FINRA Series 10 practice exam

A representative was fired for cause 3 and a half years ago, after allegations of sales practice violations. They are now applying for registration at a firm. What is the most important action that they must take?

According the NMS Rule 612, what is the minimum price increment, up or down, for a stock currently trading at $\$0.75$?

What type of exemption does Regulation D provide?

For the purposes of being able to participate in the 401(k) plan at work, a part-time employee who is 23 years old, would need to work at least 500 hours a year, for how many consecutive years?

A client in their brokerage account, has $\$300\text{k}$ in cash, and $\$200\text{k}$ in securities in the account. If the firm goes bankrupt, what is the client's SIPC protection?

All felony charges in the past how many years will create a statutory disqualification?

Which of the following investments resembles a mutual fund but, because it is issued by a state or local government entity, is excluded from the definition of an investment company?

When the term censure is used with a representative, what does that generally mean?

Which of the following would most likely cause the biggest issue when it comes to an outside business activity.

If a fund a broker-dealer is considering selling is called the "MNO Technology Growth Fund", and is invested $50\%$ in technology stock, $20\%$ in technology convertible bonds, and $30\%$ in cash, what concerns might the firm's principal have from a regulatory and ethical standpoint?

When recommending municipal securities, what additional suitability factor most directly affects the tax benefit a customer receives?

What is a primary difference between mediation and arbitration?

A CTR would be filed for;

A firm has a control relationship with the issuer of a bond it wants to purchase for one of its clients' discretionary accounts. Under Rule G-22, which of the following steps must the firm take before they can execute the trade?

A general partner of a DPP wishes to raise money publicly. What should the firm advise them they are required to do?

A PPN is a type of structured product. Of these choices, which would be the best way for a representative to explain it to prospects?

A dealer drafts a product advertisement for a state's 529 savings plan that shows the plan's average annual total returns for the past five years. Under the MSRB's advertising rule for municipal fund securities, what must the principal confirm the advertisement includes?

Under NASDAQ rules, when is the last time a market-on-close order can be placed?

FINRA's 5% markup policy applies to which market(s)?

A representative is sending a communication to one of their institutional clients, but they think the institutional client might show retail clients. How should they treat this communication.

An officer of ACH Inc decides to buy 10,000 shares of the company in January, at $\$20$ a share. In April of that year, after the stock shot up to $\$30$, the officer sells the shares. Provided there is no claim of insider trading, what must happen?

In a single week, a member firm mails a postcard to 600 retail prospects announcing that its downtown branch has moved to a new address and telephone number. The postcard makes no recommendation and promotes no product or service of the firm. How should the principal classify the postcard under FINRA Rule 2210?

How often does the board of directors meet to reapprove 12b-1 plan fees?

If a trader at firm A contacts a market maker from a different firm, and suggests that the other firm delay reporting a large transaction. Later, the trader from firm A shares an institutional investor's pending strategy with the market maker. How would this best be described?

An Energy and Mining MLP received $88\%$ of its income from managing a natural gas pipeline system, and the remainder from fees for unrelated business consulting services. Does this MLP have the qualifications to maintain pass-through status?

An investor is trying to calculate the NAV and POP of a mutual fund. The mutual funds has total assets of $\$146{,}000{,}000$, has total liabilities of $\$5{,}000{,}000$, and has a sales charge of $4.1\%$. The fund also has $4{,}100{,}000$ shares outstanding with investors. What is the POP?

Under standard margin rules, if a customer wants to buy $\$100{,}000$ in securities, and makes the required margin deposit, what is the maximum market value of the customer's securities the firm may pledge to a bank by rehypothecating the account?

What is the primary benefit of being registered as a representative of a FINRA member firm

Which of the following documents is optional in a margin account?

What would be the best description of the difference between debenture and bond?

A research analyst at a member firm has recently completed a strongly negative report on a company, and it is scheduled to be released next week. The analyst told their friend who is a trader at the firm, and that trader immediately starts shorting the stock. What would be the best description of this?

Client invested $\$80{,}000$ into a nonqualified mutual fund account in a single purchase, and has taken every distribution in cash. They are now 68 years old, and the account value is worth $\$120{,}000$. If they want to take out $\$60{,}000$, how much of that is taxable?

In margin accounts, there are a lot of acronyms used in the industry. What is the most common meaning for the acronym "DR"?

