Finra General Securities Representative ination (GS) (Series-7) Exam Questions

Finra General Securities Representative Examination (GS) Exam Objectives

1. 1

   1.0 Seeks Business for the Broker-Dealer from Customers and Potential Customers

   • 1.1Contacts current and potential customers in person and by telephone, mail, and electronic
   • 1.2means; develop promotional and advertising materials and seek appropriate approvals to
   • 1.3distribute marketing materials.
   • 1.4Knowledge of:
   • 1.5Standards and required approvals of public communications
   • 1.6Types of communications (e.g., retail, institutional, correspondence)
   • 1.7Seminars, lectures, and other group forum requirements
   • 1.8Product-specific advertisements and disclosures?
   • 1.9Investment company products and variable contractsOptions-related communications; options disclosure document (ODD)Municipal Securities
   • 1.10Research reports (e.g., quiet periods, distribution, third-party research)
   • 1.11Government securities, collateralized mortgage obligations (CMOs), certificates of deposit (CDs)
   • 1.12FINRA Rules
   • 1.13Communications with the Public
   • 1.14Communications with the Public about Variable Life Insurance and Variable Annuities
   • 1.15Use of Investment Companies Rankings in Retail Communications
   • 1.16Requirements for the Use of Bond Mutual Fund Volatility Ratings
   • 1.17Communications with the Public about Collateralized Mortgage Obligations (CMOs)
   • 1.18Options Communications
   • 1.19Members’ Responsibilities Regarding Deferred Variable Annuities
   • 1.20Options
   • 1.21SEC Rules and Regulations
   • 1.22Securities Act of 1933
   • 1.23Section 5 Prohibitions Relating to Interstate Commerce and the Mails
   • 1.24Investment Company Sales Literature
   • 1.25Advertising by an Investment Company as Satisfying Requirements of Section 10
   • 1.26Summary Prospectuses for Open-End Management Investment Companies
   • 1.27Securities Exchange Act of 1934
   • 1.2815c2-12 Municipal Securities Disclosure
   • 1.2915c3-3 Customer Protection Reserves and Custody of Securities
   • 1.30Cboe Rules
   • 1.31Addressing of Communications to Customers
   • 1.32Delivery of Current Options Disclosure Documents
   • 1.33Options Communications
   • 1.34MSRB Rule
   • 1.35Advertising
   • 1.36Describes investment products and services to current and potential customers with the
   • 1.37intent of soliciting business
   • 1.38Knowledge of:
   • 1.39Process for bringing new issues to market (e.g., due diligence, registration statement, preliminary
   • 1.40prospectus, final prospectus, underwriting agreement, selling group agreement, blue-sky laws and
   • 1.41procedures)
   • 1.42Regulatory requirements for initial public offerings (IPOs) (e.g., restrictions on prospecting or soliciting,
   • 1.43allowable communications with the public)
   • 1.44Primary financing for municipal securities (e.g., competitive sale, negotiated sale, private offering, advance
   • 1.45refunding)
   • 1.46Syndicate formation and operational procedures (e.g., the purpose of syndicate bid, roles and responsibilities of
   • 1.47underwriters, selling group concession and reallowance)
   • 1.48Pricing practices and components of underwriters’ spread and determination of underwriters’ compensation
   • 1.49and selling practices
   • 1.50Prospectus requirements (e.g., timeliness of information, preliminary prospectus (red herring), final
   • 1.51prospectus)
   • 1.52Information required in a registration statement and offering material on the new issue (e.g., in pre-filing period,
   • 1.53in the cooling-off period, in the post-registration period)
   • 1.54Official statements, preliminary official statements, notice of sale for municipal securities
   • 1.55Qualified institutional buyer (QIB) and accredited investor
   • 1.56Qualification requirements for Regulation A offerings (e.g., filing of abbreviated registration statement and
   • 1.57offering circular
   • 1.58Regulation D offerings (e.g., exemption from SEC registration, access to capital markets, accredited
   • 1.59investors)
   • 1.60Securities and transactions exempted from registration, including Section 3(a)(11) of the Securities Act of
   • 1.61and Rule 147 thereunder (i.e., intrastate offering)
   • 1.62Regulatory requirements for private placements or resales
   • 1.63Nonregistered foreign securities sold to institutions qualified in the U.S.
