Investment Jobs Securities Licensing Test 3

Question 1

Which organization regulates futures and commodity trading in the United States?

Accepted Answer

CFTC

Answer

The Commodity Futures Trading Commission (CFTC) is the federal agency that regulates futures and options markets in the United States.

Question 2

To trade futures contracts professionally, which license is typically required?

Accepted Answer

Series 3

Answer

The Series 3 (National Commodity Futures Examination) is required for individuals who solicit or accept orders for commodity futures contracts.

Question 3

What is the purpose of the 'know your customer' (KYC) rule in securities regulation?

Accepted Answer

To ensure representatives understand client financial situations before making recommendations

Answer

KYC requires securities professionals to gather sufficient information about a client's financial situation and investment objectives to make suitable recommendations.

Question 4

Under SEC rules, which form must be provided to retail investors by investment advisers to disclose services, fees, and conflicts?

Accepted Answer

Form ADV Part 2

Answer

Form ADV Part 2 (the 'brochure') must be delivered to clients and discloses an adviser's services, fees, strategies, and conflicts of interest.

Question 5

What is a 'churning' violation in securities regulation?

Accepted Answer

Excessive trading in a client's account to generate commissions

Answer

Churning refers to the illegal practice of a broker executing excessive trades in a client's account primarily to generate commissions rather than to serve the client's interests.

Investment Practice Test

Investment Practice Test

Investment Jobs Securities Licensing Test 3