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FINRA PRACTICE EXAM WITH
CORRECT QUESTIONS AND
ANSWERS
Thekredemptionkvaluekofkankopen- endkinvestmentkcompany'skshareskiskbasedkonkthe: previouskofferingkprice previouskclosingkNAV NAVkcomputedkafterkthekorderkiskreceived offeringkpricekcomputedkafterkthekorderkiskreceivedk- kCORRECTkANSWER-NAVkcomputedkafterkthekorderkiskreceived Thekcomputationkofkdollarkpriceskandkaccruedkinterestkonkmunicip alkbondskisknormalkonkwhatkcalendarkbasis? 30/ 30/ Actual/ Actual/365k-kCORRECTkANSWER-30/ Blue-skyklawskarekregulatedkbykwhichkofkthekfollowingkentities? SEC MSRB FINRA stateksecuritieskregulatorsk-kCORRECTkANSWER- Stateksecuritieskregulators Atkthektimekofkissuance,kwhichkofkthekfollowingksecuritiesknormallyk hasktheklongestkperiodktokexpiration? Rights Options Warrants Repurchasekagreementsk-kCORRECTkANSWER-Warrants
RegularkwayksettlementkonkTreasurykBondskis: samekday nextkbusinesskday secondkbusinesskday fifthkbusinesskdayk-kCORRECTkANSWER-nextkbusinesskday Akfirmkiskakparticipantkinkakpublickoffering.kToksellkaksubstantialkamo untkofktheksecuritiesktokitskcustomers,kthekfirmkagreesktokrepurchas ekthekshareskatknoklesskthankthekoriginalksaleskprice.kSuchkagreem entskare: prohibitedkaskfraudulentkandkmanipulative.k Permissiblekifktheksecuritieskarekdepositedkintokescrow.k prohibitedkunlesskthekfirmkimmediatelyksetskasidekfundskforkthekre purchase permissiblekifkthekcustomerskretainkthekrightktoksellktheksecuritieskin tokthekopenkmarket.k-kCORRECTkANSWER- prohibitedkaskfraudulentkandkmanipulative UnderkSECkS- Pk(ConsumerkPrivacy),kwhichkofkthekfollowingkinformationkmustkakf irmkincludekinkitskcustomerkprivacykandkopt-outknotices? thekaddresskofkthekfirm'skwebsite thekfeektokoptkoutkfromkthekprivacykprogram thekdeadlinekbykwhichktokoptkoutkfromkthekprivacykprogram thekpoliciesktokprotectktheksecuritykofknonpublickinformationk- kCORRECTkANSWER- thekpoliciesktokprotectktheksecuritykofknonpublickinformation UTMAkaccountskarekopenedkunderkthektaxkIDknumberkofkthe: minor donor parent custodiank-kCORRECTkANSWER-minor UnderkFINRAkrules,knoncashkcompensationkconnectedkwithktheks alekofkvariablekcontractskincludeskallkofkthekfollowingkitemskEXCEP T:
ThekownerkofkwhichkofkthekfollowingkproductskiskMOSTkexposedkto kinflationarykrisks? utilitykstocks treasurykbills treasurykbonds bluekchipkindustrialsk-kCORRECTkANSWER-treasurykbonds Whatkiskthekconceptkofkankannuitykcontract?k- kCORRECTkANSWER- thekkindkofkannuitykselectedkpartlykdetermineskthekpaymentkamou ntsktokthekannuitant WhichkofkthekfollowingkstatementkisktruekaboutkallkUSkGovkagencyki ssues? theykarekexemptkfromkfederalktaxes theykarekexemptkfromkregistrationkunderkthekSecuritieskActkofk 193 3 theykarekissuedkinkbearerkformkonly