SIE study

1. Q: What is the primary mission of the SEC?
A: Protect investors, maintain fair and efficient markets, facilitate capital formation.

2. Q: Which Act created the SEC?
A: Securities Exchange Act of 1934.

3. Q: The SEC enforces what core principle?
A: Full and fair disclosure.

4. Q: What does the SEC regulate?
A: Securities markets, broker-dealers, exchanges, and SRO oversight.

5. Q: Can the SEC bring criminal charges?
A: No, but it can refer cases to the DOJ.

6. Q: What is the maximum civil penalty the SEC can impose on individuals for securities fraud?
A: Up to 3× profits or losses avoided.

7. Q: Who regulates monetary policy in the U.S.?
A: The Federal Reserve Board.

8. Q: The Federal Reserve influences markets using what tool most frequently?
A: Open market operations.

9. Q: What is the discount rate?
A: Rate the Fed charges member banks for loans.

10. Q: What is the federal funds rate?
A: Rate banks charge each other for overnight loans.

11. Q: Are Federal Reserve policies fiscal or monetary?
A: Monetary.

FINRA

12. Q: FINRA regulates whom?
A: Broker-dealers and registered representatives.

13. Q: FINRA’s authority comes from?
A: SEC oversight (SEC approves FINRA rules).

14. Q: What is FINRA Rule 2210?
A: Rule governing communications with the public.

15. Q: FINRA Rule 4512 requires what?
A: Customer account information (name, DOB, address, etc.)

16. Q: FINRA Rule 2090 refers to what?
A: Know Your Customer (KYC).

MSRB

17. Q: MSRB writes rules for what markets?
A: Municipal securities markets.

18. Q: Who enforces MSRB rules for broker-dealers?
A: FINRA.

19. Q: Who enforces MSRB rules for banks?
A: Federal banking regulators.

20. Q: MSRB Rule G-37 covers what?
A: Political contributions.

21. Q: MSRB Rule G-17 requires what?
A: Fair dealing.

SIPC

22. Q: What does SIPC protect?
A: Customer securities and cash if broker-dealer fails.

23. Q: SIPC coverage limit?
A: $500,000 total; $250,000 cash.

24. Q: Does SIPC protect against market losses?
A: No.

25. Q: Is SIPC a government agency?
A: No, it's a nonprofit.

FDIC

26. Q: FDIC insures what?
A: Bank deposits up to $250,000 per depositor per bank.

27. Q: Does FDIC cover securities?
A: No.

IRS / Treasury

28. Q: The IRS enforces what law?
A: Internal Revenue Code.

29. Q: Treasury auctions what instruments?
A: Bills, notes, bonds.

30. Q: Who issues Treasury receipts (STRIPS)?
A: Broker-dealers (not Treasury itself).

NASAA / State Regulators

31. Q: What do state securities regulators enforce?
A: Blue Sky Laws.

32. Q: NASAA’s role?
A: Coordinates state regulatory actions.

Market Participants

33. Q: Issuer = ?
A: Entity selling securities to raise capital.

34. Q: Underwriter = ?
A: Helps issuer bring securities to market.

35. Q: Market maker = ?
A: Dealer obligated to quote bid and ask.

36. Q: Prime broker = ?
A: Provides services to hedge funds (clearing, lending).

37. Q: Custodian = ?
A: Holds assets for safekeeping.

38. Q: Trustee = ?
A: Protects bondholders in indentures.

39. Q: Transfer agent = ?
A: Maintains shareholder records.

40. Q: What is a clearing corporation?
A: Facilitates trade settlement (DTCC).

Investor Categories

41. Q: Accredited investor income threshold?
A: $200k individual / $300k joint (two years).

42. Q: Accredited investor net worth requirement?
A: $1M excluding primary residence.

43. Q: Institutional investor = ?
A: Entities with large assets (banks, funds, insurance companies).

44. Q: Retail investor = ?
A: Individual small investors.

🔵 MARKET STRUCTURE (CARDS #61–95)

61. Q: Primary market = ?
A: New issue market.

62. Q: Secondary market = ?
A: Trading between investors.

63. Q: OTC market trades what?
A: Unlisted securities.

64. Q: Third market = ?
A: Listed securities traded OTC.

65. Q: Fourth market = ?
A: Institution-to-institution direct trading.

66. Q: What is an exchange?
A: Central marketplace with rules.

67. Q: What is Level 3 NASDAQ access?
A: Market maker order entry.

68. Q: Bid = ?
A: Price dealer buys.

69. Q: Ask = ?
A: Price dealer sells.

70. Q: Spread = ?
A: Difference between bid and ask.

71. Q: Inside market = ?
A: Lowest ask + highest bid.

72. Q: ECN definition?
A: Electronic Communication Network matching orders automatically.

73. Q: Dark pool definition?
A: Private anonymous trading venue.

🔵 ECONOMICS (CARDS #96–130)

96. Q: Monetary policy controls what?
A: Money supply and interest rates.

97. Q: Fiscal policy controls what?
A: Government spending and taxation.

98. Q: Expansionary policy lowers what rate?
A: Discount rate.

99. Q: When the Fed buys securities, rates…
A: Fall.

100. Q: When the Fed sells securities, rates…
A: Rise.

101. Q: Leading indicator example?
A: Building permits.

102. Q: Lagging indicator example?
A: CPI.

103. Q: Coincident indicator example?
A: GDP.

104. Q: Business cycle stages?
A: Expansion → Peak → Contraction → Trough.

105. Q: Cyclical industries?
A: Autos, travel, luxury.

106. Q: Defensive industries?
A: Pharma, utilities, grocery.

107. Q: Inflation hurts which securities most?
A: Fixed income.

108. Q: GDP is measured how often?
A: Quarterly.

109. Q: U.S. trade deficit increases when?
A: Dollar strengthens.

110. Q: Strong dollar helps whom?
A: Importers.

111. Q: Weak dollar helps whom?
A: Exporters.

112. Q: Keynesian theory emphasizes?
A: Fiscal policy.

113. Q: Monetarist theory emphasizes?
A: Controlling money supply.

114. Q: Exchange rates impact?
A: Import/export competitiveness.

115. Q: GNP = ?
A: Production by U.S. citizens globally.

116. Q: GDP = ?
A: Production inside U.S.

🔵 OFFERINGS & NEW ISSUE RULES (CARDS #131–150)

131. Q: What is an IPO?
A: First sale of securities to public.

132. Q: What Act governs IPO registration?
A: Securities Act of 1933.

133. Q: Filed document for new issue?
A: Registration statement.

134. Q: Who signs the registration statement?
A: CEO, CFO, and majority of board.

135. Q: Cooling-off period minimum length?
A: 20 days.

136. Q: During cooling-off, what is allowed?
A: Indications of interest, red herring distribution.

137. Q: During cooling-off, what is NOT allowed?
A: Sales, marketing materials beyond tombstones.

138. Q: Tombstone ad can include?
A: Basic info only — no sales language.

139. Q: Prospectus must be delivered when?
A: At or before sale to customer.

140. Q: Final prospectus includes what?
A: Public offering price.

141. Q: Shelf registration lasts how long?
A: Up to 3 years.

142. Q: Firm commitment underwriting = ?
A: Underwriter buys entire issue.

143. Q: Best efforts = ?
A: Underwriter sells what it can.

144. Q: All-or-none offering = ?
A: Entire issue or canceled.

145. Q: Mini-max offering = ?
A: Minimum amount must be sold before offering is valid.

146. Q: Rule 147 covers?
A: Intrastate offerings.

147. Q: Reg D covers?
A: Private placements.

148. Q: 144 governs sale of what?
A: Restricted and control stock.

149. Q: Rule 144A sales may be made to?
A: QIBs (Qualified Institutional Buyers).

150. Q: What is a selling group?
A: Dealers assisting in distribution but not financially liable.

EQUITY SECURITIES (CARDS #151–185)

