Municipal securities - Margin accounts and taxation - Recordkeeping and regulatory reporting - Debt securities and government obligations |
1. Bubba and his wife, Bubbette, maintain a joint account with a brokerage firm as "joint tenants in common".
Bubbette calls a registered representative at the brokerage and places an order to sell 100 shares of XYZ,
which is long in the account. Which of the following statements is correct about this order?
A) it may be entered only after confirming with Bubba
B) it must be approved by an officer of the brokerage prior to entry
C) it may be entered
D) the order may not be accepted
2. The Bubba Fund is a load mutual fund that offers a reinvestment plan. What does this mean?
A) purchasers of fund shares must agree to make regular investments over a period of years
B) income, dividend, and capital gain distributions may be automatically used to purchase new shares of
the fund
C) holders of fund shares are permitted to regularly purchase additional shares at the bid price
D) no federal income taxes are paid on dividends and capital gain distributions from the fund
3. Who is responsible for verifying that limited partners meet net worth and income requirements?
A) the sponsor
B) the limited partners
C) the registered representative
D) the general partner
4. Bubba's margin account has securities valued at $20,000 and an $8,000 credit balance. What is the
equity in Bubba's account?
A) $12,800
B) $8,080
C) $28,000
D) $20,000
5. Which of the following are not flat rate taxes?
A) general income tax
B) gasoline tax
C) excise tax
D) gift tax
Solutions:
| Question # 1 Answer: C | Question # 2 Answer: B | Question # 3 Answer: C | Question # 4 Answer: C | Question # 5 Answer: D |
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