CFA Live & Online Auction Procedures 3

Question 1

Under federal law, which class of firearms CANNOT be transferred to a private buyer through an online auction without additional NFA paperwork?

Accepted Answer

Machine guns manufactured after May 19, 1986

Answer

The Hughes Amendment of 1986 prohibits civilian transfer of machine guns manufactured after May 19, 1986, regardless of auction format.

Question 2

What does the term 'hammer price' refer to in auction terminology?

Accepted Answer

The final winning bid amount at the moment the auctioneer's gavel falls

Answer

The hammer price is the amount of the winning bid at the moment the auctioneer signals the sale, before any additional fees are added.

Question 3

An online auction platform sells a handgun to a winning bidder in a different state. To whom must the gun be shipped?

Accepted Answer

A federally licensed firearms dealer (FFL) in the buyer's state

Answer

Federal law requires interstate handgun transfers to go through an FFL dealer in the buyer's state, who conducts the background check.

Question 4

What is a 'soft close' feature in online firearm auctions?

Accepted Answer

Automatic extension of the auction end time when a bid is placed in the final minutes

Answer

Soft close extends the auction deadline by a set period each time a last-minute bid arrives, preventing bid sniping and ensuring fair competition.

Question 5

Which scenario would most likely cause an auction house to withdraw a firearm lot before the sale?

Accepted Answer

Discovery that the serial number appears on a stolen firearms database

Answer

A firearm confirmed as stolen must be withdrawn and the matter reported to law enforcement; proceeding with the sale could constitute criminal liability.

CFA Practice Test

CFA Practice Test

CFA Live & Online Auction Procedures 3