Chapter 1 Practice Questions
1. Which of the following is not an SRO?
A. FINRA
B. Fannie Mae
C. Nasdaq
D. The MSRB
2. 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
3. The Securities Exchange Act of 1934:
A. Mainly deals with the primary market
B. Created the MSRB
C. Requires registration of securities
D. Requires registration of broker-dealers
4. 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
5. 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.
6. 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 owned by clients, and regularly recommends the purchase and/or sale of specific securities for additional consideration
B. A CPA with a conventional tax preparation and consulting business
C. A banker who is advising clients on bank CDs
D. All of the choices listed
7. All of the following are true of the Securities Act of 1933 except:
A. One of its purposes is to prohibit fraud and deceit in the marketing of securities.
B. It requires securities to be