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Customer Accounts
| Question | Answer |
|---|---|
| A customer's "education" is required information on a New Account Form: T/F | FALSE ("occupation" is needed) |
| A New Account cannot be opened for a customer if they refuse to disclose D.O.B. and/or SSN/Tax ID: T/F | TRUE (both are part of the 4 needed: Name, Address, DOB, SSN) |
| A marriage certificate can be used to verify a new customer's identity: T/F | FALSE (passport, driver's license, and military ID are valid for verification) |
| Government-issued ID is required for New Corporate Accounts: T/F | TRUE (e.g. certified articles of incorporation, State-Issued business license) |
| Member firms must verify the validity of government-issued IDs: T/F | FALSE (though one should exercise good judgement in determining if they are "fake") |
| For IRS reporting purposes on a joint account, only one participant's SSN is required: T/F | TRUE (the "New Account Form" generally requires all SSNs) |
| For opening a cash account, a customer's signature is required on the New Account Form: T/F | FALSE (the registered rep's signature is required, i.e. if it's done over the phone) |
| SIPC contact information must be provided to the customer before or upon opening the account and " " thereafter | ANNUALLY |
| What critical info is required on a new acct form? | •Customer Name; •Address; •Social Security Number or Tax I.D. Number; and •Date of Birth. |
| In order to open a new account for a customer, the customer’s name, date of birth, address and tax identification number must be: | obtained prior to account opening,independently verified within a reasonable time before or after account opening |
| What information is needed to open a new cash account for a customer? | the citizenship of the customer, whether the customer is an officer or director of a publicly held company, whether the customer is an employee of another broker-dealer |
| Which of the following signatures must appear on the New Account Form? | Registered Representative, Manager or Principal, customer DOES NOT need to sign |
| When must Customers must be given information about SIPC: | at, or prior to, account opening |
| If an investor wishes to open a margin account, which of the following paperwork is customarily completed? | New Account Form Hypothecation Agreement Loan Consent Agreement Credit Agreement |
| To determine the suitability of recommendations made to a customer, inquiry should be made about? | Statement objectives Investment experience Financial situation Financial needs |
| Under FINRA rules, a registered representative must obtain and retain which of the following information relating to the customer's account? | Customer Address Country of Citizenship Financial Status |
| The definition of a "pattern day trader" is a person who effects at least | 4 day trades in a 5 business day period |
| Which of the following customer information is required to determine suitability for an account that will engage in day trading? | employment status, marital status, tax status |
| “red-flags” that are usually unsuitable for seniors? | Variable annuities Structured products Mortgaging home equity for investment purposes Using retirement savings to invest in high-risk investments |
| A customer must be sent what document at, or prior to, opening an options account? | options disclosure document |
| A customer must sign and return which of the following documents within 15 days after opening an options account? | options agreement |
| Under FINRA rules, initial approval of new accounts must be performed, in writing, by the: | branch manager |
| Approval of new accounts for MSRB member firms can be performed by the: | Branch Office Manager Municipal Securities Principal General Securities Principal |
| Initial approval of options accounts is performed by the: | Branch Office Manager, Registered Options Principal |
| Which of following documents are unique to margin accounts? | margin agreement loan consent agreement credit disclosure statement |
| A registered representative is allowed to choose what without requiring written trading authorization from the customer? | Price and time |
| •If an employee of another NYSE member firm wishes to open an account, the NYSE requires that: | ◦Prior written approval be obtained from the employer member; and ◦Duplicate confirmations and statements be sent to the employer member |
| •If an employee of an NYSE member firm wishes to open an account at a non-NYSE member financial services firm, or an account is to be opened where this employee has a financial interest, then: | ◦Prior written consent must be obtained from the NYSE member employer; and ◦Duplicate confirmations and statements must be sent to the NYSE employer member |
| •If an employee of another municipal securities firm wishes to open an account, then: | ◦Prior written notice must be given to the municipal employer; ◦Duplicate confirmations must be sent to the municipal employer |
| •If an employee of another member firm wishes to open an options account, then: | ◦Prior written permission must be obtained from the employer member; and ◦Duplicate confirmations must be sent to the employer member. |
| What accounts consist of a Fiduciary? | Trust, Custodian Guardian |
| Can fiduciary accounts be opened as a margin acct? | No, unless special permission is given |
| If a customer wishes to open an account for a minor without additional documentation, the account must be opened as a: | Cash acct |
| Interest income in a custodian account is reported on the tax return of the: | Minor |
| To send trade confirmations to a person holding a power of attorney over a customer's account, written approval must be obtained from the: | Customer |
| If there is no trading activity in a customer's account, a statement must be mailed: | quarterly |
| A customer is traveling to Tibet and directs your firm to hold his mail. Under FINRA rules, the mail can be held for: | 3 months international, 2 months domestic |
| What percent margin are for a Reg T long and short stock? | 50% |
| What percent margin are for minimum maitenence margin for a long and short stock | 25% for long, 30% short |
| What constitutes a pattern day trader? | 4 or more day trades in a 5 business day period |
| Regulation T controls credit on securities from: | Broker to customer |
| Regulation T controls credit on securities from: | bank to broker |
| The maximum amount of customer securities that can be rehypothecated by a broker is: | 140% |
| Under Regulation T, an extension for payment may be requested on: | Settlement + 2 |
| To buy a listed stock in a margin account requires a deposit of: | Regulation T requires that 50% of the purchase amount, based on the price of the trade, be deposited. The closing price has no effect on the deposit amount required. |
| What is the minumum deposit required to open a margin acct? | $2,000 |
| The formula for equity in a long margin account is: | Long market value - debit balance= Equity |
| How do you compute an SMA Margin? | 50% off the long market value- debit=sma |
| How do you compute an SMA Margin on a short stock? | Equity - 50% of market value=sma value |
| What is the formula for equity in a Short Margin Account? | credit balance-short market value=equity |
| The formula for equity in a combined margin account is: | long market value - short market value + credit balance - debit balance |
| Regulation T requires settlement of trades When? | Proptly but no later than S+2 |
| Regutlation U controls the extension of credit from ___ to ___ | bank to firm |
| Regulation T applies to which securities | Non-exempt |
| Long margin minimum maintenance requirment? | 25% |
| Short margin minim maintenance requirement? | 30% |
| Buying power comes from the creation of? | excess equity in the account |
| How much SMA can be withdrawn? | 100% and can be used to meet reg T |
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