Pass the FINRA General Securities Representative SIE Questions and answers with Dumpstech

Step by Step Explanation:

Outside Business Activity Definition: Per FINRA Rule 3270, an OBA involves compensated business activities outside the scope of the RR’s role at their firm. Passive investments are excluded because they do not require active involvement.

Incorrect Options:

A, B, and C: Selling real estate, selling insurance, and refereeing are considered OBAs as they involve active participation and compensation.

A secondary market transaction occurs when securities are bought and sold between investors, typically on an exchange.

C is correct because securities purchased on a registered exchange are secondary market transactions.

A is incorrect as open-end mutual fund shares are purchased directly from the issuer.

B refers to the primary market.

D is also incorrect as private placements occur in the primary market.

"Regular way" settlement refers to the standard settlement cycle for securities transactions, which is T+2 for most stocks and bonds. This timeline is set by regulators to ensure orderly processing of trades.

D is correct because regular way settlement follows the preset T+2 cycle.

A is incorrect because cash settlement occurs the same day as the trade.

B is not a recognized term for settlement types.

C is incorrect because next-day settlement applies only to specific securities (e.g., Treasury securities).

Step by Step Explanation:

Telemarketing Rules (FINRA Rule 3230): Require firms to check the National Do Not Call Registry before contacting individuals, even if those individuals provide their contact information voluntarily.

Incorrect Options:

A: Approval isn’t required for individual follow-ups; compliance with the registry is.

B: While calls must be limited to appropriate hours, the registry check is still mandatory.

C: Written consent does not override the registry requirement.

Federal Reserve Regulation T mandates that customers must pay for purchases in a cash account within two business days of settlement (T+4). If payment is not made, the brokerage firm must liquidate the securities and place the account on a 90-day restriction.

C is correct because the customer’s account is frozen for 90 days, during which all trades must be paid for in advance.

A is incorrect as closing transactions are still permitted but require prepayment.

B is incorrect because the restriction lasts for 90 days, not 30.

D is incorrect as only the delinquent account, not related accounts, is frozen.

A transfer agent is responsible for maintaining accurate records of shareholder purchases, redemptions, and account balances. They also handle the issuance and cancellation of shares and ensure shareholders receive appropriate distributions.

D is correct because maintaining shareholder records is a core duty of a transfer agent.

A is incorrect because underwriting is the responsibility of a broker-dealer.

B is incorrect because distributing the prospectus is handled by the fund’s distributor.

C is incorrect because custody of securities is the role of a custodian, not the transfer agent.

Step by Step Explanation:

Securitization: The process of pooling financial assets, such as mortgage loans, and creating asset-backed securities that investors can buy.

Incorrect Options:

B: Hypothecation refers to pledging assets as collateral.

C & D: Loan and claim processing are administrative terms, not related to the creation of securities.

Step by Step Explanation:

FINRA Rule 3220: This rule limits gifts to $100 per person annually to prevent conflicts of interest.

Aggregate Limit: There is no provision for exceeding the $100 annual limit, regardless of the number of gifts.

Purpose: The rule ensures that gifts do not influence decisions or create unethical relationships.

An option is considered "at the money" when the current price of the underlying asset (or index level) equals the option’s strike price.

B is correct because the index level equals the strike price.

A is incorrect because "in the money" requires the option to have intrinsic value (e.g., for a call, the index level must be above the strike price).

C is incorrect because "out of the money" applies when the index level is below the strike price (for calls) or above it (for puts).

D is incorrect because "at the money" options have no intrinsic value.