SRO EXAM WITH CORRECT
QUESTIONS AND ANSWERS 2025
Which of the following statements regarding Self-Regulatory Organizations (SROs) is NOT
true?
[A] SROs are supported by their own member firms.
[B] SROs pay dividends to employees.
[C] SROs allow member firms to vote.
[D] SROs set rules, regulations, and penalties. - CORRECT-ANSWERS[B] -
Since most SRO's are non-profit and not publicly-traded, they do NOT pay dividends to anyone.
SROs do set rules, allow members to vote, and are supported by their own member firms.
Which of the following statements pertaining to written communications to the public by a
registered representative is FALSE?
,[A] The member firm must have in place written supervisory procedures on communications
with the public.
[B] If a firm or individual is considered registered by a regulatory agency, it is acceptable for
that firm or individual to state that they are considered qualified or approved by the regulatory
agency.
[C] Registered representatives and firms are prohibited from gua - CORRECT-ANSWERS[B] -
All but B are true. An individual or his or her member firm may never state that they have been
approved or qualified by a regulatory agency.
All of the following are likely violations of FINRA rules EXCEPT:
[A] Selling a customer's blue chip stocks and buying high yield bonds
,[B] Short-term trading in mutual funds
[C] Recommending penny stocks to customers whose investment objective is current income
[D] Handling a large number of accounts on a discretionary basis - CORRECT-ANSWERS[D] -
All but "D" are violations of fair dealings with customers. Selling blue chip stocks to purchase
much riskier investments such as high yield bonds is not suitable. Mutual funds are intended for
long-term trading. Penny stocks are high risk investments and don't pay dividends. Having a
large number of discretionary accounts is not a violation.
If an RR wants to invest in a Private Securities offering, the branch manager should advise the
RR that
[A] The BOM must review the offering memorandum for the offering.
[B] The RR must provide the firm with a written notice detailing the proposed transaction.
, [C] Investments may be made as long as duplicate statements of the activity are provided to
the member firm.
[D] The RR may participate but none of the RR's clients would be allowed to participate. -
CORRECT-ANSWERS[C] -
Generally, RR's are not allowed to participate in Private Securities transactions away from the
firm - but if they were they would be required to obtain prior written authorization from the
firm and would be required to submit duplicate confirmations and account statements to the
firm.
An individual is in the process of becoming registered with a broker-dealer. All of the following
are requirements of this individual, EXCEPT:
QUESTIONS AND ANSWERS 2025
Which of the following statements regarding Self-Regulatory Organizations (SROs) is NOT
true?
[A] SROs are supported by their own member firms.
[B] SROs pay dividends to employees.
[C] SROs allow member firms to vote.
[D] SROs set rules, regulations, and penalties. - CORRECT-ANSWERS[B] -
Since most SRO's are non-profit and not publicly-traded, they do NOT pay dividends to anyone.
SROs do set rules, allow members to vote, and are supported by their own member firms.
Which of the following statements pertaining to written communications to the public by a
registered representative is FALSE?
,[A] The member firm must have in place written supervisory procedures on communications
with the public.
[B] If a firm or individual is considered registered by a regulatory agency, it is acceptable for
that firm or individual to state that they are considered qualified or approved by the regulatory
agency.
[C] Registered representatives and firms are prohibited from gua - CORRECT-ANSWERS[B] -
All but B are true. An individual or his or her member firm may never state that they have been
approved or qualified by a regulatory agency.
All of the following are likely violations of FINRA rules EXCEPT:
[A] Selling a customer's blue chip stocks and buying high yield bonds
,[B] Short-term trading in mutual funds
[C] Recommending penny stocks to customers whose investment objective is current income
[D] Handling a large number of accounts on a discretionary basis - CORRECT-ANSWERS[D] -
All but "D" are violations of fair dealings with customers. Selling blue chip stocks to purchase
much riskier investments such as high yield bonds is not suitable. Mutual funds are intended for
long-term trading. Penny stocks are high risk investments and don't pay dividends. Having a
large number of discretionary accounts is not a violation.
If an RR wants to invest in a Private Securities offering, the branch manager should advise the
RR that
[A] The BOM must review the offering memorandum for the offering.
[B] The RR must provide the firm with a written notice detailing the proposed transaction.
, [C] Investments may be made as long as duplicate statements of the activity are provided to
the member firm.
[D] The RR may participate but none of the RR's clients would be allowed to participate. -
CORRECT-ANSWERS[C] -
Generally, RR's are not allowed to participate in Private Securities transactions away from the
firm - but if they were they would be required to obtain prior written authorization from the
firm and would be required to submit duplicate confirmations and account statements to the
firm.
An individual is in the process of becoming registered with a broker-dealer. All of the following
are requirements of this individual, EXCEPT:
