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| Section | Weight | Objectives |
|---|---|---|
| Opens Accounts after Obtaining and Evaluating Customers’ Financial Profile and Investment Objectives | 9% | - Suitability rules and regulatory compliance - Account types and documentation requirements - Financial profile, risk tolerance, and investment objectives |
| Provides Customers with Information about Investments, Makes Suitable Recommendations, Transfers Assets and Maintains Appropriate Records | 73% | - Municipal securities - Investment companies, ETFs, and variable annuities - Margin accounts and taxation - Options and derivative products - Recordkeeping and regulatory reporting - Direct participation programs - Debt securities and government obligations - Equity securities |
| Obtains and Verifies Customers’ Purchase and Sales Instructions; Processes, Completes and Confirms Transactions | 11% | - Trade settlement and confirmation rules - Regulatory requirements for transaction processing - Order types and execution procedures |
| 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 |
1. Bubba is a registered representative who wishes to buy shares of a new issue his firm is distributing.
Under FINRA Conduct Rules, Bubba may:
A) do so if he has a history of buying hot issues
B) not do so for his own account, buy may purchase shares for his sister's account
C) do so if his allotment is insubstantial and not disproportionate to public orders
D) not do so under any circumstance
2. Bubba Corporation issued bonds that pay interest on January 15 and July 15 each year until maturity. An
investor purchasing these bonds on Monday, April 12, must pay the contract price plus accrued interest
for:
A) 90 days
B) 89 days
C) 93 days
D) 87 days
3. Bubba Brokerage Corporation announces through its wire system that it has a large block of stock for sale.
Customers purchasing the stock will not pay a commission. The block is crossed on the NYSE floor and is
printed on the NYSE tape. This is called a:
A) specialist block purchase
B) exchange distribution
C) special order
D) secondary distribution
4. Bubba is buying a Federal Home Loan Bank issue that is offered at 95.22. How much will he pay to
purchase one bond?
A) $956.88
B) $95.22
C) $951.63
D) $952.20
5. Bubba owns a perpetual warrant to buy one share of Internet Corporation common stock at $30. Internet
Corporation stock is trading at 41.50 and is ex-dividend today at $0.75. What is the market value of
Bubba's warrant?
A) cannot be determined from this information
B) 5.62
C) 5.38
D) 5.75
Solutions:
| Question # 1 Answer: D | Question # 2 Answer: A | Question # 3 Answer: B | Question # 4 Answer: A | Question # 5 Answer: A |
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