Investments MCQ: The Securities and Exchange Act of 1934

The Securities and Exchange Act of 1934

Showing posts with label The Securities and Exchange Act of 1934. Show all posts

Under both federal and state law, the concept of a discretionary account is defined. It would be considered discretion when an agent:

A) picks the specific security that is the subject of a transaction.
B) can decide the specific price.
C) can decide the specific time at which the transaction will be made.
D) makes the decisions in the account once the client assures the agent that the proper authorizations are in the mail.

Answer: A) picks the specific security that is the subject of a transaction.

Which of the following statements is TRUE about sales of new issues under the Securities Exchange Act of 1934?

A) Credit may be used in purchasing new issues.
B) Installment payments are allowed on purchases.
C) The SEC determines what issues may be purchased on margin.
D) The use of credit to purchase new issues is prohibited for the first 30 days.

Answer: D) The use of credit to purchase new issues is prohibited for the first 30 days.

Which of the following statements is (are) TRUE regarding the jurisdiction of the SEC under the Securities Exchange Act of 1934?

I. The SEC has jurisdiction over exchanges and SROs.
II. The SEC has jurisdiction over broker/dealers, agents, investment advisers, and representatives that III. are required to be registered under federal law.
IV. The SEC has jurisdiction over banks and savings and loans regarding their securities activities.

A) II only.
B) I, II and III.
C) I and II.
D) I only.

Answer: C) I and II.

What is the purpose of the Securities Exchange Act of 1934?

A) It regulates the persons involved in the secondary market.
B) It provides requirements relating to new issues.
C) It provides policies relating to unethical business practices.
D) It provides standards among the states.

Answer: A) It regulates the persons involved in the secondary market.

Which of the following is TRUE of SEC Commissioners under the Securities Exchange Act of 1934?

A) They are appointed by a senate panel.
B) They are appointed for life.
C) They may not invest in any securities other than those issued or guaranteed by the U.S. government.
D) Their political affiliation is of no concern.

Answer: C) They may not invest in any securities other than those issued or guaranteed by the U.S. government.

The Securities Exchange Act of 1934 calls for the registration of many different entities involved in the securities business, such as exchanges and broker/dealers. The Act also requires registration of securities information processors such as:

I. CNBC.
II. "Investor's Business Daily" .
III. Reuters.
IV. The "Pink Sheets".

A) I and II.
B) I and IV.
C) II and III.
D) III and IV.

Answer: D) III and IV.

Under the Securities Exchange Act of 1934, which body regulates the extension of credit for nonexempt securities?

A) The SEC.
B) The New York Stock Exchange.
C) The Federal Reserve Board.
D) The Comptroller of Currency.

Answer: C) The Federal Reserve Board.

Which of the following qualifies as discretionary trading under the Securities Exchange Act of 1934?

A) Determining which securities to buy for a client.
B) Purchasing securities at the discretion of a client.
C) Obtaining authorization from a client to purchase a particular security if the price hits a specific level.
D) Receiving oral authority from a client to make a specific purchase at a price to be decided by the broker/dealer.

Answer: A) Determining which securities to buy for a client.

Under the Securities Exchange Act of 1934, which of the following would NOT be grounds for disqualification of a broker/dealer's registration?

A) Violating a securities act.
B) Being sued by a client.
C) Conviction of misappropriation of client funds.
D) Prohibition by court order from practicing as an investment adviser.

Answer: B) Being sued by a client.

The Securities and Exchange Commission does NOT have any regulatory jurisdiction over which of the following?

A) National securities exchanges.
B) FINRA.
C) Federal Reserve Board.
D) Municipal Securities Rulemaking Board.

Answer: C) Federal Reserve Board.

Seven years ago, Ivan was found guilty of embezzling securities from clients. He now wishes to join another brokerage firm. Which of the following statements is TRUE regarding this situation?

A) He cannot be employed because he is still subject to statutory disqualification provisions.
B) He may be employed in a sales position, provided the firm agrees to be liable for any losses due to his misconduct.
C) He may be employed by a brokerage firm, provided he is not involved directly in any dealings with clients.
D) There are no provisions restricting his employment because the restriction time period has elapsed.

Answer: A) He cannot be employed because he is still subject to statutory disqualification provisions.

Under the Securities Exchange Act of 1934, commissioners of the SEC:

I. are appointed by a joint House/Senate panel.
II. are appointed by the President.
III. may not engage in any other business.

A) II only.
B) III only.
C) II and III.
D) I and II.

Answer: C) II and III.

Under section 13(d) of the Securities Exchange Act of 1934, a person who acquires more than 5% of a class of securities registered under the act must, within ten days, file a report of beneficial ownership with:

I. the SEC.
II. the issuer.
III. the exchange where traded.

A) I, II and III.
B) I and II.
C) I and III.
D) II and III.

Answer: A) I, II and III.

Mary bought 1,000 shares in the morning and sold 1,000 shares of the same security in the afternoon. Under the Investment Advisers Act of 1940 rules on unethical business practices of investment advisers, which of the following statements is TRUE?

A) She has violated the act.
B) She has violated the act if a profit was made.
C) Her broker has violated the act.
D) She has violated the act only if she was trying to create market activity for the security to give a misleading appearance.

Answer: D) She has violated the act only if she was trying to create market activity for the security to give a misleading appearance.

According to the Securities Exchange Act of 1934, a report of beneficial ownership must be filed with the SEC by interested persons when their ownership of a security registered on a national exchange exceeds what level?

A) 2%.
B) 10%.
C) 12%.
D) 5%.

Answer: D) 5%.

When an IAR submits an order ticket to purchase securities for a client, all of the following would appear EXCEPT:

A) the IAR's name.
B) the details of the order.
C) the current market price of the security.
D) the broker dealer's name.

Answer: C) the current market price of the security.

Under the rules of the Investment Advisers Act of 1940, trading in a client's account would be considered excessive if:

I. the investment adviser receives a commission from trading.

II. trading was conducted without considering the client's investment objectives.

III. trading is inappropriate in view of a client's resources.

A) I, II and III.
B) II and III.
C) I only.
D) II only.

Answer: B) II and III.

Which of the following would be considered when determining whether excessive trading has occurred in a client's account?

A) The size of the companies issuing the securities.
B) The number of years the account has been opened.
C) The nature of the client's financial objectives.
D) The performance of the account in comparison to other client's accounts.

Answer: C) The nature of the client's financial objectives.

The Investment Advisers Act of 1940 requires written authority for a discretionary account, unless the investment adviser's discretionary authority is limited to determining:

the price of the stock.
the amount of the stock.
the time of the order.

A) II and III.
B) I and III.
C) I only.
D) I and II.

Answer: B) I and III.

Which of the following is considered an associated person of a broker/dealer?

A) A secretary to a general partner of a broker/dealer.
B) A secretary who assists brokers with clerical tasks.
C) A clerical person who is not authorized to accept or execute orders for clients.
D) A broker/dealer's officer who represents the broker/dealer in effecting or attempting to effect the purchase or sale of securities.

Answer: D) A broker/dealer's officer who represents the broker/dealer in effecting or attempting to effect the purchase or sale of securities.