1149 道题
A mutual fund grows so large that it stops accepting new investors. Which statement is correct?
- a.It becomes a closed-end fund and must list its shares on an exchange within one year
- b.It must convert to a unit investment trust with a fixed portfolio and a set termination date
- c.It remains an open-end fund because existing shareholders can still buy and redeem shares✓
- d.It loses its SEC registration because it no longer sells new shares to the public
An open-end fund is defined by continuous issuance and redemption with existing shareholders. A fund that closes to new investors still lets current holders buy and sell, so it stays open-end. A closed-end fund, by contrast, raises money in a single offering and then trades on an exchange.FINRA Investor Education, Mutual Funds
The CFO of a listed company buys 5,000 shares in March and sells 5,000 shares of the same stock at a profit in the following July. What is the consequence under Section 16(b) of the Securities Exchange Act of 1934?
- a.No consequence, because Section 16(b) reaches only trades made on inside information
- b.The profit must be repaid only if she held the shares for under 30 days
- c.The profit belongs to the buyers who purchased from her in July
- d.Any profit from the purchase and sale within less than six months is recoverable by the issuer, regardless of intent✓
Section 16(b) is a strict short-swing rule: profit that a director, officer or more-than-10% owner realizes from a purchase and sale, or sale and purchase, within a period of less than six months is recoverable by the issuer, irrespective of intent. March to July is under six months. The rule does not require proof that she used inside information.Exchange Act Section 16(b) (15 U.S.C. 78p(b))
A 50-year-old retiree wants to draw from his IRA before age 59 1/2 without the 10% additional tax by taking a series of substantially equal periodic payments (SEPP). Which statement describes this exception?
- a.It is available only for employer plans, and does not apply to IRAs under any circumstances
- b.It is an exception that applies to both IRAs and qualified plans, if the payments follow an IRS-approved method✓
- c.It requires the payments to be exactly equal to the plan's required minimum distribution each year, with no other method allowed
- d.It applies once the owner takes a single lump-sum withdrawal of the entire account balance
The IRS list of exceptions includes an equal-payments exception under Section 72(t)(2)(A)(iv) that is available for both qualified plans and IRAs. The payments must be a series of substantially equal payments calculated under an IRS-approved method, not a lump sum.IRC 72(t)(2)(A)(iv)
A customer closes her account in June 2026. For how long must the firm keep the account cards and records that relate to the terms and conditions of the opening and maintenance of that account, under SEC Rule 17a-4(c)?
- a.At least three years after the account is closed
- b.At least six years after the account was opened
- c.Only until the account is closed
- d.At least six years after the account is closed✓
SEC Rule 17a-4(c) requires a broker-dealer to preserve for at least six years after the closing of a customer's account any account cards or records that relate to the terms and conditions of opening and maintaining the account. The clock runs from closing, not from opening.17 CFR 240.17a-4(c)
An investor writes a call option on a stock she does not own and receives a $400 premium. The call expires worthless 14 months later (it was a LEAPS contract). How is the $400 taxed?
- a.As ordinary income in the year she received the premium, since options never create capital gains
- b.As a long-term capital gain, because the option was outstanding for more than one year
- c.It is not taxed, because it only reduces the basis of a stock that she never bought
- d.As a short-term capital gain recognized when the option expires, even though 14 months passed✓
A writer does not include the premium in income when received. It is held in a deferred account until the obligation expires, is exercised or is closed out. If the obligation expires, the premium is a short-term capital gain, regardless of how long the writer was obligated. Long-term treatment depends on the holding period of stock, which a writer of an uncovered call does not have.IRS Publication 550, Puts and Calls (writers)
A variable annuity owner dies during the accumulation phase. Absent an optional death-benefit rider, what is the beneficiary generally guaranteed?
- a.The highest account value reached while the contract was in force
- b.A return of the premiums paid, net of any withdrawals✓
- c.The premiums paid, compounded at the contract's assumed interest rate
- d.The full account value at the owner's age 59½
Variable annuity death benefits generally guarantee only a return of the premium net of withdrawals. A rider, which costs extra, can step the benefit up with market performance or a fixed rate.FINRA Investor Education, Annuities
Which of Regulation Best Interest's four component obligations requires a broker-dealer to understand the risks, rewards and costs of a recommendation and to have a reasonable basis to believe it is in the retail customer's best interest?
