Chapter 1 Practice Questions
1.Under FINRA’s Code of Arbitration procedure, the exception to the requirement for binding arbitration occurs:
A.When a representative is accused of recommending unsuitable investments to the client
B.When a dispute arises between two member firms
C.When a member firm has its license canceled, suspended, or revoked
D.When a dispute arises between a member firm and an associated person of that firm
2.A customer brings a claim against a firm and the arbitration panel consists of three arbitrators. The default arrangement is _____; alternatively, the customer may elect to have the panel consist of _____.
I.Three non-public arbitrators
II.One public arbitrator, two non-public arbitrators
III.Two public arbitrators, one non-public arbitrator
IV.Three public arbitrators
A.II, III
B.III, IV
C.II, IV
D.I, III
3.The Municipal Securities Rulemaking Board (MSRB) has the authority to:
I.Draft rules and regulations
II.Enforce rules and regulations
A.I only
B.II only
C.Both I and II
D.Neither I nor II
4.Which of the following is not a privilege given to a government-sponsored enterprise (GSE)?
A.They do not have to pay state and local taxes.
B.They are exempt from SEC oversight.
C.Their loans are backed by the explicit guarantee of the federal government.
D.They have access to a standing line of credit that exceeds $2 billion.
5.The Investment Advisers Act of 1940 would require which of the following to register as an investment adviser?
A.An estate planning attorney who examines assets own