   • 1.64Foreign securities prohibited from being sold to U.S. investors
   • 1.65FINRA Rules
   • 1.66Networking Arrangements Between Members and Financial Institutions
   • 1.67Tape Recording of Registered Persons by Certain Firms
   • 1.68Corporate Financing Rule Underwriting Terms and Arrangements
   • 1.69Public Offerings of Securities with Conflicts of Interest
   • 1.70Restrictions on the Purchase and Sale of Initial Equity Public Offerings
   • 1.71New Issue Allocations and Distributions
   • 1.72Sale of Securities in a Fixed Price Offering
   • 1.73Disclosure of Price and Concessions in Selling Agreements
   • 1.74Notification Requirements for Offering Participants
   • 1.75SEC Rules and Regulations
   • 1.76Securities Act of 1933
   • 1.77Section 3 Exempted Securities
   • 1.78Section 4 Exempted Transactions
   • 1.79Communications Not Deemed a Prospectus
   • 1.80134a Options Material Not Deemed a Prospectus
   • 1.81Persons Deemed Not To Be Engaged in a Distribution and Therefore Not Underwriters
   • 1.82144A Private Resales of Securities to Institutions
   • 1.83Reclassification of Securities, Mergers, Consolidations and Acquisitions of Assets
   • 1.84Intrastate Offers and Sales
   • 1.85Post-filing Free Writing Prospectuses in Connection with Certain Registered Offerings Securities Exchange Act of 1934
   • 1.8610b-1 Prohibition of Use of Manipulative or Deceptive Devices or Contrivances concerning
   • 1.87Certain Securities Exempted from Registration
   • 1.8810b-3 Employment of Manipulative and Deceptive Devices by Brokers or Dealers
   • 1.8910b-18 Purchases of Certain Equity Securities by the Issuer and Others
   • 1.9015c2-8 Delivery of Prospectus
   • 1.9117a-3 Records To Be Made by Certain Exchange Members, Brokers and Dealers
   • 1.92Regulation A Conditional Small Issues Exemption
   • 1.93Regulation C Registration
   • 1.94Delayed or Continuous Offering and Sale of Securities
   • 1.95Contents of Prospectus Used After Nine Months
   • 1.96Prospectus for Use Before Effective Date
   • 1.97430A Prospectus in a Registration Statement at the Time of Effectiveness
   • 1.98430B Prospectus in a Registration Statement After Effective Date
   • 1.99Conditions to Permissible Post-filing Free Writing Prospectuses
   • 1.100Regulation D Rules Governing the Limited Offer and Sale of Securities Without Registration Under the
   • 1.101Securities Act of 1933
   • 1.102Use of Regulation D
   • 1.103Definitions and Terms Used in Regulation D
   • 1.104General Conditions to be Met
   • 1.105Filing of Notice of Sale
   • 1.106Exemption for Limited Offerings and Sales of Securities Not Exceeding $5,000,000
   • 1.107Exemption for Limited Offers and Sales Without Regard to Dollar Amount of Offering
   • 1.108Disqualifying Provision Relating to Exemptions under Rules 504 and 506
   • 1.109Insignificant Deviations from a Term, Condition or Requirement of Regulation D
   • 1.110Regulation M
   • 1.111Regulation S Rules Governing Offers and Sales Made Outside the United States Without Registration
   • 1.112Under the Securities Act of 1933
   • 1.113Trust Indenture Act of 1939
   • 1.114MSRB Rules
   • 1.115Primary Offering Practices
   • 1.116Transactions with Employees and Partners of Other Municipal Securities Professionals
   • 1.117Disclosures in Connection with Primary Offerings
   • 1.118CUSIP Numbers, New Issue, and Market Information Requirements
   • 1.119Solicitation of Municipal Securities Business
2. 2

   2.0 Opens Accounts After Obtaining and Evaluating Customers Financial Profile and Investment Objectives

   • 2.1Informs customers of the types of accounts and provides disclosures regarding various
   • 2.2account types and restrictions
   • 2.3Knowledge of:
   • 2.4Types of accounts (e.g., pattern day trading, prime brokerage, delivery versus payment/receive versus
   • 2.5payment (DVP/RVP), advisory or fee-based)
   • 2.6Account registration types (e.g., tenants in common (TIC), community property, sole proprietorship,
   • 2.7partnership, unincorporated associations)
   • 2.8Requirements for opening customer accounts
   • 2.9Retirement plans and other tax-advantaged accounts
   • 2.10Transfers, rollovers, eligibility, distribution strategies, and taxation (e.g., types of allowable contributions,
   • 2.11distribution options, taxation of distribution at retirement, age restrictions for distributions, permissible
   • 2.12investments)
   • 2.13Employer-sponsored plans and ERISA (e.g., 457, defined benefit, profit-sharing, stock options and
   • 2.14stock purchase, non-qualified deferred compensation programs)
   • 2.15Wealth events (e.g., inheritance)
   • 2.16Account registration changes and internal transfers
   • 2.17FINRA Rules
   • 2.18Day-trading Risk Disclosure Statement
   • 2.19Approval Procedures for Day-trading Accounts
   • 2.20Customer Account Information
   • 2.21Authorization Records for Negotiable Instruments Drawn from a Customer’s Account
   • 2.22Approval and Documentation of Changes in Account Name or Designation
   • 2.23Cboe Rule
   • 2.24Opening of Accounts
   • 2.25Internal Revenue Code
   • 2.26Retirement Savings
   • 2.27Limitations on Benefits and Contributions Under Qualified Plans
   • 2.28Qualified Tuition Programs
   • 2.29Coverdell Education Savings Accounts
   • 2.30Employee Retirement Income Security Act of 1974 (ERISA)
   • 2.31Obtains and updates customer information and documentation, including required legal
   • 2.32documents and identifies and escalates suspicious activity
   • 2.33Knowledge of:
   • 2.34Customer screening (e.g., customer identification program (CIP), know-your-customer (KYC), domestic or
   • 2.35foreign residency and/or citizenship, corporate insiders, employees of broker-dealers or self-regulatory
   • 2.36organizations (SROs))
   • 2.37Information security and privacy regulations (e.g., initial privacy disclosures to customers, opt-out notices,
   • 2.38disclosure limitations, exceptions)
