Series 26: Chapter 6 Practice Questions

Chapter 6 Practice Questions

1. 1. Firms must inform customers how their business continuity plans address potential business disruptions and how they will respond to various events. This disclosure must be made:
2. A. When a customer opens an account, in writing
3. B. Every year, in writing
4. C. Within ten days of opening an account, in writing or over the phone
5. D. Whenever the firm fails to meet its net capital requirements in a given month, in writing
6. 2. Which of the following records must be kept for the lifetime of the firm?
7. A. Memos of brokerage orders
8. B. Minutes of partners’ meetings
9. C. General ledger
10. D. Fingerprints of associated persons
11. 3. The ratio of aggregate indebtedness to net capital of an established firm cannot be greater than:
12. A. 1:1
13. B. 10:1
14. C. 12:1
15. D. 15:1
16. 4. The SEC requires broker-dealers to do the following with fully paid securities and excess margin securities:
17. A. Segregate them only
18. B. Segregate them and ensure they are safely kept
19. C. Commingle the two
20. D. Segregate only at the written request of the customer
21. 5. With respect to FOCUS Reports, all firms must file ___.
22. A. Part I quarterly
23. B. Part I annually
24. C. Part II or Part IIA quarterly
25. D. Part II or Part IIA annually
26. 6. Which of the following describes a “material weakness”?
27. A. A lack of assets necessary to conduct business
28. B. A discrepancy in the amount of information available to two or more different investors
29. C. A deficiency in a broker-dealer’s controls that could reasonably prevent the discovery of inaccuracies in its reporting statements
30. D. A fault in an issuer’s registration statement
31. 7. Which of the following is true regarding FINRA’s authority to ensure capital compliance of its members?
32. I. FINRA may, if necessary, increase