theykarekgeneralkobligationskofkthekfedkgovk- kCORRECTkANSWER- theykarekexemptkfromkregistrationkunderkthekSecuritieskActkofk 193 3 Directkparticipationkprogramsk(DPP's)kprovide: liquiditykandktransparency exposurektoknon-correlatedkassetskwithksteadykreturns market-relatedkcorrelationskwithkhigherkaveragekreturns investorskwithkdirectkpurchaseskofkstockkfromkpublickcompaniesk- kCORRECTkANSWER-exposurektoknon- correlatedkassetskwithksteadykreturns Whichkofkthekfollowingkoutcomeskarekpossiblekforkthekwriterkofkakco veredkcallkoption? profitklimitedkandklossklimited profitklimitedkandklosskunlimited profitkunlimitedkandklossklimited
profitkunlimitedkandklosskunlimitedk-kCORRECTkANSWER- profitklimitedkandklossklimited whenkiskinterestkonktreasuryknoteskpaid? quarterly semiannually annually atkmaturityk-kCORRECTkANSWER-semiannually ankassociatedkpersonkwhokisknotkakregisteredkrepresentativekiskpe rmittedktokengagekinkwhichkofkthekfollowingkactivities? acceptkankunsolicitedkcustomerkorder providekaccountkopeningkformsktokaknewkcustomer discusskthekattributeskofkakparticularkinvestmentkproduct prequalifykprospectivekcustomerskasktokinvestmentkobjectivesk- kCORRECTkANSWER- providekaccountkopeningkformsktokaknewkcustomer aktransactionkinkwhichkakwriterkcoverskakpositionkbykpurchasingkank optionkiskcalled: closingksale closingkpurchase openingksale openingkpurchasek-kCORRECTkANSWER-closingkpurchase whichkofkthekfollowingkactionskiskrequiredkofkakbroker-dealer'skanti- moneyklaunderingkprogram? designatingkankAMLkcompliancekofficer filingkofkthekfirm'skAMLkprogramkwithkFINRA conductingkbackgroundkcheckskofkallkemployees identifyingktokregulatorskthekemployeeskresponsiblekforkCurrencyk TransactionkReportsk-kCORRECTkANSWER- designatingkankAMLkcompliancekofficer UnderkthekSecuritieskActkofk1933,kregistrationkiskrequiredkforkwhic hkofkthekfollowingksecurities? Eurodollarkbonds
qualifiedkdistributionskarekexcludedkfromkfederalkincomektaxk- kCORRECTkANSWER- qualifiedkdistributionskarekexcludedkfromkfederalkincomektax akcustomerkbuysk 1 kABCkJank 35 kputkforkakpremiumkofk$3kandksimult aneouslykbuysk 100 kshareskofkABCkstockkfork$35kperkshare.kthekcu stomerkwillkbreakkevenkwhenkthekstockkisksellingkatkwhatkpricekperk sharekatkexpiration? $ $ $ $38k-kCORRECTkANSWER-$ UnderkFINRAkrules,kwhichkofkthekfollowingkactivitieskbykakregistere dkrepresentativekrequireskwrittenknotificationktokherkfirm? volunteeringkaskakyouthksoccerkleaguekcoach gamblingkresultingkinkwinningskinkexcesskofk$10k drivingkpartktimekforkaktransportationknetworkkcompanykonkweeken d sellingknonproprietarykinvestmentkcompanyksecuritieskproductskth roughkherkfirmk-kCORRECTkANSWER- drivingkpartktimekforkaktransportationknetworkkcompanykonkweeken ds inkover-the- counterkmarket,kthektermk"spread"krefersktokthekdifferencekbetwee nkthe: bidkandkaskedkprices offeredkandkaskedkprices indicatedkandkfirmkprices openingkandkclosingkpricesk-kCORRECTkANSWER- bidkandkaskedkprices WhichkofkthekfollowingkFormkU4kreportablekeventskresultskinkakstat utorykdisqualification? personalkbankruptcykfiling writtenkcustomerkcomplainkallegingkmisappropriationkofkassets