   • 2.39Account authorizations (e.g., power of attorney (POA), trust documents, corporate resolutions, trading
   • 2.40authority, discretionary account documents)
   • 2.41FINRA Rule
   • 2.42408T Discretionary Power in Customers’ Accounts
   • 2.43Know Your Customer
   • 2.44Discretionary Accounts
   • 2.45SEC Rules and Regulations
   • 2.46Securities Exchange Act of 1934
   • 2.47Section 3(a)(35) Definitions and Application of Title “Investment Discretion”
   • 2.48Regulation S-P Privacy of Consumer Financial Information and Safeguarding Personal Information
   • 2.49Cboe Rule
   • 2.50Discretionary Accounts
   • 2.51Makes reasonable efforts to obtain customer investment profile information including, but
   • 2.52not limited to, the customer's other security holdings, financial situation and needs, tax
   • 2.53status and investment objectives
   • 2.54Knowledge of:
   • 2.55Essential facts regarding customers and customer relationships
   • 2.56Financial factors relevant to assessing a customer’s investment profile
   • 2.57Security holdings, other assets and liabilities, annual income, net worth, tax considerations
   • 2.58Other considerations (e.g., age, marital status, dependents, employment, investment experience, home
   • 2.59ownership and financing, employee stock options, insurance, liquidity needs)
   • 2.60Investment objectives (e.g., preservation of capital, income, growth, speculation)
   • 2.61Reasonable-basis, customer-specific, and quantitative care obligations
   • 2.62Investment strategies and recommendations to hold
   • 2.63Verification of investor accreditation and sophistication
   • 2.64FINRA Rules
   • 2.65Suitability
   • 2.66Requirements for the Use of Investment Analysis Tools
   • 2.67SEC Rules and Regulations
   • 2.68Securities Act of 1934
   • 2.6915l-1 Regulation Best Interest
   • 2.70MSRB Rule
   • 2.71Suitability of Recommendations and Transactions
   • 2.72Obtains supervisory approvals required to open accounts
   • 2.73Knowledge of:
   • 2.74Required review, approvals, and documentation for account opening and maintenance
   • 2.75Physical receipt, delivery, and safeguarding of cash or cash equivalents, checks, and securities
   • 2.76Circumstances for refusing or restricting activity in an account or closing accounts
   • 2.77FINRA Rules
   • 2.78Supervision
   • 2.79Supervisory Control System
   • 2.80Cboe Rule
   • 2.81Supervision of Accounts
   • 2.82MSRB Rule
   • 2.83Supervision
3. 3

   3.0 Provides Customers with Information AboutInvestments, Makes Recommendations, Transfers Assets and Maintains Appropriate Records

   • 3.1Recommendations, Transfers Assets, and Maintains Appropriate Records
   • 3.2Provides customers with information about investment strategies, risks and rewards, and
   • 3.3communicates relevant market, investment,t and research data to customers
   • 3.4Knowledge of:
   • 3.5Customer-specific factors that generally affect the selection of securities (i.e., customer’s investment profile,
   • 3.6including the customer’s risk tolerance, investment time horizon, and investment objectives, and liquidity needs)
   • 3.7Portfolio or account analysis and its application to security selection (e.g., diversification, asset allocation
   • 3.8principles, concentration, volatility, and potential tax ramifications)
   • 3.9Portfolio theory (e.g., alpha and beta considerations, Capital Asset Pricing Model (CAPM))
   • 3.10Delivery of annual reports and notices of corporate actions (e.g., dividends, splits, odd lot tenders)
   • 3.11Fundamental analysis of financial statements and types of financial statements included in an annual report,
   • 3.12importance of footnotes, material risk disclosures, and key terms (e.g., assets, liabilities, capital, cash flow,
   • 3.13income, earnings per share (EPS), book value, shareholders' equity, depreciation, depletion, goodwill)
   • 3.14Balance sheet and methods of inventory valuation: last-in, first-out (LIFO), first-in, first-out (FIFO) and
   • 3.15methods of depreciation
   • 3.16Income statement and calculations derived from an income statement: earnings before interest and taxes
   • 3.17(EBIT); earnings before taxes (EBT); net profit; and earnings before interest, taxes, depreciation and
   • 3.18amortization (EBITDA)
   • 3.19Principal tools to measure financial health
   • 3.20Liquidity: working capital, current ratio, quick assets, acid test ratio
   • 3.21Risk of bankruptcy: bond ratio, debt-to-equity ratio
   • 3.22Efficient use of assets: inventory turnover ratio, cash flow
   • 3.23Profitability: margin-of-profit ratio, net profit ratio, asset coverage, and safety of income (i.e., net asset value (NAV) per bond, bond interest coverage, book value per share)
   • 3.24EPS: fully diluted EPS, price-earnings (P/E) ratio, dividend payout ratio, current yield
   • 3.25Competitiveness (comparative performance): return on common equity
   • 3.26SEC Rules and Regulations
   • 3.27Securities Exchange Act of 1934
   • 3.2814e-3 Transactions in Securities on the Basis of Material, Nonpublic Information in the Context of
   • 3.29Tender Offers
   • 3.3014e-4 Prohibited Transactions in Connection with Partial Tender Offers
   • 3.31Cboe Rule
   • 3.32Suitability of Recommendations
   • 3.33Reviews and analyzes customers' investment profiles and product options to determine that
   • 3.34investment recommendations meet applicable standards
   • 3.35Knowledge of:
   • 3.36Equity securities
   • 3.37Types of stock (e.g., authorized, issued, outstanding, Treasury stock, stated value)
   • 3.38Characteristics of common stock
   • 3.39Rights of common stockholders (e.g., pre-emptive right, pro rata share of dividends, access to
   • 3.40corporate books, voting power (statutory, cumulative, nonvoting), residual claims on corporate assets)
   • 3.41Spinoffs
   • 3.42Stock acquired through a consolidation or transfer
   • 3.43Penny stocks and rules associated with penny stock transactions
   • 3.44Characteristics of preferred stock
