Review Quiz
- 1. A registered rep receives Paul Lupowski’s market order to sell shares of Zoolock. He holds Zoolock shares himself in his own account and decides it would be good to sell. He executes a market order to sell his shares and after a short coffee break executes the customer’s market order, receiving a higher price on the customer’s order than he received himself. Which of the following statements is most accurate?
- A. The broker traded ahead of a customer’s market order in violation of FINRA rules.
- B. The action of trading ahead would have been legal if the broker had informed Lupowski of his intent ahead of time.
- C. Trading ahead would have been perfectly all right if the broker had given Lupowski an opportunity to forbid the action.
- D. The broker did not violate FINRA rules because the customer received a better price.
- 2. You are a registered representative, and you prepare and mail a letter to 50 well-heeled prospects you met at a trade show. According to FINRA, that letter is now considered:
- A. sales literature
- B. generic advertising
- C. institutional sales material
- D. correspondence
- 3. A registered representative has made a computer-based investment analysis tool that compares the investment results of tax-free versus taxable mutual funds under various tax rates. What must he do in order to advertise and use this tool for non-institutional customers?
- A. file and receive the approval of the SEC before use
- B. file with FINRA within 10 days of first use
- C. he may not advertise this tool
- D. an investment analysis cannot compare tax-free versus taxable investments
- 4. Baroch Investments’ advertisements contain endorsements from customers, one of whom compares Baroch’s services favorably against her former broker, a nationally known competitor. These testimonials must be accompanied by which of these disclaimers and d