A stop limit order that has its trigger price hit by the market would do what?

A broker-dealer is acting as an agent for an institutional investor. They execute transactions for the investor through multiple firms under an RVP arrangement. What would be a good way to describe the mechanics of an RVP transaction?

A communication sent to many of the firms clients compares variable annuities to bank savings accounts. What else, if anything, must be included?

Under Regulation A, what is the maximum a company can raise in a Tier 1 offering?

Who creates the regulatory element of the continuing education?

A person has been a registered representative for 3 years at their firm, and then leaves the industry. How long must the firm retain the U4 of the rep, in total?

When an associated person of a firm opens accounts at another member firm, which of the following must occur?

The firm's supervisory control report must be submitted to senior management how often and what does it contain, for a firm with over $\$200$ million in gross revenue?

A firm that has 18 registered, how many of them must have been associated with one or more disciplined firms, for the firm to need to put procedures to tape into effect?

A representative at a member firm receives a $\$75$ gold plated pen with their personal name on it from a rep at a different firm. They received this gift at a local dinner, a representative of that firm was hosting. They provided the same personalized pen, to each rep that showed up. Under G-20, how would this be handled?

A customer telephones the branch to report a new home address, and the registered representative responsible for the customer's individual account updates the account record. Under SEC recordkeeping rules, what must the firm do within 30 days after it receives notice of the change?

A principal is reviewing a member firm's website for retail investors. The home page carries a readily apparent BrokerCheck link and the plain-text statement "Member FINRA," which is the site's only mention of FINRA and is not hyperlinked. A separate page presents the professional profile of a registered representative who serves retail customers and has no BrokerCheck link. What must the principal require?

An investor has a short margin account that has a current SMV of $\$78{,}000$ and a CR of $\$156{,}000$. If the market value falls to $\$64{,}300$, how much new SMA is created?

A level 2, NYSE circuit breaker, is triggered with what size drop?

Under current FINRA rules, what is the time for regular way settlement?

A representative has worked with several other firms to help their clients, and those firms send them gifts. This year they received a $\$125$ engraved pen, a $\$150$ gift certificate to a local restaurant, and a glass vase worth $\$180$. From an oversight perspective, what would the concerns be.

A representative was associated with a firm that has now been expelled by FINRA for sales practice violations. The representative in question, was not personally charged in any matter, but was employed there for 25 months. Does this create any issues?

A DPP is conducting a public offering and engages an underwriter to assist them. If the offering is for a total valuation of $\$75{,}000{,}000$, what is the maximum compensation the underwriter can receive?

A SAR must be filed for a suspicious transaction, or pattern of transactions, that equals or exceeds what value?

Mutual funds typically make what type of distributions?

Pegging, when it comes to market manipulation, refers to;

A customer deposits $9,500 in currency into a brokerage account on each of five consecutive business days. The customer tells the registered representative that the deposits are kept small so the firm will not have to report them. How should the principal reviewing the activity treat it?

Under MSRB Rule G-26, a carrying firm has how many days after it validates the transfer request, to complete the transfer?

Once a firm has been notified, how many days does it have to put into effect taping procedures?

A person registered with a Series 7 license has been asked to supervise equity traders at the firm. What additional licenses does this person need?

The Series 6 license qualifies an individual to do what?

Which Nasdaq tier is usually where small-cap companies and start-ups would be listed?

A broker-dealer that carries customer accounts ends its fiscal year on December 31. It sends its statement of financial condition to customers in a separate mailing, not with their quarterly account statements, and does not use the net capital summary alternative. Under SEC Rule 17a-5(c), within how many days after the fiscal year-end must it furnish the audited statement?

What are the official regulated types of communications?

How do we calculate the equity percentage in a short margin account?

A new associate opens an account at another broker-dealer in order to purchase a variable annuity for their retirement, and a 529 for their child. What is required?

A client purchased 157 shares of stock when the price was $\$58.80$ a share, and they make the required deposit. If the share price later goes to $\$62.92$ a share, what is the excess equity in the client's account?

What can make wash trades and matched orders so difficult to detect?

A 46 year old client wants to close their only Roth IRA, which is at the firm, and withdraw the whole balance. The account is worth $\$10{,}000$, $\$7{,}000$ of which is the client's contributions, $\$3{,}000$ is earnings. How is this handled?

An investor wants to purchase shares in a mutual fund. What price will the purchase be effected?

