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Series 27 Practice Exam 2

Series 27 Practice Exams

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Practice Exam 2

Series 27 Practice Exam 2

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Question 1 of 10

1. Question

With respect to the filing requirements of SEC Rules 17a-5 and 17a-12, each of the statements which following are correct with the exception of:

An annual report which has been audited by the firm’s accountant or CFO is required to be filed within 60 days of year-end unless otherwise extended
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The annual report is required to be audited by an independent accounting firm which has no affiliation in any form with the filing firm
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17a-5 applies to broker-dealers in the ordinary course of their securities business whereas 17a-12 applies to OTC Derivatives dealers
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Regular customers of a FINRA member broker-dealer shall receive an unaudited copy of the 17a-5 semi-annual report as well as a copy of the annual audited report
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Question 2 of 10

2. Question

Records pertaining to terminated registered personnel are to be retained for no less than:

3 years after termination
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4 years after termination
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6 years after termination
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For the lifetime of the firm
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Question 3 of 10

3. Question

All FINRA member firms are required to have a business continuity plan. Each of the statements below are relevant to that requirement except:

The firm must have a designated off-site location in the event of a disaster or other sudden occurrence which would make a branch office or the headquarters of a firm unable to function normally.
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At least so senior level persons, one of whom is a Series 24 general securities principal, the other who is knowledgable in the operations of the firm, will be the two contact persons for the firm.
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FINRA will require each contact person identified by the firm to furnish FINRA with their contact phone numbers, email addresses, physical addresses, and such other details as FINRA may require to make contact as seamless as possible in the event of a disaster or other event requiring the execution of the business continuity plan.
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All member firms will furnish FINRA with a copy of the firm’s then current business continuity plan and any changes or amendments thereto.
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Question 4 of 10

4. Question

Rule 15c3-1 allows member firms to compute net capital by a standard method or an alternative method. Under the alternative method:

Minimum net capital is set at $ 1,000,000
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The firm must maintain net capital of no less than 2% of aggregate debit items as computed under 15c3-3
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An established firm cannot have a net capital ratio above 1500 per centrum
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Only NYSE-member firms are permitted to utilize the alternative method
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Question 5 of 10

5. Question

A general securities clearing carrying firm has been presented with the opportunity to become a syndicate member in the distribution of a new issue of common stock of a NASDAQ-listed company. As the FinOp, you’ve reviewed the firm’s capital position and take note of the fact that your firm may need a capital infusion in order to accept the role of syndicate member. Which statement below is accurate?

One of the most efficient and effective ways to increase your firm’s capital is a subordinated loan with a term of no less than 1 year.
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The firm may issue stock in order to close the gap in its financial position to enable it to do the underwriting.
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The firm could take a short-term loan from its primary bank to cover the gap in funding.
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The firm will utilize a temporary subordinated loan with a duration no longer than 45 days to close the gap in funding.
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Question 6 of 10

6. Question

FINRA Rule 4120 contains a number of provisions which may require the firm to reduce its business or not to expand its business. The specific percentages associated with this rule are:

A firm’s net capital has fallen below 150% of its required minimum for a period of 15 business days
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A firm’s net capital ratio has exceeded 1000% for a period of 15 business days
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A firm’s net capital has fallen below 125% of its required minimum for a period of 15 business days
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All of the above are found in the rule
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Question 7 of 10

7. Question

While performing the quarterly securities count, a clearing carrying firm has discovered a long count difference in one stock and a short stock difference in a different stock.

The long count difference may be used to increase the firm’s net capital
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The short count difference will result in an immediate reduction to net capital equal to 100% of the CMV of the short count
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A short count difference if unresolved for 45 calendar days will result in the firm executing a buy-in of the missing securities
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A long or short count has no impact on the firm’s net capital
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Question 8 of 10

8. Question

The lost, stolen and counterfeit provisions of federal securities regulations state that:

In the event the firm believes possible criminal activity is involved, it will notify the FBI as soon as possible
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In the event the firm believes the securities have been misplaced but no criminal activity is suspected, the firm will notify the Transfer Agent for that issuer’s securities and provide as much detail as possible
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In any event, the firm is obligated to make and keep comprehensive records pertaining to the lost, missing, stolen or counterfeit securities so that its books and records accurately reflect the firm’s financial condition
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All of these
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Question 9 of 10

9. Question

Rule 15c2-4 requires a member firm engaged in the sale of newly issued securities to forward customers’ payments:

To an independent escrow account set up to receive such payments until the underwriting process is complete
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By Noon of the business day following the receipt of payments from purchasing customers to an independent escrow account
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If the firm is an introducing broker-dealer, both A. And B. Apply
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15c2-4 requires customers pay at least the Reg. T margin deposit on newly issued securities
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Question 10 of 10

10. Question

A Simplified Arbitration procedure is appropriate when a customer complaint involves no more than:

$ 25,000
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$ 50,000
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$100,000
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It is appropriate when both the complainant and respondent agree to it, and FINRA’s Director of Arbitration approves its use.
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