General Securities Sales Supervisor (Series10) Practice Exam

Disable ads (and more) with a membership for a one time $2.99 payment

Prepare for the General Securities Sales Supervisor Exam with flashcards and multiple-choice questions. Each question includes hints and explanations to enhance your learning experience. Get exam-ready today!

Each practice test/flash card set has 50 randomly selected questions from a bank of over 500. You'll get a new set of questions each time!

Practice this question and more.

Which type of transactions does the 5% Policy exclude?

Secondary distributions
Municipal securities transactions
Riskless transactions
Primary distributions

The correct answer is: Municipal securities transactions

The correct choice highlights that the 5% Policy excludes municipal securities transactions. The 5% Policy is a guideline set forth by the Financial Industry Regulatory Authority (FINRA) regarding markup and markdowns on transactions in different types of securities. Municipal securities, which are bonds issued by local, state, or regional governments, are typically exempt from the 5% Policy due to their unique pricing mechanisms and the fact that they are often sold based on the yield rather than a fixed percentage markup. This allows for flexibility in pricing to accommodate the varying credit qualities and market conditions related to municipal issuances. Understanding this exclusion is important for brokers and dealers when determining how to price municipal securities. While the 5% Policy serves as a benchmark for fair pricing practices, municipal securities operate under different principles, justifying their exclusion from this particular guideline.