151. Q: What type of security represents ownership in a corporation?
A: Common stock.

152. Q: Common shareholders’ voting rights include voting on what?
A: Board of directors and major corporate actions.

153. Q: How do common shareholders vote?
A: Statutory or cumulative voting.

154. Q: Which voting method benefits minority shareholders?
A: Cumulative voting.

155. Q: Preemptive rights allow shareholders to do what?
A: Maintain proportional ownership in new offerings.

156. Q: Do preemptive rights guarantee shareholders can maintain control?
A: Yes—if exercised.

157. Q: Common dividends are paid from what?
A: Corporate earnings.

158. Q: Are common stock dividends guaranteed?
A: No.

159. Q: What liability do common shareholders have?
A: Limited liability.

160. Q: What is the liquidation order for shareholders?
A: Creditors → Bondholders → Preferred → Common.

161. Q: What is the primary risk of common stock?
A: Market risk.

162. Q: What is the main advantage of common stock?
A: Unlimited upside potential.

163. Q: Preferred stock has characteristics similar to what?
A: Bonds.

164. Q: Preferred stock typically features what?
A: Fixed dividends.

165. Q: Preferred stock is sensitive to what?
A: Interest-rate risk.

166. Q: Cumulative preferred stock ensures what?
A: Missed dividends must be paid before common gets any.

167. Q: Participating preferred stock allows what?
A: Extra dividends if profits exceed expectations.

168. Q: Callable preferred exposes investor to what risk?
A: Call risk.

169. Q: Convertible preferred benefits investor how?
A: Equity upside + lower coupon rate.

170. Q: Rights are typically valid for how long?
A: 30–45 days.

171. Q: Rights allow shareholders to buy stock at what price?
A: Below market (discount).

172. Q: Warrants are typically issued above or below market?
A: Above market.

173. Q: Why are warrants issued above market?
A: They are long-term incentives for future price appreciation.

174. Q: Are warrants long-term or short-term?
A: Long-term.

175. Q: ADRs represent what?
A: Foreign shares traded in the U.S.

176. Q: ADR dividends are paid in what currency?
A: U.S. dollars.

177. Q: Do ADRs eliminate currency risk?
A: No.

178. Q: Sponsored ADRs involve who?
A: The foreign company.

179. Q: Unsponsored ADRs are issued by who?
A: A U.S. bank without foreign company involvement.

180. Q: Which investors typically buy growth stocks?
A: Those seeking capital appreciation.

181. Q: Which investors typically buy value stocks?
A: Those seeking undervalued opportunities and dividends.

182. Q: Beta measures what risk?
A: Market/systematic risk.

183. Q: A beta > 1 indicates what?
A: Higher volatility than the market.

184. Q: A beta < 1 indicates what?
A: Lower volatility.

185. Q: Which type of stock investors benefit most from dividends?
A: Income-focused investors.

🔵 DEBT SECURITIES — GENERAL BOND KNOWLEDGE (CARDS #186–215)

186. Q: Par value of a bond is?
A: $1,000.

187. Q: Coupon = ?
A: Coupon rate × par value.

188. Q: Bonds pay interest how often?
A: Semiannually.

189. Q: Yield-to-maturity accounts for what?
A: Total return including discount/premium.

190. Q: Price-yield relationship?
A: Inverse.

191. Q: Which yield is lowest on premium bonds?
A: YTM.

192. Q: Which yield is highest on discount bonds?
A: YTM.

193. Q: What is call risk?
A: Bond is redeemed early at lower yield.

194. Q: What is reinvestment risk?
A: Coupons reinvested at lower rates.

195. Q: What is credit risk?
A: Risk issuer cannot make payments.

196. Q: What is interest-rate risk?
A: Bond prices fall when interest rates rise.

197. Q: What is duration?
A: Sensitivity of bond prices to interest-rate changes.

198. Q: Longer duration = ?
A: More interest-rate risk.

199. Q: Zero-coupon bonds have what risk?
A: Highest interest-rate risk.

200. Q: What is extension risk?
A: For MBS—slower-than-expected prepayments.

201. Q: What is inflation (purchasing power) risk?
A: Inflation reduces real return.

202. Q: What is liquidity risk?
A: Difficulty selling at fair price.

203. Q: What is default risk?
A: Issuer cannot make interest/principal payments.

204. Q: Refunding occurs when?
A: Issuer replaces old debt with new debt.

205. Q: Who rates bonds?
A: Moody’s, S&P, Fitch.

206. Q: Investment grade S&P rating minimum?
A: BBB-.

207. Q: Investment grade Moody’s rating minimum?
A: Baa3.

208. Q: Junk bonds are also called what?
A: High-yield bonds.

209. Q: Callable bonds have higher or lower coupons?
A: Higher—compensates investor for call risk.

210. Q: Puttable bonds have higher or lower coupons?
A: Lower—investor protection allows them to demand repayment.

211. Q: Convertible bonds offer what?
A: Lower coupon; equity upside.

212. Q: What is a sinking fund?
A: Reserve to retire bonds over time.

213. Q: Current yield formula?
A: Annual interest / market price.

214. Q: What is nominal yield?
A: Coupon rate.

215. Q: YTC applies when?
A: Bond is called early.

🔵 TREASURY SECURITIES (CARDS #216–240)

216. Q: T-bills maturity?
A: Up to 1 year.

217. Q: T-bills pay interest how?
A: Issued at discount; no coupons.

218. Q: T-notes maturities?
A: 2–10 years.

219. Q: T-bonds maturities?
A: 10–30 years.

220. Q: Treasury interest is exempt from what?
A: State and local taxes.

221. Q: Are Treasuries subject to federal tax?
A: Yes.

222. Q: STRIPS are issued by?
A: Dealer firms, not Treasury.

223. Q: STRIPS interest risk?
A: Highest of all Treasury securities.

224. Q: Treasury receipts are what?
A: Zero-coupon bonds from separated interest payments.

225. Q: Who auctions Treasuries?
A: U.S. Treasury (TreasuryDirect).

226. Q: What type of risk do Treasuries lack?
A: Credit/default risk.

227. Q: Which risk do Treasuries still have?
A: Inflation risk.

228. Q: Cash management bills maturity?
A: Very short-term.

229. Q: Competitive Treasury bids specify what?
A: Yield.

230. Q: Non-competitive Treasury bids guarantee what?
A: Full allocation at average yield.

231. Q: TIPS protect against what?
A: Inflation (principal adjusts with CPI).

232. Q: TIPS coupon applies to?
A: Adjusted principal.

233. Q: Are TIPS taxable?
A: Yes, federal only.

234. Q: Treasury auctions occur how often?
A: Regular schedules (varies by security).

235. Q: Cash Treasury settlements occur in?
A: T+1.

236. Q: Regular Treasury settlement?
A: T+1.

237. Q: Are Treasuries callable?
A: Generally no.

238. Q: What is a book-entry Treasury?
A: Electronic ownership.

239. Q: STRIPS are suitable for?
A: Long-term investors seeking no reinvestment risk.

240. Q: T-bills are quoted how?
A: Discount yield basis.

🔵 AGENCY SECURITIES (CARDS #241–260)

241. Q: GNMA backed by?
A: Full U.S. government guarantee.

242. Q: FNMA backed by?
A: GSE (implied) but not full guarantee.

243. Q: FHLMC backed by?
A: GSE (implied) but not full guarantee.

244. Q: Agency securities interest taxed at what level?
A: Federal + state + local (except some exceptions).

245. Q: GNMA minimum denomination?
A: $1,000.

246. Q: GNMA risk type?
A: Prepayment + extension risk.

247. Q: FNMA buys what?
A: Mortgages from lenders.

248. Q: FHLMC buys what?
A: Mortgage loans from banks.

249. Q: Agency mortgage pass-throughs pay how?
A: Monthly interest + principal.

250. Q: CMOs divide MBS cash flows into what?
A: Tranches.

251. Q: PAC tranche characteristic?
A: Most stable prepayment schedule.

252. Q: PACs have what risk?
A: Least prepayment/extension risk.

253. Q: TAC tranche protects against what?
A: Prepayment risk only.

254. Q: Z-tranche pays interest when?
A: After other tranches.

255. Q: Targeted amortization class benefits who?
A: Investors needing predictable cash flow.

256. Q: Planned amortization class benefits who?
A: Investors needing stability.

257. Q: CMO interest taxed at what level?
A: Federal + state + local.

258. Q: Are CMOs agency-guaranteed?
A: Some are (GNMA-based), others are not.

259. Q: CMO advertisement restrictions?
A: Must show average life, not maturity.

260. Q: Mortgages pay what type of interest?
A: Monthly.

🔵 MUNICIPAL SECURITIES (CARDS #261–280)