akfelonyktheftkcharge akfelonykconvictionkforkakDUIkchargek-kCORRECTkANSWER- akfelonykconvictionkofkakDUIkcharge Whichkofkthekfollowingkactionskiskrequiredkwhenkakfirmkreceiveskca shkinkexcesskofk$10kkfromkonekcustomerkinkonekbusinesskday? filekakCurrencykTransactionkReportk(CTR) filekaksuspiciouskactivitykreportk(SAR)kwithkthekSEC issuekakcashktransferkreceiptktokthekcustomer placekakfive- daykholdkonkthekcustomer'skaccountkforkthekfundskreceivedk- kCORRECTkANSWER-filekakcurrencyktransactionkreportk(CTR) aksavingskaccountkatkakbankkiskguaranteedkbykwhichkofkthekfollowi ngkentities? FDIC SIPC FederalkReservek DepartmentkofkthekTreasuryk-kCORRECTkANSWER-FDIC No- loadkmutualkfundskmaykhaveklowerkexpensekratioskthankloadkmutu alkfundskforkwhichkofkthekfollowingkreasons? no-loadkfundskdoknotkchargek 12 - b1kfees no-loadkfundskareknotkpermittedktokchargekak12b- 1 kfeekgreaterkthank 25 kbasiskpoints saleskchargeskforkloadkmutualkfundskincreasektheirkannualkexpens ekratios fundkmanagementkfeeskforkno- loadkfundskarekalwaysklowerkthankloadkfundsk- kCORRECTkANSWER-no- loadkfundskareknotkpermittedktokchargekak12b- 1 kfeekgreaterkthank 25 kbasiskpoints akdeclinekinkthekGDPkmustklastkforkatkleastkhowkmanykquartersktokb ekconsideredkakrecession? 1
whichkofkthekfollowingkinvestmentkriskskiskthekgreatestkriskkinkakvari ableklifekinsurancekpolicy? creditkrisk marketkrisk inflationkrisk interestkratekriskk-kCORRECTkANSWER-marketkrisk underkRulek144A,kankissuerkofkrestrictedkstockkiskpermittedktoksellkt okwhichkofkthekfollowingkinvestors? financialkinstitutions accreditedkinvestors qualifiedkinstitutionalkbuyers nonkaccreditedkinvestorskwhokhavekpreviouslykpurchasedkrestrict edkstockk-kCORRECTkANSWER- qualifiedkinstitutionalkbuyersk(QIBs) Akregisteredkrepresentativekwhokwantsktokplacekakmutualkfundkadv ertisementkmustkobtainkwrittenkapprovalkfromkwhichkofkthekfollowin gkparties? FINRA eachkstate'sksecuritieskadministrator akregisterkprincipalkofkthekRR'skfirm thekinvestmentkmanagementkdivisionkofkthekappropriatekregionalk SECkofficek-kCORRECTkANSWER- akregisteredkprincipalkofkthekRR'skfirm whichkofkthekfollowingkstakeholderskhaskfirstkclaimkprioritykinkakcha pterk 11 kproceeding? equitykholders securedkdebtkholders unsecuredkdebtkholders administrativekclaimkholdersk-kCORRECTkANSWER- securedkdebtkholders akregisteredkrepresentativekwantsktokparticipatekinkakprivateksecuri tiesktransaction.kwhichkofkthekfollowingkactionskmustkthekRRktake?
