FINRA Series 10 Practice Exams 1 & 2|72 Questions with Verified Answers,100% CORRECT, Exams of Business Economics

Download FINRA Series 10 Practice Exams 1 & 2|72 Questions with Verified Answers,100% CORRECT and more Exams Business Economics in PDF only on Docsity! FINRA Series 10 Practice Exams 1 & 2|72 Questions with Verified Answers C - CORRECT ANSWER All investment company advertising must be filed with FINRA: A 10 business days prior to 1st use B 10 business days prior to use for the 1st year of operations; no filing is required thereafter C 10 business days after 1st use D 10 business days after 1st use for the 1st year of operations; no filing is required thereafter C - CORRECT ANSWER A registered representative works from her home office, with supervision of the location performed by the branch manager at the local member firm office in that town. Both the home office and the local member firm office are registered with FINRA as branch locations. Which statement is TRUE? A The local office may be advertised as a branch, but the home office may not B The home office may be advertised as a branch, but the branch office may not C Both the local office and the home office may be advertised as branches D Neither the local office nor the home office may be advertised as branches B - CORRECT ANSWER Under MSRB rules, an order ticket for an agency transaction must include all of the following EXCEPT: A time of order receipt B time of order entry C time of order execution D time of order cancellation lowest ask price - CORRECT ANSWER Under the FINRA 5% Policy, the mark-up percentage is calculated based upon the A - CORRECT ANSWER A "bona fide" customer, to whom a copy of a member firm's statement of financial condition must be provided upon request, is defined as a person who: A has cash or securities in the possession of the member B has traded through the member within the past 3 months C is not a member of FINRA D has engaged in any business transaction with the member within the past 12 months C - CORRECT ANSWER Municipal issuers are subject to: A regulations promulgated by the Municipal Securities Rulemaking Board B registration requirements for new issues imposed under the Securities Act of 1933 C anti-fraud Rule 10b-5 promulgated under the Securities Exchange Act of 1934 D all of the above C - CORRECT ANSWER Which security MUST be registered with the SEC? A Port authority revenue bond B C 6 months after the representative begins employment with the new firm D 12 months after the representative begins employment with the new firm C - CORRECT ANSWER A registered representative lives in a co-op apartment house in Manhattan. She has just been elected to the board of directors of the co- op, a position for which she receives no compensation. All of the following steps are required EXCEPT: A written notice must be given to the employing member firm B written approval must received from the employing member firm C written notice must be given to FINRA D prompt amendment of the individual's U4 Form is required 3 years - CORRECT ANSWER Records of all advertising must be retained by FINRA member firms for: A - CORRECT ANSWER An issuer will sell securities under the terms of an "investment letter" because: A it does not wish to go through the cost and time of registering the issue with the SEC B it is a well-known seasoned issuer and is therefore exempt from registration C the purchasers of the securities all reside in the same state D the offering is limited to no more than $50,000,000 in a 12-month period A - CORRECT ANSWER Under Rule 144, control stock that is purchased in the open market can be sold: A immediately B after a 6 month holding period has elapsed C after a 1 year holding period has elapsed D after a 2 year holding period has elapsed D - CORRECT ANSWER A registered representative who has already retired wants to sell his "book" of business to another representative who works in the same branch office. Which statement is TRUE about this? A Because this is considered to be a personal business transaction, notification is not required to the firm B Notification to the SEC is required because the retiring representative becomes a statutory broker-dealer if his or her "book" of business is sold C This action is prohibited because a written contract to sell the "book" of business must be completed prior to retirement D This action is permitted as long as it complies with the firm's policies and procedures C - CORRECT ANSWER A registered representative at a FINRA member firm gives a speech to 15 potential customers about investing in high yielding common stocks and gives opinions about specific issues that would allow the attendees to form an opinion as to whether to buy those securities. Which statement is NOT true? A The speech must be approved in advance by the Supervisory Analyst B The speech must be accompanied by an "Analyst Certification" C The speech must be approved in advance by FINRA D The speech must disclose any potential conflicts of interest between the member firm or analyst and the recommended issuers one business day of discovery - CORRECT ANSWER If, in the course of settlements, securities are suspected to be stolen, a report must be filed with the Securities Information Center within: 1 municipal principal - CORRECT ANSWER A municipal dealer who is a FINRA member employs 7 sales representatives, 3 traders, 2 financial advisors and 2 administrative persons. Under MSRB rules, this dealer must have: B - CORRECT ANSWER An officer of a company would have to give a "disclosure notice" in which of the following situations? A At a meeting of the company's Board of Directors, where the officer is going to disclose the latest quarterly results B When taking outside analysts to a luncheon, where company results are going to be discussed C When talking to the issuer's outside counsel about company legal matters D When talking to company employees in training sessions that include discussions of company results I and III - CORRECT ANSWER A political contribution in excess of the MSRB limit is made erroneously by an MFP to an elected official's campaign. Such a contribution to which elected officials' campaigns would have the worst impact on the municipal broker-dealer that effects municipal securities business? I Governor running for re-election in the state II Senator of that