   • 3.45Types of preferred stock (e.g., cumulative, non-cumulative, participating, nonparticipating, convertible,
   • 3.46callable, adjustable rate, and variable rate)
   • 3.47Rights of preferred stockholders (e.g., preference upon corporate dissolution, dividend payment, conversions, sinking fund provisions)
   • 3.48Rights and warrants: origination, exercise terms, the relationship of the subscription price to the market price of
   • 3.49underlying stock, anti-dilution agreement
   • 3.50Electronic exchanges or auction markets (e.g., electronic communications networks (ECNs), over-the counter (OTC), dark pools of liquidity)
   • 3.51Types and characteristics of non-U.S. market securities (e.g., American Depositary Receipts (ADRs),
   • 3.52corporate equity)
   • 3.53Tax treatment of equity securities transactions
   • 3.54Capital gains and losses, dividend distributions (qualified and non-qualified), wash sales, holding
   • 3.55periods
   • 3.56Determination of net long-term and short-term gains or losses
   • 3.57When-issued securities, securities acquired through conversion
   • 3.58Calculation of cost basis per share on: purchases, exchange of convertibles for common shares, stock
   • 3.59dividends and stock rights, inherited or gifted securities
   • 3.60Cost valuation: FIFO, LIFO, identified shares
   • 3.61Packaged products
   • 3.62Investment companies, exchange-traded funds (ETFs), unit investment trusts (UITs)
   • 3.63Types of mutual funds: equity, fixed income, money market, interval
   • 3.64Structure of investment companies (e.g., open-end and closed-end funds)
   • 3.65Fund objectives (e.g., value, growth, income, balanced, international, sector, life cycle)
   • 3.66Characteristics of:
   • 3.67− Open-end funds: e.g., NAV, forward pricing, offering price, exchange privileges within families of
   • 3.68funds, fees, and expenses: no load, load (front-end, back-end), distribution fees, management fees,
   • 3.69nature of 12b-1 fees
   • 3.70− Closed-end funds: distributed in the primary market at the IPO price, traded in the secondary market
   • 3.71Sales practices (e.g., dollar-cost averaging (DCA), computing sales charges, breakpoints)
   • 3.72Redemption (e.g., redemption price, payout or withdrawal plans, conversion privilege, restrictions,
   • 3.73contingent deferred sales charge, tenders)
   • 3.74Tax treatment of mutual funds
   • 3.75Reinvestment of dividends and capital gain distributions
   • 3.76Charges and expenses
   • 3.77Variable life insurance/annuity contracts
   • 3.78Characteristics and insurance features (e.g., minimum guarantees, death benefits, living benefits,
   • 3.79riders)
   • 3.80Separate accounts (e.g., purpose, management of portfolio, investment policies, performance of
   • 3.81account)
   • 3.82Valuation of a variable annuity contract (e.g., accumulation units, surrender value, annuitization units)
   • 3.83Purchasing or exchanging variable annuities (e.g., immediate annuity, charges, fees, penalties, right of
   • 3.84accumulation (ROA), waiver of premium)
   • 3.85Annuitization: types of election, variable payout, assumed interest rate, the relationship between assumed
   • 3.86interest rate and actual rate of return
   • 3.87Tax treatment of variable annuity contracts during the accumulation period and annuity period and taxation
   • 3.88at the surrender of the contract
   • 3.89Real estate investment trusts (REITs)
   • 3.90Structure (e.g., finite number of shares, distributed in the primary market at the IPO price, traded in secondary
   • 3.91market, premiums, and discounts to NAV)
   • 3.92Types and characteristics (e.g., equity REIT, mortgage REIT, hybrid REIT)
   • 3.93Tax treatment (e.g., dividends, capital gains, distributions)
   • 3.94Direct participation programs (DPPs)
   • 3.95General characteristics
   • 3.96− Structures (e.g., limited partnerships (e.g., roles and duties of general partners vs. limited
   • 3.97partners), limited liability companies, corporations that have tax pass-through exemption from the
   • 3.98IRS)
   • 3.99− Tax treatment (e.g., flow-through of income, expenses and tax liability, real estate depreciation, oil
   • 3.100and gas tax advantages)
   • 3.101Types of DPPs (e.g., real estate, oil and gas, small-cap debt and equity, business development
   • 3.102companies (BDCs), equipment leasing) and their investment advantages, risks, and tax implications
   • 3.103Types of DPP offerings (i.e., private placements and public offerings)
   • 3.104Evaluation of DPPs (e.g., economic soundness of the program, expertise of the general partner, basic
   • 3.105of the program; start-up costs, leverage,e and other revenue considerations)
   • 3.106Options
   • 3.107Listed options and their characteristics (e.g., contract specifications and adjustments, dividends,
   • 3.108exercise/assignment, settlement date, opening and closing transactions, values (premium, intrinsic and
   • 3.109time), volume, open interest, position limits, exercise limits)
   • 3.110The Options Clearing Corporation (OCC)
   • 3.111American-style and European-style
   • 3.112Long-term Equity AnticiPation Securities (LEAPS)
   • 3.113Basic strategies (e.g., covered writing and hedging for equity, index, foreign currency, and yield-based
   • 3.114options)
   • 3.115Protective put for equity and index options
   • 3.116Covered call and put writing for equity options
   • 3.117Advanced strategies (e.g., spreads, straddles, combinations, uncovered writing)
   • 3.118Long (debit) and short (credit) spreads
   • 3.119Straddle/combination for equity and index options
   • 3.120Uncovered (naked) call or put writing for equity, index, and yield-based options
   • 3.121Profit and loss calculations, break-even points, economics of positions
   • 3.122Tax treatment of options transactions (equity, index, foreign currency, yield-based)
   • 3.123Debt Securities
   • 3.124Types of debt securities and money market instruments (e.g., corporate commercial paper, brokered CDs,
