Regulations - Answers

  1. A. One registers with a federal commission like the SEC or CFTC; one joins an industry association like the NFA.
  2. B. An AP needs three years in the field to handle discretionary accounts, and may require further licensure to supervise.
  3. D. The others are false.
  4. C. Not all testimonials are necessarily paid testimonials.
  5. D. Compliance directors initiate investigations. MRAs and offers to settle bypass the hearing process. Although arbitration cannot be appealed, disciplinary hearings can.
  6. B. The broker/dealer must apply to offer security futures through the process of notice registration with the CFTC, unless that broker/dealer is fully registered with both the CFTC and the SEC in which case it may offer a full range of both futures and securities products.
  7. C. A series 24 is a FINRA general securities principal, a 53 is a municipal fund securities principal (for brokerage firms that write 529 plan (a municipal fund security) business and a Series 3 is the license for an associated person who holds no supervisory capability).
  8. 3. The other three organizations are federal agencies that regulate futures, securities and banks.
  9. A. CFTC requires segregation of accounts from firm assets. By contrast, SIPC rules protect account values up to specific thresholds, with differing limits for cash and securities.

Facing Your Fears
Related Articles
  1. Chart Advisor

    Copper Continues Its Descent

    Copper prices have been under pressure lately and based on these charts it doesn't seem that it will reverse any time soon.
  2. Stock Analysis

    What Exactly Does Warren Buffett Own?

    Learn about large changes to Berkshire Hathaway's portfolio. See why Warren Buffett has invested in a commodity company even though he does not usually do so.
  3. Markets

    Are EM Stocks Finally Emerging?

    Many investors are looking at emerging market (EM) stocks and wonder if it’s time to step back in, while others wonder if we’ll see further declines.
  4. Markets

    What Slow Global Growth Means for Portfolios

    While U.S. growth remains relatively resilient, global growth continues to slip.
  5. Options & Futures

    Terrorism's Effects on Wall Street

    Terrorist activity tends to have a negative impact on the markets, but just how much? Find out how to take cover.
  6. FA

    CIPM: The Key To A Niche Career In Finance

    CIPM designates usually work as investment performance analysts.
  7. Investing Basics

    Explaining the Liquidity Preference Theory

    According to the liquidity preference theory, investors demand interest in return for sacrificing their liquidity.
  8. Investing News

    Defensive Investing: Learn from a Hedge Fund Pro

    Looking for ideas on companies, sectors or investments to short? Consider the opinion of this hedge fund luminary.
  9. Investing

    Will Eni’s Discovery Affect Oil Prices?

    Following a massive natural gas discovery in the Mediterranean, Egypt's energy concerns will be coming to an end, but how does this affect oil prices?
  10. Investing Basics

    Water Investments: Will They Sink or Swim?

    Will these water-related investments sink or swim?
  1. Swap

    A derivative contract through which two parties exchange financial ...
  2. Hedge

    Making an investment to reduce the risk of adverse price movements ...
  3. Convergence

    The movement of the price of a futures contract towards the spot ...
  4. Crude Oil

    Crude oil is a naturally occurring, unrefined petroleum product ...
  5. Futures Market

    An auction market in which participants buy and sell commodity/future ...
  6. Implied Volatility - IV

    The estimated volatility of a security's price.
  1. Which mutual funds made money in 2008?

    Out of the 2,800 mutual funds that Morningstar, Inc., the leading provider of independent investment research in North America, ... Read Full Answer >>
  2. Do hedge funds invest in commodities?

    There are several hedge funds that invest in commodities. Many hedge funds have broad macroeconomic strategies and invest ... Read Full Answer >>
  3. Is a financial advisor required to have a degree?

    Financial advisors are not required to have university degrees. However, they are required to pass certain exams administered ... Read Full Answer >>
  4. Can mutual funds invest in options and futures?

    Mutual funds invest in not only stocks and fixed-income securities but also options and futures. There exists a separate ... Read Full Answer >>
  5. Can I use my IRA to pay for my college loans?

    If you are older than 59.5 and have been contributing to your IRA for more than five years, you may withdraw funds to pay ... Read Full Answer >>
  6. Can I use my 401(k) to pay for my college loans?

    If you are over 59.5, or separate from your plan-sponsoring employer after age 55, you are free to use your 401(k) to pay ... Read Full Answer >>
Hot Definitions
  1. Barefoot Pilgrim

    A slang term for an unsophisticated investor who loses all of his or her wealth by trading equities in the stock market. ...
  2. Quick Ratio

    The quick ratio is an indicator of a company’s short-term liquidity. The quick ratio measures a company’s ability to meet ...
  3. Black Tuesday

    October 29, 1929, when the DJIA fell 12% - one of the largest one-day drops in stock market history. More than 16 million ...
  4. Black Monday

    October 19, 1987, when the Dow Jones Industrial Average (DJIA) lost almost 22% in a single day. That event marked the beginning ...
  5. Monetary Policy

    Monetary policy is the actions of a central bank, currency board or other regulatory committee that determine the size and ...
  6. Indemnity

    Indemnity is compensation for damages or loss. Indemnity in the legal sense may also refer to an exemption from liability ...
Trading Center