state running for President III Cousin of the MFP running for a town council seat IV Local businessman running for a Congressional seat D - CORRECT ANSWER A registered representative enters an order ticket to buy 1,000 shares of ABC stock at $57 per share for a customer. Prior to the execution of the order, the representative discovers that the trade was supposed to be for 100 shares and not 1,000 shares. Which statement is TRUE? A The order cannot be changed once it has been entered A - CORRECT ANSWER An individual is employed by a corporation as a sales manager and participates in her company's 401(k) plan. Over the years, she has contributed $40,000 into the plan and her employer has made matching contributions totaling $16,000. She retires at age 65, at which point the account value is $82,000. What is this individual's tax basis in the plan? A 0 B $40,000 C $56,000 D $82,000 B - CORRECT ANSWER The practice of soft dollar remuneration is: A prohibited under FINRA rules B permitted under FINRA rules C permitted under FINRA rules only if the firm's research analysts are properly registered D permitted under FINRA rules only if the firm's research reports are made available to the general public II and IV - CORRECT ANSWER Under MSRB Rule G-27, which statement(s) is (are) TRUE regarding a municipal dealer's supervisory system? I A municipal principal must be physically located at each branch office where municipal business is conducted II A municipal principal need not be physically located at each branch office where municipal business is conducted III A municipal representative is permitted to supervise the activities of trainees IV A municipal representative is not permitted to supervise the activities of trainees B - CORRECT ANSWER A customer holds a mutual fund and receives a dividend distribution of $1,000 that is automatically reinvested. Which statement is TRUE regarding the tax treatment of the dividend? A The cash dividend of $1,000 is not taxed because it has been reinvested B The cash dividend of $1,000 is taxable at a maximum rate of 15% C The cash dividend of $1,000 is taxable at a maximum rate of 35% D The cash dividend of $1,000 is taxable when it is taken as a distribution by the customer D - CORRECT ANSWER A market maker engages in transactions for institutional investors, including VWAP transactions where the market maker is permitted to position its inventory account and hedge to fill the institutional customer's VWAP orders. The market maker must obtain written permission from the institutional client to engage in these transactions: A prior to each VWAP transaction for that client B monthly C quarterly D annually D - CORRECT ANSWER A registered representative has a hedge fund client that previously traded equities, but has recently started to take positions in different mutual funds. As the BOM reviewing account activity, you see 10 separate purchases of ABCD fund of $9,000 and 10 separate redemption (sales) of an existing XYZZ fund position of $8,000 each. What should you be concerned about? A Late trading B Trade shredding C Gun jumping D Market timing B - CORRECT ANSWER Which of the following situations will cause a 10% penalty tax to be imposed on a withdrawal from a 529 Plan? A The plan beneficiary received a full scholarship, so the funds in the plan were not needed to pay for college B The beneficiary graduated from college and unexpended funds remained in the plan C The beneficiary graduated from college and unexpended funds were rolled over to another family member D The beneficiary moved to another state and rolled over the funds to the plan sponsored by the new state of residence C - CORRECT ANSWER A corporation wishes to place a large purchase order to buy its own stock for the company's Employee Stock Option Plan (ESOP). The current inside market for the stock is $20.00 - $20.50. The last trade in the stock occurred at $20.10. What is the highest price at which the company can purchase its own shares? A Any price that is reasonably related to the current market B $20.00 C $20.10 D $20.50 I, II and IV - CORRECT ANSWER In which of the following circumstances MUST a municipal principal approve a research report prior to distribution? I The report is being sent exclusively to individual clients II The report is being sent exclusively to an out-of-state bank An individual associated with a commodities firm C The Chief Financial Officer of a financial institution D A Chief Compliance Officer of a financial institution B - CORRECT ANSWER All of the following are disclosed on a customer confirmation EXCEPT: A the fact that a member is a market maker when a transaction is effected for the customer on a principal basis B the fact that a security is marginable, if this is the case C the mark-up amount in riskless transactions where the member is not a registered market maker D the commission amount when a transaction is effected on an agency basis, as well as making available the time of the trade and the name of the contra-party A - CORRECT ANSWER The spouse of a registered representative belongs to an investment club. The investment club wishes to purchase an Initial Public Offering of ABCD Common stock. Which statement is TRUE about the investment club purchasing the IPO? A The investment club is permitted to buy the IPO without restriction B The investment club is permitted to buy the IPO only if the transaction was not directed by the registered representative C The investment club is permitted to buy the IPO only if the amount purchased is insubstantial D The investment club is prohibited from buying the IPO A - CORRECT ANSWER A customer of a broker-dealer sells short 500 shares of PDQ stock on the ex date for a dividend distribution. The dividend will be: A received by the lender B received by the borrower C received by the buyer D paid to the lender by the borrower A - CORRECT ANSWER If there is no inside market, the best indication of the prevailing market price for mark-up purposes is the: A price at which the firm last bought as principal B average inventory cost C lowest cost of stock in inventory D highest cost of stock in inventory ongoing - CORRECT ANSWER With what frequency must a member firm provide AML (Anti-Money Laundering) training for its employees? B - CORRECT ANSWER All of the following actions by a FINRA member are prohibited under the Conduct