FIN346 Chapter 5

What is one of the main duties of a stock broking firm to its clients?

• Compete with the client

• Obey the client’s instructions

• Act as principal without informing the client

• Avoid issuing contract notes

Which type of client is NOT typically handled by stock broking firms?

• Institutional clients

• Foreign clients

• Retail stores

• Corporate clients

What is the primary role of the Dealing Department in a stock broking firm?

• Preparing contract notes

• Executing client transactions

• Managing client trading limits

• Overseeing the balance sheet

The Operations Department in a stock broking firm is responsible for what?

• Issuing research reports

• Managing trade settlements

• Ensuring compliance with exchange policies

• Analyzing client credit risk

What type of income does a commissioned CMSR receive?

• Fixed monthly income

• Hourly wages

• Salary with benefits

• Commission-based income

Which of the following is a restriction for CMSRs?

• Engaging in foreign exchange trading

• Managing fixed-income portfolios

• Being a shareholder in a company that deals in securities

• Writing reports for non-security businesses

A paid CMSR is typically stationed at which location?

• Brokerage firms

• Investment banks

• Corporate offices

• Stock exchange headquarters

What is the key feature of the treasury department in a stock broking firm?

• Managing the balance sheet and liquidity

• Issuing client instructions

• Preparing contract notes

• Handling individual client accounts

According to the Contracts Act 1950, an agent is defined as:

• A person who acts independently in securities transactions

• A party that holds shares in multiple companies

• A principal managing other people’s finances

• A person employed to act on behalf of another in dealings with third parties

What is one of the duties of an agent?

• Avoid conflicts of interest

• Compete with the principal

• Act outside the scope of authority

• Delegate all tasks to subordinates