- a.The Disclosure Obligation
- b.The Care Obligation✓
- c.The Compliance Obligation
- d.The Conflict of Interest Obligation
Regulation Best Interest has four components: disclosure, care, conflict of interest and compliance. The Care Obligation calls for reasonable diligence, care and skill to understand the potential risks, rewards and costs, to believe the recommendation suits the particular customer's investment profile without placing the firm's interest ahead of the customer's, and to avoid a series of excessive transactions. The Disclosure Obligation covers written disclosure of material facts about the relationship.SEC Regulation Best Interest, 17 CFR 240.15l-1(a)(2)(ii)
A member firm approves a registered representative's participation, for selling compensation, in a private securities transaction. How must the firm treat the transaction?
- a.Leave it off the firm's books, because it was arranged outside the firm's regular business and was the representative's own
- b.Treat it as a passive investment of the representative that needs no review or supervision by the firm
- c.Record it on the firm's books and records and supervise it as if the firm itself had executed it✓
- d.Report it to the representative's customers only if the offering later loses value
Under FINRA Rule 3280, when a member approves participation in a private securities transaction for which the associated person may receive selling compensation, the transaction is recorded on the member's books and records and supervised as though it were executed on the member's behalf. If the member disapproves, the person may not take part in any way, directly or indirectly.FINRA Rule 3280(c)
A best-efforts underwriter describes an offering as "all-or-none." Under SEC rules, what must be true for that description to be used?
- a.The underwriter must buy any unsold securities for its own account at the offering price once the period ends
- b.Each purchaser must pay a 20% deposit that the issuer keeps if the offering is withdrawn or fails to close
- c.Investors' money must be promptly refunded unless all of the securities are sold within the specified time✓
- d.The offering may close at any size as long as the issuer receives the proceeds first
Rule 10b-9 bars calling an offering all-or-none unless it is conditioned on prompt refund of the money if all of the securities are not sold at the stated price within the stated time. A guarantee to buy the unsold balance is a firm commitment, not a best-efforts condition. Closing at any size defeats the all-or-none label.17 CFR 240.10b-9
A money market fund's weighted average maturity is 55 days, but because it holds floating-rate notes with long final maturities, its weighted average life measured without regard to interest-rate resets is 135 days. What does Rule 2a-7 conclude?
- a.The fund complies, because only the 60-day average maturity test applies to a money market fund
- b.The fund complies, because the weighted average life limit is 180 days for government funds
- c.The fund breaches the rule, because the weighted average life may not exceed 120 calendar days✓
- d.The fund breaches the rule only if the weighted average life exceeds 397 days on any day
Rule 2a-7 imposes two average tests: a 60-day cap on weighted average maturity and a 120-day cap on weighted average life, which is measured without the interest-rate-reset shortcuts. A fund with a 135-day weighted average life breaks the second limit even though it passes the first.17 CFR 270.2a-7(d)(1)(iii)
A company's chief executive officer adopts a Rule 10b5-1 trading plan. Which cooling-off period applies before any trade under the plan may occur?
- a.The later of 90 days after adoption or two business days after the company discloses results for the quarter in which the plan was adopted, up to a 120-day maximum✓
- b.No period, because a written plan adopted in good faith is effective immediately
- c.A flat 30 days after adoption, the same as for any other person
- d.The earlier of 30 days after adoption or the next annual meeting
For a director or officer of the issuer, Rule 10b5-1 requires a cooling-off period before trades under the plan, equal to the later of 90 days after adoption or two business days after the company's Form 10-Q or 10-K discloses results for the quarter in which the plan was adopted, subject to a 120-day maximum. A person who is not the issuer or a director or officer has a 30-day period.17 CFR 240.10b5-1(c)(1)(ii)(B)
Which security is exempt from Securities Act registration because of its short maturity?
