The state of Massachusetts has issued a general obligation (G.O.) bond that pays 3% interest. As an
agent selling this bond, you can legitimately tell the investor that

• A.the bond is guaranteed by the state of Massachusetts and is, therefore, a risk-free investment.
• B.the interest income the investor receives from the bond will be free from federal taxation.
• C.all state general obligation bonds are also guaranteed by the federal government.
• D.all of the above statements are true.

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The Administrator may not introduce a stop order to deny, revoke, or suspend the effective registration of
a security based on facts that were disclosed during the registration process unless he does so within

• A.30 days.
• B.45 days.
• C.60 days.
• D.1 year.

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A-2-Z Associates is a full service brokerage and is also in the investment advisory industry, charging its
clients for investment advice for additional remuneration. Which of the following statements is true?

• A.A-2-Z can charge an individual client an advisory fee for its advice or a commission when it executes a
  trade that the client makes based on that advice, but not both.
• B.A-2-Z can charge the client both an advisory fee for its advice and a commission on any trade the client
  makes based on the advice. This is all laid out in the advertising brochures full service brokerage firms
  like A-2-Z provide their prospective clients.
• C.A-2-Z can charge the client both an advisory fee for its advice and a commission for the execution of a
  trade based on that advice, but it must inform the client of its potential conflict of interest in doing so and
  get the client's written consent.
• D.A-2-Z can charge the client only an advisory fee when it is serving as an investment adviser; no
  commissions may be collected.

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Carrie is a registered agent employed by CanDo Broker-Dealers. Her uncle is a minister who regularly refers his parishioners to Carrie, in return for which Carrie has agreed to donate a quarter of her commissions from these transactions to the parish.
Is Carrie doing anything illegal?

• A.No. Carrie is just donating some of her commissions back to the church, and transactions with
• B.Yes. Carrie is splitting her commissions with an entity that is not affiliated with her broker-dealer
• C.It depends. As long as the church parishioners are aware of the arrangement between Carrie and
• D.It depends. If the church itself is a client of CanDo's, then it is considered to be affiliated with

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A "market not held" order is

• A.an order in which the client tells the broker to use his own discretion in timing a purchase or sale in an
  attempt to get a better price.
• B.a prohibited activity in which an agent engages in the purchase or sale of securities that are not offered
  by his broker-dealer.
• C.an order to buy or sell a stock at a specified price, which differs from the current market price.
• D.an order to sell securities that the investor owns if the stock decreases by a certain amount from the
  current price.

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