Chapter 7 Practice Question Answers
- 1. Answer: B. Fred must file Form 8-R for his sole proprietorship and Form 7-R for himself. Registered FCMs file a Form 101 with the CFTC when they carry reportable positions. Non-guaranteed IBs must file Form 1-FR-IB with the NFA semiannually to report their current financial condition.
- 2. Answer: A. A futures commission merchant must pay a one-time nonrefundable fee of $500 for each Form 7-R filed. Introducing broker, commodity pool operator, and commodity trading advisor applicants must pay $200 for each Form 7-R filed. The NFA requires an annual maintenance fee of $100 for each registration category as an FCM, IB, CPO, or CTA.
- 3. Answer: D. A futures commission merchant must pay a one-time nonrefundable fee of $500 for each Form 7-R filed. Introducing broker, commodity pool operator, and commodity trading advisor applicants must pay $200 for each Form 7-R filed. An $85 nonrefundable fee is applied to each Form 8-R filed for registering a principal or associated person. When the NFA determines that an applicant appears fit for registration, it will provide notice that the registration has been granted. CFTC registration will remain in effect until it is revoked or withdrawn.
- 4. Answer: B. The risk disclosure document must be made available to each customer and to the general public by posting a copy on its website. The document provides material information regarding its risks, creditworthiness, and its principal liabilities. The financial detail of a FOCUS report is not required in the risk disclosure.
- 5. Answer: C. While it is true that the risk disclosure statement discusses the risks of trading on margin, and that by signing the acknowledgement the customer is stating that he understands those risks, it is only upon signing the commodity customer agreement that the customer has actually agreed to maintain the required margin and be subject to margin calls and potential liquidation.
- 6. Answer: D.