Investment Jobs Investment Compliance Test 3

Question 1

What is 'pay-to-play' in the context of investment adviser compliance?

Accepted Answer

Making political contributions to influence the award of government investment advisory contracts

Answer

Charging fees based on investment performance

Answer

Requiring clients to invest a minimum amount before receiving advice

Answer

Paying referral fees for new client introductions

Question 2

What is the purpose of FINRA's suitability rule (Rule 2111)?

Accepted Answer

To require that securities recommendations be suitable based on the customer's investment profile

Answer

To require brokers to pass suitability exams before recommending complex products

Answer

To limit unsuitable investors from opening margin accounts

Answer

To establish suitability standards for institutional investor classifications

Question 3

Under the Investment Advisers Act of 1940, at what AUM threshold are advisers generally required to register with the SEC (rather than the state)?

Accepted Answer

$110 million

Answer

$25 million

Answer

$100 million

Answer

$500 million

Question 4

What is 'market manipulation' under SEC Rule 10b-5?

Accepted Answer

Intentional actions to artificially affect securities prices or trading volumes to mislead investors

Answer

Legal algorithmic trading that improves market efficiency

Answer

Large institutional trades that move market prices

Answer

Circuit breakers that halt trading during extreme volatility

Question 5

What is the GIPS (Global Investment Performance Standards) framework?

Accepted Answer

A voluntary set of ethical standards for calculating and presenting investment performance to prospective clients

Answer

SEC regulations for hedge fund performance reporting

Answer

FINRA rules governing performance advertising by broker-dealers

Answer

International accounting standards for investment company financial statements

Question 6

Which regulation requires broker-dealers to deliver a 'Regulation Best Interest' disclosure (Form CRS) to retail investors?

Accepted Answer

Regulation BI (Best Interest)

Answer

Regulation D

Answer

Regulation T

Answer

Regulation S-K