requestkakmeetingkwithkhisksupervisorktoklaykoutkthekstructurekofkth ekdeal callkhisksupervisorkandkinformkherkofkthekdealkandkthekRR'skpotenti alkinvolvement sendkwrittenknoticektokhisksupervisorkoutliningkthekactivitykandkcom pensationkstructure initiatekthekpaperworkkrequiredkbykthekpolicieskofkthekfirmkoncekthek activitykhaskbegunk-kCORRECTkANSWER- sendkwrittenknoticektokhisksupervisorkoutliningkthekactivitykandkcom pensationkstructure akRRkiskreviewingkthekfollowingkportfolio:k30%kABCkEnergykcompa ny,k30%khealthkcarekcompany,k30%kETF,k10%kmoneykmarketkfun ds.kwhichkofkthekfollowingkriskskiskinherentkinkthiskportfolio? credit liquidity political nonsystematick-kCORRECTkANSWER-nonsystematic whichkofkthekfollowingkproductskiskadverselykimpactedkifkthekissuer' skcreditkratingkiskdowngraded? mutualkfunds unitkinvestmentktrustsk(UIT's) exchange-tradedkfundsk(ETF's) exchange-tradedknotesk(ETN's)k-kCORRECTkANSWER-ETN's akbroker- dealerkiskpermittedktokacceptkpaymentkforkaknewkissuekfromkaknewk customerkwhenkthe: registrationkiskeffective redkherringkiskdelivered preliminarykprospectuskiskamended transactionktakeskplacekduringkthekcooling-offkperiodk- kCORRECTkANSWER-registrationkiskeffective
2 kreversekstockksplit,kthekinvestor'skpostkstock- splitkpositionkwillkbe: 50 kshareskatk$25kperkshare 50 kshareskatk$100kperkshare 200 kshareskatk$25kperkshare 200 kshareskatk$100kperksharek-kCORRECTkANSWER- 50 kshareskatk$100kperkshare akmemberkofkakstockkexchangekresponsiblekforkprovidingkliquidityki nkaksecuritykbykbeingkwillingktokbuykandksellkatkallktimeskiskknownkas ka:k broker underwriter marketkmaker transferkagentk-kCORRECTkANSWER-marketkmaker underkindustrykregulations,kankinitialkpurchasekofk$3kkofkcommonk stockkinkakmarginkaccountkrequireskakcashkdepositkof:k $ $1, $2, $3,000k-kCORRECTkANSWER-$2, whichkofkthekfollowingkcommunicationskwithkthekpublickiskconsider edkmisleading? historicalkillustrationskbasedkonkfactualkperformance productkcomparisonskthatkillustratekmaterialkdifferences akresearchkreportkthatkincludeskakbuykrecommendationkforkakspeci ficksecurity literaturekprovidingkak 10 - yearkperformancekinformationktoksupportkpredictionskofkfuturekperf ormancek-kCORRECTkANSWER-literaturekprovidingk 10 - yearkperformancekinformationktoksupportkpredictionskofkfuturekperf ormance thekprimarykpurposekofkaksyndicatekdeskkinkthekcontextkofkankequit ykofferingkiskto:
determinektheklistkofksellingkshareholders buildkankorderkbookkandkallocatekthekstock solicitkinterestkfromkinvestorskinkthekstockkoffering chaperonekcompanykmanagementkduringkthekroadkshowk- kCORRECTkANSWER-buildkankorderkbookkandkallocatekthekstock whichkofkthekfollowingkrepresentskthekeffectkofkakstockksplit? thekpricekperksharekofkcommonkstockkincreasesk thekpricekperksharekofkcommonkstockkdecreases eachkstockholder'skproportionatekownershipkdecreases eachkstockholder'skproportionatekownershipkincreasesk- kCORRECTkANSWER- thekpricekperksharekofkcommonkstockkdecreases akcustomerkhaskakcashkbalancekinkherkaccountktogetherkwithklongk positionskinkseveralksecurities.kshekhaskmadeknoksecuritiesktransa ctionskinkthekaccountkduringkthekpastk 18 kmonths.khowkoftenkmustkt hekfirmksendkherkankaccountkstatement? monthly quarterly semiannually annuallyk-kCORRECTkANSWER-quarterly akcustomerkiskankofficerkofkakcompanykthatkiskinvolvedkinksomeksig