Contract Review & Negotiation Flashcards
7 cards from real Series 66 – Uniform Combined State Law Exam practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Contract Review & Negotiation flashcards as text
A broker-dealer's new account agreement includes a predispute arbitration clause. What disclosure is required?
Answer: Highlighted language immediately before the signature line stating arbitration is final and binding and court rights are waived
FINRA rules require specific, prominent arbitration disclosures just above the customer's signature.
Which provision is prohibited in a customer's predispute arbitration agreement?
Answer: A provision limiting the customer's ability to participate in a class action
Agreements may not limit customers' rights to pursue class actions or limit the arbitrators' authority.
A margin agreement contains a hypothecation clause. What does it permit?
Answer: The firm to pledge the customer's securities as collateral for a loan
Hypothecation allows the broker-dealer to pledge margin securities as loan collateral.
A customer orally gives an agent time-and-price discretion. How long does that authority generally last without written authorization?
Answer: Until the end of the business day it was granted
Time and price discretion lasts only through the day granted unless the customer provides written authority.
Two clients open a joint account with rights of survivorship (JTWROS). One client dies. What happens to the account?
Answer: It passes automatically to the surviving owner
JTWROS gives the surviving owner the decedent's interest regardless of the will.
A limited trading authorization (limited power of attorney) given to an agent generally allows the agent to do what?
Answer: Buy and sell securities but not withdraw cash or securities
Limited trading authority covers trading only, not withdrawals.
A customer agreement states the customer waives all rights under the Securities Exchange Act. How is this treated?
Answer: Void under the anti-waiver provision of the Exchange Act
Exchange Act anti-waiver provisions make waivers of compliance void.
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