Tag: Series 24

Study Question of the Week: September 10, 2013 Edition

This week’s study question from the Solomon Online Exam Simulator question database is now available. Relevant to the Series 24, Series 62, and Series 82. –ANSWER POSTED– Continue reading

This week’s study question from the Solomon Online Exam Simulator question database is now available.

Question (Relevant to the Series 24, Series 62, and Series 82): 

Sparkly Jewelry Inc. uses a finder to help identify potential investors for a private placement of securities. Which of the following activities would not require the finder to register as a broker-dealer?

Answers:

A. The finder invites potential customers to an informal talk describing the seminar

B. The finder receives a commission when a potential investor invests in the private placement

C. The finder introduces potential investors to the issuer

D. The finder describes the benefits of the private placement to investors

Correct Answer: C.

Rationale: Issuers sometimes use finders to locate potential investors for private placements. Finders may be registered broker-dealers, but they do not need to be. Finders are not required to be registered broker-dealers if they limit their activities to introducing potential investors to an issuer. They cannot promote or recommend securities to a prospective investor, develop terms, or negotiate for either the issuer or the investor.Their compensation must be a flat fee or a percentage fee that is not contingent on the closing of a securities sale. Form D requires issuers to disclose any finder’s fees.

Weekly study questions are from Solomon’s industry-leading Online Exam Simulator.

 

Study Question of the Week: August 27, 2013 Edition

This week’s study question from the Solomon Online Exam Simulator question database is now available. Relevant to the Series 6, Series 7, Series 24, Series 26, Series 62, and Series 82. –ANSWER POSTED– Continue reading

This week’s study question from the Solomon Online Exam Simulator question database is now available.

Question (Relevant to the Series 6, Series 7, Series 24, Series 26, Series 62, and Series 82): 

Which of the following best describes Regulation U?

Answers:

A. Places credit restrictions on broker-dealers by establishing initial margin requirements and prescribing how a margin transaction must be maintained

B. Empowers the Federal Reserve to regulate credit associated with respect to the purchase of securities, also known as margin

C. Requires broker-dealers to be registered

D. Imposes credit restrictions on non-broker-dealer lenders that may finance margin transactions such as banks

Correct Answer: D.

Rationale: Section 7 of the Exchange Act of 1934 empowers the Federal Reserve to regulate credit associated with respect to the purchase of securities, also known as margin. Its intent is to manage the amount of speculative activity that can be applied to securities transactions and to manage the supply of money in the credit markets.

The Federal Reserve responded to its new powers by enacting Regulation T, which places credit restrictions on broker-dealers by establishing initial margin requirements and prescribing how a margin transaction must be maintained. Initial margin requirements are currently set at 50%. Regulation T was soon followed in 1936 by Regulation U, which imposes credit restrictions on other lenders that would finance margin transactions, such as banks. Regulation U forbids banks from extending more credit than the “maximum loan value” for margin securities, which it identifies as 50% of the stock’s current market value.

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Study Question of the Week: July 23, 2013 Edition

This week’s study question from the Solomon Online Exam Simulator question database is now available. Relevant to the Series 6, Series 7, Series 24, Series 26, Series 62, Series 65, and Series 66. –ANSWER POSTED– Continue reading

This week’s study question from the Solomon Online Exam Simulator question database is now available.

Question (Relevant to the Series 6, Series 7, Series 24, Series 26, Series 62, Series 65, and Series 66): 

Roth IRAs are more liquid than traditional IRAs in what way?

Answers:

A. they offer tax-free distribution

B. they allow for the withdrawal of all principal contributions at any time without tax or penalty

C. there are a larger number of exceptions available to the early withdrawal penalty

D. there are no mandatory minimum distributions required

Correct Answer: B. they allow for the withdrawal of all principal contributions at any time without tax or penalty

Rationale: Although Roth IRAs do offer tax-free distributions and have no mandatory minimum distributions, their advantage in liquidity lies in the ability of the account owner to withdraw all principal contributions at any time, including before age 59 1/2.

Weekly study questions are from Solomon’s industry-leading Online Exam Simulator.

Study Question of the Week: July 17, 2013 Edition

This week’s study question from the Solomon Online Exam Simulator question database is now available. Relevant to the Series 6, Series 7, Series 24, Series 26, and Series 99. –ANSWER POSTED– Continue reading

This week’s study question from the Solomon Online Exam Simulator question database is now available.

