Branch Manager Training Program Sample Examination Questions (revised November 6, 2002)

Transcription

1 Purpose Branch Manager Training Program Sample Examination Questions (revised November 6, 2002) The sample questions and answers provided below are intended to assist the Student in their preparation for the final examination. These questions and answers should help the Student determine if they fully understand the concepts and content of the Branch Manager Training Program and the standards of conduct expected of those the will be required to supervise. For each question, a series of possible answers are provided. You should select the one best answer in each case unless the question specifically instructs you to select all of answers that apply. The answers are provided for each question at the end of this section. A thorough review of the material is suggested before attempting the sample exam questions. The pass mark for the final examination is 80%. The Student is encouraged to go through these questions in an environment that would be similar to the examination format. Set aside two hours and attempt to complete the full sample examination during that time frame. Once you are satisfied with your answers, compare your results to the answers provided, and determine if there are any areas where further review and study of the materials would be appropriate. Sample Exam - Questions 1. What are the broad objectives of securities regulation? (select all that apply) a. To protect the long-term viability of the securities industry. b. To ensure that investors have access to information they need to make informed decisions. c. To establish qualifications and standards of conduct for people registered to advise investors or to trade on their behalf. d. To regulate the level of fees and charges that may be paid by investors. e. To provide rules of fair play for the markets. f. To protect the integrity of the capital market and the confidence of investors. 1

2 2. Securities legislation requires every registered dealer to: (select all that apply) a. Recruit a large network of Sales Representatives and Branch Managers. b. Deal fairly, honestly and in good faith with clients. c. Recommend low risk investments to all clients. d. Ensure that all of its activities are properly supervised and conducted in accordance with the law. e. Maintain complete records of all its business activities. 3. Violation of securities legislation can lead to: a. Cancellation or suspension of registration. b. Restrictions on the violator s ability to trade securities. c. Civil liability. d. Fines and/or imprisonment. e. Items (a) and (b). f. All of the above. 4. Which of the following instruments are securities? (select all that apply) a. Mutual fund units. b. Common shares. c. Insurance policies. d. Scholarship Plan units. 5. The structure and tax characteristics of RESPs are governed by: a. The MFDA. b. Provincial Securities Legislation. c. The IDA. d. The RESPDAC. e. Federal Legislation. 6. The rules governing the way in which Scholarship Plans can be distributed to the public are contained in: a. Federal CESG Regulations. b. The Income Tax Act. c. CCRA policies and bulletins. d. Provincial Securities Legislation. 7. The MFDA is the self-regulatory organization for: a. Scholarship Plan Dealers. b. The securities industry. c. Insurance salespersons. d. Dealers and salespersons that distribute mutual funds in Canada. 2

3 8. In the province of Quebec, which organization is responsible for the supervision of scholarship plan dealers and agents? a. Commission des valeurs mobileires du Quebec b. MFDA c. Bureau des services financiers (BSF) d. IDA e. CAIFA 9. Prior to appointment as a Branch Manager an applicant must have: a. Significant industry experience. b. Successfully completed this or a comparable course. c. Been qualified for registration as a Sales Representative. d. Been accepted as a Branch Manager by the securities regulator. e. All of the above/ 10. Which of the following are skills and characteristics of a good Branch Manager: a. Extensive knowledge of the product and regulatory requirements. b. Strong leadership skills. c. Good time management. d. Trustworthiness, honesty and integrity. e. All of the above. 11. The primary responsibilities of a Branch Manager include: a. To set compliance policies for the Dealer. b. To supervise all activities related to the operation of the Branch. c. To ensure compliance in the Branch with the applicable legislation and the policies of the dealer. d. All of the above. e. All except item (a). 12. Which of the following statements is not true? a. Branch Managers must ensure that adequate training is provided to Sales Representatives. b. Branch Managers are responsible for supervising their Sales Representatives. c. Branch Managers develop the compliance policies for the Branch. d. Branch managers must ensure that staff and Sales Representatives comply with regulations and Dealer policies. 3