Rules EXCEPT: A The sale of mutual fund shares to a non-member at a discount to the public offering price B The sale of a new issue of municipal bonds to a non-member bank at a discount to the public offering price C The sale of part of a new issue being underwritten by the member to the issuer's employees at a discount to the public offering price D The sale of a new issue that is "hot" to employees of FINRA member firms A - CORRECT ANSWER A registered representative has an uncle who was his client until last year. The uncle decided to transfer the account to his own son, who has just entered the securities business as an associated person. The registered representative is still close with his uncle and wants to borrow some money from him so that he can buy his first house. Which statement is TRUE about this? A The registered representative can borrow the money from his uncle without any further action needed B The registered representative cannot borrow the money because the uncle was his customer during the past 18 months C The registered representative cannot borrow the money unless he gives written notice to his firm and follows the firm's instructions D The registered representative must give prior written notice to FINRA and receive approval before money can be borrowed from the uncle C - CORRECT ANSWER All of the following would cause an individual's registration application to be subject to statutory disqualification EXCEPT: A that individual has willfully violated any provision of the Securities Acts B that individual has been expelled by a Self-Regulatory Organization C that individual has been suspended for 90 days by a Self-Regulatory Organization D that individual has made an intentional misstatement of material fact on a registration application C - CORRECT ANSWER During the period when an initial public offering is "in registration," a registered representative is permitted to: A solicit buy orders for the issue B accept firm indications to buy C disclosures to clients about the investment features of a security D disclosures to clients of the trading actions of other customers A - CORRECT ANSWER Under MSRB rules regarding control relationships, a control relationship is deemed to exist if a: A person has the ability to direct, or cause the direction of, management or the policies of the broker-dealer B municipal securities professional provides, or enters into an agreement to provide, financial and advisory services to an issuer regarding the terms and structure of a new issue C municipal securities dealer shares, directly or indirectly, in the profits and losses of the account of a customer carried or introduced by such broker or dealer in which municipal securities are held or traded D municipal securities broker, directly or indirectly, gives or permits to be given, any gift of up to $100 in value to any person other than an employee of that firm, if the payments are in relation to the municipal securities activities of the firm C - CORRECT ANSWER A retail client places an order to buy a new issue of municipal bonds being sold by competitive bid as a Group Net order. It does not fill. Why would this occur? A All orders ahead were filled for institutional investors B The underwriter chose to fill orders ahead for institutions and not for individuals C All of the Pre-Sale orders were not able to be filled D The Designated orders were placed at an earlier time than the Group Net Orders S (settlement date) - CORRECT ANSWER Under Rule 17a-4, customer statements must be posted no later than: C - CORRECT ANSWER Which of the following individuals is required to be fingerprinted at a broker-dealer? A ACATS clerk B Outside director who has an office at the broker-dealer C Individual who posts transactions to the P & S blotter D Individual in the registration department responsible for onboarding new hires D - CORRECT ANSWER Which statement is TRUE regarding TRACE? A TRACE reports trades in corporate stocks within 15 minutes B TRACE reports trades in corporate bonds within 10 seconds C TRACE does not report trades of government and agency bond issues D TRACE reports must be made as soon as practicable, but no later than 15 minutes after the trade C - CORRECT ANSWER An institutional client has taken a short position in ZZZ Common stock. Unsolicited, the client is approached by ZZZ Corporation a week later to make an injection of capital into the company in a PIPE transaction. ZZZ is offering the client the shares at a 20% discount to the current market price and will file a shelf registration for those shares after the deal closes. The client likes the terms of the deal, and intends to use the shares received to cover the existing short position. Which statement is TRUE about this? A The client cannot use the shares received in the PIPE transaction to cover the short position B The client can use the shares received in the PIPE transaction to cover the short position because the transaction was unsolicited C The client can use the shares received in the PIPE transaction to cover the short position because the short position was established before the client knew about the proposed PIPE transaction D The client can use the shares received in the PIPE transaction to cover the short position only if the profit is disgorged to ZZZ Corporation D - CORRECT ANSWER A public appearance by an associated person is: A considered to be correspondence and is subject to post use review and approval by the principal B considered to be a retail communication is subject to prior approval by the principal C considered to be an institutional communication and is subject to post use review an approval by the principal D not considered to be correspondence, nor a retail or institutional communication, and is subject to the firm's written supervisory procedures I, II, III, IV - CORRECT ANSWER Which of the following information is available on EMMA? I Official Statements for municipal bond issues, notes, and 529 plans II Details of bonds that have been pre-refunded III Real-time prices and yields for municipal bond trades, as reported through RTRS IV Real-time price and yields for municipal note trades as reported through SHORT B - CORRECT ANSWER In order to open a new account for an individual customer, which information is NOT required on the new account form? A Customer Name B Employer's Address C