- a.A corporate note that matures in eighteen months and is secured by receivables
- b.Prime-quality commercial paper with a maturity of not more than nine months when issued✓
- c.A twelve-month certificate of deposit sold by a broker-dealer to retail clients
- d.A corporate debenture with one year left to maturity that was originally a ten-year issue
Section 3(a)(3) exempts notes, drafts, bills of exchange and bankers' acceptances arising from current transactions that have a maturity at issuance of not more than nine months. The test is maturity at issuance, so a long-term bond approaching maturity does not qualify. Longer short-term paper, such as eighteen-month notes, also falls outside the exemption.Securities Act of 1933 Section 3(a)(3)
A money market fund's portfolio holds only securities that comply with Rule 2a-7. Which limit applies to the dollar-weighted average portfolio maturity (WAM) of the fund?
- a.No more than 60 calendar days✓
- b.No more than 90 calendar days
- c.No more than 120 calendar days
- d.No more than 397 calendar days
Rule 2a-7 caps the fund's dollar-weighted average portfolio maturity at 60 calendar days. Two other figures in the rule are easy to confuse with it: the dollar-weighted average life (WAL) may not exceed 120 days, and no single instrument may have a remaining maturity greater than 397 calendar days.17 CFR 270.2a-7(d)(1)
A brokerage firm that is a SIPC member fails, and a customer has $620,000 in securities and $50,000 in cash at the firm. What is the most SIPC can advance for this customer's claim, assuming the claims are valid?
- a.$250,000
- b.$500,000✓
- c.$670,000
- d.$300,000
SIPC advances to the trustee up to $500,000 per customer, of which no more than $250,000 can be for a claim for cash. A customer with $670,000 in total value is therefore protected up to $500,000, and the remaining value is recovered, if at all, from the estate. SIPC does not insure against market losses.Securities Investor Protection Act Section 9(a)
Which history of premiums and discounts must an ETF post on its website under Rule 6c-11?
- a.A table showing the number of days its shares traded at a premium or discount during the most recent calendar year and quarters since✓
- b.A table of the daily premium and discount for only the last five trading days
- c.A statement of the highest premium the fund has ever recorded
- d.Nothing, because ETF prices are set at net asset value
Rule 6c-11 requires a table showing the number of days the ETF traded at a premium or discount over the most recently completed calendar year and the quarters since, along with a line graph of premiums and discounts. ETF shares trade at market prices, so premiums and discounts to net asset value do occur.17 CFR 270.6c-11(c)(1)(iii)
A company has decided to go public but has not yet filed its registration statement. Under Section 5(c) of the Securities Act, what may its underwriter do?
- a.Make oral offers to institutional clients before the filing, but not written offers to any retail clients
- b.Accept indications of interest and binding orders from clients as long as no money changes hands
- c.Make no offers to sell the security, orally or in writing, until the registration statement is filed✓
- d.Send a written summary prospectus to any client who requests one before the filing is made
Section 5(c) makes it unlawful to offer a security for sale through a prospectus or otherwise until a registration statement has been filed. The waiting period after filing is when oral offers are allowed; sales and binding orders must wait until effectiveness. The quiet pre-filing period covers oral and written offers alike.Securities Act of 1933 Section 5(c)
Under Rule 2a-7, what is the longest remaining maturity an individual instrument may have when a money market fund acquires it?
- a.60 calendar days
- b.397 calendar days✓
- c.One year, counted as exactly 365 calendar days
- d.Two years
A money market fund may not acquire an instrument whose remaining maturity is greater than 397 calendar days. The 60-day figure is a limit on the whole portfolio's average maturity, not on any single holding.17 CFR 270.2a-7(d)(1)
A 33-year-old who has never owned a home wants to withdraw money from a traditional IRA toward a first home purchase. Up to what amount can avoid the 10% additional tax under the first-time homebuyer exception?
- a.$5,000
- b.$25,000
- c.The full account balance
- d.$10,000✓
The IRS exception for qualified first-time homebuyers covers up to $10,000 of IRA distributions. The amount withdrawn is still included in income unless it is a qualified Roth distribution; the exception removes only the 10% additional tax. The exception is listed for IRAs but not for employer plans such as a 401(k).IRC 72(t)(2)(F)
Which description matches the Federal Reserve's primary credit program at the discount window?