4 13. Branch Managers can manage their time and fulfill their duties more effectively by: (select all that apply) a. Maintaining good record keeping systems. b. Ensuring that Branch personnel are well trained and familiar with Branch and Dealer procedures. c. Assigning responsibility for Branch supervision to administrative support staff. d. Setting aside two specific days per month to approve new business applications and review Branch sales activities. 14. Branch Managers are required to review all new account applications: a. Submitted by new Sales Representatives. b. That are not properly completed. c. Of subscribers who have submitted a formal complaint. d. Promptly after they are received. 15. Sales Representatives must understand the essential financial and personal circumstances and investment objectives of their clients prior to making any recommendations. This fundamental obligation is known as: a. The Code of Sales Conduct. b. The Know Your Client Rule. c. Fiduciary Duty. d. Due Diligence. 16. Why is the Know Your Client Rule so important? a. Finding out the salary of the subscriber can help maximize the size of the sale. b. Knowing the client enables the Sales Representative, Branch Manager and Scholarship Plan Dealer to ensure that the client s best interests are served. c. The Sales Representative will be able to extract valuable information about the family makeup and potential for future business. d. The KYC information will help ensure that the Sales Representative can makes prudent and suitable investment recommendations. e. Items b & d above. f. All of the above 4

5 17. Which of the following information must be collected and documented to meet the Know Your Client requirements. (select all that apply) a. The subscriber s name, address and telephone number. b. The subscriber s bank account and credit card balances. c. The subscriber s employment information. d. The subscriber s social insurance number. e. Financial information about the subscriber, such as family income and net worth. 18. Ensuring that the KYC information for a subscriber is current and accurate is solely the responsibility of the Sales Representative. a. True, because only the Sales Representative has contact with the client. b. False, the Branch Manager and the Dealer can also be held responsible for inadequate KYC procedures. 19. A Sales Representative may still provide investment advice to a client even if the client refuses to disclose any KYC information to the Sales Representative. a. True b. False. 20. When entering into a new scholarship plan agreement, Social Insurance Numbers are required for: a. Subscriber(s) b. Student(s)(beneficiaries) c. Both Social Insurance Numbers are required. d. Neither Social Insurance Numbers are required. 21. When a subscriber account is assigned to a new Sales Representative, the new Representative should: a. Send out another copy of the prospectus to the subscriber. b. Ask the subscriber to provide other potential sales leads. c. review the Know Your Client information with the subscriber to confirm its accuracy. d. review the subscriber s file with the Branch Manager to see if additional sales would be possible. 5

6 22. A fiduciary relationship between client and Dealer can be established when: a. The client has an ownership interest in the Dealer. b. The client has initiated legal proceedings against the Dealer. c. The client has been invited to place his or her trust and confidence in the Dealer or the Dealer s representative and reasonably expects that the Dealer will act in his or her best interest. d. The Dealer has entered into a subscription agreement with the client. 23. When a fiduciary relationship between client and Dealer exists: a. The client is entitled to restitution from the Dealer for any losses. b. The Dealer has a legal obligation to put the interests of the clients ahead of his own interests. c. The Dealer must complete the subscription agreement at a specified price. d. The Dealer is in a conflict of interest and cannot act for the client. 24. The Code of Sales Practices developed by the RESP Dealers Association of Canada provides uniform standards of practice in which of the following areas: (select all that apply) a. Advertising. b. Sales Practices. c. Hiring practices. d. Client Confidentiality. e. Claims against competitors. 25. Sales Representatives must be registered in the jurisdiction(s): a. In which they reside. b. In which their Dealer is registered. c. In which their clients reside. d. Both (a) and (c). e. Both (a) and (b). 26. Which of the following activities require registration as a Sales Representative? a. Assisting a subscriber in completing an application form. b. Soliciting business from prospective subscribers. c. Giving quotes on the value of an existing agreement. d. Receiving commissions or other remuneration directly related to specific sales. e. All of the above, except item (c). 6

