Series 99 Practice Exam.
Free practice test — 60 quality-checked questions, instant feedback.
These are original study questions written from published exam objectives—not recalled, copied, or confidential live-exam items. Always confirm current coverage with the official sources linked on this page.
Browse all questions & answers
1. Which statement correctly pairs two published characteristics of the Series 99 examination?
- A. It contains 50 scored questions and requires a passing score of 68 percent
- B. It contains 75 scored questions and requires a passing score of 70 percent
- C. It contains 50 scored questions and requires a passing score of 72 percent
- D. It contains 100 scored questions and requires a passing score of 68 percent
Show answer & explanation
Answer: A
The Series 99 examination contains 50 scored questions and has a passing score of 68 percent. The other combinations misstate one or both figures.2. When evaluating the risk profile of an investment product, which characteristic generally increases the potential for greater price volatility?
- A. A shorter time to maturity for a fixed-income instrument
- B. A guaranteed principal return backed by an insurer
- C. A fixed, contractually stated coupon paid at par
- D. Higher sensitivity of the product's value to changes in market conditions
Show answer & explanation
Answer: D
As a matter of conceptual product analysis, greater sensitivity of a product's value to changing market conditions is associated with greater price volatility and therefore greater risk. This reasoning does not rely on any specific figure.3. Which situation best illustrates liquidity risk in an investment product?
- A. The product cannot be sold quickly without accepting a significantly lower price
- B. The product's issuer defaults on a scheduled payment
- C. Rising interest rates reduce the market value of the product
- D. Inflation erodes the real value of future fixed payments
Show answer & explanation
Answer: A
Liquidity risk is the risk that a product cannot be converted to cash quickly without a meaningful loss in value. The other choices describe default risk, interest-rate risk, and inflation risk respectively. This is a conceptual distinction requiring no grounded figure.4. An investor holds a fixed-income product and is concerned that the purchasing power of its future payments may decline over time. Which type of risk is this concern describing?
- A. Inflation (purchasing-power) risk
- B. Default risk
- C. Liquidity risk
- D. Reinvestment risk of principal at maturity
Show answer & explanation
Answer: A
Inflation, or purchasing-power, risk is the risk that rising prices erode the real value of fixed future payments. This differs from liquidity, default, and reinvestment risk. This is a conceptual distinction requiring no grounded figure.5. A firm is budgeting the enrollment cost for an associate who must register for the Series 99 qualification exam. What is the published cost of the exam?
- A. $75
- B. $50
- C. $150
- D. $100
Show answer & explanation
Answer: D
The published cost of the Series 99 examination is $100.6. A representative is comparing two products. Which factor most directly reflects credit (default) risk rather than market risk?
- A. The ease with which the product can be sold without a large price concession
- B. The degree to which the product's price moves with broad market indices
- C. The effect of general interest-rate changes on the product's price
- D. The likelihood that the issuer will fail to meet its payment obligations
Show answer & explanation
Answer: D
Credit or default risk concerns the possibility that an issuer fails to make required payments, which is distinct from market risk, liquidity risk, and interest-rate risk. This is a conceptual distinction requiring no grounded figure.7. Which SEC rule establishes the minimum liquid capital a broker-dealer must maintain to remain in business?
- A. Rule 10b-5, the antifraud rule
- B. Rule 17a-4, the records retention rule
- C. Rule 15c3-1, the net capital rule
- D. Rule 15c3-3, the customer protection rule
Show answer & explanation
Answer: C
Rule 15c3-1 imposes a minimum net capital requirement designed to ensure a firm can meet obligations and wind down without loss to customers, applying haircuts to illiquid or volatile positions. Rule 15c3-3 protects customer property, Rule 17a-4 governs how long records are preserved, and Rule 10b-5 is the general antifraud provision.8. A customer wishes to transfer only certain positions rather than an entire account to another firm. Within ACATS, what is this type of transfer called?
