Surprise 1
This market is where previously issued securities trade between investors.
What is the secondary market?
“Long 2 XYZ Oct 50 Calls” means the investor:
What is Has the right to buy 200 shares at $50
This IRA type allows anyone with earned income to contribute.
What is a traditional IRA?
Free-riding occurs when a customer
What is Buys and sells without paying?
This rule requires mutual funds to deliver a prospectus before or at confirmation.
What is the prospectus delivery requirement?
Money market securities have this type of maturity.
What is a Short-term?
A stock trades at $30 and pays a quarterly dividend of $0.20. What is its current yield?
2.6%
This type of IRA allows tax-free withdrawals after age 59½ if rules are met.
What is a Roth IRA?
Hypothecation refers to:
What is a customer pledging securities as loan collateral?
This rule restricts selling just below a breakpoint to earn more commission.
What is a breakpoint sale violation?
To be a covered call, the seller must:
What is own the underlying shares?
The Bank Secrecy Act focuses mainly on:
What is AML compliance
These required distributions begin at age 73 for traditional IRAs.
What are RMDs (Required Minimum Distributions)?
A discretionary order allows the RR to choose:
What is Action, asset, or amount?
This regulation governs the initial issuance of securities to the public.
What is the Securities Act of 1933?
This underwriter commitment requires buying all unsold shares.
What is a Firm Commitment?
This trust terminates when the grantor dies.
What is a revocable trust?
This employer plan allows employees to make pre-tax salary contributions.
What is a 401(k)?
This signed document is required before margin trading may occur.
What is the margin agreement?
This rule limits how much a mutual fund may charge in distribution (12b-1) fees.
What is the FINRA 12b-1 fee limit?
These systems allow institutions to trade large blocks without showing quotes publicly.
What are dark pools?
Regulation SP (Gramm-Leach-Bliley Act (GLBA)) requires firms to:
Protect customer privacy
Withdrawing retirement funds early usually results in this penalty.
What is a 10% early withdrawal penalty?
This is the minimum equity that must remain in a margin account.
What is the maintenance requirement?
This disclosure tells customers that margin accounts involve risk and may lose more than invested.
What is the margin risk disclosure statement?
This type of system electronically matches buy and sell orders anonymously.
What is an ECN (Electronic Communication Network)?
These accounts are used to hold employee retirement-plan assets.
What are qualified retirement plan accounts?
These IRA contributions are not tax-deductible, but qualified withdrawals are tax-free.
What are Roth IRA contributions?
A municipal general obligation bond is backed by:
What is The issuer’s taxing authority?
A callable bond is MOST likely to be called when:
What Interest rates fall?
The length of time a shelf registration is valid.
What is 3 years?
Front-running is prohibited because it involves:
What is Trading ahead of customer orders?
A bond quoted at 101.08 is priced at:
What is $1,010.80?
This type of order is placed entirely by the customer without firm input.
What is an unsolicited order?
This rule allows the sale of restricted stock under specific holding-period and volume limits.
What is SEC Rule 144?
The maximum civil penalty for insider trading.
What is three times the profit gained or loss avoided?
This account type is inappropriate for selling uncovered call options.
What is a fiduciary account?
This rollover must be completed within 60 days or it becomes taxable.
What is an indirect rollover?
A municipal bond paying tax-free interest is MOST suitable for
What is A retiree in a high tax bracket?
This act regulates mutual funds, UITs, and closed-end funds.
What is the Investment Company Act of 1940?
Short 2 XYZ Feb 80 Put
"Selling the right to sell 200 shares of XYZ stock at $80 strike price with an expiration date of February."
These three elements—action, asset, and amount—must be determined by the client.
What are the three elements required to avoid discretion?
This rule says an IRA can only be rolled over once every 12 months.
What is the one-per-year rollover rule?
This agreement allows a broker to lend a customer’s securities for short sales.
What is the loan consent agreement?
This rule ensures investors receive fair pricing when buying or selling municipal securities.
What is the MSRB fair pricing rule?
What is a Direct Participation Program?
What is an investor buying ownership into an issuer and sharing in profits & losses?
This trust is created after a person’s death and holds assets for distribution.
What is a testamentary trust?
This retirement plan combines employer and employee contributions, often for small businesses.
What is a SIMPLE IRA?
This notice is issued when equity falls below maintenance minimums.
What is a maintenance call?
A suitability determination must be made when
What is Opening an customers account?