Chapter 8 Practice Question Answers
1. Answer: D. A registered Municipal Securities Representative (Series 52) may engage in these activities:
» Underwriting, trading, or sales of municipal securities
» Financial advisory or consultant services for issuers in connection with the issuance of municipal securities
» Research or investment advice with respect to municipal securities
» Any other activities that involve communication, directly or indirectly, with public investors in municipal securities
Recall from Chapter One that a municipal bond fund is simply a mutual fund that specializes in investing in municipal bonds. In order to sell municipal bond funds, a Municipal Securities Representative must also pass the General Securities Representative Examination (Series 7).
2. Answer: C. MSRB Rule G-3 requires that all municipal securities broker-dealers have at least two Municipal Securities Principals. However, there are two exceptions to this rule:
» Brokers, dealers, or municipal securities dealers that are members of a registered securities association, such as FINRA, and conduct a general securities business.
» Brokers, dealers, or municipal securities dealers (including bank dealers) having fewer than eleven full-time employees engaged in the performance of its municipal securities activities. These parties shall have at least one Municipal Securities Principal.
For those firms whose municipal securities activities are limited exclusively to municipal fund securities, a Municipal Fund Securities Limited Principal may be counted toward the numerical requirement of two Municipal Securities Principals. All municipal securities firms, except bank dealers, must have at least one FINOP.
3. Answer: B. A branch office is any location where one or more associated persons of a member regularly conduct securities business. However, there are a few exceptions that do not qualify as branch offices, due to certain circumstances. These in