261. Q: GO bonds backed by?
A: Full taxing authority of issuer.

262. Q: What taxes back GO bonds?
A: Property, sales, income taxes.

263. Q: Revenue bonds backed by?
A: User fees (tolls, airports, utilities).

264. Q: Who analyzes GO bonds?
A: Tax base, demographics, debt levels.

265. Q: Who analyzes revenue bonds?
A: Feasibility studies.

266. Q: Municipal interest taxed how?
A: Exempt federal; maybe state/local.

267. Q: Municipal bond buyers best profile?
A: High-income individuals.

268. Q: What are BANs?
A: Bond anticipation notes.

269. Q: What are TANs?
A: Tax anticipation notes.

270. Q: What are RANs?
A: Revenue anticipation notes.

271. Q: What are TRANs?
A: Tax and revenue anticipation notes.

272. Q: What are GANs?
A: Grant anticipation notes.

273. Q: What is a mill?
A: $1 tax per $1,000 of assessed value.

274. Q: Muni official statement equivalent to?
A: Prospectus.

275. Q: Underwriters of muni bonds submit what?
A: MSRB form G-32 disclosures.

276. Q: Who enforces MSRB rules?
A: FINRA for broker-dealers.

277. Q: Muni bonds have what risks?
A: Interest-rate, credit, liquidity.

278. Q: Muni taxable bonds include?
A: Build America Bonds (BABs).

279. Q: Muni variable-rate demand notes offer?
A: Liquidity via put feature.

280. Q: Muni auction-rate securities risk?
A: Auction failure → illiquidity.

🔵 CORPORATE DEBT (CARDS #281–290)

281. Q: Secured corporate bonds examples?
A: Mortgage bonds, collateral trust bonds.

282. Q: Unsecured corporate bonds?
A: Debentures.

283. Q: Subordinated debentures?
A: Lower claim in liquidation.

284. Q: Income bonds pay interest when?
A: Only if issuer has sufficient income.

285. Q: Guaranteed bonds backed by?
A: Another company’s promise.

286. Q: Asset-backed securities consist of?
A: Auto loans, credit cards, student loans.

287. Q: Corporate interest taxed?
A: Federal + state + local.

288. Q: Who pays higher yields?
A: Corporate issuers.

289. Q: What is Eurodollar debt?
A: Dollar-denominated debt sold outside U.S.

290. Q: Yankee bonds issued by?
A: Foreign issuers in U.S. markets.

🔵 MONEY MARKET INSTRUMENTS (CARDS #291–300)

291. Q: Maturity requirement for money market?
A: Less than 1 year.

292. Q: Characteristics of money market securities?
A: Safe, liquid, low yield.

293. Q: Examples of money market instruments?
A: T-bills, commercial paper, repos, CDs.

294. Q: Commercial paper maturity?
A: Up to 270 days.

295. Q: Bankers’ acceptance used for?
A: International trade.

296. Q: Negotiable CDs issued by?
A: Banks.

297. Q: Repurchase agreement definition?
A: Dealer sells security and agrees to repurchase later at higher price.

298. Q: Reverse repo definition?
A: Dealer buys security and sells back later.

299. Q: Money market funds aim to maintain what NAV?
A: $1.00.

300. Q: Are money market funds guaranteed by the government?
A: No, but extremely safe.

🔵 OPTIONS — BASICS (CARDS #301–330)

301. Q: A call option gives the holder what?
A: Right to buy the underlying stock.

302. Q: A put option gives the holder what?
A: Right to sell the underlying stock.

303. Q: What is the standard contract size for equity options?
A: 100 shares.

304. Q: Expiration for standard equity options?
A: Third Friday of the expiration month.

305. Q: American-style options can be exercised when?
A: Anytime up to expiration.

306. Q: European-style options can be exercised when?
A: Only at expiration.

307. Q: Option premium consists of what two parts?
A: Intrinsic value + time value.

308. Q: What is intrinsic value for a call?
A: Market – Strike (if positive).

309. Q: What is intrinsic value for a put?
A: Strike – Market (if positive).

310. Q: Can intrinsic value be negative?
A: No (minimum is zero).

311. Q: When is a call in the money (ITM)?
A: Market > Strike.

312. Q: When is a put ITM?
A: Market < Strike.

313. Q: When is an option at-the-money (ATM)?
A: Market = Strike.

314. Q: When is an option out-of-the-money (OTM)?
A: When intrinsic value = 0.

315. Q: Time value decreases due to what effect?
A: Time decay.

316. Q: Time decay accelerates when?
A: Near expiration.

317. Q: Breakeven for long call = ?
A: Strike + Premium.

318. Q: Breakeven for long put = ?
A: Strike – Premium.

319. Q: Maximum loss for long call?
A: Premium.

320. Q: Maximum loss for long put?
A: Premium.

321. Q: Maximum gain for long call?
A: Unlimited.

322. Q: Maximum gain for long put?
A: Strike – 0 – Premium.

323. Q: Maximum gain for short call?
A: Premium.

324. Q: Maximum loss for short call?
A: Unlimited.

325. Q: Maximum gain for short put?
A: Premium.

326. Q: Maximum loss for short put?
A: Strike – 0 – Premium.

327. Q: Covered call = ?
A: Long stock + short call.

328. Q: Covered call objective?
A: Generate income.

329. Q: Uncovered (naked) call risk?
A: Unlimited loss.

330. Q: Protective put strategy?
A: Long stock + long put (downside hedge).

🔵 OPTIONS — ADVANCED (SPREADS, STRADDLES, HEDGING) (CARDS #331–360)

331. Q: What is a spread?
A: Buying and selling options of same type on same security.

332. Q: Debit spread wants what to happen?
A: Widen.

333. Q: Credit spread wants what to happen?
A: Narrow.

334. Q: Bull call spread?
A: Buy lower strike call, sell higher strike call.

335. Q: Bear call spread?
A: Sell lower strike call, buy higher strike call.

336. Q: Bull put spread?
A: Sell higher strike put, buy lower strike put.

337. Q: Bear put spread?
A: Buy higher strike put, sell lower strike put.

338. Q: Maximum gain for debit spread?
A: Difference in strikes – net debit.

339. Q: Maximum loss for debit spread?
A: Net debit.

340. Q: Maximum gain for credit spread?
A: Net credit.

341. Q: Maximum loss for credit spread?
A: Difference in strikes – net credit.

342. Q: Long straddle = ?
A: Buy call + buy put (same strike/exp).

343. Q: Long straddle outlook?
A: Expect volatility.

344. Q: Short straddle = ?
A: Sell call + sell put.

345. Q: Short straddle outlook?
A: Expect price stability.

346. Q: Maximum gain on long straddle?
A: Unlimited (if market rises) or large (if market falls).

347. Q: Maximum loss on long straddle?
A: Premiums paid.

348. Q: Maximum gain on short straddle?
A: Premiums received.

349. Q: Maximum loss short straddle?
A: Unlimited on upside.

350. Q: Protective call?
A: Short stock + long call (upside hedge).

351. Q: Collar strategy?
A: Long stock + short call + long put.

352. Q: At expiration, options settle in what timeframe?
A: T+1 for equity options.

353. Q: Index option settlement method?
A: Cash settlement.

354. Q: VIX options measure what?
A: Market volatility.

355. Q: OCC guarantees what?
A: Performance of option contracts.

356. Q: When assigned, the option writer must do what?
A: Fulfill the exercise obligation.

357. Q: Assigned writer chosen how?
A: Random selection.

358. Q: When a call is exercised, what occurs?
A: Buyer purchases shares at strike price.

359. Q: When a put is exercised?
A: Buyer sells shares at strike.

360. Q: LEAPS expire when?
A: Up to 30 months.

🔵 PACKAGED PRODUCTS — INVESTMENT COMPANIES (CARDS #361–390)

Open-End (Mutual Funds)