   • 3.125Eurodollar bond, variable-rate preferreds)
   • 3.126Characteristics: structure, risks and rewards, call provisions
   • 3.127Structured products (e.g., equity-linked securities, exchange-traded notes (ETNs))
   • 3.128Types and characteristics of non-U.S. market securities (e.g., sovereign and corporate debt)
   • 3.129Types of yields (e.g., coupon (nominal), current, yield to maturity (YTM), yield to call (YTC), yield to worst
   • 3.130and discount yield, calculations, and relationship to price)
   • 3.131Bond ratings
   • 3.132Tax implications of taxable debt securities, including original issue discount (OID) rules, interest, principal,
   • 3.133premiums, discounts, and capital gains and losses
   • 3.134Corporate bonds
   • 3.135Types of corporate bonds (e.g., mortgage bonds, equipment trust certificates, debentures, step coupon
   • 3.136bonds, zero-coupon bonds, convertible bonds, high-yield bonds, income bonds) and their characteristics
   • 3.137Convertible bonds: general characteristics, (e.g., conversion privilege, fixed versus variable, conversion ratio
   • 3.138or price, calculation of parity price of the underlying security, arbitrage, factors influencing conversion)
   • 3.139Municipal Securities
   • 3.140General characteristics of municipal fund securities, method of quotations (e.g., yield/basis price, dollar
   • 3.141price), interest rate, payment periods, denominations, diversity of maturities (e.g., serial, term), and legal
   • 3.142opinion (purpose and contents)
   • 3.143Analysis and diversification of municipal investments: geographical, type and rating
   • 3.144Analysis of general obligation (GO) bonds, including characteristics of the issuer, nature of the issuer’s
   • 3.145debt, factors affecting the issuer’s ability to pay, municipal debt ratios
   • 3.146Analysis of revenue bonds, including feasibility studies, sources of revenue, security (protective covenants
   • 3.147of bond indenture), financial reports and outside audits, restrictions on the issuance of additional bonds, flow
   • 3.148of funds, earnings coverage, sources of credit information, rating services, credit enhancements
   • 3.149Purpose and characteristics of specific types of municipal securities:
   • 3.150Types of municipal bonds (e.g., GO bonds, limited tax GO bonds and notes, revenue bonds, short-term
   • 3.151municipal obligations (e.g., tax anticipation notes (TANs), bond anticipation notes (BANs), revenue
   • 3.152anticipation notes (RANs), tax-exempt commercial paper, grant anticipation notes (GANs), tax and
   • 3.153revenue anticipation notes (TRANs)))
   • 3.154Special tax, special assessment, moral obligation, advance or pre-refunded, double-barreled, taxable
   • 3.155(e.g., Build America bonds), OIDs, zero-coupon (capital appreciation) bonds, certificates of participation
   • 3.156(COPs), alternative minimum tax (AMT), lease revenue, variable rate securities, auction rate securities
   • 3.157Municipal fund securities including 529 college savings plans, local government investment pools
   • 3.158(LGIPs), ABLE accounts (e.g., change in beneficiary, rollovers, ownership, tax consequences of
   • 3.159unqualified withdrawals)
   • 3.160Call features (e.g., par or premium, optional, mandatory, partial call, sinking fund, extraordinary calls,
   • 3.161make whole calls), advantages/disadvantages to issuers and investors
   • 3.162Put or tender options
   • 3.163Refunding methods: direct exchange versus sale of new issue, advance refunding, refunding at call
   • 3.164dates/current refunding escrowed to maturity, crossover refunding
   • 3.165Factors affecting the marketability of municipal bonds: rating, maturity, call features, interest (coupon) rate,
   • 3.166block size, liquidity (ability to sell the bond in the secondary market), dollar/yield price, issuer name (local or
   • 3.167national reputation), credit enhancement, credit and liquidity support, denominations
   • 3.168Pricing of municipal securities and other mathematical calculations: dollar price, accrued interest (regular
   • 3.169coupon, odd first coupon), computations of accrued interest (30/360), amortization of premium, accretion of
   • 3.170discount, relationship of bond prices to changes in maturity, coupon, various yield calculations (taxable
   • 3.171equivalent yield, net yield after capital gains tax, current yield, YTC on premium bonds) value of basis point,
   • 3.172in default,
   • 3.173Tax treatment of municipal securities: securities bought at a discount or premium in the secondary market,
   • 3.174OID, federal income tax status, state and local tax status, computation of taxable equivalent yield, accrued
   • 3.175interest, AMT, bonds, taxable bonds, bank-qualified bonds
   • 3.176Registered hedge funds and fund of funds
   • 3.177Structure (e.g., private placements, registered, exemption from registration under the Investment Company
   • 3.178Act of 1940, blind pool/ blank check)
   • 3.179Characteristics (e.g., limited or no liquidity, limited available information, lock-up provisions, charges and
   • 3.180expenses, tangible assets, a wide array of investment styles, models, and vehicles)
   • 3.181Tax treatment of distributions
   • 3.182Asset-backed securities
   • 3.183Collateralized mortgage obligations (CMOs)
   • 3.184Collateralized debt obligations (CDOs)
   • 3.185Characteristics (e.g., indenture, maturities, form of ownership, interest payment periods, call and put
   • 3.186features, calculation of accrued interest, and specific characteristics (e.g., maturity, type of collateral, priority
   • 3.187of claim, call provisions))
   • 3.188S. Treasury securities
   • 3.189Treasury bills, notes, bonds
   • 3.190Treasury receipts (Separate Trading of Registered Interest and Principal Securities (STRIPS)/zero-coupon)
   • 3.191Treasury Inflation Protected Securities (TIPS)
   • 3.192Characteristics (e.g., types, maturities, denominations, payment of interest)