- a.Loans made to individual investors to buy Treasury securities at auction through the Fed
- b.Short-term loans, mostly overnight, to depository institutions in generally sound financial condition✓
- c.Overnight loans that one commercial bank makes to another bank at a negotiated rate of interest, with no Fed role
- d.Emergency loans made to the Treasury when tax receipts fall short of federal spending needs
Primary credit is the main discount window program; an institution that is in generally sound financial condition and has pledged collateral can borrow, usually overnight. The rate charged is the discount rate. Bank-to-bank overnight lending is the federal funds market, which is a different rate, and the Fed does not lend to individual investors through the discount window.Federal Reserve Act; discount window
A representative wants to draw money from a customer's bank checking account by submitting a draft to the customer's bank to pay for a securities purchase. Under FINRA Rule 4514, what must the representative first have?
- a.The customer's oral permission recorded on the firm's phone line, with a supervisor's signature on the record
- b.The approval of the firm's principal, even without the customer's signature, if the account has traded before
- c.A copy of the customer's most recent bank statement on file, plus the firm's own internal record of the request
- d.The customer's express written authorization, which can be the customer's signature on the instrument✓
FINRA Rule 4514 bars a member or associated person from obtaining or submitting for payment a check, draft or other negotiable paper drawn on a customer's checking, savings or similar account without the customer's express written authorization, which may include the customer's signature on the instrument itself.FINRA Rule 4514
Under SEC Rule 12b-1, which approval must a fund's plan to pay distribution expenses from fund assets receive from the board?
- a.A vote of the investment adviser's management committee only
- b.Written consent of the fund's distributor, without a board meeting
- c.A vote of the full board and of the directors who are not interested persons, cast in person at a meeting called for that purpose✓
- d.A vote of only the directors who are officers of the adviser
A 12b-1 plan and its related agreements must be approved by the board of directors and also by the directors who are not interested persons and have no financial interest in the plan, voting in person at a meeting called for the purpose. The independent-director vote guards shareholders against paying for distribution that mainly benefits the adviser.17 CFR 270.12b-1(b)(2)
A customer holds 800 shares of a stock in one account and has a short position of 300 shares in the same stock. Under Regulation SHO, for how many shares is she deemed to own the stock when she enters a sell order?
- a.500 shares, because ownership is only to the extent of her net long position✓
- b.800 shares, because the long position is what she holds in the account at the firm
- c.300 shares, because the short position controls her ownership for the purpose of the mark
- d.1,100 shares, because the long and short positions are added together for the mark
Rule 200(c) provides that a person is deemed to own securities only to the extent that she has a net long position. With 800 long and 300 short, her net long position is 500 shares, and only that amount can support a sale marked long.17 CFR 242.200(c)
A member firm wants to pay a finder's fee to a consultant who steers wealthy clients to the firm. The consultant is not registered as a broker-dealer but, because of the activity, would be required to be. What does FINRA Rule 2040 say?
- a.The firm may pay him if the fee is disclosed to each client in writing before any referral
- b.The firm may pay him up to 10% of the commissions the clients generate for the firm
- c.The firm may pay him if its principal approves the arrangement in advance and keeps a record
- d.The firm may not pay him, directly or indirectly, any compensation for those activities✓
FINRA Rule 2040(a) bars a member from paying, directly or indirectly, any compensation, fees, concessions, discounts, commissions or other allowances to a person that is not registered as a broker-dealer but must be because of the activities for which it is being paid. Disclosure or approval does not cure that.FINRA Rule 2040(a)
An investor owns 100 shares with a $35 per share cost basis and writes a call with a $40 strike for a $3 per share premium. The call is exercised and she delivers the shares. What is her total gain, ignoring commissions?
- a.$500, because the premium is taxed separately and is not part of the stock sale
- b.$300, because only the premium received is a gain and the stock sale itself is ignored
- c.$200, because the premium received reduces the sale proceeds of the stock
- d.$800, because the premium increases the amount realized on the sale of the stock✓
When a call the investor wrote is exercised and she sells the underlying stock, the premium is added to the amount realized on the sale. Proceeds are $4,000 from the strike plus $300 premium, or $4,300, against a $3,500 basis, leaving an $800 gain. Whether the gain is long-term or short-term depends on how long she held the stock.IRS Publication 550, Puts and Calls (writers)
An investor pays a $2.50 per share premium for a call with a $60 strike and later exercises it, buying 100 shares. What is her basis per share in the stock?
