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Series 26 Practice Exam 2

Series 26 Practice Exams

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Series 26 Practice Exam 2

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Question 1 of 10

1. Question

Section 19 of the Investment Company Act of 1940 specifies that the net capital gains from portfolio transactions shall be distributed to a mutual fund’s shareholders:

At least quarterly
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At least semi-annually
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Annually
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At the same frequency as mutual fund dividends are paid
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Correct

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Question 2 of 10

2. Question

The Securities & Exchange Act of 1934 contains a number of requirements for the contents of customer confirmations. Among them is the requirement to disclose:

Capacity of the B/D
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Any conflicts of interest between the B/D and the security being sold
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The rationale for recommending that particular security to the customer
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All of these
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Correct

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Question 3 of 10

3. Question

One of your long-time reps has informed you that they have someone who wants to transfer their account to your firm. FINRA rules set forth the requirements as follows:

1 day for validation of the account and then 3 days to effect the transfer
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1 day for validation of the account and then 5 days to effect the transfer
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3 days for validation of the account and then 1 day to effect the transfer
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5 days for validation of the account and then 1 day to effect the transfer
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Correct

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Question 4 of 10

4. Question

According to the SEA of 1934, Regulation T, none of the below is eligible to be purchased on margin except:

Mutual fund shares
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Regulation D private placement shares
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Closed-end fund shares
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None of these may be purchased on margin
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Question 5 of 10

5. Question

One of your registered reps has had a written customer complaint filed against them. The complaint alleges the rep made an unsuitable recommendation of some $50,000 in the client’s account. How should the incident be handled, according to FINRA’s Code of Arbitration?

It will be handled through non-binding mediation
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It will be handled by simplified arbitration with one arbitrator
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It will be handled by an arbitration hearing with 3 arbitrators
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It will be handled by a court of competent jurisdiction
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Correct

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Question 6 of 10

6. Question

By signing Form U-4, each of your newly-hired agents have agreed to which of the following?

To submit all complaints to FINRA
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To agree to consent to service of process
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To have disclosed all prior employers
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To have disclosed all prior residences
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Correct

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Question 7 of 10

7. Question

When one of your reps appears to have numerous customers purchasing mutual fund shares on the day prior to the ex-date, you are likely looking at which of the following violations of FINRA regulations?

Breakpoint selling
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Tax-loss transactions
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Short-term trading of mutual funds
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Selling dividends
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Correct

Incorrect
Question 8 of 10

8. Question

As an Investment Company/Variable Contract member firm engaging in subscription selling exclusively, SEC rules set a minimum net capital for the firm of:

$100,000
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$50,000
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$25,000
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$5,000
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Correct

Incorrect
Question 9 of 10

9. Question

At the time of new account opening, your firm’s AML registered principal will ordinarily be the individual who will check the client’s identity against which of the following?

The Department of Justice list of known criminals
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The FBI list of known financial criminals
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The OFAC list
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The FINRA list of known financial criminals
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Correct

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Question 10 of 10

10. Question

One of your reps has a mutual fund client who wishes to invest $15,000 into one of the funds you are recommending. The one they want to buy has a $25,000 breakpoint. Your rep writes the order ticket for the $15,000; however, when you get the executed ticket for managerial review, you would be looking to make sure your rep isn’t engaging in:

A breakpoint sale
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A below breakpoint sale
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Mutual fund short-term trading
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Excessively sized transactions
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Correct

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