   • 3.193S. government agency securities
   • 3.194Government National Mortgage Association (Ginnie Mae)
   • 3.195Federal National Mortgage Association (Fannie Mae)
   • 3.196Federal Home Loan Mortgage Corporation (Freddie Mac)
   • 3.197SLM Corporation (Sallie Mae)
   • 3.198Characteristics: types, maturities, denominations, primary dealers, distribution, issue form, quotations, passthrough, calculating a spread, pricing, payment of interest, and principal
   • 3.199FINRA Rules
   • 3.200Recommendations to Customers in OTC Equity Securities
   • 3.201Fair Prices and Commissions
   • 3.202Charges for Services Performed
   • 3.203Net Transactions with Customers
   • 3.204Direct Participation Programs
   • 3.205Variable Contracts of an Insurance Company
   • 3.206Investment Company Securities
   • 3.207Series Trading in Index Warrants, Currency Index Warrants, and Currency Warrants
   • 3.2084210(f)(2) Definitions Related to Options, Currency Warrants, Currency Index Warrants and Stock Index
   • 3.209Warrant Transactions
   • 3.210SEC Rules and Regulations
   • 3.211Securities Exchange Act of 1934
   • 3.212Section 9(a) Prohibition Against Manipulation of Security Prices (Transactions Relating to Purchase
   • 3.213or Sale of Security)
   • 3.214Exemption of Certain Issuers from Section 15(D) of the Act
   • 3.2153a51-1 Definition of "Penny Stock"
   • 3.21615g-1 Exemptions for Certain Transactions
   • 3.21715g-2 Penny Stock Disclosure Document Relating to the Penny Stock Market
   • 3.21815g-5 Disclosure of Compensation of Associated Persons in Connection with Penny Stock
   • 3.219Transactions
   • 3.22015g-9 Sales Practice Requirements for Certain Low-priced Securities
   • 3.221Investment Company Act of 1940
   • 3.222Section 2(a) General Definitions
   • 3.223Section 10 Affiliations or Interests of Directors, Officer,s and Employees
   • 3.224Section 12(a) Functions and Activities of Investment Companies (Purchase of Securities on Margin;
   • 3.225Joint Trading Accounts; Short Sales of Securities; Exceptions)
   • 3.226Section 13(a) Changes in Investment Policy (Prohibited Actions for Registered Investment
   • 3.227Companies)
   • 3.228Section 15(a) Investment Advisory and Underwriting Contracts (Written Contract to Serve or Act as
   • 3.229Investment Adviser; Contents)
   • 3.230Section 16(a) Changes in Board of Directors; Provisions Relative to Strict Trusts (Election of
   • 3.231Directors)
   • 3.232Section 17(a) Transactions of Certain Affiliated Persons and Underwriters (Prohibited Transactions)
   • 3.233Section 18 Capital Structure
   • 3.234Section 19 Dividends
   • 3.235Section 22 Distribution, Redemption, and Repurchase of Redeemable Securities
   • 3.236Section 23 Distribution and Repurchase of Securities: Closed-end Companies
   • 3.237Section 30 Periodic and Other Reports; Reports of Affiliated Persons
   • 3.238Section 35 Unlawful Representations and Names
   • 3.239Section 36 Breach of Fiduciary Duty
   • 3.240Section 37 Larceny and Embezzlement
   • 3.24112b-1 Distribution of Shares by Registered Open-end Management Investment Company
   • 3.242Cboe Rules
   • 3.243Definitions
   • 3.244(f) Long-term Equity Options Series (LEAPS®)
   • 3.245Adjustments
   • 3.246(e) Exercise of American-style Index Options
   • 3.247Allocation of Exercise Notices
   • 3.248Just and Equitable Principles of Trade
   • 3.249Position Limits
   • 3.250Position Limits for Broad-based Index Options
   • 3.251Position Limits for Industry Index Options
   • 3.252Position Limits Interest Rate Options
   • 3.253(b) Exercise Limits Index Options
   • 3.254(f) Exercise Limits Interest Rate Options
   • 3.2551
   • 3.256Exercise of Option Contracts
   • 3.257MSRB Rules
   • 3.258Definition of Municipal Fund Securities
   • 3.259Quotations Related to Municipal Securities
   • 3.260Conduct of Municipal Securities Activities
   • 3.261Prices and Commissions
   • 3.262Reporting of Information on Municipal Fund Securities
   • 3.263Real Estate Investment Trusts (REITs)
   • 3.264REIT Modernization Act of 1999
   • 3.265Internal Revenue Code
   • 3.266Distributions of Property
   • 3.267Dividend Defined
   • 3.268Definition of Real Estate Investment Trust
   • 3.269Dividends Paid by Real Estate Investment Trust After Close of Tax Year
   • 3.270Certain exchanges of Insurance Policies
   • 3.271Loss from Wash Sales of Stock or Securities
   • 3.272Gains and Losses from Short Sales
   • 3.273Contracts Marked to Market
   • 3.274Provides required disclosures regarding investment products and their characteristics,
   • 3.275risks, services, and expenses
   • 3.276Knowledge of:
   • 3.277Required disclosures on specific transactions (e.g., material aspects of investments, statement of additional
   • 3.278information, material events, control relationships)
   • 3.279Types of investment risk (e.g., call, systematic and nonsystematic, reinvestment, timing)
   • 3.280Types of investment returns (e.g., tax-exempt interest, return of capital)
   • 3.281Costs and fees associated with investments (e.g., markups, commissions, net transactions, share classes,
   • 3.282non-discretionary fee-based accounts, surrender charges, 12b-1 fees, mortality and expense charges in
   • 3.283variable products, soft dollar arrangements)
   • 3.284Tax considerations (e.g., unification of gift and estate taxes, lifetime exclusion, annual gift limit, taxation of
   • 3.285securities received as a gift, inheritance of securities)
   • 3.286Market analysis considerations (e.g., market sentiment, market indexes, options volatility, put/call ratio,
   • 3.287market momentum, available funds, trading volume, short interest, index futures)
   • 3.288Market analysis considerations for municipal securities, including Bond Buyer indexes (e.g., 11 GO Bonds
   • 3.289Index, Municipal Bond Index (40 Bond), 20 GO Bonds Index)
   • 3.290Technical analysis of basic chart patterns and key terms (e.g., trend lines, saucer/inverted saucer, headand-shoulders/inverted head-and-shoulders, breakouts, resistance/support levels, moving averages,
