Series 7 Book 2

Front 1

When opening a new account the_________________ must complete an _________________form

Back 1

registered representative

New account

Front 2

The basic information required on a new account form is customer_______and___________. Whether it is a cash or_________account. Whether the customer is of________age
Social security #
Customer occupation
Whether the client is employed by another_____________

Back 2

name
address
margin
legal
broker

Front 3

For Nyse it is required that the country of_________be obtained since there are restrictions on foreign ownership of companies in "sensitive" industries.

Back 3

citizenship

Front 4

Nyse used to require a bank reference to open an account. This is no longer a formal rule. Who still may require this?

Back 4

Nyse firms

Front 5

The NYSE requires that each customer be asked if he or she is a ______ _______ or __________ of 10% or more of a publicly traded company stock.

If so the_______and__________must be disclosed

This is the technical definition of an______________

Back 5

director officer shareholder

company
position

insider

Front 6

The MSRB requires that the customer's________bracket be obtained when opening a_________account

Back 6

tax
muni bond

Front 7

All of the regulatory bodies_______,_________,_________,________ require that any security that is recommended to a customer be a suitable investment for that person. This is the NYSE_______________rule

Back 7

NYSE NASD MSRB CBOE

Know your customer

Front 8

As a general guide to determine suitability, the customer should be asked about investment_____, Investment_________, existing portfolio and tax____and tax_______

Back 8

objective, experience, status, bracket

Front 9

If a customer refuses to disclose financial status can a recommendation be made, under MSRB rules?

Back 9

No

Front 10

A registered rep can/cannot execute trades that are considered unsuitable at specific direction of the client.

Back 10

can

Front 11

Before an Options account can be opened, client must receive the latest________ ________ document.
The date the client was sent this form must be ________on the new account form.

Back 11

options disclosure
marked

Front 12

To open an options account a client must be asked specifically about:
Investment_________, Investment_________, Financial_______, Financial_________, Marital status, Net________, Liquid Net_______, and estimated annual________.

Back 12

objective, experience, situation, needs, worth, worth, income

Front 13

A new options customer with limited experience may be limited to buying_________ and ________ only.

It is up to the_______ to decide the level of options trading allowed.

Back 13

calls and puts
firm

Front 14

Options agreement must be signed____days_____the account is opened

Back 14

15

after

Front 15

The CBOE requires that if the customers financial situation changes materially, the ________agreement must be amended.

Back 15

Options

Front 16

The_____ _______must sign the new account form which indicates that he or she believes that the information is true and accurate. The _______ or________must sign the form accepting the account before trading________.

Back 16

registered rep

principal or branch manager

starts

Front 17

The NASD requires that New accounts of "over the counter" firms be approved by the ________________.

This person has to pass the series___
if the person is solely a member of the NASD

Back 17

General Securities Principal.

24

Front 18

Muni bond accounts have to approved by municipal________ with a series__or ___

Back 18

principal

53 or 8

Front 19

Is there a requirement for client signature on new account form?

Back 19

NO

Front 20

To open a cash account, only the __________form is required. In a cash account the customer agrees that he will pay in _______ for all purchases.

Back 20

new account

full

Front 21

Margin Securities are held in _______name

Back 21

street

Front 22

Is client signature required on new accuont form?

Back 22

No

Front 23

When opening a margin account, the customer must be provided with a Credit _______ _______.

Back 23

disclosure document

Front 24

The credit disclosure document is also called the ___ __ ________ document

Back 24

truth in lending

Front 25

What 2 options are available for joint account ownership?

Back 25

Joint tenancy with rights of survivorship

Tenancy in Common

Front 26

To open an account for a corporation proof that the corporation exists is/is not required?

This takes the form of a corporate_______

The resolution is signed by the _______of the corporation and the corporate_____ must be affixed

Back 26

is
resolution

secretary

seal

Front 27

In opening a partnership account what must be obtained?

Back 27

Copy of the partnership agreement

Front 28

Most partnership agreements are amended________, so each time an amended agreement must be obtained.

Back 28

annually

Front 29

With a limited trading authorization can this person withdraw funds from the account?

Can they buy and sell?

Back 29

Cannot withdraw funds

Can place orders to buy or sell

Front 30

What is a fiduciary?

Types of fiduciaries are:

Back 30

An account where a third party is acting for and in the best interest of the owner of the account.

Trusts, Guardian, Admin of Estate, Conservator for Incompetent
Executor of estate, Receiver in Bankruptcy

Front 31

Fiduciary accounts are generally prohibited from ________transactions. Only ________accounts are permitted.

Back 31

margin

cash

Front 32

Generally legal list investments consist of debt rated in the top ___ ratings(___ or better)

Back 32

4

BBB

Front 33

In a guardian account what document must be obtained to open this type of account?

Back 33

Court order appointing the guardian.

