Chapter 2 Practice Question Answers
- 1. Answer: B. If a representative does not satisfy the regulatory element within the required time period, the representative’s license will become inactive and he will not be able to receive compensation for activities that require a securities license.
- 2. Answer: B. Alliance must file a Form U5 with FINRA and send Randall a copy within 30 days of his termination. Because this is a partial termination, Alliance does not have to state the reason they let him go. Once Randall gets a new job, it is Randall’s responsibility to provide his new employer with a copy of his Form U5.
- 3. Answer: C. Among the information disclosed on Form U4 are the applicant’s residential, employment, and criminal histories and financial disclosures, such as prior bankruptcies.
- 4. Answer: D. Investment advisers handling assets under $100 million must register in the states in which they operate. Mid-sized firms that operate in at least fifteen states, however, must instead register with the SEC. Large firms with assets greater than $100 million may register with the SEC.
- 5. Answer: D. The Commission has 45 days from the date of filing an application to either grant registration to a broker-dealer or institute proceedings to determine whether registration should be denied. The proceedings will include notice as to grounds for denial, as well as an opportunity for a hearing. After such proceedings, the Commission will either grant or deny a broker-dealer’s registration.
- 6. Answer: C. Employees that fail the exam must wait 30 days after each of their first and second attempts. After their third attempt they will be required to wait 180 days for each attempt thereafter.
- 7. Answer: C. FINRA provides licensing relief to registered representatives who are called into or volunteer for active military service. Richard’s license will expire 90 days after completion of active service, unless he reregisters with a memb