- a.$60.00, because the premium paid is treated as a separate capital loss on the call
- b.$62.50, because the cost of the call is added to the basis of the stock✓
- c.$57.50, because the premium paid reduces the cost of the stock she acquired
- d.$62.50 only if she held the call for more than one year before exercising it
A buyer's cost of a call is a capital expenditure that cannot be deducted. If the call is exercised, the cost is added to the basis of the stock bought, so the basis is the $60 strike plus the $2.50 premium. The holding period for the stock starts at exercise, and the length of time the call was held does not change the basis.IRS Publication 550, Puts and Calls (holders)
A client in the 32% bracket is considering a publicly traded REIT. How are most REIT dividends generally taxed?
- a.As a tax-free return of capital for the first five years after the shares are bought, then ordinary income
- b.As ordinary income, without the reduced rates that apply to many other corporate dividends✓
- c.At the 0%, 15% or 20% rates that apply to qualified dividends paid by most domestic corporations
- d.As long-term capital gains only if the REIT owns office property and the shares are held for a year
Dividends paid by REITs generally are treated as ordinary income and are not entitled to the reduced rates on other corporate dividends. REITs typically distribute essentially all taxable income.SEC Investor.gov, REITs
A private company has $30 million in assets and 600 shareholders of record, of whom 520 are not accredited investors. What must it do under Section 12(g) of the Securities Exchange Act of 1934?
- a.Nothing, because registration is required only when there are 5,000 holders of record
- b.Nothing, because the rule counts only accredited investors
- c.Register only if it plans to list the stock on a national exchange
- d.Register the class of equity with the SEC, because it has assets over $10 million and 500 or more holders who are not accredited investors✓
Section 12(g) requires an issuer to register a class of equity securities when it has total assets above $10 million and the class is held of record by either 2,000 persons or 500 persons who are not accredited investors. This company has assets over $10 million and 520 non-accredited holders, so the 500-holder test is met even though it has fewer than 2,000 holders in total.Exchange Act Section 12(g) (15 U.S.C. 78l(g)); 17 CFR 240.12g-1
Under Regulation Best Interest, which type of recommendation falls within the rule's scope?
- a.A recommendation to a natural person who will use it primarily for personal, family or household purposes✓
- b.A recommendation to a corporation for use in its treasury operations
- c.A recommendation to a registered investment company about its portfolio
- d.An unsolicited order placed by a customer without any recommendation
Regulation Best Interest applies when a broker-dealer or its associated person recommends a securities transaction or investment strategy to a retail customer, defined as a natural person who uses the recommendation primarily for personal, family or household purposes. Corporate treasury use falls outside that definition, and an unsolicited order involves no recommendation to trigger the rule.SEC Regulation Best Interest, 17 CFR 240.15l-1
A customer who lives in a federally declared disaster area and sustained an economic loss takes a qualified disaster recovery distribution from her IRA. What is the dollar cap on the amount that is exempt from the 10% additional tax?
- a.$10,000
- b.$22,000✓
- c.$5,000
- d.$50,000
The IRS lists a disaster recovery distribution of up to $22,000 to a qualified individual who sustained an economic loss because of a federally declared disaster where she lives. The $10,000 and $5,000 figures belong to the first-time homebuyer and birth-or-adoption exceptions.IRC 72(t)(2)(M)
A 44-year-old pays her daughter's college tuition with money taken from a traditional IRA. A colleague has the same need but would draw on his 401(k) plan instead. How does the 10% additional tax exception for qualified higher education expenses apply?
- a.It applies to the 401(k) withdrawal, but not to the IRA withdrawal, even if paid to the school
- b.It applies to the IRA withdrawal, but it is not available for a 401(k) distribution✓
- c.It applies to both, as long as the money is paid directly to the school by the owner
- d.It applies to neither, because the exception exists only for withdrawals from 529 plans
In the IRS table of exceptions, qualified higher education expenses appear as an exception for IRAs, including SEP and SIMPLE IRAs, but not for qualified plans such as a 401(k). Even when the exception applies, the withdrawal remains taxable as ordinary income to the extent it is pre-tax money.IRC 72(t)(2)(E)
A member firm is controlled by the issuer of a stock, and a customer asks it to buy that stock. When must the member tell the customer about the control relationship under FINRA Rule 2262?
