General Securities Principal Qualification (Series 24) Practice Exam

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• Which entity is primarily responsible for issuing complaints in securities regulation enforcement?
• When is a principal required? 1) actively engaged in management of investment banking/securities business; 2) when supervising associated persons. Which statement is accurate?
• Which statement best describes criminal penalties for insider trading?
• The 140% rule describes the amount of collateral that can be pledged to a bank for a loan based on which balance?
• In transactions for associated persons, what must be provided in writing?
• Given net worth of $600,000 and subordinated debt of $200,000, what is the debt/equity ratio?
• What is the capital requirement for a qualified OTC market maker?
• Which of the following is NOT listed among FINRA's responsibilities in the source material?
• Which category requires maintaining customer complaints?
• Which statement describes an OSJ's management requirement?
• To whom must lost securities be reported on the third day?
• Under the 140% rule, what does the 140% refer to?
• In simplified arbitration, the decision is issued within how many days?
• What is a defining feature of a special reserve account?
• Are primary market makers exempt from the location rule?
• Which of the following is not typically eligible in Portfolio Margin accounts?
• Repurchase agreements are allowed only for which securities?
• Are all NMS securities marginable?
• Which statement about the NYSE is true?
• How is a branch office defined?
• Which is a responsibility of principals in brokerage supervision?
• If a firm terminates membership, within how many business days must Focus report II or IIa be filed?
• Which of the following correctly describes a trigger for FINRA early warning reports?
• Which of the following describes free riding?
• What is the minimum time before prepayment under subordinated loan standards?
• How many business days does a broker-dealer have to respond to a potential employer regarding an associated person?
• Awards must be paid within how many days of the decision date?
• Which statement best describes mediation?
• Which term describes a market participant that provides quotes on a security and stands ready to transact?
• ETFs tracking narrow-based stock indices are subject to which haircut percentage?
• When calculating net capital requirements, you should always default to which standard?
• What is the effect of accepting a settlement offer on hearing rights?
• Which form must be filed electronically for changes in ownership or control?
• What is Form MC400 used for?
• Rule 9522 grants which entity the right to approve statutorily disqualified persons to become an associate of a member firm?
• A private securities transaction is defined as which of the following?
• Which of the following is a FINRA responsibility?
• Disqualifications such as DUI and assault may be approved since they do not pose what risk to investors?
• If a customer refuses to provide information for a new account, which action is permitted?
• Which statement correctly describes an ECN's function?
• Which statement about management companies is true?
• What is the term for the practice of breaking up a large transaction to avoid reporting requirements?
• Introducing firms may, among other things, perform which of the following?
• Who typically trades in dark pools?
• What is the Tier 1 annual fee for statutorily disqualified employees, if approved by FINRA?
• The Code of Procedure was created to address alleged violations of which rules and laws?
• What is the minimum term for a subordinated loan?
• Which statement best describes SEC Rule 201?
• Which market participant provides quotes on a stock and stands ready to buy or sell?
• Rule 4530 requires reporting within 30 calendar days. Which statement is true?
• Under telemarketing monitoring, which threshold applies to Level A employees?
• Sharing of customer accounts is generally not approved; the only exception applies to what case?
• What percentage is the additional haircut for undue concentration on a non-exempt stock?
• IPOs become marginable after how many days?
• The Supplemental Schedule known as SSOI and SIS serves what primary purpose?
• Which statement about the NYSE’s number of exchanges is true?
• Which statement best defines a disciplined firm?
• The DMR process responsibilities include reviewing applicants' capital, scope of business, and harmony with which overarching goals?
• If a firm’s accountant resigns or is fired, what must be done?
• What is the maximum fine for a minor rule violation?
• SMA can be used as a line of credit and may be used as long as the account maintains at least what maintenance level?
• Firms carrying more than a certain amount must document risk and liquidity procedures. What is that threshold?
• Who handles DVP transactions?
• Are haircuts subtracted from capital to arrive at Net Capital?
• Which option best defines a threshold security?
• Which document is filed as part of lifetime records?
• Based on the example, what is the stated minimum net capital requirement?
• For NYSE maintenance in portfolio margin contexts, what is the maintenance requirement?
• In a limited trading market, what is the haircut on regular long and short positions?
• How many fingerprinting attempts are allowed for an associated person?
• What is the basic formula for net capital?
• Under the Alternative Net Capital Method, which of the following is true?
