Series 53: Chapter 1 Practice Question Answers

Taken from our Series 53 Online Guide

Chapter 1 Practice Question Answers

  1. 1. Answer: B. Multiple accounts owned by the same person may be separated for coverage purposes if the accounts are considered to be held by separate customers. These categories include (1) individual accounts; (2) joint accounts; (3) accounts held by executors, administrators, and guardians/custodians/conservators (such as UGMA accounts); (4) accounts held by corporations, partnerships, or unincorporated associations; and (5) trust accounts. If a customer has both a cash and margin account, the accounts are combined for coverage purposes.
  2. 2. Answer: D. Although government and municipal securities are exempt from the registration requirements of the Securities Act of 1933, they are still subject to the Act’s anti-fraud prohibitions. The 1975 amendments to the 1933 and 1934 Securities Acts ensure that all anti-fraud regulations that apply to registered securities also apply to municipal securities.
  3. 3. Answer: B. While the MSRB drafts rules and regulations governing the behavior of municipals broker-dealers and financial advisors, it does not have the authority to enforce them. The MSRB rules for broker-dealers are generally enforced by the SEC and FINRA. The Comptroller of the Currency enforces MSRB rules for national banks and their subsidiaries and for foreign banks. The FDIC enforces MSRB rules for state and local banks that are not part of the Federal Reserve System. The Federal Reserve Board enforces rules applying to state and local banks that are part of the Federal Reserve System.
  4. 4. Answer: C. MSRB rules regulate the municipal securities industry in general and are not limited to secondary markets. After a public comment period and once approved by the SEC, MSRB rules have the force and effect of federal law. MSRB rules fall into these general categories: (1) professional qualification rules that establish qualifications for conducting business; (2) fair practice rules to protect investors, municip

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