Chapter 3 Practice Questions
1. Member firms are required to verify the identification of their customers and run a check past OFAC. What is OFAC, and what is the purpose of the ID check?
A. Office of Foreign Assets Control; to check if the person is on a known or suspected terrorist list
B. Office of Financial Assets and Compliance; to check if the person is a known or suspected money launderer
C. Office of Foreign Aliens Compliance; to check if the person is a known or suspected funder of terrorist organizations
D. Office of Financial Adviser Compliance; to check if the person has a criminal record
2. Regulation S-P helps protect clients from:
A. Recommendations to purchase high-risk securities such as S&P 500 index derivatives
B. Abusive commissions and sales charges
C. Having their private information misused
D. Money laundering
3. A joint brokerage account owned by two unmarried persons in which the death of one of the owners causes his share of the assets to pass to his estate is referred to as:
A. Tenancy by the entirety
B. Joint tenants with rights of survivorship
C. Joint tenants in common
D. All of the choices listed
4. Under a Uniform Transfers to Minors Act account, assets must be transferred to the minor no later than age:
A. 18
B. 21
C. 25
D. 30
5. According to the SEC, a trade confirmation must be given to a customer at or before the completion of a transaction. Which of the following would not be enough to constitute a completed purchase?
A. Fifty percent of the payment was made on the settlement date for a security bought on margin by debiting the customer’s account.
B. Securities were delivered to the purchaser and 100% of payment was made from the customer’s separately managed account before the settlement date.
C. The securities were delivered on the settlement date.
D. One hundred percent of the payment was made for the security in cash on the settlement date.