tempt
How long must customer confirmations be retained? - ANSWER Three Years
Where is interest and dividends reported annually? - ANSWER Form 1099
What does the firm charge when acting as an agent?
A) Commission
B) A Markup or Drawdown - ANSWER A) Commission
What does the firm charge when acting as a principal?
A) Commission
B) A Markup or Drawdown - ANSWER B) A Markup or Drawdown
How often must customer account statements be sent? - ANSWER At least quarterly
The initial confirmation of a when-issued municipal bond contains which of the following?
I. Number of bonds involved in the transaction
II. Settlement date
III. Yield to maturity
IV. Total dollar amount due
A) II and IV
B) I and II
C) I and III
1
, D) III and IV - ANSWER C) I and III. On a new municipal bond offering, where the cus-
tomer receives a when-, as-, and if-issued confirmation, the final settlement date is not
known. Therefore, the amount of accrued interest is unknown (because it is payable up to
but not including, settlement). Thus, the total dollar amount is unknown because it includes
accrued interest. The number of bonds purchased and the yield to maturity (price) are
known and must be included on the confirmation.
All of the following are required by the Municipal Securities Rulemaking Board on customer
confirmations except
A) the source of any commission received on an agency transaction.
B) the amount of markdown or markup on a principal transaction.
C) the amount of any commission received on an agency transaction.
D) the price the dealer originally paid for the bond. - ANSWER D) the price the dealer
originally paid for the bond. The dealer's cost of a bond sold to a customer is not required to
be disclosed.
Does a member firm have to complete customer identification procedures after acquiring
another firm? - ANSWER No. It can be assumed that the other member firm fulfilled its
obligation.
What is a TIF? - ANSWER It is the broker-to-broker transfer initiation form, that must be
completed when a customer wants to transfer their account to another member firm (called
the receiving member). The form is completed by the former member (the carrying mem-
ber)
What does the Automated Customer Account Transfer Service (ACATS) do? - ANSWER It
automates and standardizes the procedure for the transfer after the TIF is sent by the receiv-
ing firm.
Parker has been a client of Enigma Mathematical Portfolio Modeling (EMPM), a FINRA mem-
ber broker-dealer, for 10 years. Parker has decided that it is time to move the account to a
new firm, Turing Technical Analytics (TTA). Which of the following statements accurately re-
flects the requirements when using the ACATS system?
2
How long must customer confirmations be retained? - ANSWER Three Years
Where is interest and dividends reported annually? - ANSWER Form 1099
What does the firm charge when acting as an agent?
A) Commission
B) A Markup or Drawdown - ANSWER A) Commission
What does the firm charge when acting as a principal?
A) Commission
B) A Markup or Drawdown - ANSWER B) A Markup or Drawdown
How often must customer account statements be sent? - ANSWER At least quarterly
The initial confirmation of a when-issued municipal bond contains which of the following?
I. Number of bonds involved in the transaction
II. Settlement date
III. Yield to maturity
IV. Total dollar amount due
A) II and IV
B) I and II
C) I and III
1
, D) III and IV - ANSWER C) I and III. On a new municipal bond offering, where the cus-
tomer receives a when-, as-, and if-issued confirmation, the final settlement date is not
known. Therefore, the amount of accrued interest is unknown (because it is payable up to
but not including, settlement). Thus, the total dollar amount is unknown because it includes
accrued interest. The number of bonds purchased and the yield to maturity (price) are
known and must be included on the confirmation.
All of the following are required by the Municipal Securities Rulemaking Board on customer
confirmations except
A) the source of any commission received on an agency transaction.
B) the amount of markdown or markup on a principal transaction.
C) the amount of any commission received on an agency transaction.
D) the price the dealer originally paid for the bond. - ANSWER D) the price the dealer
originally paid for the bond. The dealer's cost of a bond sold to a customer is not required to
be disclosed.
Does a member firm have to complete customer identification procedures after acquiring
another firm? - ANSWER No. It can be assumed that the other member firm fulfilled its
obligation.
What is a TIF? - ANSWER It is the broker-to-broker transfer initiation form, that must be
completed when a customer wants to transfer their account to another member firm (called
the receiving member). The form is completed by the former member (the carrying mem-
ber)
What does the Automated Customer Account Transfer Service (ACATS) do? - ANSWER It
automates and standardizes the procedure for the transfer after the TIF is sent by the receiv-
ing firm.
Parker has been a client of Enigma Mathematical Portfolio Modeling (EMPM), a FINRA mem-
ber broker-dealer, for 10 years. Parker has decided that it is time to move the account to a
new firm, Turing Technical Analytics (TTA). Which of the following statements accurately re-
flects the requirements when using the ACATS system?
2
