Series 3 Example Questions

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Sample Questions


When demand for the U.S. dollar weakens, which of the following is true?

A ) The price of imports will decline
B ) The dollar will be able to buy more units of a foreign currency
C ) Foreign governments are more likely to invest in American businesses
D ) The price of foreign goods will rise

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Answer: The Best Answer is D

Feedback: When demand for the U.S. dollar weakens, its price relative to other currencies goes down. The dollar will buy fewer units of that currency, and the price of foreign goods will increase per dollar spent. Imports will become more expensive, as will the cost of foreign travel. In contrast, when the U.S. dollar is strong, it can buy more units of a foreign currency, and imports will become relatively cheap. A strengthened dollar often convinces foreign governments and banks to invest in U.S. businesses.


Andrew shorts one Eurodollar futures contract at 95.20. His original margin is $820 with a maintenance margin of $630. If the contract later settles at 95.40, and Andrew conducted no other transactions, how much is Andrew required to deposit as additional margin?

A ) $0
B ) $500
C ) $320
D ) $310

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Answer: The Best Answer is B

Feedback: Since Eurodollar futures settled at a higher price and Andrew shorted the contract, his equity will decline. Thus, he will need to add margin to the account. His contract increased from 95.20 to 95.40, an additional 20 basis points. Since each basis point is equal to $25, the equity in his account declined by $500 (20 x $25 = $500). This would reduce Andrew’s account balance from $820 to $320. Since Andrew dipped below his maintenance margin, he must deposit enough cash to bring him up to his initial margin of $820. Thus, Andrew must deposit an additional $500 to meet the original margin requirement ($320 + $500 = $820).


Which of the following are not able to serve on a case requiring FINRA arbitrators?

A ) All FINRA-registered principals
B ) Non-public arbitrators
C ) Arbitrators from the FINRA arbitrator roster
D ) Public arbitrators

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Answer: The Correct Answer is A

Feedback: FINRA arbitrators are selected from a roster of neutral persons, at least half of whom must be from outside the industry. FINRA classifies these as public arbitrators. A public arbitrator is one who has no present association with the industry and has not been employed in the industry for at least the past twenty years. A nonpublic, or private, arbitrator is a person who is employed in the securities industry or has been so employed within the past five years. Being registered as a principal with FINRA does not automatically mean an individual is qualified to be an arbitrator. Arbitrators must be trained before they are eligible to serve on a case.