361. Q: Mutual funds issue what type of shares?
A: Redeemable shares.

362. Q: Mutual fund shares are bought/sold at what price?
A: NAV (buy/redeem).

363. Q: Mutual funds cannot be bought on?
A: Margin (until after 30 days).

364. Q: NAV calculation frequency?
A: Once per day after market close.

365. Q: POP = ?
A: NAV + sales charge.

366. Q: Are mutual fund shares traded intraday?
A: No.

367. Q: Mutual fund distributions taxed as?
A: Income or capital gains.

368. Q: 12b-1 fees include what?
A: Marketing and distribution expenses.

369. Q: Max total 12b-1 fee?
A: 1.00%.

370. Q: A shares use what load?
A: Front-end load.

371. Q: B shares use what?
A: Back-end load (CDSC).

372. Q: C shares use what?
A: Level load (higher 12b-1).

373. Q: Breakpoints apply to what share class?
A: A shares.

374. Q: Breakpoint sale definition?
A: Selling just below breakpoint to earn commission—violation.

375. Q: Rights of accumulation allow what?
A: Add family holdings to qualify for breakpoints.

376. Q: Letter of intent (LOI) lasts how long?
A: 13 months.

377. Q: Can LOI be backdated?
A: Yes, 90 days.

378. Q: Mutual fund suitability concern for C-shares?
A: Expensive for long-term investors.

379. Q: Mutual funds required disclosures?
A: Prospectus and annual/semiannual reports.

380. Q: Mutual funds must distribute what percentage of income?
A: 90% to qualify as regulated investment company (RIC).

381. Q: Regulation for mutual funds?
A: Investment Company Act of 1940.

382. Q: Can mutual funds lend money?
A: Restricted.

383. Q: Mutual fund switching creates what?
A: Possible new sales charges + tax event.

384. Q: Mutual funds may not issue what?
A: Senior securities.

385. Q: Money market funds attempt to maintain what NAV?
A: $1.00.

386. Q: Are money market funds insured?
A: No.

387. Q: Mutual funds must send financial reports how often?
A: Semiannually.

388. Q: Mutual fund advertising must include what?
A: Past performance with disclaimers.

389. Q: Mutual funds invest in what?
A: Diversified portfolios.

390. Q: What is a target-date fund?
A: Shifts to more conservative assets over time.

🔵 CLOSED-END FUNDS, ETFs, ETNs (CARDS #391–415)

Closed-End Funds

391. Q: Closed-end funds issue what?
A: Fixed number of shares.

392. Q: Closed-end shares trade where?
A: On exchanges.

393. Q: Closed-end funds may trade at what relative to NAV?
A: Premium or discount.

394. Q: Closed-end funds can issue what securities?
A: Common, preferred, and debt.

ETFs

395. Q: ETFs trade how?
A: Intraday like stocks.

396. Q: ETF fees compared to mutual funds?
A: Lower.

397. Q: ETFs can be bought on margin?
A: Yes.

398. Q: ETF tax efficiency due to what?
A: In-kind creation/redemption.

399. Q: Are ETFs redeemable directly by retail customers?
A: No—only in creation units by institutions.

400. Q: Actively managed ETF advantage?
A: Active management + intraday trading.

401. Q: Leveraged ETFs aim to achieve what?
A: 2× or 3× daily index return.

ETNs

402. Q: ETNs are what type of security?
A: Unsecured debt.

403. Q: ETN primary risk?
A: Issuer/credit risk.

404. Q: ETN return linked to what?
A: Index, commodity, or currency.

405. Q: Are ETNs interest-paying?
A: No.

406. Q: ETNs suitable for whom?
A: Short-term tactical investors.

407. Q: ETNs tax treatment?
A: May have tax deferral benefits.

408. Q: ETNs can be volatile due to?
A: Issuer credit rating changes.

🔵 UITs, REITs, 529 PLANS, ABLE, LGIPs (CARDS #416–440)

UITs

416. Q: UIT stands for?
A: Unit Investment Trust.

417. Q: UIT portfolios are?
A: Fixed, not actively managed.

418. Q: UITs issue what?
A: Redeemable units.

419. Q: UITs terminate when?
A: At a future date defined at inception.

420. Q: UITs are regulated by?
A: Investment Company Act of 1940.

REITs

421. Q: REIT stands for?
A: Real Estate Investment Trust.

422. Q: REITs avoid corporate tax by distributing what % of income?
A: 90%.

423. Q: REIT dividends taxed how?
A: As ordinary income.

424. Q: REIT types?
A: Equity, Mortgage, Hybrid.

425. Q: REIT liquidity varies across what?
A: Publicly traded vs non-traded vs private.

426. Q: REITs do NOT pass what?
A: Losses.

529 PLANS

427. Q: What is a 529 plan?
A: Tax-advantaged education savings.

428. Q: Two types of 529 plans?
A: Prepaid tuition + savings plan.

429. Q: 529 tax treatment?
A: Earnings grow tax-deferred; withdrawals tax-free for qualified expenses.

430. Q: 529 non-qualified withdrawals taxed how?
A: Income tax + 10% penalty.

431. Q: 529 owner vs beneficiary?
A: Owner controls; beneficiary uses funds.

ABLE ACCOUNTS

432. Q: ABLE account purpose?
A: Tax-advantaged savings for disabled individuals.

433. Q: ABLE account disability must have begun when?
A: Before age 26.

434. Q: ABLE contributions taxed how?
A: After-tax contributions; tax-free withdrawals for disability expenses.

LGIPs (Local Government Investment Pools)

435. Q: LGIPs are designed for whom?
A: State/local governments for cash management.

436. Q: LGIPs structured like what?
A: Money market funds.

437. Q: LGIPs risk?
A: Not federally guaranteed.

438. Q: LGIP oversight?
A: State supervision.

439. Q: LGIP objective?
A: Liquidity + safety.

440. Q: LGIP disclosure governed by?
A: MSRB rules for municipal fund securities

Direct Participation Programs

441. Q: DPP stands for?
A: Direct Participation Program.

442. Q: DPP benefit?
A: Pass-through income/losses.

443. Q: DPP downside?
A: Illiquidity.

444. Q: General partner liability?
A: Unlimited.

445. Q: Limited partner liability?
A: Limited to investment.

446. Q: DPP suitability concern?
A: Illiquid, long-term.

447. Q: Types of DPPs?
A: Real estate, oil & gas, equipment leasing.

HEDGE FUNDS

448. Q: Hedge funds typically available to whom?
A: Accredited investors.

449. Q: Hedge fund fees typically include?
A: 2% management + 20% performance.

450. Q: Hedge fund lock-up period?
A: Time investor cannot redeem shares.

RADING BASICS & ORDER TYPES (CARDS #451–480)

451. Q: Market order executes at?
A: Best available price immediately.

452. Q: Limit order guarantees what?
A: Price, not execution.

453. Q: Buy limit order triggers when?
A: Market at or below limit price.

454. Q: Sell limit order triggers when?
A: Market at or above limit price.

455. Q: Stop order purpose?
A: To trigger a market order.

456. Q: Buy stop activates when?
A: Market hits or rises above stop price.

457. Q: Sell stop activates when?
A: Market hits or falls below stop price.

458. Q: Stop-limit order triggers how?
A: Market order becomes limit order at stop price.

459. Q: GTC stands for?
A: Good-til-canceled.

460. Q: Day order expires when?
A: End of trading day.

461. Q: IOC order stands for?
A: Immediate-or-cancel.

462. Q: FOK stands for?
A: Fill-or-kill (all or none).

463. Q: AON stands for?
A: All-or-none (fill entire quantity).

464. Q: Discretionary order means?
A: Broker chooses price/time.

465. Q: Solicited order means?
A: Rep recommended the trade.

466. Q: Unsolicited order means?
A: Customer initiated the trade.

467. Q: Principal capacity means?
A: Firm trades from its own inventory.

468. Q: Agency capacity means?
A: Firm matches buyer and seller (broker).

469. Q: Which type includes markup/markdown?
A: Principal trades.

470. Q: Which includes commission?
A: Agency trades.

471. Q: Short sale requires what?
A: Borrowing shares.

472. Q: Short sellers profit when?
A: Price declines.

473. Q: Long position profits when?
A: Price rises.

474. Q: Freeriding is what?
A: Selling stock before paying for it.

475. Q: Penalty for freeriding?
A: 90-day account freeze.

476. Q: Trade date = ?
A: Day order is executed.

477. Q: Settlement date = ?
A: Day buyer must pay and seller delivers.

478. Q: Affirmation must occur by when?
A: End of trade date.

479. Q: Confirmation must be sent when?
A: No later than settlement date.

480. Q: Regular-way settlement for stocks?
A: T+2.

🔵 TRADE SETTLEMENT & CORPORATE ACTIONS (CARDS #481–510)