• Which statement best describes a fully disclosed firm?
• Tentative Net Capital will usually refer to undue concentration on the exam.
• Which of the following is a characteristic of ETNs?
• Under the 6-month rule, gains from insider trades within six months are disgorged.
• What is required when an associated person engages in a private securities transaction?
• In a cross guarantee arrangement, which describes the cross-guarantee concept?
• Which statement best describes a Portfolio Margin account requirement?
• A Trial Balance is a report taken from the general ledger that includes which components?
• A Supplemental Liquidity Provider (SLP) is described as creating which type of market in its assigned stock?
• What is the minimum number of principals required for a broker-dealer, except sole proprietorships?
• Under withdrawal of equity policy, what percentage of excess capital triggers SEC notification if withdrawn in 30 days?
• Designation records must be retained for how long?
• Which of the following is an example of a Non-Conventional Investment (NCI)?
• The requirement to notify FINRA 10 days before record dates is under which act?
• What describes a threshold security?
• Which term refers to a person who holds 5% or more of voting rights in a broker-dealer?
• Free credit balances are credited on what schedule?
• Which requirement applies to funds with a name that indicates a specific security focus?
• FINRA requires how many resident principals for the Office of Supervisory Jurisdiction?
• Location of Securities updates can be provided in which formats?
• Broker Check is updated for fines of at least what amount, or suspensions/barring?
• Which statement best describes K1-firms?
• ETNs are notes issued by financial institutions and thus carry issuer credit risk.
• Oral disclosures on bank premises must include which items?
• What is the primary purpose of the Firm Element training?
• Day-trader buying power is typically set at what multiple of the SMA amount?
• For disputes over 100k, how many arbitrators are appointed?
• In prime brokerage accounts, what is the minimum required for institutional accounts?
• Reasonable basis theory applies to Non-Conventional Investments. Which statement reflects this?
• Which form opens a 180-day window for a new broker-dealer registration application?
• Under currency transaction reporting, transactions exceeding what amount per day must be reported?
• Long sales that do not result in delivery must be closed out after how many business days from settlement?
• Which statement about regulatory element exemptions is true?
• What is the Tier 2 annual fee for statutorily disqualified employees if approved by FINRA?
• During arbitration selection, who can the customer choose from?
• Under Rule 16(b), insiders must disgorge profits from trades within six months.
• A Trial Balance can be used to perform which computation?
• Under misappropriation theory, which statement is correct?
• Which does OSJ stand for in FINRA context?
• Under the 140% rule, what is the maximum loan relative to debit balance?
• Which entity is responsible for maintaining two-sided quotes in a regular trading session?
• After a pre-hearing conference, what is the typical timeframe for a decision to be rendered?
• Who provides the U-5 form to the new employer after termination?
• The NAC is responsible for which functions?
• Which of the following describes the capital requirement for a qualified third market maker on a national securities exchange?
• Under a Reg T extension, which scenario best describes the extension?
• When a stock is shorted and a dividend is paid, what does the member firm do to the short seller's account?
• What is the minimum net capital for dealers?
• In brokerage supervision, which action reflects a principal's responsibility regarding registered representatives?
• What is the minimum net capital for a qualified block positioner?
• Insider-trading fines are paid to which government entity?
• What is the purpose of price bands?
• After approval, how many days does a firm have to implement recording procedures?
• Which of the following is a subordinated loan standard requirement?
• Which of the following best describes naked shorts in relation to delivery?
• Code of Procedure addresses alleged violations of which rules and laws?
• OTC securities are marginable only if they are on which list?
• Which form is used to reflect a change in ownership or control of a broker-dealer?
• Which statement best describes a crossed market?
• Retail communications regarding BD services may use which legend?
• What does the Trust Indenture Act of 1939 provide?
• Members must report complaints within how many days?
• Excess SIPC coverage protects beyond $500,000 per customer and requires notice within 30 days if discontinued.
• In Portfolio Margin, what is the typical real-time intra-day monitoring equity threshold?
• In arbitration selection, which types of arbitrators are available?
• Mutual funds become marginable after how many days?
• Which investment vehicle is described as professionally managed, often OTC-traded, that pays 90% of income to shareholders and has at least 75% of assets invested in real estate?
• An offer of rescission must generally be made within how many days?
• Which description best defines a carrying firm?
• Prime brokerage accounts are described as bundled services.
