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Series 53 Example Questions

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Sample Questions


1)

Cheryl, a municipal securities agent, has an account at a broker-dealer other than her employer. When she trades in that account, her employer broker-dealer will receive:

A ) An amendment to Cheryl's Form U4
B ) Nothing
C ) A notice informing them of the activity
D ) A copy of the customer confirmation

See Answer

Answer: The Best Answer is D

Feedback: Brokers or dealers may not open a municipal securities account in which transactions are made for a customer who is employed by another broker-dealer unless it first gives written notice to their own employer. With each transaction for such an account, the broker or dealer must simultaneously deliver a duplicate copy of each customer confirmation to her employer.


2)

Which of the following would not be required for a trade confirmation for a “when-issued” municipal security?

I. Name of the customer and whether the customer is a purchaser or seller II. Whether the broker-dealer is a principal or agent, and whether it is agent for the customer, another entity or both III. Yield IV. Settlement date

A ) I and IV
B ) II and III
C ) III and IV
D ) I and III

See Answer

Answer: The Best Answer is C

Feedback: For "when-issued" transactions, the customer confirmation must include all the standard information except settlement date, dollar price (for transactions executed on a yield basis), yield (for transactions executed on a dollar price), total costs and accrued interest. These cannot be confirmed because they are not yet known.


3)

All of the following records must be kept by municipal securities dealers for six years except?

A ) Blotters or records of original entry
B ) Customer complaints
C ) Account records (ledgers) for each customer account and accounts of the broker-dealer
D ) Subsidiary records

See Answer

Answer: The Best Answer is D

Feedback: According to MSRB Rule G-9, municipal securities dealers must keep the following records for at least six years: blotters or records of original entry, account records for each customer account and accounts of the broker-dealer; primary offering records must be kept along with continuing disclosure statements, customer complaints, political contributions. Subsidiary records itemizing municipal securities in transfer, securities to be validated and transactions not completed on settlement date, need to be kept by municipal securities dealers for at least 4 years.


4)

A municipal securities trade occurs at 6:00 p.m. Eastern Time on a Monday. When will it need to be reported by?

A ) By 6:30 p.m. Eastern Time on Monday
B ) Within 30 seconds of the trade
C ) Within 15 minutes of the trade
D ) Within 15 minutes of the opening of the RTRS Business Day (7:30) on Tuesday

See Answer

Answer: The Best Answer is C

Feedback: Transactions completed during the hours of the RTRS (Real-time Transaction Reporting System) Business Day must generally be reported within 15 minutes of Time of Trade. The "RTRS Business Day" is 7:30 a.m. to 6:30 p.m. Eastern Time (ET), Monday through Friday. Transactions completed outside the hours of the RTRS Business Day must be reported no later than 15 minutes after the beginning of the next RTRS Business Day


5)

A broker-dealer gives $1000 to a governor's reelection campaign in State A. The governor wins the race and keeps his position. One year later, the broker-dealer acts as an underwriter for an offering where State A is the issuer. Assuming that no violation has occurred, which of the following is true?

A ) The broker-dealer is located in State A
B ) The issue is a negotiated offering
C ) The broker-dealer is not located in State A
D ) The issue is a competitive offering

See Answer

Answer: The Best Answer is D

Feedback: The “pay to play” rule was put into place to prevent underwriting firms from winning business via campaign donations to elected officials. The rule prohibits broker-dealers or their professionals from conducting any securities business with an issuer within two years of making a political contribution to elected officials of that issuer. This rule is specifically intended to discourage the fraudulent selection of underwriters in negotiated underwritings based on prior political contributions. Competitive underwritings are not subject to this rule because underwriters in a competitive underwriting are chosen through the lowest net interest cost rather than through the discretion of municipal officials. Note that the rule has an exception for “municipal finance professionals” (MFPs) who live in a municipality and are entitled to vote for an official of the municipality. These individuals are allowed to contribute up to $250 per election. In contrast, MFPs who do not live in a municipality cannot give any amount if they or their firm wish to conduct municipal securities business with the municipality.


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