   • 3.291consolidation, stabilization, overbought and oversold)
   • 3.292Disclosure of material events affecting retail sales of municipal bonds
   • 3.293FINRA Rule
   • 3.294Financial Exploitation of Specified Adults
   • 3.295SEC Rules and Regulations
   • 3.296Securities Exchange Act of 1934
   • 3.297Section 28(e) Effect on Existing Law (Exchange, Broker, and Dealer Commissions; Brokerage and
   • 3.298Research Services)
   • 3.299Internal Revenue Code
   • 3.300Taxable Gifts
   • 3.301Communicates with customers about account information, processes requests, and retains
   • 3.302documentation
   • 3.303Knowledge of:
   • 3.304Customer confirmations and statements, including components, timing, mailings to third parties, and
   • 3.305exceptions
   • 3.306Account value, profits,and losses realized and unrealized
   • 3.307Withdrawals and tenders
   • 3.308Customer account records (e.g., updating for change of address, sending required notifications, investment
   • 3.309s)
   • 3.310Transferring accounts between broker-dealers (e.g., Automated Customer Account Transfer Service
   • 3.311(ACATS), transfer agent and procedures)
   • 3.312Books and records retention requirements
   • 3.313Account closure procedures
   • 3.314FINRA Rules
   • 3.315409T Statements of Accounts to Customers
   • 3.316Customer Account Statements
   • 3.317Customer Confirmations
   • 3.318Educational Communication Related to Recruitment Practices and Account Transfers
   • 3.319Books and Records Requirements
   • 3.320Customer Account Transfer Contracts
   • 3.321SEC Rules and Regulations
   • 3.322Securities Exchange Act of 1934
   • 3.32310b-10 Confirmation of Transactions
   • 3.32415g-6 Account Statements for Penny Stock Customers
   • 3.32517a-4 Records To Be Preserved by Certain Exchange Members, Brokers and Dealers
   • 3.326Regulation FD Disclosure Requirements
   • 3.327Cboe Rules
   • 3.328Reporting duties
   • 3.329Maintenance, Retention and Furnishing of Books, Records and Other Information
   • 3.330Reports of Uncovered Short Positions
   • 3.331Financial Reports
   • 3.332Audits
   • 3.333Automated Submission of Trading Data
   • 3.334Risk Analysis of Market-maker Accounts
   • 3.335Risk Analysis of Portfolio Margin Accounts
   • 3.336Regulatory Cooperation
   • 3.337Confirmation to Customers
   • 3.338Statements of Accounts to Customers
   • 3.339Transfer of Accounts
   • 3.340MSRB Rules
   • 3.341Books and Records To Be Made by Brokers, Dealers, and Municipal Securities Dealers and Municipal
   • 3.342Advisors
   • 3.343Preservation of Records
   • 3.344Confirmation, Clearance, Settlement, and Other Uniform Practice Requirements to
   • 3.345Transactions with Customers
   • 3.346Customer Account Transfers
4. 4

   4.0 Obtains and Verifies Customers Purchase and Sales Instructions and Agreements; Processes, Completes and Confirms Transactions

   • 4.1Provides current quotes
   • 4.2Knowledge of:
   • 4.3Orders, offerings, and transactions in customer accounts (e.g., at advertised yield)
   • 4.4Trade execution activities
   • 4.5Types of securities quotes (e.g., firm, subject)
   • 4.6Types of orders (e.g., all-or-none (AON), fill-or-kill (FOK), immediate-or-cancel (IOC), not-held, market-onclose (MOC), spread, straddle)
   • 4.7Short sale requirements and strategies (e.g., order marking, locate, borrow and delivery, speculation,
   • 4.8hedging, arbitrage)
   • 4.9Securities lending (e.g., hard to borrow, fail to deliver)
   • 4.10Best execution obligations
   • 4.11FINRA Rules
   • 4.12Short Sale Delivery Requirements
   • 4.13Requirements for Alternative Trading Systems to Record and Transmit Orders and Execution
   • 4.14Information for Security Futures
   • 4.15Publication of Transactions and Quotations
   • 4.16Offers and Stated Prices
   • 4.17Prohibition on Transactions, Publication of Quotations, or Publication of Indications of Interest During
   • 4.18Trading Halts
   • 4.19Order Entry and Execution Practices
   • 4.20Best Execution and Interpositioning
   • 4.21Series Quoting and Trading in NMS stocks
   • 4.22Trading Otherwise than on an Exchange
   • 4.23Trading Halts
   • 4.24Trading Halts Due to Extraordinary Market Volatility
   • 4.25Transactions Related to Initial Public Offerings
   • 4.26Series Quoting and Trading in OTC Equity Securities
   • 4.27Series OTC Reporting Facility
   • 4.28COD Orders
   • 4.29SEC Rules and Regulations
   • 4.30Securities Exchange Act of 1934
   • 4.3115c2-7 Identification of Quotations
   • 4.3215c2-11 Initiation or Resumption of Quotations Without Specified Information
   • 4.3315g-3 Broker or Dealer Disclosure of Quotations and Other Information Relating to the Penny Stock
   • 4.34Market
   • 4.3515g-4 Disclosure of Compensation to Brokers or Dealers
   • 4.36Regulation ATS Alternative Trading Systems
   • 4.37Regulation SHO Regulation of Short Sales
   • 4.38Cboe Rules
   • 4.39Certain Types of Orders Defined
   • 4.40Required Order Information
   • 4.41NYSE Rules
   • 4.42Trading Halts Due to Extraordinary Market Volatility
   • 4.43Orders and Modifiers
   • 4.44Series Auctions
   • 4.45Order Execution and Routing
   • 4.46Dealings on the Floor-persons
   • 4.47Bonds, Rights and 100-Share-Unit Stocks
   • 4.48Precedence of Highest Bid and Lowest Offer
   • 4.4972(d) Priority of Cross Transactions and Supplemental Material .10 Definition of a Block
   • 4.50Publicity of Bids and Offers
   • 4.51Disputes as to Bids and Offers
   • 4.52“Crossing” Orders
   • 4.53Prohibited Dealings and Activities
   • 4.54Dealings and Responsibilities of DMMs
   • 4.55123A Miscellaneous Requirements
   • 4.56123D(d) Initial Listing Regulatory Halt
   • 4.57Block Crosses Outside of the Prevailing NYSE Quotation
   • 4.58Automatic Executions
   • 4.59Execution of Automatically Executing Orders
   • 4.60Availability of Automatic Execution Feature