Question (Relevant to the Series 6, Series 7, Series 24, Series 26, and Series 99): 

Under FINRA Rule 2830, an associated person may accept which of the following gifts from a mutual fund distributor?

Answers:

A. Reimbursement for out-of-pocket expenses incurred by the associated person and his spouse in attending an educational conference

B. Occasional meals and NFL tickets tied to a stated annual sales quota

C. A crisp new $100 bill delivered once every year on Christmas eve

D. None of the choices listed

Correct Answer: D. None of the choices listed

Rationale: Rule 2830 prohibits all of these gifts from a mutual fund distributor to an associated person; specifically, any cash compensation (unless described in a current prospectus of the investment company), meals and tickets tied to a sales target, and reimbursement for meeting expenses incurred by anyone other than the associated person.

Weekly study questions are from Solomon’s industry-leading Online Exam Simulator.

Study Question of the Week: July 10, 2013 Edition

This week’s study question from the Solomon Online Exam Simulator question database is now available. Relevant to the Series 7, Series 24, Series 55, Series 62, and Series 79. –ANSWER POSTED– Continue reading

This week’s study question from the Solomon Online Exam Simulator question database is now available.

Question (Relevant to the Series 7, Series 24, Series 55, Series 62, and Series 79): 

An issuer would like to buy back shares and has already made a once-per-week block transaction this week. The inside quote for the security is 18.30 – 18.34. The last transaction was 18.32. Under SEC Rule 10b-18, which two of the following statements are true?

I. The maximum number of shares the issuer could buy in a day is 25% of the ADTV for the previous four weeks.

II. The maximum number of shares the issuer could buy in a day is 30% of the ADTV for the previous four weeks.

III. The highest price the issuer could buy at would be $18.32.IV. The highest price the issuer could buy at would be $18.34.

Answers: 

A. I and III

B. II and IV

C. I and IV

D. II and III

Correct Answer: A. I and III

Rationale: Under SEC Rule 10b-18,when an issuer buys back their own shares, the bid may not be higher than the last transaction or the highest independent bid, whichever is greater. The maximum daily purchase cannot exceed 25% of the ADTV (average daily trading volume) over the previous four weeks.

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Study Question of the Week: July 2, 2013 Edition

This week’s study question from the Solomon Online Exam Simulator question database is now available. Relevant to the Series 6, Series 7, Series 24, Series 26, Series 62, Series 79, Series 82 and Series 99. –ANSWER POSTED– Continue reading

This week’s study question from the Solomon Online Exam Simulator question database is now available.

Question (Relevant to the Series 6, Series 7, Series 24, Series 26, Series 62, Series 79, Series 82 and Series 99): 

A registered representative wishes to participate in a securities transaction outside of the jurisdiction of his firm. He does not receive compensation for the transaction. Which of the following is true?

Answers:

A. The registered representative needs to inform his firm prior to participating and adhere to any conditions that the firm puts on the rep in connection with the rep’s participation

B. The registered representative does not need to inform his firm because he is not receiving compensation

C. The registered representative needs to inform his firm and await permission before participating in the securities transaction

D. The registered representative cannot participate in any outside securities transactions because it is considered selling away and it is prohibited

Correct Answer: A.

Rationale: A “private securities transaction“ shall mean any securities transaction outside the regular course or scope of an associated person’s employment with a member. A registered representative who wishes to participate in private securities transactions needs to notify his firm and await permission if he will be receiving compensation. If he will not receive compensation, he must notify his firm. The firm shall provide the representative prompt written acknowledgement of the notice and at the firm’s discretion require the person to adhere to specified conditions in connection with the rep’s participation in the transaction.

Weekly study questions are from Solomon’s industry-leading Online Exam Simulator.

Study Question of the Week: June 19, 2013 Edition

This week’s study question from the Solomon Online Exam Simulator question database is now available. Relevant to the Series 6, Series 7, Series 24, Series 26, and Series 99. –ANSWER POSTED– Continue reading

This week’s study question from the Solomon Online Exam Simulator question database is now available.

Question (Relevant to the Series 6, Series 7, Series 24, Series 26, and Series 99): 

Under FINRA Rule 2830, an associated person may accept which of the following gifts from a mutual fund distributor?

