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Core Knowledge and Fundamentals Flashcards

7 cards from real FINRA practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.

Read the first 7 Core Knowledge and Fundamentals flashcards as text

  1. Which of the following is an example of a 'prohibited practice' under FINRA rules regarding churning?

    Answer: Executing excessive trades in a customer account primarily to generate commissions

    Churning occurs when a broker excessively trades a customer's account to generate commissions, violating the obligation to act in the customer's best interest.

  2. Under FINRA Rule 2010, registered representatives are required to observe high standards of what?

    Answer: Commercial honor and just and equitable principles of trade

    FINRA Rule 2010 requires members to observe high standards of commercial honor and just and equitable principles of trade in all business conduct.

  3. What is the settlement period for most U.S. equity transactions under current regulations?

    Answer: One business day (T+1)

    Since May 2024, U.S. equity trades settle on a T+1 basis, meaning one business day after the trade date.

  4. A registered representative who receives a written customer complaint must forward it to the appropriate supervisor within how many business days under FINRA Rule 4513?

    Answer: Same day it is received

    FINRA Rule 4513 requires written customer complaints to be reported to a principal promptly, generally the same day they are received.

  5. Which of the following best describes a 'bond's duration'?

    Answer: A measure of a bond's price sensitivity to interest rate changes

    Duration measures how sensitive a bond's price is to changes in interest rates; a higher duration means greater price volatility.

  6. Under FINRA Regulation Best Interest (Reg BI), broker-dealers must act in whose best interest when making a recommendation?

    Answer: The retail customer at the time of the recommendation

    Reg BI requires broker-dealers to act in the best interest of the retail customer at the time of a recommendation, without placing firm interests ahead of the customer.

  7. What is the role of the Securities Investor Protection Corporation (SIPC)?

    Answer: To protect customers if a broker-dealer fails financially by returning missing cash and securities

    SIPC protects customers of failed broker-dealer firms by returning missing cash and securities up to $500,000, including a $250,000 limit on cash.

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  1. finra.org — Renewal, score validity, test dates, test delivery, eligibility, fees, exam format, passing score, score release, time limit · verified Oct 2026