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10 Cards in this Set
- Front
- Back
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Under FINRA rules who must review the acceptance of new discretionary accounts?
[A] The ROP who approved the account [B] The RR who opened the account [C] A ROP other than the ROP who approved the account [D] An RR other than the RR who opened the account |
C
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Advertisements and sales literature issued by a member firm pertaining to options must be retained by the member firm and be readily available for examination by the Exchange for a period of
[A] 6 months. [B] 1 year. [C] 3 years. [D] 6 years. |
C
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When a client opens an options account at a firm, regulations dictate that the firm must receive an account agreement signed by the customer in what time frame?
[A] Following approval of the account, the firm must receive the signed account agreement within 15 days. [B] The firm must receive the signed account agreement prior to approval of the account. [C] Following approval of the account, the firm must receive the signed account agreement within one month. [D] The firm must receive the signed account agreement no fewer than 10 business days before approval of the account. |
A
Options regulations at the exchange level require that the signed option account agreements be received by the firm no later than 15 days following the firm's approval of the account for options trading. |
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Information which a registered representative must attempt to obtain from a client prior to opening an option account includes the client's:
Investment experience and knowledge Estimated annual income from all sources Employment status Investment objectives [A] I and IV [B] II and III [C] III and IV [D] I, II, III and IV |
D
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A customer has been approved for options trading. The member firm sends the customer the completed background and financial information to be verified by the customer. After 20 days the member firm still has not received a response from the customer. Which of the following is TRUE regarding this account?
[A] No options orders are permitted until the customer signs and returns the form. [B] The member firm can consider the information verified and options trading is permitted. [C] The customer can effect closing transactions only until the form is returned. [D] The account must be closed and closing transactions entered immediately. |
B
f, after 15 days, the client has not responded or returned the background and financial information verification letter, the member firm can consider the non-response as verification of the account information, which means that no further action is necessary. The account can continue to trade options. |
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Which two of the following are necessary in order for an RR to have reason to recommend an options strategy to a client?
The client has the ability to evaluate risks associated with trading options contracts. The RR must feel that regardless of market conditions, the recommended strategy will be successful. The client has the ability to bear the financial risks of trading options contracts. Trading in options will reduce the risk in the portfolio of the client. [A] I and III [B] II and III [C] II and IV [D] III and IV |
A
Before an RR recommends an options strategy to a client, the RR must have reason to believe that the client has the ability to evaluate and bear the risks associated with trading options. The RR does not have to ensure that the options strategy is successful under all conditions because this is unreasonable. The RR also does not have to ensure that the options positions reduce risk, since trading in options typically introduces additional risk to a portfolio. |
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Which of the following option related material could be sent by a registered representative without prior written approval from the firm's registered option principal?
[A] ten letters to prospective clients regarding options [B] form letters to all established clients discussing covered call writing strategies [C] a research report regarding options strategies [D] a monthly statement about a client's account that includes options transactions throughout the month |
D
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Which of the following would be required on a customer's confirmation when the customer purchased a listed option contract?
Trading Volume Exercise price Open Interest Expiration month [A] I, II, and III only [B] II and IV only [C] II, III, and IV only [D] I, II, III, and IV |
B
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Although a new options account was approved for options trading by the firm's registered options principal on July 10, on July 26, the customer still has failed to return a signed options agreement. Which of the following is correct regarding the account?
[A] All of the open options positions should be liquidated. [B] An extension should be requested from the OCC. [C] The customer's account should be frozen for a 90-day period. [D] The customer should be allowed to close existing options positions, but not open any new options positions. |
D
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When must the options disclosure document (ODD) be furnished to a customer?
[A] At or prior to the account being approved for options [B] Prior to the first options transaction [C] At the time the first confirmation is sent [D] After the ROP at the member firm’s principal office reviews the new account |
A
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