Answers:

A. Reimbursement for out-of-pocket expenses incurred by the associated person and his spouse in attending an educational conference

B. Occasional meals and NFL tickets tied to a stated annual sales quota

C. A crisp new $100 bill delivered once every year on Christmas eve

D. None of the choices listed

Correct Answer: D.

Rationale: Rule 2830 prohibits all of these gifts from a mutual fund distributor to an associated person; specifically, any cash compensation (unless described in a current prospectus of the investment company), meals and tickets tied to a sales target, and reimbursement for meeting expenses incurred by anyone other than the associated person.

Weekly study questions are from Solomon’s industry-leading Online Exam Simulator.

Study Question of the Week: June 4, 2013 Edition

This week’s study question from the Solomon Online Exam Simulator question database is now available. Relevant to the Series 7, Series 24, Series 26, Series 62, and Series 82. –ANSWER POSTED– Continue reading

This week’s study question from the Solomon Online Exam Simulator question database is now available.

Question (Relevant to the Series 7, Series 24, Series 26, Series 62, and Series 82): 

FINRA considers institutional communications to be written communications sent solely to institutional investors. FINRA considers an “institutional investor“ to be any of the following except:

Answers:

A. An individual with total assets of $55 million

B. An insurance company

C. A corporation with net assets of $20 million

D. A qualified plan that has 100 participants

Correct Answer: C

Rationale: Institutional communications are written communications sent to institutional investors. FINRA Rule 2210, Communication with the Public, defines “institutional investor“ as any of the following:

(A) a bank,savings and loan association, insurance company, or registered investment company;

(B) an investment adviser registered either with the Securities and Exchange Commission under Section 203 of the Investment Advisers Act of 1940 or with a state securities commission (or any agency or office performing like functions);

(C) any other entity (whether a natural person, corporation, partnership, trust, or otherwise) with total assets of at least $50 million;

(D) governmental entity or subdivision thereof;

(E) employee benefit plan, or multiple employee benefit plans offered to employees of the same employer, that meet the requirements of Section 403(b) or Section 457 of the Internal Revenue Code and in the aggregate have at least 100 participants, but does not include any participant of such plans;

(F) qualified plan, as defined in the Exchange Act, or multiple qualified plans offered to employees of the same employer,that in the aggregate have at least 100 participants, but does not include any participant of such plans;

(G) member or registered person of such a member; and

(H) person acting solely on behalf of any such institutional investor.

Weekly study questions are from Solomon’s industry-leading Online Exam Simulator.

Study Question of the Week: May 15, 2013 Edition

This week’s study question from the Solomon Online Exam Simulator question database is now available. Relevant to the Series 7, Series 24, Series 62, Series 79, Series 82. –ANSWER POSTED– Continue reading

This week’s study question from the Solomon Online Exam Simulator question database is now available.

Question (Relevant to the Series 7, Series 24, Series 62, Series 79, and Series 82): 

Placement agents for private placements almost always engage in a __________ commitment with the issuer.

Answers:

A. firm

B. best efforts

C. shelf

D. primary

Correct Answer: B

Rationale: Placement agents for private placements almost always engage in a best efforts commitment with the issuer.

 

Weekly study questions are from Solomon’s industry-leading Online Exam Simulator.

Study Question of the Week: April 9, 2013 Edition

This week’s study question from the Solomon Online Exam Simulator question database is now available. Relevant to the Series 24, Series 62, Series 65, Series 66, and Series 79. –ANSWER POSTED– Continue reading

This week’s study question from the Solomon Online Exam Simulator question database is now available.

Question (Relevant to the Series 24, Series 62, Series 65, Series 66 and Series 79):

From an owner’s perspective which business structure offers the most flexibility in profit retention?

Answers:

A. S corporation

B. LLC

C. Partnership

D. C corporation

Correct Answer: D. C corporation

Rationale: S corporations, LLCs and partnerships are pass-through tax entities. This means that profits and losses are allocated to the owners and reported on their individual tax returns, regardless of whether earnings have been distributed or retained. In contrast, a C corporation, the traditional corporate entity, may distribute earnings via dividends or keep the profits in the business as retained earnings without the earnings being taxed to the owners’ individual returns.

Weekly study questions are from Solomon's industry-leading Online Exam Simulator.