nificantkchanges.kallkofkthekfollowingkitemskarekexampleskofkcorpor atekaffairskthatkcouldkbekconsideredkinsidekinformationkifkthekcusto merkshareskthemkwithkhiskregisteredkrepresentativekEXCEPT: pendingktransactions declaredkstockkdividend topkmanagementkchanges imminentkfinancialkliquiditykproblemsk-kCORRECTkANSWER- declaredkstockkdividend whenksellingkakfixedkamountkofkakbasekcurrencyktokpurchasekakcou nterkcurrency,kwhichkofkthekfollowingkfactorskiskprimarilykusedktokde terminekhowkmuchkofkthekcounterkcurrencykthekcustomerkwillkrecei ve?k
whichkofkthekfollowingkresponseskdescribeskankadvantagekofkinde xkfunds thekprotectionkofkprincipalkduringkbearishkmarkets highkturnoverktoktakekadvantagekofkmarketkopportunities higherkmanagementkfeeskduektokactivekmanagementkofkthekfund lowerkmanagementkfeeskduektokpassivekmanagementkofkthekfundk
- kCORRECTkANSWER- lowerkmanagementkfeeskduektokpassivekmanagementkofkthekfund underkaksystemkofkstatutorykvoting,kakcommonkstockholderkhaskask manykvoteskforkeachkvacancykonkthekboardkofkdirectorskasktheknu mberkof: positionskvacantkonkthekboard directorskpresentkatkthekmeeting shareskownedkbykthekstockholder proxieskavailablekforkvotingkbykthekboardk-kCORRECTkANSWER- shareskownedkbykthekstockholder whichkofkthekfollowingksecurityktypeskprovideskinvestorskwithkakstat edkmaturitykdate,kakfloatingkinterestkrate,kandkankoptionktokputktheks ecuritykbackktokakfinancialkintermediarykonkakdailykorkweeklykbasis ? equitykputkoption perpetualkpreferredkstock variablekratekdemandknote tax-deferredkvariablekannuityk-kCORRECTkANSWER- variablekratekdemandknote whichkofkthekfollowingkconsiderationskshouldkakregisteredkreprese ntativekexplainktokakcustomerkwhenkrecommendingkak 529 kcollegek savingskplan? thekpotentialkdeductibilitykofkcontributionskfromkstatektaxes thekpotentialkdeductibilitykofkcontributionskfromkfederalktaxes thekincomekeligibilitykrestrictionsktokcontributektokthekaccount thekrightkofkthekaccountkbeneficiaryktokthekassetskatkthekagekofkmaj orityk-kCORRECTkANSWER- thekpotentialkdeductibilitykofkcontributionskfromkstatektaxes
akcompanykannounceskaktenderkofferktokitskshareholderskwithktheki ntentktokbuykakmaximumkofk 1 kmillionkshareskofkitskoutstandingkstoc kkatk$10kperksharekandksetsknokminimumknumberkofksharesktokbekp urchased.kankinvestorkwantsktokparticipatekinkthiskofferkandktender skhisk1,000ksharekposition.katkthekclosekofkthekofferkperiod,konlyk 90 0,000kshareskhavekbeenktendered.khowkmanykofkthekinvestor'sksh areskwillkthekcompanykpurchase? 0 100 900 1,000k-kCORRECTkANSWER-1, whichkofkthekfollowingkinvestmentskarekgenerallyktradedkaccording ktoktheirkaverageklifekratherkthanktheirkstatedkmaturitykdates? corporatekbonds governmentkbonds asset-backedksecuritiesk fixed-ratekcapitalksecuritiesk-kCORRECTkANSWER-asset- backedksecurities whichkofkthekfollowingkstatementkisktruekaboutktreasurykstock? itkhaskvotingkrights itkreceiveskdividends itkiskissuedkstockkthatkhaskbeenksubsequentlykreacquiredkbykthekco rporation itkiskauthorizedkstockkthatkhasknotkbeenkissuedkandkiskheldkinkthekco rporation'sktreasuryk-kCORRECTkANSWER- itkiskissuedkstockkthatkhaskbeenksubsequentlykreacquiredkbykthekco rporation inkakperiodkofklowkinflationkandkeconomickrecession,kthekfederalkre servekiskexpectedktoktakekwhichkofkthekfollowingkactions? decreasektaxes raisekthekfederalkfundskrate buykbondskinkthekopenkmarket
