Question 1

Which of the following statements best describes an American Depositary Receipt (ADR)?

Options :

A : ADRs trade like U.S. issues and are quoted in U.S. dollars.

B : ADRs trade like U.S. issues and are quoted in foreign currency.

C : ADRs represent shares of a U.S. security held in foreign commercial banks.

D : ADRs represent shares of a foreign security held in foreign commercial banks.

Answer: A

Question 2

A municipal securities dealer makes a political contribution of $990 to a local mayoral candidate. At the end of the quarter, to whom, if anyone, must the dealer report the contribution?

Options :

A : SEC

B : MSRB

C : FINRA

D : No disclosure required as the amount is below the reporting threshold

Answer: B

Question 3

A broker-dealer (BD) creates a marketing postcard that includes a statement regarding FINRA's endorsement of the BD. Which of the following responses is true?

Options :

A : The statement regarding FINRA-s endorsement is not permissible.

B : The statement is permissible if a principal of the BD approves it in writing prior to use.

C : The statement is permissible if the statement is approved in writing by FINRA prior to use.

D : The statement is permissible if the postcard does not discuss specific investment opportunities.

Answer: A

Question 4

A registered representative must complete which of the following activities when entering a discretionary trade?

Options :

A : Only exercise discretion over market orders

B : Indicate that discretion was exercised on the order ticket to be identified for supervisory review

C : Obtain authorization from the customer before each discretionary order is entered

D : Receive instructions from the customer as to the price at which to buy or sell a security

Answer: B

Question 5

On settlement date, a customer is unable to pay for a purchase in his cash account. His position is liquidated. Which of the following statements is true according to Federal Reserve Regulation T?

Options :

A : Only closing transactions are permitted.

B : The customer is barred from trading for 30 days.

C : The customer-s account is frozen for 90 days.

D : All related accounts are frozen for 90 days.

Answer: C

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