7 27. Which of the following activities can non-registered staff perform? a. Arranging appointments for sales representatives. b. Mailing out prospectuses and approved marketing materials to prospective clients. c. Discussing with subscribers the anticipated performance of investments in a Plan. d. Providing information to subscribers on the status of their agreements. e. Accepting instructions from existing subscribers for additional purchases. f. Items (a), (b) and (c) only. g. Items (a), (b) and (d) only. 28. A person who has applied for registration as a Sales Representative can start to trade for clients and advise clients: a. Immediately, providing that they are being supervised by a Branch Manager or another fully registered Sales Representative. b. On the seventh day following the filing of the registration application. c. Only after they have received formal confirmation from the securities regulator(s) that their registration has been made effective. 29. Which of the following items do not need to be filed as part of the registration application of a Sales Representative? a. Completed Application Form. b. Passport-type photos of the Sales Representative. c. Copy of birth certificate and social insurance card. d. Consent to collect personal information. e. Securities Fraud Information Centre Form. 30. Which of the following changes must be promptly reported to the securities regulator(s)? (select all that apply) a. Change of a Sales Representatives name or home address. b. The termination of a Sales Representative. c. The opening of a new Branch or sub-branch. d. A change the marital status of a Sales Representative. e. Criminal charges or civil lawsuits against a Sales Representative. 7

8 31. The Branch Manager is about to hire a Sales Representative who is licensed to sell insurance. Which of the following statements is not true? a. The Scholarship Plan Dealer does not offer insurance under their securities license. b. The insurance license satisfies the Scholarship Plan proficiency requirements. c. Insurance policies must be sold through a separate entity that is qualified to sell insurance in the jurisdiction. d. The Sales Representative must seek approval of both the Dealer and the securities regulator to be dually-employed. 32. If a Sales Representative terminates his or her employment with a Dealer, the Representative s registration to trade in Scholarship Plans is: a. Still active, but only for existing clients of the Representative. b. Immediately suspended, and can only be reinstated with the consent of the securities regulator after the Representative secures employment with another Dealer. c. Can be transferred on the same day to another Dealer of the Representative s choosing. 33. The reasons for the termination of a Sales Representative do not have to disclosed to securities regulators: a. Until 60 days after the termination. b. If the Sales Representative does not agree with the reasons. c. If the Sales Representative intends to move to another Scholarship Plan Dealer. d. If the Sales Representative intends to apply for an insurance license. e. None of the above. Reasons must be provided. 34. When a Sales Representative has left one Scholarship Plan Dealer but has not yet received approval from the securities regulator for the transfer of their registration, the Sales Representative may: a. Send out letters to previous clients soliciting their business with the new plans offered by the new Scholarship Plan Dealer. b. Send out letters informing previous clients of the pending transfer. c. Advertising and promoting the new plans offered by the new Scholarship Plan Dealer. 8

9 35. What must appear in every sales communication sent by a Sales Representative to a subscriber or potential subscriber? a. The address of the Scholarship Plan. b. Confirmation that the Representative has been approved by the securities regulators. c. The name of the Scholarship Plan Dealer. d. A trade name used by the Sales Representative. 36. Which of the following items is not considered a sales communication? a. Correspondence with subscribers recommending investments. b. Brochures and pamphlets describing the Scholarship Plan. c. Newspaper advertisements promoting the services of the Dealer. d. Prospectuses. e. Internet websites promoting the Scholarship Plan. 37. When including performance data, sales communications should include: (select all that apply) a. Where available, returns for one, three, five and ten year periods. b. A statement that past performance is not necessarily indicative of future performance. c. A forecast of expected performance for at least the next 12 month period. d. All of the above. 38. A sales communication would be deceptive or misleading if: (select all that apply) a. It disclosed the potential benefits and the risks of the proposed investment with equally prominence. b. It included exaggerated or unsubstantiated claims. c. It implied that past performance was a reliable predictor of future performance. d. It compared rates of return on various investment products without fully explaining the differences in risk or liquidity. e. It implied that the product was endorsed by securities regulators. 39. Before a trade name can be used by a Sales Representative on a business card or in a sales communications, the trade name must be: a. Registered with the Federal Office of Trade Practices. b. Be at least as prominent as the name of the Dealer. c. Approved by the Dealer. d. The name of a corporation, partnership or society. 9