481. Q: Corporate bonds settlement?
A: T+2.

482. Q: Municipal bonds settlement?
A: T+2.

483. Q: Treasuries settlement?
A: T+1.

484. Q: Options settlement (trade)?
A: T+1.

485. Q: Options exercise settlement?
A: Equity = T+2; Index = T+1 (cash).

486. Q: Cash settlement?
A: Same day.

487. Q: Stock dividend increases what?
A: Shares owned.

488. Q: Stock dividend decreases what?
A: Price per share, cost basis.

489. Q: Forward stock split effect?
A: Shares ↑, price ↓.

490. Q: Reverse split effect?
A: Shares ↓, price ↑.

491. Q: Cash dividends: key dates?
A: Declaration, ex-dividend, record, payable.

492. Q: Who sets ex-dividend date?
A: FINRA/exchange.

493. Q: Ex-dividend date occurs when?
A: One business day before record date.

494. Q: Who gets the dividend?
A: Owner on record date.

495. Q: Buyer on ex-date gets dividend?
A: No.

496. Q: Tender offer definition?
A: Offer to buy shares above market price.

497. Q: Buyback definition?
A: Company repurchases its shares.

498. Q: Rights offering gives what?
A: Right to purchase shares at discount.

499. Q: Proxy allows what?
A: Shareholder voting rights.

500. Q: M&A effect on options?
A: Adjusted contracts maintain equivalent value.

501. Q: Corporate action notices must be delivered when?
A: Promptly after announcement.

502. Q: Fractional shares from splits handled how?
A: Cash in lieu.

503. Q: Tender offers cannot be what?
A: Purchased on margin.

504. Q: Tender offers must be open how long?
A: At least 20 business days.

505. Q: Partial tender prorated how?
A: Pro rata among tendering holders.

506. Q: SEC Rule 10b-18 covers what?
A: Issuer share repurchases.

507. Q: 10b-18 safe harbor limits?
A: Volume, timing, price restrictions.

508. Q: Forwarding of proxy materials covered by?
A: FINRA Rule 2251.

509. Q: Who pays for forwarding proxy materials?
A: Issuer.

510. Q: Corporate action adjustments must maintain what?
A: Same economic value.

🔵 CUSTOMER ACCOUNTS (CARDS #511–545)

511. Q: New account form requires what?
A: Name, DOB, address, SSN, employment, objectives.

512. Q: CIP requires what?
A: Identity verification (USA PATRIOT Act).

513. Q: Customer signature required when?
A: Margin & options agreements.

514. Q: Trusted contact person required for what accounts?
A: All retail accounts.

515. Q: Regulation S-P protects what?
A: Customer nonpublic personal information.

516. Q: Privacy notice delivered when?
A: At account opening & annually.

517. Q: Can customer data be shared with affiliates?
A: Yes, unless customer opts out.

518. Q: What is a discretionary account?
A: Rep chooses action, asset, amount.

519. Q: Discretion requires what?
A: Written authorization.

520. Q: Time & price discretion requires?
A: No written authorization (day only).

521. Q: Account statements sent how often?
A: Quarterly (monthly if active).

522. Q: Joint account types?
A: JTWROS, TIC.

523. Q: JTWROS ownership?
A: Equal; passes to survivor.

524. Q: TIC ownership?
A: Based on percentage; passes to estate.

525. Q: Community property applies to?
A: Married couples in certain states.

526. Q: Corporate accounts require what?
A: Corporate resolution.

527. Q: Trust accounts require what?
A: Trust agreement.

528. Q: UTMA/UGMA accounts owned by?
A: Minor.

529. Q: Custodian can do what?
A: Manage account; cannot gift to self.

530. Q: Margin accounts require what form?
A: Margin agreement + hypothecation.

531. Q: Day trading account requires?
A: Minimum $25,000 equity.

532. Q: Pattern day trader defined as?
A: 4+ day trades in 5 business days.

533. Q: Fee-based accounts charge?
A: Flat fee or % of assets.

534. Q: Commission accounts charge?
A: Per trade.

535. Q: Non-U.S. persons must provide what form?
A: W-8BEN.

536. Q: Customer statements must include what?
A: Account value and activity.

537. Q: Complaint definition?
A: Written allegation only.

538. Q: Firms must respond to complaints how?
A: In writing.

539. Q: Complaints retained for how long?
A: 4 years.

540. Q: 529 account owner can change beneficiary?
A: Yes.

541. Q: TOD account benefit?
A: Avoids probate.

542. Q: Qualified retirement accounts tax structure?
A: Pre-tax contributions; taxed at withdrawal.

543. Q: Required minimum distribution (RMD) age?
A: 73.

544. Q: Roth IRA distributions taxed?
A: Tax-free if qualified.

545. Q: Contribution limit for IRAs?
A: $7,000 (<50).

🔵 MARGIN (CARDS #546–565)

546. Q: Regulation T governs what?
A: Extension of credit.

547. Q: Reg T margin requirement?
A: 50% of purchase price.

548. Q: Initial minimum equity for margin account?
A: $2,000.

549. Q: What securities are marginable?
A: Exchange-listed, some OTC.

550. Q: Options are marginable?
A: Premium only; not contracts.

551. Q: Long margin account equity = ?
A: LMV – DR.

552. Q: Short margin account equity = ?
A: CR – SMV.

553. Q: LMV definition?
A: Long Market Value.

554. Q: SMV definition?
A: Short Market Value.

555. Q: DR definition?
A: Debit balance.

556. Q: CR definition?
A: Credit balance.

557. Q: Maintenance requirement (long)?
A: 25%.

558. Q: Maintenance requirement (short)?
A: 30%.

559. Q: House requirements?
A: Higher than FINRA minimum.

560. Q: Restricted account definition?
A: Equity below Reg T but above maintenance.

561. Q: Margin call?
A: Deposit cash/securities.

562. Q: Excess equity?
A: Withdrawable.

563. Q: SMA stands for?
A: Special Memorandum Account.

564. Q: SMA increases when?
A: Market value increases.

565. Q: SMA decreases when?
A: Withdrawals or new purchases.

🔵 AML + PATRIOT ACT (CARDS #566–585)

566. Q: AML compliance program regulated by?
A: USA PATRIOT Act.

567. Q: AML red flags include?
A: Unusual transfers, structuring, secrecy.

568. Q: SAR must be filed within?
A: 30 days.

569. Q: SAR confidential?
A: Yes; cannot disclose filing.

570. Q: CTR required for cash over?
A: $10,000.

571. Q: CTR must be filed within?
A: 15 days.

572. Q: OFAC list?
A: SDN list.

573. Q: If a customer matches SDN list, firm must?
A: Block transactions; report to OFAC.

574. Q: CIP verifies what?
A: Identity of customer.

575. Q: CIP documents include?
A: Passport, license.

576. Q: Customer must be checked against what lists?
A: OFAC, terrorism lists.

577. Q: AML training for reps must occur?
A: Annually.

578. Q: AML officer responsible for?
A: Program implementation.

579. Q: Money laundering stages?
A: Placement → Layering → Integration.

580. Q: Structuring (smurfing) definition?
A: Breaking deposits to avoid reporting.

581. Q: Correspondent accounts require what?
A: Enhanced scrutiny.

582. Q: Foreign shell banks allowed?
A: No.

583. Q: Broker-dealers must maintain what?
A: Customer identification records.

584. Q: AML program must be approved by?
A: Senior management.

585. Q: AML testing must occur how often?
A: Annually.

🔵 PROHIBITED ACTIVITIES (CARDS #586–600)

