FINRA Core Knowledge and Fundamentals 2

Question 1

Under FINRA rules, which entity is primarily responsible for overseeing broker-dealers in the United States?

Accepted Answer

FINRA, as a self-regulatory organization

Answer

FINRA is the self-regulatory organization (SRO) that oversees broker-dealers and registered representatives in the U.S. securities industry.

Question 2

What is the primary purpose of the Customer Protection Rule (SEC Rule 15c3-3)?

Accepted Answer

To safeguard customer funds and securities held by broker-dealers

Answer

Rule 15c3-3 requires broker-dealers to maintain customer funds and fully paid securities separate from firm assets to protect customers if the firm fails.

Question 3

Which of the following best describes a 'market maker' in FINRA terminology?

Accepted Answer

A dealer that stands ready to buy and sell a particular security on a continuous basis

Answer

A market maker is a dealer firm that continuously quotes bid and ask prices for a specific security, providing liquidity to the market.

Question 4

Under FINRA Rule 4512, member firms must maintain customer account records for a minimum of how many years?

Accepted Answer

6 years

Answer

FINRA Rule 4512 requires customer account records to be kept for at least six years after the account is closed.

Question 5

What does the term 'nominal yield' refer to in fixed income securities?

Accepted Answer

The coupon rate stated on the face of the bond

Answer

Nominal yield is simply the coupon rate printed on the bond certificate, expressed as a percentage of face value.

(FINRA) FINRA Exams Practice Test

(FINRA) FINRA Exams Practice Test

FINRA Core Knowledge and Fundamentals 2