17 Questions
Why does the Investment Company Act of 1940 require mutual funds to have a significant percentage of its directors be disinterested?
To prevent conflicts of interest and protect shareholders
What is the purpose of information barriers within a broker-dealer?
To limit the spread of non-public information
What is the main role of a FINRA member?
To be a part of a national securities exchange
When must an investment adviser register with the SEC according to the text?
If its assets under management exceed $110 million
What does an investment adviser with AUM of $100 million up to $110 million have the option to do?
Decide whether to register with the state or the SEC
What organization is responsible for updating the states' securities laws (Blue Sky Laws)?
The North American Securities Administrators Association (NASAA)
What is the responsibility of a transfer agent?
Maintaining a list of shareholders and their contact information
What does a broker-dealer do when acting in an agency capacity?
Selling a security to an investor
In what capacity does a firm charge a markup on a stock transaction?
Dealer (principal) capacity
What does a market maker do when providing liquidity?
Consistently buying and selling securities
What information is conveyed in a market maker's quote: 7.10 – 7.15, 20 x 10?
Bid and ask prices with trading volume
What qualification deems a married couple as accredited investors?
$1,000,000 net worth excluding primary residence
What is the limit to the percentage of returns registered representatives can share if they invested 30% in a joint account with a customer?
30%
What is an example of a violation referred to as freeriding?
Using the proceeds of a sale to pay for the purchase
Who is prohibited from using the proceeds of a short sale to pay for another stock purchase?
Customers
What restriction do FINRA member firms have regarding purchasing equity IPOs?
They are restricted from purchasing equity IPOs for immediate family members
In the context of insider trading, who would be considered to have violated laws if material, non-public information (MNPI) is posted by a government official on an online bulletin board?
Both the government official and the person executing trades
Test your knowledge about the roles of transfer agents and registrars in managing shares, and learn about stock market concepts such as arbitrage and the role of the DTC.
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