586. Q: Insider trading = ?
A: Trading on material nonpublic information.

587. Q: Tipper liability?
A: If they provide MNPI.

588. Q: Tippee liability?
A: If they trade on MNPI.

589. Q: Penalty for insider trading?
A: 3× damages + fines + prison.

590. Q: Market manipulation examples?
A: Pump & dump, marking the close, spoofing.

591. Q: Front running = ?
A: Trading ahead of customer orders.

592. Q: Churning = ?
A: Excessive trading for commissions.

593. Q: Selling away = ?
A: Private securities transactions without approval.

594. Q: Borrowing from customers allowed?
A: Only if family or bank.

595. Q: Sharing in customer account allowed?
A: Only with proportionate sharing + written approval.

596. Q: Guaranteeing customer against loss?
A: Prohibited.

597. Q: Parking securities?
A: Prohibited.

598. Q: Painting the tape?
A: Market manipulation via coordinated trades.

599. Q: Wash trades?
A: Buy & sell same security to create fake activity.

600. Q: Free-riding violation punishable by?
A: 90-day freeze.

REGISTRATION & FORMS (CARDS #601–630)

601. Q: What form registers an associated person with FINRA?
A: Form U4.

602. Q: What info must be disclosed on U4?
A: Personal history, employment, criminal charges, bankruptcies, liens.

603. Q: Does a felony EVER need to be disclosed?
A: Yes — always.

604. Q: What misdemeanors must be disclosed?
A: Investment-related misdemeanors.

605. Q: Who must sign the U4?
A: The applicant and a principal.

606. Q: Does customer consent appear on the U4?
A: No.

607. Q: When must a U4 be updated?
A: Within 30 days of a change.

608. Q: When must a U4 amendment for disciplinary actions be filed?
A: Within 10 days.

609. Q: What form terminates registration?
A: Form U5.

610. Q: A firm must file Form U5 within what timeframe?
A: 30 days of termination.

611. Q: Timeframe for U5 filed with cause?
A: 10 days (expedited disclosure).

612. Q: Does a rep keep their license if the firm files a U5?
A: No — they become unregistered.

613. Q: How long does someone have to re-register without retaking exams?
A: 2 years.

614. Q: Form U6 is used for what?
A: Reporting disciplinary actions.

615. Q: What database makes U4/U5 info public?
A: BrokerCheck.

616. Q: BrokerCheck must be provided to customers when?
A: At account opening.

617. Q: Form CRS stands for?
A: Customer Relationship Summary.

618. Q: Form CRS must be delivered when?
A: Before or at recommendation / account opening.

619. Q: Form CRS length limit?
A: 2 pages (4 for dual registrants).

620. Q: Form CRS goal?
A: Disclosure of fees, conflicts, services.

621. Q: Who must file Form CRS?
A: BD and IA firms serving retail investors.

622. Q: What is statutory disqualification?
A: Prohibition from associating with a BD.

623. Q: What triggers statutory disqualification?
A: Felony (10 yrs), securities misdemeanors, expulsion.

624. Q: May a statutorily disqualified person apply for reinstatement?
A: Yes — via Eligibility Proceedings.

625. Q: Required fingerprinting applies to whom?
A: All associated persons handling securities funds/records.

626. Q: Fingerprinting governed by what rule?
A: SEC Rule 17f-2.

627. Q: OSJ stands for?
A: Office of Supervisory Jurisdiction.

628. Q: Who supervises RRs?
A: Designated principals.

629. Q: Who supervises principals?
A: OSJ or senior principal.

630. Q: Annual compliance meeting required how often?
A: Once per year.

🔵 CONTINUING EDUCATION (CE) (CARDS #631–650)

631. Q: CE has what two components?
A: Firm Element + Regulatory Element.

632. Q: When must the Regulatory Element be completed?
A: 120 days after 2nd registration anniversary, then annually.

633. Q: Regulatory Element (Rule 1240) delivered how?
A: Computer-based.

634. Q: Consequence of failing Regulatory Element?
A: Registration becomes inactive.

635. Q: Firm Element applies to?
A: Registered persons in covered roles.

636. Q: Firm Element created by whom?
A: Each firm based on needs analysis.

637. Q: Frequency of Firm Element?
A: Annually.

638. Q: Must CE be completed during a leave of absence?
A: Yes, unless exempted.

639. Q: What is IAR CE?
A: Annual continuing education for investment adviser reps.

640. Q: IAR CE requirement?
A: 12 credits per year.

641. Q: Is CE required during military leave?
A: No — registration is paused (“tolled”).

642. Q: If a rep fails CE for years, what happens?
A: They must requalify by retaking exams.

643. Q: Who tracks completion of CE?
A: FINRA.

644. Q: CE documentation must be retained for how long?
A: 3 years.

645. Q: Firm Element may include what?
A: Ethics, AML, products.

646. Q: Regulatory Element content determined by?
A: FINRA.

647. Q: Firm Element applies to associated persons or customers?
A: Associated persons.

648. Q: CE applies to individuals or firms?
A: Individuals.

649. Q: CE ensures what?
A: Competence and regulatory knowledge.

650. Q: When must CE be done after U5 termination?
A: Only if re-registering.

🔵 BOOKS & RECORDS (CARDS #651–675)

(SEA 17a-3 & 17a-4 — VERY HIGH TEST PROBABILITY)

651. Q: Which rule governs records to be made?
A: SEC Rule 17a-3.

652. Q: Which rule governs records to be preserved?
A: SEC Rule 17a-4.

653. Q: Customer account information must be updated when?
A: Every 36 months.

654. Q: How long must complaint records be kept?
A: 4 years.

655. Q: How long must customer account records be kept?
A: 6 years.

656. Q: Blotters must be maintained for how long?
A: 6 years.

657. Q: Order tickets must be preserved for how long?
A: 3 years.

658. Q: Communications (emails) kept how long?
A: 3 years.

659. Q: Partnership articles kept how long?
A: Lifetime.

660. Q: Corporate charter retained for?
A: Lifetime.

661. Q: Customer confirmations kept for?
A: 3 years.

662. Q: Fails-to-deliver tracked under which regulation?
A: Regulation SHO.

663. Q: Business Continuity Plan (BCP) must be updated how often?
A: Annually.

664. Q: BCP must designate what?
A: Two emergency contacts.

665. Q: BCP must address what scenarios?
A: Data backup, alternate facilities, communication with customers.

666. Q: Do firms need SEC approval for BCP?
A: No.

667. Q: Customer statements retained for how long?
A: 6 years.

668. Q: Trade confirmations must be sent when?
A: No later than settlement date.

669. Q: BCP governed by?
A: FINRA Rule 4370.

670. Q: Can firms store records electronically?
A: Yes, if tamper-proof (WORM format).

671. Q: WORM stands for?
A: Write Once Read Many.

672. Q: Do records need to be accessible immediately?
A: Yes — within specified time.

673. Q: Records must be kept in what format?
A: Easily accessible.

674. Q: Firms must maintain what about reps' outside accounts?
A: Duplicate statements.

675. Q: Time to furnish books to regulators?
A: Promptly on request.

🔵 GIFTS, GRATUITIES, BUSINESS ENTERTAINMENT (CARDS #676–695)

676. Q: FINRA gift limit?
A: $100 per person per year.

677. Q: Are business meals gifts?
A: No if rep attends.

678. Q: Are tickets gifts?
A: No if rep attends.

679. Q: Non-cash compensation allowed for?
A: Sales contests (limited), product-specific training.

680. Q: Investment company non-cash rules?
A: Must be reasonable, not tied to sales targets.

681. Q: Gifts >$100 allowed when?
A: Never (except occasional de minimis).

682. Q: FINRA Rule for gifts?
A: Rule 3220.

683. Q: MSRB Rule for gifts?
A: G-20.

684. Q: Business expense reimbursement allowed?
A: Yes with receipts.

685. Q: Non-cash comp for variable annuities regulated by?
A: FINRA Rule 2320(g).

686. Q: Gifts to government officials restricted under?
A: MSRB G-37.

687. Q: Can a rep receive gifts from customers?
A: Yes, but subject to $100 rule.

688. Q: Can reps share commissions?
A: Only with other registered reps.

689. Q: Can a rep split commissions with non-registered persons?
A: No.

690. Q: What defines business entertainment?
A: Activity attended by rep & customer.

691. Q: Promotional items allowed if?
A: De minimis and not tied to sales.

692. Q: Mutual fund non-cash comp rule?
A: Must not be tied to sales.

693. Q: Is paying rent for a client allowed?
A: No — prohibited.

694. Q: Gifts paid by firm must be recorded?
A: Yes.

695. Q: Alcohol given as gift counted under $100?
A: Yes.

🔵 POLITICAL CONTRIBUTIONS (MSRB G-37) (CARDS #696–710)