Which class of mutual funds are most likely to be redeemed for less than NAV?

An investor files an error account dispute after their firm purchased 1200 shares of MNO, when they actually placed an order for only 200 shares. How will this be resolved.

A company conducting a PIPE transaction is trying to raise capital. Which of these best describes the key features of a PIPE?

Does a person holding a Series 65, and with no other qualifications, qualify as an accredited investor?

Under Regulation BI, which clients are going to be protected by its requirements?

A broker-dealer is running a seminar for retail investors, and the rep has a slideshow for the seminar. After the slideshow, there will be a question-and-answer period. How would this be treated?

An investor is watching a stock trading at $\$78$ that has a technical resistance of $\$80$. The investor wants to buy the stock only if it breaks through that resistance. Which order should be entered?

In a short margin account, what is the minimum equity, according to FINRA?

A married couple opens a tenants in common account. If the wife want to sell 500 shares without telling her husband, can she?

A principal reviews the firm's procedures for accounts opened for individual customers to whom the firm makes recommendations. Under SEC recordkeeping rules, when must the firm first furnish the customer a copy of the account record, and how often after that?

A registered representative at Firm A has opened an account at Outside Firm. Firm A has notified Outside Firm they want duplicate confirmations and they start being sent. 9 months later the representative leaves Firm A and moves to Firm B. What happens to the duplicate confirmation arrangement?

A customer comes to a firm and they claim to be an SMMP. The firm believes that the customer can evaluate risks independently, but they have not agreed to exercise independent judgement. Which protections would apply in this situation?

Which of the following is a non-punitive regulatory action that can be done to a natural person?

A firm participating as a selling group member participated in a recent IPO. Under FINRA Rule 2241, how long must the firm wait before first publishing a research report on the company?

A client purchased 383 shares of stock, when the current market price was $\$42.10$. They made the standard margin deposit. What is the highest price, in whole cents, the stock could fall to at which a maintenance call would be required to be made?

A principal reviews a new account application for an individual who lives in a house in Columbus. The only address on the application is a P.O. box, where the customer prefers to receive mail. Under the customer identification program rule, what must the firm obtain before opening the account?

Under MSRB rules, which of the following situations, would most likely be considered a valid reason for a carrying firm to protest a transfer request?

Which of the following would differentiate a limit order and stop order, both set at $\$50$, when the market was $\$60$, and the market now hits $\$50$.

A broker-dealer is involved in a riskless transaction with a client. Under the 5% policy, how would this be handled?

The Series 39 is required for what role?

All of the following statements about mutual funds in margin accounts would be incorrect for a representative to tell a client, except;

How many forms of continuing education would the simplest registered principal license require each year?

A registered representative recommends an investment to a customer. The only customer-specific information in the account record is that the customer is in the highest federal income tax bracket. What should the principal reviewing the recommendation conclude?

An affiliate of a firm holds $3\%$ of the outstanding shares of the company. The last 6 weeks of average volume, in order from most recent (in thousands), were $1{,}005$, $874$, $865$, $727$, $785$, and $683$. If the firm has a total of 100 million shares outstanding, what is the maximum number of shares this person can sell in any three-month period under Rule 144?

The level 2 Nasdaq quote shows what information about the security?

An investor has a long margin account that has a current LMV of $\$87{,}000$ and a DR of $\$40{,}000$. If the market value rises to $\$92{,}400$, how much new SMA is created?

Which of the following investments would likely be a good suggestion for someone looking to preserve their capital.

What is SMA?

What is the primary difference between the Series 4, and the Series 24 licenses, in terms of options supervision?

A client wants to buy 5000 shares at $\$45$ immediately. The representative was only able to find 4000 shares at $\$45$ at the current moment. The client did specify an FOK order. What happens.

How long must complaints be kept by MSRB rules?

A firm acting in an agency capacity would be compensated in which way?

What does it mean for a firm to file pre- versus post-use?

An elderly client of the firm with a very low risk tolerance has asked their representative to purchase a speculative security. If the representative believes that the investment is not suitable, what should the rep do?

What is a stock power?

Under FINRA Rule 2165, a specified adult would be best defined as;

The principal of an established member firm is deciding which of four new communications must be filed with FINRA. Which one is excluded from the filing requirements?

Under MSRB Rule G-30, for an agency transaction in a municipal security, or municipal securities, the commission charged must be based on which factors?

