Series 7: Chapter 11 Practice Questions

Chapter 11 Practice Questions

1. 1. A member firm’s advertisements contain paid endorsements from customers, one of which compares its services favorably against another broker, a nationally known competitor. The testimonials must be accompanied by each of these disclaimers and disclosures except:
2. A. These testimonials may not represent the views of other customers.
3. B. The experience of these customers is no guarantee of future performance.
4. C. Customers’ payments for their endorsement must be footnoted.
5. D. Material differences between the two brokerages’ services must be disclosed.
6. 2. A member firm must preserve records of customer complaints for at least _____ years from the date of the complaint.
7. A. Four
8. B. Three
9. C. Six
10. D. Two
11. 3. Networking arrangements between a member firm and a bank must include all of the following characteristics except a:
12. A. Contract describing the parties’ responsibilities and compensation arrangements
13. B. Bank guarantee of the member firm’s customer accounts
14. C. Physical separation from the bank’s deposit-taking activities
15. D. Guarantee of member firm access to the bank’s networking arrangement’s records
16. 4. Two years ago, Reliable Brokerage received a written request from its customer Henry to hold his mail for a period of three months, which it did. Today, Reliable receives another written request from Henry to hold his mail, again for three months. Henry does not give a reason. Reliable knows that Henry regularly checks his account using its website, and that the contact information it has for him is current. Can Reliable honor the request? Why or why not?
17. A. Yes, because Henry has ready access to his account information.
18. B. Yes, because Reliable can contact Henry in a timely manner about his account.
19. C. No, because the three-month limit is an all-time limit, unless there i