   • 4.61Election of Buy Minus Zero Plus Orders
   • 4.62Processes and confirms customers’ transactions pursuant to regulatory requirements and
   • 4.63informs customers of delivery obligations and settlement procedures
   • 4.64Knowledge of:
   • 4.65Information required on an order ticket (e.g., symbol, account number, price)
   • 4.66Market-making activities: role and functions of the designated market maker, listing requirements, limitations
   • 4.67on trading during significant market declines, principal transactions, agency transactions, quotations (e.g.,
   • 4.68firm, subject or otherwise qualified, bid wanted, offer wanted, size obligations), SEC order handling rules,
   • 4.69transaction reporting
   • 4.70Use of automated execution systems
   • 4.71Regulatory reporting requirements (e.g., Trade Reporting and Compliance Engine (TRACE), Electronic
   • 4.72Municipal Market Access (EMMA), trade reporting facility (TRF), Real-Time Transaction Reporting System
   • 4.73(RTRS))
   • 4.74Delivery requirements
   • 4.75Good delivery (e.g., certificates in possession of the seller, certificates in the name of two persons,
   • 4.76deceased owner, stock or bond powers, mutilated certificates, due bills, DVP/RVP, book-entry securities,
   • 4.77stock certificate, endorsements, denominations, bearer, registrar, registered, Direct Registration System
   • 4.78(DRS))
   • 4.79Settlement of transactions (e.g., security-specific requirements, when-, as- and if-issued, ex-rights, ex-dividends, due bill checks, negotiated settlements, option exercise/assignment, don’t know (DK),
   • 4.80extensions)
   • 4.81FINRA Rules
   • 4.82Adjustment of Orders
   • 4.83Series Quotation, Order, and Transaction Reporting Facilities
   • 4.84Other Trading Practices
   • 4.85Series Trade Reporting and Compliance Engine
   • 4.86Series Clearing, Transactions, and Order Data Requirements, and Facility Charges
   • 4.87Series Uniform Practice Code
   • 4.88SEC Rules and Regulations
   • 4.89Securities Exchange Act of 1934
   • 4.9015c6-1 Settlement Cycle
   • 4.91Cboe Rules
   • 4.92Exercise of Options Contracts
   • 4.93Allocation of Exercise Notices
   • 4.94Delivery and Payment
   • 4.95MSRB Rules
   • 4.96Uniform Practice
   • 4.97Reports of Sales or Purchases
   • 4.98Nasdaq Stock Market Rules
   • 4.99Series Requirements for Nasdaq Market Makers and Other Nasdaq Market Center Participants
   • 4.100Series Nasdaq Market Center-Execution Services
   • 4.101NYSE Rules
   • 4.102“When Issued” “When Distributed”
   • 4.103Series Comparison and Exchange of Contracts
   • 4.104ComparisonNon-cleared Transactions
   • 4.105Differences and OmissionsCleared Transactions (“DK’s”)
   • 4.106ComparisonTransactions Excluded from a Clearance
   • 4.107Informs the appropriate supervisor and assists in the resolution of discrepancies, disputes,
   • 4.108errors and complaints
   • 4.109Knowledge of:
   • 4.110Erroneous reports, errors, cancels, and rebills
   • 4.111Requirements for addressing customer complaints and consequences of improper handling of complaints
   • 4.112Methods of formal resolution (e.g., arbitration, mediation, litigation)
   • 4.113Form U4 reporting requirements
   • 4.114FINRA Rules
   • 4.115Records of Written Customer Complaints
   • 4.116Reporting Requirements
   • 4.117Series Investigations and Sanctions
   • 4.118Clearly Erroneous Transactions in Exchange-listed Securities
   • 4.119Clearly Erroneous Transactions in OTC Equity Securities
   • 4.120Series Code of Arbitration Procedure for Customer Disputes
   • 4.121Series Code of Arbitration Procedure for Industry Disputes
   • 4.122Series Code of Mediation Procedure
   • 4.123Cboe Rules
   • 4.124Price Binding Despite Erroneous Report
   • 4.125Customer Complaints
   • 4.126Addresses margin issues
   • 4.127Knowledge of:
   • 4.128Requirements and characteristics of margin accounts (e.g., minimums, approvals, ineligible accounts,
   • 4.129eligible/ineligible securities), and required disclosures (e.g., interest rate disclosure and hypothecation)
   • 4.130Product or strategy-specific requirements (e.g., Treasury securities, mutual funds)
   • 4.131Calculations in margin accounts (e.g., long and/or short positions)
   • 4.132Initial margin: long market value, short market value, debit balance, credit balance, initial Regulation T
   • 4.133margin requirement on long or short positions, Regulation T requirement for established accounts, loan
   • 4.134value, excess equity, buying power of deposited securities
   • 4.135Maintenance: additional purchases, sales (long or short), cash withdrawals, stock withdrawals, simultaneous
   • 4.136purchases and sales, restrictions, liquidation to meet a margin/maintenance call, deposit of cash or
   • 4.137securities required to meet a margin or maintenance call
   • 4.138Special memorandum account (SMA): balance, buying power, prohibited use of SMA, effect of excess
   • 4.139equity, deposit of marginable securities, receipt of cash dividends and earned interest, liquidation of
   • 4.140securities in the account, cash or securities withdrawals, new margin securities purchased or sold short
   • 4.141Other margin accounts (e.g., portfolio margin, day trading)
   • 4.142FINRA Rules
   • 4.143Margin Disclosure Statement
   • 4.144Margin Requirements
   • 4.145Cboe Rules
   • 4.1461
   • 4.147General Rules
   • 4.1481
   • 4.149Time Margin Must Be Obtained
   • 4.1501
   • 4.151Margin Requirements
   • 4.1521
   • 4.153Portfolio Margin
   • 4.1541
   • 4.155Determination of Value for Margin Purposes
   • 4.1561
   • 4.157"When Issued" and "When Distributed" Securities
   • 4.1581
   • 4.159Guaranteed Accounts
   • 4.1601
   • 4.161Meeting Margin Calls by Liquidation Prohibited
   • 4.1621
   • 4.163Margin Required Is Minimum
   • 4.1641
   • 4.165Compliance with Margin Requirements of the New York Stock Exchange
   • 4.1661
   • 4.167Daily Margin Record
   • 4.168Federal Reserve
   • 4.169Regulation T Credit by Brokers and Dealers