Q1. Which of the following statements regarding allocating trades is TRUE? It is:

A)     never permissible to deviate from a proportional account value weighting method of trade allocation, unless this is done on the basis of an advance indication of interest in the issue.

B)     permissible under the standards to allocate trades on the basis of a predetermined formula that may deviate from a pro rata basis but is inherently fair.

Q2. Pro rata allocation on the basis of an advance indication of interest means each account for which the shares are suitable:

A)     shall receive m/n shares, where there are m shares available and n such accounts.

B)     and which has expressed an advance indication of interest, shall receive m/n shares, where there are m shares available and n such accounts.

C)     and which has expressed an advance indication of interest, shall receive w*m shares, where w is the account's proportional value of all such accounts and there are m shares available.

Q3. Allocation on a strict pro rata basis means each account for which the shares are suitable:

A)   shall receive m/n shares, where there are m shares available and n such accounts.

B)   and which has expressed an advance indication of interest, shall receive w*m shares, where w is the account's proportional value of all such accounts and there are m shares available.

C)   and which has expressed an advance indication of interest, shall receive m/n shares, where there are m shares available and n such accounts.

Q4. Which of the following trade allocation procedures is improper? Allocation:

A)     on a strict pro rata basis over all suitable accounts.

B)     based upon a predetermined formula.

C)     based upon past participation in IPOs.

Q5. Which of the following statements regarding allocating trades is TRUE? It is permissible under the Standards to allocate trades:

A)     based upon compensation arrangements.

B)     based upon any method the firm deems suitable so long as the allocation procedure has been disclosed to all clients.

C)     on a pro-rata basis over all suitable accounts.

答案和详解如下：

Q1. Which of the following statements regarding allocating trades is TRUE? It is:

A)     never permissible to deviate from a proportional account value weighting method of trade allocation, unless this is done on the basis of an advance indication of interest in the issue.

B)     permissible under the standards to allocate trades on the basis of a predetermined formula that may deviate from a pro rata basis but is inherently fair.

C)     never permissible to deviate from a pro rata basis, unless this is done on the basis of an advance indication of interest in the issue.

Correct answer is B)

If the firm has developed an allocation procedure that is formula-based, inherently fair, and the details are disclosed to clients, it is possible to deviate from a pro rata allocation basis.

Q2. Pro rata allocation on the basis of an advance indication of interest means each account for which the shares are suitable:

A)     shall receive m/n shares, where there are m shares available and n such accounts.

B)     and which has expressed an advance indication of interest, shall receive m/n shares, where there are m shares available and n such accounts.

C)     and which has expressed an advance indication of interest, shall receive w*m shares, where w is the account's proportional value of all such accounts and there are m shares available.

Correct answer is B)

Pro rata allocation on the basis of an advance indication of interest means that all accounts that are suitable and that have expressed an interest in the issue shall receive m/n shares, where there are m shares available and n suitable accounts have expressed interest.

Q3. Allocation on a strict pro rata basis means each account for which the shares are suitable:

A)   shall receive m/n shares, where there are m shares available and n such accounts.

B)   and which has expressed an advance indication of interest, shall receive w*m shares, where w is the account's proportional value of all such accounts and there are m shares available.

C)   and which has expressed an advance indication of interest, shall receive m/n shares, where there are m shares available and n such accounts.

Correct answer is A)

Strict pro rata means that each suitable account should receive m/n shares, where there are m shares available and n suitable accounts.

Q4. Which of the following trade allocation procedures is improper? Allocation:

A)     on a strict pro rata basis over all suitable accounts.

B)     based upon a predetermined formula.

C)     based upon past participation in IPOs.

Correct answer is C)

Participation in prior IPOs does not insure suitability for subsequent IPOs. Moreover, this method of allocation could result in a fairness problem, since larger accounts are more likely to have had a greater level of participation in past IPOs.

Q5. Which of the following statements regarding allocating trades is TRUE? It is permissible under the Standards to allocate trades:

A)     based upon compensation arrangements.

B)     based upon any method the firm deems suitable so long as the allocation procedure has been disclosed to all clients.

C)     on a pro-rata basis over all suitable accounts.

Correct answer is C)

It is permissible to allocate trades on a pro-rata basis over all suitable accounts. It is not permissible to base allocations upon compensation arrangements. Any method is not necessarily suitable, and disclosure does not absolve the member from ensuring that the allocation is necessarily fair.

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