- a.Only if the customer asks about the firm's ownership
- b.Within 30 days after the trade, in the quarterly statement
- c.Before entering into the contract for the purchase, and if that disclosure is oral it must be confirmed in writing at or before completion of the transaction✓
- d.Only when the firm acts as principal for its own account
Rule 2262 requires a member that controls, is controlled by, or is under common control with an issuer to disclose that control to the customer before entering into any contract to buy or sell that issuer's security, and to supplement an oral disclosure in writing at or before completion of the transaction.FINRA Rule 2262
An individual filing a single return has $20,000 of capital losses and $5,000 of capital gains for the year, with no other capital items. How much of the net capital loss can she deduct against ordinary income this year?
- a.$15,000, because net capital losses are fully deductible
- b.$1,500, with the remaining $13,500 carried forward
- c.$3,000, with the remaining $12,000 carried forward✓
- d.$0, because capital losses can offset only capital gains
Capital losses offset capital gains, and an excess of net loss over gains may be deducted against other income up to $3,000 a year ($1,500 for a married individual filing separately). Here the net loss is $15,000, so $3,000 is deducted this year and $12,000 carries forward to later years.26 U.S.C. 1211(b)
Which of the following contracts is excluded from the standard one-business-day settlement requirement of SEC Rule 15c6-1?
- a.A purchase of 200 shares of a listed common stock for a retail customer
- b.A purchase of a limited partnership interest that is not listed on an exchange or quoted on an automated quotation system✓
- c.A sale of a corporate bond to an institutional customer through a dealer
- d.A purchase of a U.S. Treasury security from a dealer
Rule 15c6-1(b)(1) exempts contracts for limited partnership interests that are neither listed on an exchange nor quoted on an automated quotation system of a registered securities association, along with security-based swaps and anything the SEC exempts by order. Listed stocks and ordinary bonds fall under the standard cycle.17 CFR 240.15c6-1(b)(1)
A member firm wants to borrow a customer's fully paid securities. Which written disclosure must the firm give the customer first under FINRA Rule 4330?
- a.A notice that the loan is fully insured by the Securities Investor Protection Corporation up to $500,000
- b.A notice that the customer keeps voting rights and dividend rights on the loaned shares
- c.A clear and prominent notice that SIPA may not protect the customer on the loan, and that the collateral may be the only source of satisfaction if the firm cannot return the securities✓
- d.A notice that the firm may report the loan to the customer's tax adviser at year end
Before first borrowing a customer's fully paid or excess margin securities, FINRA Rule 4330 requires the firm to determine the loans are appropriate for the customer and to give written notice that SIPA may not protect the customer in the loan and the collateral may be the only source of recovery. The customer is also told of risks such as loss of voting rights. SIPC coverage does not automatically extend to the loan.FINRA Rule 4330(b)
A married investor files a separate return and has a net capital loss of $6,000 and no gains this year. What is the most she may deduct against ordinary income on that return?
- a.$1,500✓
- b.$3,000
- c.$6,000
- d.$0
The yearly limit on deducting a net capital loss against ordinary income is $3,000, or $1,500 for a married individual filing separately. The unused $4,500 carries forward.IRC 1211(b)
A client invested $100,000 in a variable annuity, withdrew $20,000, and the contract has since fallen to $60,000. He dies before payouts begin, and the contract has the standard death benefit with no riders. What is the guaranteed death benefit?
- a.$100,000, the full premium paid, with no reduction for withdrawals
- b.$60,000, the current contract value after the market decline
- c.$20,000, the amount he withdrew from the contract earlier
- d.$80,000, the premium paid less withdrawals✓
A variable annuity's standard death benefit generally guarantees only a return of the premium, net of any withdrawals. Here $100,000 less $20,000 is $80,000. A death benefit rider, for an additional fee, can raise the amount based on market performance or a fixed rate.FINRA investor education: Annuities (death benefit)
A target-date 2035 fund is described in its prospectus. How does such a fund typically change its holdings as 2035 gets closer?