10 40. In the distribution of a Scholarship Plan, a copy of the Plan prospectus must be: a. Given to every subscriber who is not a wealthy and sophisticated investor. b. Given to every subscriber who requests one. c. Provided to every subscriber at or before the time of the subscription. d. Filed with the securities commission within one month of the first sale. 41. Securities legislation allows a subscriber to withdraw from a Scholarship Plan purchase, without charge: a. Anytime within the first 90 days after the purchase. b. By giving the Dealer written notice within two business of receiving the prospectus. c. By filing a Notice of Dispute with the securities regulators. 42. If a prospectus contains a misrepresentation, every purchaser who bought securities under the prospectus may have the right to sue the Dealer and the issuer for damages or for rescission of the purchase. a. True. b. False. 43. To effectively supervise Sales Representatives, a Branch Manager must: (select all that apply) a. Review all new business on a timely basis. b. Respond promptly to any complaints about service or standards of conduct. c. Carefully review advertising and promotional material. d. Regularly visit the workplaces of Sales Representatives who work outside the Branch. e. Maintain regular contact with the Representatives. 44. Records of supervisory activities conducted in the Branch: a. Must be maintained by the Dealer for 1 year. b. Must be maintained by the Dealer for 7 years. c. Must be forwarded to the securities regulators annually. d. Will generally be subject to examination by securities regulators in the course of regulatory audits. e. Items (b) and (d). f. All of the above. 10

11 45. Which of the following are not typical responsibilities for the Scholarship Plan Dealer? a. Maintaining subscriber records. b. Ensuring that Sales Representatives are properly registered. c. Providing quality leads and prospects to Branch Managers. d. Distribute financial reporting to subscribers and securities regulators. e. Develop and approve marketing materials. f. Review account activity for compliance and suitability. 46. When a formal complaint is received from a subscriber, the Branch Manager should: a. Inform Head Office compliance staff and the Provincial Trading Officer, where applicable, and promptly initiate an investigation to determine the relevant facts. b. Decline to pursue any complaint that is not in writing. c. Refer the complaint to the Sales Representative for resolution. d. Direct the complainant to the Dealer s lawyer. 47. What information should a Sales Representative review with any prospective subscriber prior to a purchase? (select all that apply) a. Significant features of the plan. b. Risk factors for the investment. c. Testimonials from other subscribers. d. Securities commission endorsement. e. Enrolment fees and redemption costs. 48. Federal regulations require that Dealers verify the identity of all clients and maintain on file a copy of the client s signature. a. True. b. False 49. A client s identity can be verified by having on file a copy of a void cheque. a. True. b. False. 11

12 50. Securities regulators have expressed serious concerns to the Scholarship Dealer community about: a. Inadequate supervision by Branch Managers. b. Abusive or high pressure sales tactics used by Sales Representatives. c. Inadequate knowledge of regulatory requirements among Sales Representatives and Branch Managers. d. Inadequate or misleading disclosure to subscribers with respect to enrollment fees and redemption charges. e. Items (a) and (c) above. f. All of the above. 12

13 Branch Manager Training Program Answers to Sample Exam Questions 1. b,c,e,f 2. b,d,e 3. f 4. a,b,d 5. e 6. d 7. d 8. c 9. e 10. e 11. e 12. c 13. a,b 14. d 15. b 16. e 17. a,c,d,e 18. b 19. b 20. c 21. c 22. c 23. b 24. a,b,d,e 25. d 26. e 27. g 28. c 29. c 30. a,b,c,e 31. b 32. b 33. e 34. b 35. c 36. d 37. a,b 38. b,c,d,e 39. c 40. c 41. b 42. a 43. a,b,c,d,e 44. e 45. c 46. a 47. a,b,e 48. a 49. b 50. f 13