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| Section | Weight | Objectives |
|---|---|---|
| Topic 1: Obtains and Verifies Customers’ Purchase and Sales Instructions; Processes, Completes and Confirms Transactions | 11% | - Regulatory requirements for transaction processing - Order types and execution procedures - Trade settlement and confirmation rules |
| Topic 2: Seeks Business for the Broker-Dealer from Customers and Potential Customers | 7% | - Product-specific disclosures and regulatory requirements - Customer communication and solicitation rules - Standards for advertising and public communications |
| Topic 3: Opens Accounts after Obtaining and Evaluating Customers’ Financial Profile and Investment Objectives | 9% | - Financial profile, risk tolerance, and investment objectives - Account types and documentation requirements - Suitability rules and regulatory compliance |
| Topic 4: Provides Customers with Information about Investments, Makes Suitable Recommendations, Transfers Assets and Maintains Appropriate Records | 73% | - Municipal securities - Margin accounts and taxation - Direct participation programs - Equity securities - Debt securities and government obligations - Investment companies, ETFs, and variable annuities - Recordkeeping and regulatory reporting - Options and derivative products |
1. Which of the following is identified as a funded debt instrument?
A) Fannie Mae bond
B) US treasury bond
C) corporate bond
D) Series EE savings bond
2. Which of the following is not an intangible drilling cost?
A) supplies and fuel
B) salaries
C) machinery and pipe
D) repairs
3. Bubba opens a margin account and sells short 100 shares of XYZ at $50. Assuming a Reg T requirement
of 50%, what is the opening balance in Bubba's account?
A) $10,000
B) $5,000
C) $7,500
D) $2,500
4. A large manufacturing company has current assets of approximately $9,400,000 and current liabilities of
about $4,900,000. Which of the following statements is true about the current ratio?
A) it is substantially below the standard minimum
B) it is somewhat below the standard minimum
C) it is about the standard minimum
D) it is somewhat above the standard minimum
5. Bubba buys a municipal bond at 102 and holds it ten years to maturity. For tax purposes, how is that
premium treated?
A) carried forward as a premium loss applied against profits realized on future municipal securities
B) an ordinary loss taken as a deduction from taxable income
C) amortized over the life of the bond resulting in no loss at maturity
D) recorded as a long-term capital loss
Solutions:
| Question # 1 Answer: C | Question # 2 Answer: C | Question # 3 Answer: C | Question # 4 Answer: B | Question # 5 Answer: C |
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