Questions
Chapter 7: Cash and Margin Account Rules
1. If a stock is listed on a Canadian stock exchange; what is correct about the maximum loan rates allowed by IIROC in client margin accounts?
Maximum Loan Rate
I. if stock trades above $2.00 and is eligible for reduced margin 70%
II. if stock trades above $2.00 and is not eligible for reduced margin 50%
III. if stock trades between $1.75 to $1.99 40%
IV. if stock trades between $1.50 to $1.74 20%
V. if stock trades below $1.50 10%
a) I, II
b) I, III, IV, V
c) I, II, III, IV
d) I, II, III, IV, V
Chapter 5: Sales and Trading Conduct
2. A securities firm must set up systems and implement procedures to prevent the transmission of confidential material information from one area of the securities firm to another, and to safeguard sensitive information from being used inappropriately. All of the following would be helpful to meet this objective, except ?
a) Chinese walls
b) grey lists and restricted lists
c) green sheets
d) monitoring of employee trading activity
Answers
1. c) I, II, III, IV
Statement V is incorrect. If the stock trades below $1.50, the maximum loan rate is zero; not 10%.
2. c) green sheets.
Answer c, green sheets, would not be relevant. These are information sheets given to salespeople which highlight the details of a new issue.
Chinese walls represent barriers between certain areas of the securities firm, such as corporate finance and sales. Restricted lists are securities in which the employees of a securities firm cannot trade for a certain time period.
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