A customer is asking their representative about something they heard on the news. They ask the representative, "what is the difference between a wash trade, and a wash sale?" What would be the best thing for the representative to respond?

What is the page limit for Form CRS?

If the Level 2 quote with 4 market makers is given below, what is the Level 1 quote?
MM1: $\$53.66$-$\$55.19$ (8x1)
MM2: $\$53.49$-$\$55.54$ (4x7)
MM3: $\$53.94$-$\$55.29$ (6x2)
MM4: $\$53.90$-$\$56.22$ (5x9)

What is a minor rule violation?

In a transaction for 45 shares of stock, the seller attempts to deliver 1 certificate for 45 shares. Is this acceptable under good delivery.

An investor recently completed a 60-day rollover from one IRA into another IRA, 7 months ago. They want to do another 60-day rollover from the IRA that received the money. Is this permissible?

In a TIC, if one of the tenants dies, who or what gets their share of the account?

For an OBA, what is required of the registered person?

A rep at the firm has recently discovered that one of their clients has been significantly overstating their net worth on the account forms. The representative has been making recommendations based on that stated information. What are likely the repercussions and requirements on the representative?

A dealer's marketing staff drafts a newspaper advertisement for a new issue of municipal revenue bonds that the dealer is offering to retail investors. Under MSRB Rule G-21, what approval does the advertisement need?

What does customer-specific suitability refer to?

On June 3rd, an investor purchased $6\%$ of the outstanding shares of ABC Inc. On October 2nd they purchased an additional $6\%$ of the shares. By when must the investor file a Form 3 with the SEC?

A 67 year old client wants to know how much they can contribute to their IRA from their employment. What is the best answer?

A principal reviews new account documents for a privately held corporation opening a cash account to trade equities. The file already holds the financial and investment objective information the firm collects for any customer. Because the customer is a legal entity and not a natural person, which additional information must the firm maintain for the account?

Under Regulation D, what is the maximum number of non-accredited investors that can participate in a 506(c) offering?

Which of the following would be considered a financial consideration of a potential client?

Which of the following would be prohibited to do when it comes to how a registered representative handles customer funds.

A General Securities Sales Supervisor is supervising a branch office of the company. Which of the following activities would they not be able to perform?

Correspondence is sent to how many people in a 30 calendar day period?

Under Regulation SHO location requirement, which of the following would satisfy the requirement before execution of the transaction?

What is the penalty for violating the national Do-Not-Call list rules at the federal level?

If a client asks one of the representatives at a member firm about investing in physical gold in the client's traditional IRA, what should the response of the rep be?

A closed-end fund raised $\$1$ billion, and issued 50 million shares. If one year later, the NAV is $\$30$, but the shares are trading at $\$28$, what would explain this?

A firm has linked from its website to a third-party article containing statements that the firm endorses. The article includes projections that would not be allowed in the firm's own communications. Has the firm violated any rules?

What is the annual participation fee for the MQP?

A stock that is outside the Limit Up-Limit Down Plan, and has been trading at $\$18.25$ throughout the regular trading session, suddenly has a single reported trade of $\$17.50$. A trading center is considering breaking the trade. Under the rules for clearly erroneous transactions, does this trade qualify?

Who is required to review all retail communications before they can be sent to clients?

What category of firms could the Taping Rule apply to?

An IOC order requires what combination of conditions?

A principal is reviewing a newsletter that will go to 300 retail customers. The member firm's name, under which it conducts its broker-dealer business, is ABC Securities; the public also commonly knows the firm by the trade name ABC Direct. Under FINRA's content standards, how must the newsletter identify the firm?

Which of the following properly explains bond covenants?

If a firm discovers that securities have gone missing, and does not suspect foul play, what would be the order of actions?

What is the formula used for calculating equity in a short margin account?

When a retail communication discusses tax-deferred investments, what disclosure would be required?

The initial Regulation T margin deposit is;

An investor holds warrants that were issued 2 years ago. The warrants allow the investor to purchase the stock at $\$90$ per share. The current market price is $\$85$ per share. Which statement would best describe the situation?

A client of the firm has recently turned 73, and is asking about how RMDs work, as the client has both a Roth and a Traditional IRA at the firm. The best explanation would be;

What is the timeline for an associated person responding to a FINRA disciplinary complaint?

How long are any CTR forms retained for?