696. Q: G-37 prevents what?
A: Pay-to-play in municipal securities.

697. Q: MFP stands for?
A: Municipal Finance Professional.

698. Q: MFP contribution limit?
A: $250 per election if able to vote.

699. Q: If contribution exceeds limit?
A: 2-year ban on negotiated muni business.

700. Q: De minimis exemption applies only when?
A: MFP can vote for candidate.

701. Q: Contributions from firm allowed?
A: No.

702. Q: What causes 2-year ban?
A: Any MFP contribution >$250.

703. Q: Who enforces MSRB rules?
A: FINRA.

704. Q: Are clerical staff MFPs?
A: No.

705. Q: Bundled contributions allowed?
A: No.

706. Q: PAC contributions regulated?
A: Yes — count toward limits.

707. Q: Ban applies to?
A: Negotiated underwritings.

708. Q: Competitive muni underwriting exempt?
A: Yes.

709. Q: What if MFP moves firms?
A: Ban follows individual.

710. Q: Is disclosure required?
A: Yes — quarterly reporting.

🔵 REGULATION BI & SUITABILITY (CARDS #711–730)

711. Q: Reg BI stands for?
A: Regulation Best Interest.

712. Q: Reg BI applies to whom?
A: Broker-dealers & associated persons.

713. Q: Reg BI requires what?
A: Best interest at time of recommendation.

714. Q: Suitability applies when?
A: Recommendation is made.

715. Q: KYC rule number?
A: FINRA Rule 2090.

716. Q: Suitability rule number?
A: FINRA Rule 2111.

717. Q: Three components of suitability?
A: Reasonable-basis, customer-specific, quantitative.

718. Q: Quantitative suitability tests what?
A: Turnover/churning.

719. Q: Reg BI disclosures include?
A: Fees, conflicts, services.

720. Q: Reg BI care obligation?
A: Understand risks & costs of recommendation.

721. Q: Reg BI conflict obligation?
A: Mitigate or eliminate conflicts.

722. Q: Reg BI applies to institutional customers?
A: Yes if retail investors involved.

723. Q: Reg BI replaces what rule for retail clients?
A: Suitability (though suitability still exists).

724. Q: Form CRS required by?
A: Reg BI.

725. Q: Suitability excludes what accounts?
A: Unsolicited trades.

726. Q: "Recommendation" defined as?
A: Communication reasonably leading to an action.

727. Q: Investment profile includes?
A: Age, income, risk tolerance, objectives.

728. Q: Reg BI applies to advice about what?
A: Securities transactions and strategies.

729. Q: Do retirement account rollovers fall under Reg BI?
A: Yes.

730. Q: Reg BI enforcement by?
A: SEC.

🔵 SEC REGULATIONS (M, SHO, S-P, T, S) (CARDS #731–760)

Regulation M — Market Manipulation During Distribution

731. Q: Regulation M prevents what?
A: Manipulation during securities offerings.

732. Q: Rule 101 restricts whom?
A: Underwriting participants from buying stock during distribution.

733. Q: Rule 102 restricts whom?
A: Issuers/affiliates from manipulating price.

734. Q: Rule 103 allows what?
A: Passive market making.

735. Q: Rule 104 allows what?
A: Stabilization bids.

736. Q: Rule 105 prohibits?
A: Shorting stock before offering & buying in offering.

Regulation SHO — Short Selling

737. Q: Reg SHO requires what?
A: Locate requirement before short sale.

738. Q: Threshold list identifies what?
A: Securities with large fail-to-deliver positions.

739. Q: Close-out requirement applies after what?
A: 13 consecutive settlement days.

740. Q: Naked short selling allowed?
A: No.

Regulation S-P — Privacy

741. Q: Reg S-P requires?
A: Protection of customer nonpublic personal info.

742. Q: Privacy notice delivered when?
A: At account opening & annually.

743. Q: Customer can opt out of what?
A: Sharing info with unaffiliated third parties.

Regulation T — Credit Extension

744. Q: Reg T initial margin requirement?
A: 50%.

745. Q: Reg T applies to what accounts?
A: Margin purchases.

Regulation S — Offshore Offerings

746. Q: Reg S covers?
A: Securities sold outside U.S.

747. Q: Reg S exempts what?
A: Offshore offerings from SEC registration.

748. Q: Can Reg S securities be resold immediately in U.S.?
A: No — subject to seasoning period.

749. Q: What is the seasoning period for equity?
A: 1 year (typically).

750. Q: Reg S securities can be sold immediately where?
A: Offshore markets.

ARBITRATION & MEDIATION (CARDS #751–770)

751. Q: FINRA arbitration is required for what?
A: All disputes between members & associated persons.

752. Q: Arbitration is mandatory for customers only when?
A: Customer signs arbitration agreement.

753. Q: Arbitration awards are?
A: Final and binding.

754. Q: Arbitration cannot be appealed except for?
A: Fraud, bias, procedural issues.

755. Q: Arbitration panel for customer disputes includes?
A: Public arbitrators.

756. Q: Arbitration must resolve a claim within what timeframe?
A: Typically 12–18 months.

757. Q: Mediation is?
A: Voluntary and non-binding unless settlement reached.

758. Q: Who oversees FINRA arbitration?
A: FINRA’s ODR (Office of Dispute Resolution).

759. Q: Mediation uses what role?
A: A neutral mediator.

760. Q: If mediation fails, what happens?
A: Case goes to arbitration.

761. Q: Arbitration monetary awards must be paid in?
A: 30 days.

762. Q: If firm fails to pay arbitration award?
A: Can be expelled or suspended.

763. Q: Simplified arbitration threshold?
A: Claims ≤ $50,000.

764. Q: Who hears simplified arbitration?
A: Single arbitrator.

765. Q: Are attorneys required in arbitration?
A: No.

766. Q: Arbitration disclosures include what?
A: Conflicts, prior cases.

767. Q: Can customers sue in court after signing arbitration?
A: No.

768. Q: Mediation decisions are?
A: Confidential.

769. Q: Arbitration hearings are?
A: Private.

770. Q: Mediation cost compared to arbitration?
A: Cheaper.

🔵 FINRA CODE OF PROCEDURE (DISCIPLINARY) (CARDS #771–790)

771. Q: FINRA’s Code of Procedure covers?
A: Violations, investigations, sanctions.

772. Q: COP begins with what?
A: Complaint filed by FINRA’s Department of Enforcement.

773. Q: Hearing panel includes?
A: 2 industry panelists + 1 hearing officer.

774. Q: Maximum sanction?
A: Expulsion or bar.

775. Q: Respondent must answer complaint within?
A: 25 days.

776. Q: Failure to respond results in?
A: Admission of charges.

777. Q: Appeals go to?
A: National Adjudicatory Council (NAC).

778. Q: NAC appeals go to?
A: SEC.

779. Q: SEC appeals go to?
A: Federal courts.

780. Q: Temporary cease-and-desist available for?
A: Harm to investors/markets.

781. Q: Firms must cooperate with FINRA investigations?
A: Yes — mandatory.

782. Q: Providing false info to FINRA is?
A: Prohibited (FINRA Rule 8210).

783. Q: FINRA Rule 8210 requires?
A: Production of records or testimony.

784. Q: Failure to comply with Rule 8210?
A: Automatic bar.

785. Q: Sanctions may include?
A: Fines, suspensions, expulsions.

786. Q: Statute of limitations for enforcement?
A: 6 years.

787. Q: Minor rule violations handled how?
A: Letter of Acceptance, Waiver, and Consent (AWC).

788. Q: Are enforcement actions public?
A: Yes.

789. Q: Can firms settle investigations?
A: Yes — via AWC.

790. Q: Hearing panel decisions effective when?
A: 45 days after service unless appealed.

🔵 FINRA CODE OF ARBITRATION (CARDS #791–805)

