Chapter 3 Practice Questions

1. 1. Which of the following best describe the activities of a broker?
2. A. Buying securities for their own account
3. B. Selling securities from their own account
4. C. Day trading securities for their own account
5. D. None of these choices
6. 2. All of the following are exceptions to the definition of a broker-dealer except:
7. A. A broker-dealer’s agent
8. B. An issuer
9. C. An investment adviser
10. D. A bank
11. 3. When a firm acts as a dealer in a securities transaction with one of their clients, the parties exchanging funds and securities include:
12. I. The firm
13. II. The firm’s client
14. III. Another firm’s client
15. IV. A securities issuer
16. A. I and II
17. B. II and III
18. C. I, II, and III
19. D. I, II, III, and IV
20. 4. A broker-dealer registered in one state does not need to register in another state if it has:
21. A. Less than $50,000,000 in assets
22. B. Over $100,000,000 in assets
23. C. No non-institutional clients in that state
24. D. Five or fewer non-institutional clients in that state
25. 5. All of the following are generally requirements for registration of a broker-dealer except:
26. A. Completing a Form ADV
27. B. Meeting net capital requirements
28. C. Meeting bonding requirements
29. D. Acceptance of registration by a state’s securities administrator
30. 6. A broker-dealer who works only with the following investors and does not have an office in the state would not be required to be registered with the state:
31. I. Other broker-dealers
32. II. An individual with $1 million in assets
33. III. A pension trust
34. IV. Investment companies (mutual funds)
35. A. I only
36. B. I and III
37. C. I, II, and III
38. D. I, III, and IV
39. 7. The state securities administrator may set the net capital requirements for broker-dealers operating in their state:
40. A. Without