• What is the minimum net capital for a carrying firm?
• In market quotation terminology, the inside bid refers to which of the following?
• OATS is an industry system used for what purpose?
• What haircut percentage applies to capital for ETFs tracking broad-based stock indices?
• Rule 10b-21 addresses anti-fraud rules regarding failure to deliver transactions.
• Which statement about net price is true?
• Customer complaints must be filed within how many days after the end of the quarter?
• Which elements are required in a settlement offer?
• SIPC member firms must display a sign and logo at each location and provide contact information at account opening.
• ETF securities are usually registered as which type of fund? (True/False)
• Which term describes the broker's primary function?
• In trading terms, what does a locked market mean?
• Under subordinated loan standards, repayment is suspended if AI to NC exceeds what ratio?
• What does a DPP Rollup involve?
• NYSE has a minimum earnings per share (EPS) requirement to list on the exchange.
• Delisting from NYSE requires what?
• DMR issues a written decision within how many days after the pre-membership interview?
• In arbitration proceedings, how long does the respondent have to respond to the claim?
• When a stock that is short pays a cash dividend, what happens to the short seller's account?
• Which action involves a broker-dealer repurchasing securities at the original price?
• Leverage ETFs require higher margin requirements.
• Which statement about net price is correct?
• ETFs that invest in commodities or currencies do not have to be registered as investment companies.
• For established firms, what is the AI to Net Capital ratio?
• Simplified arbitration applies to disputes under which threshold?
• Which statement correctly describes the net capital range for market makers?
• Which item is a 5-year record item?
• How many days are allowed to deliver in this context?
• For naked shorts, a fail to deliver on the short stock must be closed on which settlement day?
• The Supplemental Schedule (Rule 4524) known as SSOI and SIS must be filed how many days after the end of each calendar quarter?
• NAC is responsible for which of the following functions?
• Failure to respond to a Code of Procedure complaint is typically considered what?
• DBAs are acceptable if filed with which entities?
• Which statement correctly describes the mandatory scope of the Uniform Code of Arbitration?
• Which functions are included in an OSJ (Office of Supervisory Jurisdiction)?
• Which statement correctly identifies which options are marginable?
• The AI rule is intended to do what?
• If delivery is delayed due to mechanics of the trade, how many days to obtain payment?
• K2-ii is available to introducing B/Ds that clear all customer transactions on a fully disclosed basis with a clearing firm. What is the minimum net capital required?
• The Department of Enforcement primarily does which of the following?
• Within how many days must appeals to NAC be made?
• Focus Reports are part of which record category?
• Which statement about the U-5 form is correct?
• What is the net capital requirement for firms that sell on a subscription-only basis?
• Which statement correctly describes the delivery timeframe referenced in the material?
• Which term describes a broker?
• Which item is a 6-year record according to standard maintenance requirements?
• How often is the Location of Securities requirement updated?
• Rule 4530 requires reporting within how many calendar days?
• In the context of delivery rules, which statement is true?
• For fully disclosed firms, the minimum net capital is either $5,000 or $50,000 depending on conditions.
• What is the capital requirement for a qualified third market maker?
• Which description best fits a secured demand note agreement?
• Which location would be exempt from inspections?
• Which FINRA department conducts the pre-membership interview and issues the written decision?
• What does an electronic communications network (ECN) primarily do in securities trading?
• Which category includes U-4, U-5 and fingerprint card for term employees?
• Nasdaq Rule 1014 pertains to which aspect of pre-membership due diligence?
• Within how many days must an operational matter report be filed after calendar year end?
• In a control relationship, what is required prior to making a recommendation?
• Form BDW is used for what purpose?
• Within how many days must a pre-hearing conference be held?
• What is the primary market function of a DMM?
• What is the statute of limitations for arbitration?
• A long sale that fails to deliver must be closed out after which period?
• Under Rule 9522, which body has the authority to approve statutorily disqualified persons to become a member firm associate?
• The DMR's written decision after a pre-membership interview can include which outcomes?
• If FINRA bars or suspends an Associated Person, member firms cannot
• Which item is used to verify customer identity and is included in 5-year records?
• During what hours are price bands effective?
• Outside Business Activities exemptions include which of the following?
• Which form is used by broker-dealers to register with the SEC and SROs and must be updated within 30 days when out of date?
• An alternative AI formula that may appear on exam is which of the following?
