Ch 1

Question 1

A BD that does not hold a customer’s cash or securities is known as a _____________.

Answer 1

non-carry

Question 2

True or False: Both stocks and bonds represent ownership in a corporation.

Answer 2

False. Bonds are debt instruments, while stocks represent ownership interest in a corporation.

Question 3

To be considered an investment adviser, what are the three parts of the ABC test?

Answer 3

A - Advice, B - Business, C - Compensation

Question 4

What are the two types of arrangements that an introducing firm can have with a carrying firm?

Answer 4

Fully Disclosed and Omnibus

Question 5

Define the term dealer.

Answer 5

A person engaged in the business of buying securities for, and selling securities from, his own account

Question 6

In an _______ arrangement, a clearing firm doesn’t have information on each individual customer of an introducing firm.

Answer 6

In an omnibus arrangement, a clearing firm doesn’t have information on each individual customer of an introducing firm.

Question 7

True or False: Unlike equities, bonds do not have organized exchanges.

Answer 7

True. Unlike equity securities, corporate, municipal, and U.S. government bonds don’t have organized exchanges.

Question 8

In a _____ _________ account, information about each customer of the introducing firm is sent to the clearing firm.

Answer 8

fully disclosed account

Question 9

Which market is the decentralized, negotiated market?

Answer 9

otc