Front 34

In a discretionary account, the customer gives the______ ____ trading authorization.

The customer must sign a trading authorization_________and discretionary trades can take place

Back 34

brokerage firm

before

Front 35

In a discretionary account, the client must give Power of attorney to the _____ ______

Back 35

brokerage firm

Front 36

A trade is considered to be discretionary if the broker chooses more than the ____ and _____ of execution.

Back 36

price and time

Front 37

Trade is considered discretionary if size and/or ________ are chosen by the broker.

Back 37

security

Front 38

Every discretionary order ticket has to be signed by the appropriate _________ promptly.

Back 38

principal

Front 39

If the principal finds trades in discretionary accounts that he believes are unsuitable, too frequent, or excessive in size he will:

Back 39

discipline the broker and will remove the trades from the customers account, placing them in the house account to be reversed out the next trading day. If there are any losses on these trades, they are charged to the representative.

Front 40

Any_______ can open a custodian account

All securities in the account must be registered in _______ name.

If bearer securities are given, they must be:

Back 40

adult

account

canceled by the transfer agent and registered securities issued in their place.

Front 41

In custodial accounts ________ balances CANNOT be held in the account for an extended period of time.

Back 41

Cash

Front 42

Once a gift is given in a custodial account, it is_________.

Back 42

irrevocable

Front 43

Can a custodian let rights in the account expire worthless?

Back 43

NO

Front 44

Omnibus accounts are established to handle ________ _______ clients.

Back 44

Investment advisor

Front 45

An investment adviser trades the accounts for the clients as he sees fit, charging the clients and _____ _______ fee.

Back 45

annual management

Front 46

Customer must receive written confirmation of each transaction in the account, mailed no later than:

Back 46

the day after trade date

Front 47

If a client is travelling domestically, mail can be held______ months, overseas_____ months.

Back 47

2

3

Front 48

At all times, the registered representative must keep the following records:

Back 48

Copy of new account form information


Chronological record of trades

Current account statement, showing securities positions with their location.

Front 49

If there is an error in a confirm the firm must send a ________ confirm

Back 49

corrected

Front 50

If there is an error in execution, customer gets price at which trade _____ ____ been executed.

Back 50

Could have

Front 51

If a registered representative learns that a client has died, he must:

Back 51

cancel all open orders, note the customer account deceased, and await further instructions from the executor of the estate.

Front 52

If a account is a joint tenancy(with rights of survivorship) the account cannot be transferred into the sole name of the living owner until:

Back 52

a copy of the death certificate is received

Front 53

If a partner dies, no orders can be accepted until:

Back 53

the remaining partners amend the partnership agreement

Front 54

Once an account is closed, new account forms must be retained for___ years: customer statemetns for____ years.

Back 54

3
6

Front 55

The securities and exchange act of 1934 applies only to ______securities.

Back 55

Non exempt

Front 56

Reg T only applies to _____ securities.
Reg T controls credit from _____ to _____.

Back 56

non exempt

broker to customer

Front 57

Reg T sets____ margin.

The second level of margin regulation is applied by the _______ and the ______, which have their own margin requirements.
These are called the _____ _____ margins.

Back 57

initial

NASD exchanges

Minimum maintenance

Front 58

A margin account cannot be opened unless a customer signs a margin agreement. Under the agreement the customer pledges(hypothecates) the securities that are purchased in the account to the ______ firm.
In return the ______ firm loans the customer a portion of the purchase price. The loan to the customer is called the ______ balance.

Back 58

Brokerage
Brokerage

DEBIT

Front 59

The brokerage firm has the right to repledge client securities to a bank. This is also called:

Back 59

rehypothecation

Front 60

The bank loans funds to a broker termed a ____ loan or ____ loan on the basis of rehypothecated securities.

Back 60

call loan

Broker loan

Front 61

The credit relationship from bank to broker is controlled by Regulation___.

Back 61

U

Front 62

The basis promise of Reg U is:

Back 62

that brokerage firms cannot borrow more money from banks using customer securities as collateral than the actual amount that they loan to their customers.

Front 63

Broker is limited to rehypothecating customer securities equal to ______% of the debit balance.

Back 63

140%

Front 64

Reg T of the Federal Reserve Board controls credit from ____ to _____.
It sets_____ margin.

Back 64

Broker to customer.

Initial.

Front 65

The major exempt securities are:


The federal reserve has no power to set initial margins on these securities.

However these securities

Back 65

U.S. Government
Agency Issues
Muni issues
Commercial paper

Front 66

Only_________traded securities are marginable

Back 66

actively

Front 67

In a cash account, any security can be purchased as long as payment is made in_______-.

Under Reg. T, payment must be collected promptly, but no later than _ business days past industry settlement rules.

Back 67

full

2

Front 68

Under a reg T extension, how many days extra are given?

Back 68

3 business days