- a.It shifts toward growth stocks, because the investor still has time to grow
- b.It keeps its mix unchanged, to match its benchmark
- c.It sells all holdings and holds cash from the start of the year 2030
- d.It shifts toward conserving value and income-producing investments, taking less risk as the target date approaches✓
Target-date funds are funds of funds that change their investments over time. The farther away the date, the greater the risk the fund usually takes. As the target date approaches, the fund emphasizes conserving the value it has built and shifts toward income-producing investments.FINRA investor education: Mutual funds (target-date)
A customer asks a broker-dealer to send a wire transfer for $3,500. Which obligation applies to the broker-dealer under the Bank Secrecy Act regulations?
- a.It must obtain and retain the transmittor's name and address, the amount and the execution date, because the transfer is $3,000 or more✓
- b.No record is needed, because wires are reportable only above $10,000
- c.It must file a currency transaction report, because the transfer is over $3,000
- d.It must file a CMIR, because the funds are leaving the firm
31 CFR 1010.410(e) requires nonbank financial institutions, including broker-dealers, to keep specified records on transmittals of funds of $3,000 or more, such as the transmittor's name and address, the amount and the execution date. The CTR threshold of more than $10,000 in currency does not apply to a wire.31 CFR 1010.410(e)
A customer is short a corporate bond with a $50,000 principal amount and a current market value of $40,000. Under FINRA Rule 4210, what is the minimum maintenance margin?
- a.$12,000, which is 30% of the current market value and exceeds 5% of principal✓
- b.$2,500, which is 5% of the principal amount and is the only test the rule applies to a short bond
- c.$15,000, which is 30% of the principal amount rather than 30% of the current market value
- d.$40,000, which is 100% of the current market value, the standard used for short stock above $5
For a bond sold short, Rule 4210 requires the greater of 5 percent of the principal amount or 30 percent of the current market value. Five percent of $50,000 is $2,500, but 30 percent of the $40,000 market value is $12,000, which is greater. The test uses market value, not principal, for the 30 percent leg.FINRA Rule 4210(c)(2)(D)
Under Regulation NMS, the size of a round lot depends on the stock's price. For an NMS stock whose average closing price during the evaluation period was $600 per share, a round lot is how many shares?
- a.40 shares✓
- b.100 shares
- c.10 shares
- d.1 share
Regulation NMS defines the round lot in tiers: 100 shares at $250.00 or less, 40 shares from $250.01 to $1,000.00, 10 shares from $1,000.01 to $10,000.00, and 1 share above $10,000.00. A $600 stock falls in the second tier, so 40 shares make a round lot.17 CFR 242.600(b)(93)
A customer has $200,000 in a single account and $600,000 in a joint account with her spouse, both at the same FDIC-insured bank. Which statement is correct about the standard FDIC coverage?
- a.All $800,000 is covered because the customer holds both accounts at one bank
- b.Only $250,000 is covered in total because coverage is per depositor per bank
- c.Coverage applies by ownership category, so the single account is fully covered and the joint account is covered up to $500,000✓
- d.The single account is covered, but the joint account is covered only up to $250,000
FDIC coverage is $250,000 per depositor, per insured bank, for each account ownership category. The single account falls under $250,000, and a joint account is insured up to $250,000 for each co-owner, so $500,000 here and $100,000 of the joint balance is uninsured. Because the categories are separate, the totals are not pooled into one limit.FDIC deposit insurance
A client worried about reinvestment risk asks about Treasury STRIPS. Which feature addresses her concern?
- a.STRIPS pay semiannual interest that the holder can reinvest at the original fixed rate
- b.STRIPS are non-callable, so they cannot be redeemed early when rates fall✓
- c.STRIPS are backed by a pool of mortgages that prepay slowly when rates fall sharply
- d.STRIPS convert to common stock if rates fall
Because STRIPS cannot be called, the holder will not be forced to take cash and reinvest at a lower rate. Zeros are still exposed to interest-rate risk if sold before maturity, and long-term zeros have high duration.FINRA Investor Insights, Zero Coupon Bonds
Which transaction is NOT covered by FINRA Rule 2330 on recommended deferred variable annuity transactions?
