FINRA xPractice xExam

FINRA Practice Exam x x


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1. A savings account at a bank is guaranteed by which of the follow entities?
x x x x x x x x x x x x x




A) FDIC
B) SIPC
C) FED RES x


D. Department of the treasury: A
x x x x x


2. A firm is a participant in a public offering.To sell a Substantial amount of
x x x x x x x x x x x x x x


the securities to its customers, the firm agrees to repurchase the shares at no less
x x x x x x x x x x x x x x x


than the original sales price.
x x x x x




A. Prohibited as fraudulent and manipulative x x x x


B. Permissible if the securities are deposited into escrow x x x x x x x


C. Prohibited unless the firm immediately sets aside funds for the repurchase
x x x x x x x x x x


D. Permissible if the customers retain the right to sell the securities into the
x x x x x x x x x x x x


open market: A
x x x


3. The computation of dollar prices and accrued interest on municipal bonds
x x x x x x x x x x


is normally on what calendar basis?
x x x x x x


A. 30/360
x


B. 30/365
x x


C. Actual 360 x


D. Actual 365: A x x


4. Which of the following comparisons BEST describes the essential differ-
x x x x x x x x x


ence between a primary distribution and a secondary distribution?
x x x x x x x x x




A. A primary distribution can only be made for equity issues while a secondary
x x x x x x x x x x x x


xdistribution can be made for both equity and debt issues
x x x x x x x x x


B. A primary distribution can only be made of issues that exceed a specified
x x x x x x x x x x x x


dollar amount while a secondary distribution can be made for issues of all
x x x x x x x x x x x x x


sizes
x


C. A primary distribution must be made at a fixed public offering price (POP)
x x x x x x x x x x x x


while a secondary distribution must be made at the current market price
x x x x x x x x x x x x


D. A primary distribution involves a sale of newly issued shares by the issuer
x x x x x x x x x x x x


while a secondary distribution involves the sale of already issued and out-
x x x x x x x x x x x x


standing shares.: D
x x x


5. Which of the following investments are generally traded according to their
x x x x x x x x x x


xaverage life rather than their stated maturity dates?
x x x x x x x


A. Corporate bonds x


B. Government bonds x




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C. Assets-backed securities x


D. Fixed-rate capital securities: C x x x


6. Under normal circumstances, a customer's letter of intent on a mutual fund
x x x x x x x x x x x


purchase is valid for what maximum period of time?
x x x x x x x x x


A. 3 months
x


B. 6 months
x


C. 13 months x


D. 24 months: C x x


7. A customer buys 1 ABC Jan 35 put for a premium of $3 and simultaneously
x x x x x x x x x x x x x x


buys 100 shares of ABC stock for $35 per share. The customer will break even
x x x x x x x x x x x x x x x


when the stock is selling at what price per share at expiration?
x x x x x x x x x x x x




A. $3
B. $32
x x


C. $35
x x


D. $38: D
x x


8. Which of the following form U4 reportable events results in a statutory
x x x x x x x x x x x


disqualification?
x




A. A personal bankruptcy filing
x x x


B. A written customer complaint alleging misappropriation of assets
x x x x x x x


C. A felony theft charge
x x x


D. A felony conviction for a driving under the influence (DUI) charge: D
x x x x x x x x x x x


9. To offer its shareholders a privilege to obtain its shares at a fixed price,
x x x x x x x x x x x x x


which of the following products does a corporation issue?
x x x x x x x x x


A. Puts
B. Rights
C. Futures
D. Preferred Stock: B x x


10. When a broker-dealer charges a commission on a securities transaction, it
x x x x x x x x x x


has acted as:
x x x


A. an agent x


B. a principal
x


C. an underwriter x


D. a market maker: A
x x x


11. Which of the following considerations should a registered representative
x x x x x x x x


explain to a customer when recommending a 529 college savings plan?
x x x x x x x x x x x