• Under Nasdaq Rule 1014, pre-membership due diligence requires documentation of which items?
• True or false: under a sharing agreement for net capital, broker-dealers may expense flat monthly payments.
• Which of the following is true about DPP requirements?
• On the 5th day after settlement, fail to deliver must be aged and reduced by what haircut?
• How many years of employment do principals need check before signing U-4?
• Which organization has oversight of the Department of Enforcement?
• Statutory disqualification is defined as disciplinary actions in the last 10 years by the SEC.
• What is a characteristic of dark pools?
• What best describes temporary subordinated loans?
• Form 112 is a record item in which category?
• Under the Taping Rule, if a member firm hires too many representatives previously associated with disciplined firms, what must the firm do?
• What is the minimum net capital requirement for joint back office arrangements?
• Which statement best describes the Net Capital Rule?
• Under the cheap stock rule, what is the margin requirement for stocks under $5?
• Which risk is unique to ETNs compared with ETFs?
• Borrowing from or lending to customers is allowed without prior written approval in which scenarios?
• Which 3-year record item relates to confirming trade details with a customer?
• Form Custody must be filed within how many days after the month end or quarter?
• What is the function of floor brokers?
• What is the standard deadline to respond to a Code of Procedure complaint?
• On DVP/RVP basis accounts, are customer statements required to be sent?
• Where is a contested offer sent to work out a compromise?
• Regulatory element requirements specify completion 120 days after the 2nd registration anniversary and every how many years thereafter?
• The maximum fine for failing to report currency transactions can be up to how much?
• Internalization in brokerage refers to earning money on what?
• If requested, how many business days does the employee have to forward the U-5 to the new employer?
• Under exemptions procedures, how many days does a member firm have to appeal a decision?
• Which item is a 6-year record?
• Which term describes unlawful name representations intended to mislead investors?
• Which net capital requirement applies to a broker-dealer that accepts wire transfers and sells on a subscription basis?
• What is the AI ratio for first-year firms?
• Which statement correctly describes haircut rules for ETFs?
• Firms that cannot meet net capital requirements are considered insolvent.
• In the secured demand note example, with $100,000 stock and a $70,000 loan, what is the net increase to the firm's capital?
• Which description best defines OATS?
• Which rule prohibits unlawful name representations in securities offerings?
• If a firm does not timely announce a record date for dividends, splits, or rights, what must it do with FINRA?
• In a crossed market, which statement is true?
• How many days does the claimant have to reply to the respondent's answer?
• What does give up clearing arrangement mean?
• What type of orders may the hearing panel issue?
• LEAPS are defined as options with a minimum expiration of more than how many months?
• Which statement best describes a subordinated loan agreement?
• Does the undue concentration rule apply to exempt securities?
• Which item is subtracted from total available capital to arrive at tentative net capital?
• Networking on bank premises, which disclosure must be provided before account opening?
• Can a member force a customer to arbitration under the Uniform Code of Arbitration?
• In disputes between 50k and 100k, how many arbitrators are used?
• Membership of a member firm can be suspended or revoked if fees are not paid within how many days?
• Which statement about hidden profit is true?
• In an assigned stock, SLPs are described as providing a one-sided market with about what percentage of trading?
• Which individuals are generally considered insiders under insider trading rules?
• Which term describes shares of a specific stock with a significant amount of short interest and not delivered?
• Under contemporaneous trading theory, what is the maximum bounty?
• A disciplined firm has a one-time opportunity to reduce staff levels below thresholds to avoid requirements. How many times may this reduction be used?
• Under curtailment of member activity, which condition could trigger a reduction in business?
• Which item is explicitly listed as a lifetime record?
• A pattern day trader is defined as trading behavior of?
• Blue Sheets are used by regulators to investigate potential trading violations. Which information must be reported by members?
• Soft dollars are funds used to pay for what purpose?
• What creates SMA balance in a margin account?
• For how long must inspection records be kept?
• Is there a maximum limit to market maker net capital?
• For naked shorts, a fail to deliver on the long stock must be closed on which settlement day?
• Is fail-to-deliver an allowable asset for capital purposes?
• Selling Away refers to which practice?
• The buying power for day traders is which multiple of the SMA amount?
• FINRA's regulatory scope includes which type of securities?
• The 17-day deadline for Form Custody applies to which period?
• Which term describes a dealer?