CRCM

CRCM practice questions, page 10 of 19, with answer review and explanations.

Question 46

_____________ requires that a statement of purpose be obtained from borrowers whose loans are to be greater than $100,000 and that will be secured by margin stock. Loans made for the purpose of purchasing margin stock are subject to additional limitations

  1. Regulation U
  2. Regulation V
  3. Regulation Z
  4. Regulation X

Question 47

An exempted borrower is a member of a national securities exchange or a registered broker or dealer who:

  1. Maintains at least 1,000 active accounts annually for persons other than brokers, dealers, and persons associated with brokers and dealers
  2. Earns at least $10 million in gross revenues on an annual basis from transactions with persons other than brokers, dealers, and persons associated with brokers and dealers, or
  3. Earns at least 10 percent of its gross revenues on an annual basis from transactions with persons other than brokers, dealers, and persons associated with brokers and dealers
  4. None of these

Question 48

Banks may extend and maintain purpose credit without complying with Regulation U if the credit is extended:

  1. To a bank auditor
  2. To a qualified employee stock ownership plan running previously but not now
  3. To any customer, other than a broker or dealer, to temporarily finance the purchase or sale of securities for prompt delivery, if the credit is to be repaid in the ordinary course of business on the completion of the transaction
  4. To enable a customer to meet emergency expenses not reasonably foreseen and if the bank obtains a good faith statement from the customer. Emergency expenses are ones related to unforeseen death or disability, not a chance to make a profit.

Question 49

Margin stock includes:

  1. Equity securities registered or having delisted trading privileges on a national securities exchange:
  2. Over-the-counter (OTC) securities that do not qualify for trading in the National Market System
  3. Warrants or rights to subscribe to or purchase a common stock
  4. Securities issued by an investment company registered under the Investment Company Act, except for: A company licensed under the Small Business Investment Company Act A company that has at least 95 percent of its assets continuously invested in exempted securities; or A company that issues face-amount certificates; or A company that is considered a money market fund under the SEC Rules

Question 50

Purpose credit is credit for all of the following EXCEPT:

  1. Immediate purpose of purchasing or carrying margin stock
  2. Incidental purpose of purchasing or carrying margin stock
  3. Ultimate purpose of purchasing or carrying margin stock
  4. Accidental purpose of purchasing or carrying margin stock