A. The potential deductibility of contributions from state taxes
x x x x x x x


B. The potential deductibility of contributions from federal taxes
x x x x x x x




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C. The income eligibility restrictions to contribute to the account
x x x x x x x x


D. The rights of the account beneficiary to the assets at the age of majority: A
x x x x x x x x x x x x x x


12. Under a system of statutory voting, a common stockholder has as many
x x x x x x x x x x x


votes for each vacancy on the board of directors as the number of:
x x x x x x x x x x x x x




A. Positions vacant on the board x x x x


B. Directors present at the meeting x x x x


C. Shares owned by the stockholder
x x x x


D. Proxies available for voting by the board: C
x x x x x x x


13. Which of the following stakeholders has first claim priority in a chapter 11
x x x x x x x x x x x x


xproceeding?
A. Equity holders x


B. Secured debt holders x x


C. Unsecured debt holders x x


D. Administrative claim holders: B x x x


14. Under Federal Reserve Regulation T, a 90-day restriction is imposed when a
x x x x x x x x x x x


customer opens and closes which of the following positions?
x x x x x x x x x


A. The same stock on the same day in a margin account
x x x x x x x x x x


B. The same stock in different accounts on same day
x x x x x x x x


C. The same stock in different accounts in the same household
x x x x x x x x x


D. The same stock in a cash account without paying for the stock in full: D
x x x x x x x x x x x x x x


15. The redemption value of an open-end investment company's shares is
x x x x x x x x x


based on the:
x x x


A. Previous offering price x x


B. previous closing net asset value (NAV) x x x x x


C. NAV computed after the order is received
x x x x x x


D. Offering price computed after the order is received: C
x x x x x x x x


16. UTMA accounts are opened under the tax ID of the:
x x x x x x x x x


A. Minor
B. Donor
C. Parent
D. Custodian: A x


17. A married couple who earned income that exceeded $300,000 in each of
x x x x x x x x x x x


the prior two years and reasonably expects the same for the current year is:
x x x x x x x x x x x x x x


A. a qualified investor
x x


B. an accredited investor
x x


C. an institutional investor
x x


D. a qualified institutional buyer (QIB): B
x x x x x




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18. When is interest on Treasury notes paid?
x x x x x x


A. Quarterly
B. Semiannually
C. Annually
D. At maturity: B
x x


19. The last transaction in XYZ 5.50s 2030 was at 102.The bond is selling at:
x x x x x x x x x x x x x x


A. par
B. a premium
x


C. a discount
x


D. asset value: B x x


20. Blue-sky laws are regulated by which of the following entities?
x x x x x x x x x


A. SEC
B. MSRB
C. FINRA
D. State securities regulators: D
x x x


21. Upon expiration, all in-the-money S&P 100 index call options are settled by
x x x x x x x x x x x


the delivery of which of the following?
x x x x x x x


A. Cash
B. S&P 100 index stocksx x x


C. S&P exchange-traded fund (ETF)
x x x


D. The same number of S&P 100 index put options: A
x x x x x x x x x


22. The owner of which of the following products is MOST exposed to infla-
x x x x x x x x x x x x


tionary risk?
x x


A. Utility stocks x


B. T-bills
C. T-bonds
D. Blue chip industrials: C
x x x


23. Which of the following actions violates FINRA Rules regarding selling
x x x x x x x x x


away?
x


A. Recommending to a customer the services of another broker-dealer x x x x x x x x


B. Sharing commissions with another registered representative in the same
x x x x x x x x


Broker-Dealer
x


C. Advising customers to buy mutual funds at amounts just below a discount
x x x x x x x x x x x


level
x


D. Engaging in private securities transactions without written prior consent of
x x x x x x x x x


the employing Broker-Dealer: D
x x x x


24. A customer is an officer of a company that is involved in some significant
x x x x x x x x x x x x x


changes. All of the following items are examples of corporate affairs that
x x x x x x x x x x x x


xcould be considered inside information if the customer shares them with his
x x x x x x x x x x x




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