- a.The initial purchase of a deferred variable annuity with a recommended subaccount allocation
- b.An exchange of one deferred variable annuity for another that the representative recommends
- c.A reallocation among subaccounts made after the initial purchase✓
- d.A recommended initial subaccount allocation
Rule 2330 applies to recommended purchases and exchanges of deferred variable annuities and recommended initial subaccount allocations. It does not apply to reallocations among subaccounts made after the initial purchase, or to funds paid after the initial purchase or exchange.FINRA Rule 2330(a)(1)
Which three basic features does FINRA say a typical variable annuity offers that are not commonly found in mutual funds?
- a.Tax-deferred earnings, a death benefit, and annuity payout options that can guarantee income for life✓
- b.Daily liquidity with no surrender charges, a guaranteed rate of return, and FDIC insurance on the account
- c.Lower annual expenses than a mutual fund, tax-free withdrawals, and a fixed principal value for the contract
- d.Exchange-traded pricing throughout the day, a death benefit, and no surrender charges after the first month
A typical variable annuity offers tax-deferred treatment of earnings, a death benefit, and payout options that can provide guaranteed income for life, but its annual expenses are likely to be much higher than a typical mutual fund's. Unlike a fixed annuity, it does not guarantee a return.FINRA investor education: Annuities (variable)
Immediately after buying a new commercial paper issue, a diversified money market fund (not a single-state fund) has what maximum share of total assets that Rule 2a-7 lets it hold in securities of that one issuer, apart from the brief three-business-day exception?
- a.5% of total assets✓
- b.10% of total assets
- c.25% of total assets
- d.1% of total assets
Rule 2a-7's issuer diversification limit is 5% of total assets in the securities of any one issuer immediately after acquisition. A fund may exceed that, up to 25%, in one issuer for up to three business days, but only for one issuer at a time.17 CFR 270.2a-7(d)(3)(i)(A)
Marisol separates from service with her employer during the calendar year she turns 56. She wants to take penalty-free withdrawals right away. Which account can she use under the separation-from-service exception to the 10% additional tax?
- a.A traditional IRA into which she has already rolled that 401(k) balance
- b.The balance she leaves in her former employer's 401(k) plan✓
- c.Either the 401(k) or an IRA, because the exception turns on her age alone
- d.Neither account, because the exception requires her to reach age 59 1/2 first
The IRS list of exceptions to the 10% additional tax allows distributions from a qualified plan such as a 401(k) when the employee separates from service during or after the year she reaches age 55. The same exception is not available for IRAs, so rolling the money out first would forfeit it. Age 59 1/2 is the general threshold that this exception makes unnecessary.IRC 72(t)(2)(A)(v)
Which fee structure is typical for investors in a hedge fund?
- a.A front-end sales charge of 5.75% and a 12b-1 fee of 0.25%
- b.A management fee of 1-2% of NAV plus a performance fee of 15-20% of profits✓
- c.A flat annual fee of 0.03% of assets with no performance fee
- d.A performance fee of 1-2% of profits plus a management fee of 15-20% of NAV
Investors in hedge funds typically pay an asset management fee of 1-2% of NAV and a performance fee of 15-20% of profit, often subject to a high-water mark or hurdle rate. Registered mutual funds, not hedge funds, charge sales loads and 12b-1 fees.SEC Investor.gov, Hedge Funds
According to FINRA's investor guidance, what is the maximum annual 12b-1 fee that a mutual fund may deduct from its assets?
- a.0.25% of the assets in the fund
- b.2% of the assets in the fund
- c.1% of the assets in the fund✓
- d.There is no cap on 12b-1 fees
FINRA states that 12b-1 fees are capped at 1 percent of the investor's assets in the fund. They are taken out of fund assets to pay for marketing and selling the fund, some shareholder services, and sometimes employee bonuses.FINRA investor education: Mutual funds (12b-1)
Which statement about the regulation of annuities is correct?
- a.Fixed and variable annuities are both securities that must be registered with the SEC
- b.Only variable annuities are regulated, and only at the federal level
- c.All annuities are regulated by state insurance commissioners, and variable annuities are also securities regulated by the SEC and FINRA✓
- d.Annuities are regulated by the FDIC because they are insurance-backed deposits
Insurance regulation is a state function for every annuity. A variable annuity, and a registered index-linked annuity, is also a security, so the SEC and FINRA regulate it. Annuities are not covered by the FDIC or SIPC.FINRA Investor Education, Annuities