791. Q: Arbitration mandatory between?
A: Member vs member / rep vs firm.

792. Q: Customer arbitration mandatory when?
A: Arbitration clause signed.

793. Q: Pre-dispute arbitration clause must be where?
A: Clearly visible.

794. Q: Arbitration decisions based on?
A: Preponderance of evidence.

795. Q: Do arbitrators have to follow law?
A: No—can rule on equity.

796. Q: Customer has choice of arbitrators?
A: Can request all public panel.

797. Q: Arbitration hearing location based on?
A: Customer residence.

798. Q: Are arbitrators required to write explanations?
A: Only if both parties request.

799. Q: What happens if respondent doesn’t show?
A: Default award.

800. Q: Arbitration awards must be paid within?
A: 30 days.

801. Q: Failure to pay awards results in?
A: Suspension.

802. Q: Who maintains arbitrator roster?
A: FINRA.

803. Q: Typical arbitration filing fee?
A: Based on claim size.

804. Q: Is arbitration public record?
A: Award is public; proceedings are private.

805. Q: Attorneys required?
A: No.

🔵 FINRA RULES — ADVANCED (CARDS #806–830)

806. Q: FINRA 4511 covers?
A: General recordkeeping requirements.

807. Q: FINRA 4513 covers?
A: Written customer complaints (4-year retention).

808. Q: FINRA 4530 covers?
A: Reporting customer complaints & regulatory events.

809. Q: FINRA 5310 covers?
A: Best execution.

810. Q: Best execution requires?
A: Reasonable diligence to obtain best price.

811. Q: FINRA 5320 prohibits?
A: Trading ahead of customer orders.

812. Q: Exceptions to 5320?
A: Institutional accounts with consent.

813. Q: Rule 5210 covers?
A: Publication of transactions/quotations (no false prints).

814. Q: Rule 5220 covers?
A: Firm cannot offer at stated price unless willing to trade.

815. Q: Rule 5230?
A: Prohibits paying media to influence market price.

816. Q: Rule 5240?
A: Anti-intimidation/coordination.

817. Q: Rule 5270?
A: Front-running block transactions.

818. Q: Rule 5280?
A: Trading ahead of research reports.

819. Q: Rule 5130?
A: Prohibits restricted persons from IPO purchases.

820. Q: Restricted persons include?
A: BD employees, portfolio managers, family members.

821. Q: Allowed IPO exceptions?
A: Stand-by agreements; issuer employees.

822. Q: Rule 3240 covers?
A: Lending to/from customers.

823. Q: Rule 2165 covers?
A: Senior exploitation (temporary holds allowed).

824. Q: Rule 2090?
A: KYC.

825. Q: Rule 2111?
A: Suitability.

826. Q: Rule 2231?
A: Customer account statements.

827. Q: Rule 2262?
A: Disclose financial interest in issuer.

828. Q: Rule 2266?
A: SIPC disclosure.

829. Q: Rule 2264?
A: Margin disclosure statement.

830. Q: Rule 3150?
A: Holding customer mail.

🔵 MSRB RULES — FULL SET (CARDS #831–860)

831. Q: MSRB G-2?
A: Standards of Professional Qualification.

832. Q: G-3?
A: Professional qualification exams.

833. Q: G-7?
A: Records of associated persons.

834. Q: G-8?
A: Books & records to be made.

835. Q: G-9?
A: Preservation of records.

836. Q: G-10?
A: Investor education.

837. Q: G-11?
A: Primary offering practices.

838. Q: G-12?
A: Uniform practice (settlement procedures).

839. Q: G-13?
A: Quotations.

840. Q: G-14?
A: Reporting trades to RTRS.

841. Q: G-15?
A: Confirmations, settlement.

842. Q: G-17?
A: Fair dealing.

843. Q: G-18?
A: Best execution.

844. Q: G-19?
A: Suitability (municipal version).

845. Q: G-20?
A: Gifts & gratuities ($100 limit).

846. Q: G-21?
A: Advertising.

847. Q: G-22?
A: Control relationships.

848. Q: G-23?
A: Financial advisor restrictions.

849. Q: G-24?
A: Policy on gifts to employees of others.

850. Q: G-26?
A: Customer accounts.

851. Q: G-27?
A: Supervision.

852. Q: G-28?
A: Outside brokerage accounts.

853. Q: G-30?
A: Pricing & commissions.

854. Q: G-32?
A: Primary offering disclosures.

855. Q: G-34?
A: CUSIP/market information.

856. Q: G-37?
A: Political contributions.

857. Q: G-39?
A: Telemarketing.

858. Q: G-41?
A: AML program requirements.

859. Q: G-45?
A: Municipal fund securities reporting.

860. Q: G-47?
A: Time-of-trade disclosure.

🔵 ADVANCED REGULATIONS / RESEARCH ANALYST RULES (CARDS #861–885)

861. Q: FINRA Rule 2711 covers?
A: Research analysts.

862. Q: Analysts cannot do what prior to report release?
A: Share research with investment banking.

863. Q: Quiet period after IPO for research?
A: 10 days for managing underwriters.

864. Q: Analysts must disclose?
A: Conflicts, ownership, compensation.

865. Q: Analyst compensation tied to?
A: NOT investment banking results.

866. Q: Research report definition?
A: Analysis sufficient to base an investment decision.

867. Q: Draft research reports can be shared with?
A: Compliance only—not banking.

868. Q: Analyst trading restricted when?
A: Before or after report issuance.

869. Q: Public appearance requirements?
A: Must disclose conflicts verbally.

870. Q: Can analysts invest in covered companies?
A: Yes, but with restrictions.

871. Q: Can firms promise favorable ratings?
A: No.

872. Q: Research analysts require?
A: Series 86/87.

873. Q: FINRA Rule 2241 governs?
A: Equity research.

874. Q: FINRA Rule 2242 governs?
A: Debt research.

875. Q: Debt research more flexible because?
A: Not targeted to retail typically.

876. Q: Research must be based on?
A: Reasonable basis.

877. Q: Research report conflicts must be?
A: Fully disclosed.

878. Q: Compensation from issuer must be?
A: Disclosed.

879. Q: Analyst may not attend what?
A: Pitch meetings.

880. Q: Earnings estimates are part of what?
A: Fundamental research.

881. Q: Technical research focuses on?
A: Price charts, momentum.

882. Q: Independent research providers must follow?
A: Same conflict rules.

883. Q: Blackout periods apply to?
A: Analysts & covered securities.

884. Q: Analysts must certify what?
A: Their views accurately reflect opinion.

885. Q: Retaliating against analysts for bad ratings?
A: Prohibited.

🔵 ADVANCED ACCOUNT TYPES / RISK / RETIREMENT (CARDS #886–900)

886. Q: Wrap account charges?
A: Single fee for advisory + brokerage.

887. Q: Wrap accounts treated as?
A: Advisory accounts (IA registration).

888. Q: ERISA regulates what plans?
A: Private employer retirement plans.

889. Q: ERISA 404(c) provides?
A: Fiduciary protection if participants choose investments.

890. Q: Qualified plan contributions are?
A: Pre-tax.

891. Q: Roth contributions are?
A: After-tax.

892. Q: Roth withdrawals taxed?
A: Tax-free if qualified.

893. Q: 401(k) contribution limit?
A: $23,000 (<50).

894. Q: IRA catch-up contribution amount?
A: +$1,000 (>50).

895. Q: RMDs required for Roth IRAs?
A: No.

896. Q: RMDs required for traditional IRAs?
A: Yes, at age 73.

897. Q: Beneficiary IRA distribution rule?
A: 10-year rule (generally).

898. Q: Variable annuities regulated by?
A: SEC + State insurance departments.

899. Q: Variable annuity suitability must consider?
A: Time horizon, liquidity needs, financial status.

900. Q: Fixed annuity regulated by?
A: State insurance only (NOT a security).