FINRA Practice and Application 2

Question 1

A registered representative receives an order from a customer to buy 500 shares of a NYSE-listed stock at the market. The rep should execute this order:

Accepted Answer

At the next available price on the exchange

Answer

A market order must be executed promptly at the best available price in the market.

Question 2

Under FINRA rules, when must a registered representative update their Form U4 to reflect a new outside business activity?

Accepted Answer

Promptly, within 30 days of starting the activity

Answer

FINRA requires prompt disclosure of outside business activities on Form U4, generally within 30 days.

Question 3

A customer instructs her broker to sell her 1,000 shares of ABC at $50 or better. This is classified as a:

Accepted Answer

Limit order

Answer

A limit order specifies a minimum acceptable price for a sell order or maximum for a buy order.

Question 4

Which document must a broker-dealer provide to a new customer that outlines how the firm handles customer funds and securities?

Accepted Answer

The Regulation Best Interest disclosure (Form CRS)

Answer

Form CRS (Customer Relationship Summary) must be delivered to retail customers and discloses services, fees, conflicts, and legal obligations.

Question 5

A rep recommends a variable annuity with a 7-year surrender charge to a 68-year-old customer in poor health who needs liquidity within 2 years. This recommendation most likely violates:

Accepted Answer

FINRA's suitability and Regulation Best Interest standards

Answer

Recommending a long-surrender-period product to a customer needing near-term liquidity violates suitability and Reg BI best interest standards.

(FINRA) FINRA Exams Practice Test

(FINRA) FINRA Exams Practice Test

FINRA Practice and Application 2