Test Taking - Regulatory Questions
You will have a difficult time passing the exam without knowing the following regulations:
- Account opening
- Review the customer account documentation to ensure it complies with all applicable rules and regulations.
- Require all necessary information be on file before new accounts are allowed to trade.
- Provide adequate risk disclosure to customers prior to opening an account.
- Obtain each customer's name, address, occupation/business, estimated annual income, estimated net worth, age and prior investment and futures trading experience.
- If the required information is not obtained, document that the customer declined to provide such information.
- Cash flow
- Make all disbursements except petty cash by check.
- Make and keep copies of customer checks prior to depositing them.
- Restrictively endorse checks upon receipt
- Promotional material – type and retention requirements
- Maintain all promotional material for five years from date of last use.
- Maintain supporting documentation for all statements, claims and performance results.
- Include any material information so that the promotional material is not misleading.
- Include an equally prominent statement of the risk of loss if the material mentions the possibility of profit, including the presentation of past performance results.
- Calculate rates of return in a manner consistent with CFTC Part 4 regulations.
- Ensure that the past performance of any actual accounts presented is representative of the actual performance of all reasonably comparable accounts for the same time period.
- Include a statement that past results are not necessarily indicative of future results when past performance is mentioned.
- Ensure that statements of opinion are identifiable as such and have a reasonable basis in fact.
- Ensure that there is no guarantee against loss.
- Identify the "limited-risk" and "no margin call" features of options as applying only to the purchase of options.
- Explain that the "limited-risk" feature of options includes the full amount of the premium and transaction costs including commissions.
- Ensure that reprints of articles have been supplemented with the proper disclosures and disclaimers.
- Present hypothetical results only if there are less than three months of actual trading results for the offered program.
- Include the actual results of all customer accounts directed by the member firm for the past five years with any hypothetical results.
- Calculate hypothetical results in the same way as actual results.
- Ensure that hypothetical results and actual results are presented separately, clearly identified and given equal prominence.
- Explain all material assumptions made in preparing hypothetical results: minimum investment amount, distribution or reinvestment of profits, commission charges, management and incentive fees, and the method used to determine the purchase and sale price for each trade.
ProfessionalsObtain information, both general and comparative, about the best available financial modeling courses for individuals pursuing a career in investment banking.
Chart AdvisorCopper prices have been under pressure lately and based on these charts it doesn't seem that it will reverse any time soon.
Stock AnalysisLearn 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.
MarketsMany 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.
MarketsWhile U.S. growth remains relatively resilient, global growth continues to slip.
Options & FuturesTerrorist activity tends to have a negative impact on the markets, but just how much? Find out how to take cover.
FACIPM designates usually work as investment performance analysts.
Investing BasicsAccording to the liquidity preference theory, investors demand interest in return for sacrificing their liquidity.
Investing NewsLooking for ideas on companies, sectors or investments to short? Consider the opinion of this hedge fund luminary.
InvestingFollowing 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?
A derivative contract through which two parties exchange financial ...
Making an investment to reduce the risk of adverse price movements ...
The movement of the price of a futures contract towards the spot ...
Crude oil is a naturally occurring, unrefined petroleum product ...
An auction market in which participants buy and sell commodity/future ...
The estimated volatility of a security's price.
Out of the 2,800 mutual funds that Morningstar, Inc., the leading provider of independent investment research in North America, ... Read Full Answer >>
There are several hedge funds that invest in commodities. Many hedge funds have broad macroeconomic strategies and invest ... Read Full Answer >>
Financial advisors are not required to have university degrees. However, they are required to pass certain exams administered ... Read Full Answer >>
Mutual funds invest in not only stocks and fixed-income securities but also options and futures. There exists a separate ... Read Full Answer >>
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 >>
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 >>