Chapter 3 Practice Questions
- 1. Which of the following would be described as insider trading?
- A. Trading on a rumor
- B. Revealing material, nonpublic information to someone else who then trades on the information
- C. Trading on a tip from the Motley Fool
- D. Trading on immaterial, nonpublic information
- 2. Claire is the objecting beneficial owner of several hundred stock shares of XYZ Corporation. A FINRA member firm is acting as the transfer agent and therefore sees Claire’s contact information. The issuer requests Claire’s information so that it can send her proxy mailings or other shareholder communications directly. Can the FINRA member share this information?
- A. Yes
- B. Not enough information provided
- C. No
- D. Only if the issuer contacts Claire beforehand to get her written permission
- 3. Which of the following records must be kept in writing at each Office of Supervisory Jurisdiction?
- A. A list of all prospects contacted by phone within the last 30 days
- B. Written supervisory procedures
- C. Copy of the FTC’s Do Not Call Registry
- D. Copy of every registered representatives’ fingerprints
- 4. A registered principal is conducting his firm’s annual internal inspection at its OSJs. What are his responsibilities with respect to this written report?
- I. To review customer account records for irregularities and abuses
- II. To test policies and procedures for safeguarding customer accounts
- III. To evaluate supervision of customer accounts serviced by branch office managers
- A. II only
- B. III only
- C. I and II
- D. I, II, and II
- 5. Regarding internal inspections required by FINRA, each member shall inspect each OSJ office and any branch office that supervises one or more non-branch locations at least how often?
- A. Monthly
- B. Quarterly
- C. Biannually
- D. Annually
- 6. A firm’s CEO must annually certify that the firm has processes for establishing, maintaining,