FINRA Core Knowledge and Fundamentals 3

Question 1

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

Accepted Answer

Executing excessive trades in a customer account primarily to generate commissions

Answer

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.

Question 2

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

Accepted Answer

Commercial honor and just and equitable principles of trade

Answer

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

Question 3

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

Accepted Answer

One business day (T+1)

Answer

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

Question 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?

Accepted Answer

Same day it is received

Answer

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

Question 5

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

Accepted Answer

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

Answer

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

(FINRA) FINRA Exams Practice Test

(FINRA) FINRA Exams Practice Test

FINRA Core Knowledge and Fundamentals 3