- A. A position netting
- B. A give-up
- C. A partial transfer
- D. A full transfer with residual credit
Show answer & explanation
Answer: C
ACATS supports both full account transfers and partial transfers of specified assets, with residual credits sweeping later items such as dividends received after a full transfer. A give-up is an arrangement in which one firm executes and another clears. Netting is a settlement concept and does not describe movement of customer assets between firms.9. A customer buys 100 shares of a listed common stock in a cash account on a Tuesday. Under the standard settlement cycle now in effect for US equities, when does regular-way settlement occur?
- A. The same day, because listed equities settle on trade date
- B. Wednesday, one business day after the trade date
- C. Friday, three business days after the trade date
- D. Thursday, two business days after the trade date
Show answer & explanation
Answer: B
US equities, corporate bonds and municipal securities moved to a T+1 regular-way settlement cycle in May 2024, so a Tuesday trade settles Wednesday. Shortening the cycle reduces counterparty and market risk but compresses the operational window for allocations, affirmations and funding, which is why operations staffing and cutoffs changed with it.10. Under a T+1 settlement cycle, what is the relationship between a dividend's ex-date and its record date?
- A. The ex-date is two business days before the record date
- B. The ex-date is one business day before the record date
- C. They fall on the same business day
- D. The ex-date is one business day after the record date
Show answer & explanation
Answer: C
To be a holder of record on the record date, a purchase must settle by that date; under T+1 a buyer must therefore trade no later than the business day before. The first day a purchase no longer carries the dividend is the record date itself, so ex-date and record date coincide. Under the former T+2 cycle the ex-date fell one business day earlier.11. Which organization acts as the central securities depository holding immobilized certificates and effecting book-entry movement of securities between participants?
- A. The National Securities Clearing Corporation
- B. The Municipal Securities Rulemaking Board
- C. The Depository Trust Company
- D. The Options Clearing Corporation
Show answer & explanation
Answer: C
DTC is the depository holding securities in book-entry form so ownership changes by ledger entry rather than physical delivery. NSCC is the clearing corporation that nets trades and guarantees settlement, and both sit under DTCC. The OCC clears listed options, and the MSRB writes municipal securities rules but performs no clearing function.12. A clearing firm's obligations in a single security across many trades are offset into one net long or short position for settlement. What is this process called?
- A. Prime brokerage give-up
- B. Payment versus payment
- C. Trade-for-trade settlement
- D. Continuous net settlement
Show answer & explanation
Answer: D
Continuous net settlement nets each participant's buys and sells in a security to a single obligation, dramatically reducing the number and value of deliveries required. NSCC also interposes itself as central counterparty, guaranteeing completion. Trade-for-trade settlement would require each transaction to settle individually, which is how ex-clearing and some foreign markets operate.13. A customer instructs their broker-dealer to move an entire brokerage account to another firm. Which system automates the transfer, and what is the typical validation timeframe for the carrying firm?
- A. ACATS; the carrying firm has thirty calendar days to validate
- B. FINRA CRD; the receiving firm validates within five business days
- C. CNS; the carrying firm validates on settlement date
- D. ACATS; the carrying firm generally must validate or take exception within one business day
Show answer & explanation
Answer: D
The Automated Customer Account Transfer Service moves whole accounts between members on a defined timetable, with the carrying firm validating or taking exception to the transfer instruction within one business day and delivery following within roughly three. Delays are a leading customer complaint category, so operations personnel monitor exception queues closely. CRD is the registration system for individuals and firms.14. Under SEC Rule 15c3-3, the customer protection rule, what must a broker-dealer do with fully paid and excess margin securities?
- A. Pledge them as collateral for the firm's own borrowings
- B. Maintain physical possession or control of them, segregated from the firm's own assets
- C. Transfer them to the firm's proprietary trading account weekly
- D. Sell them if the customer does not trade for twelve months
Show answer & explanation
Answer: B
Rule 15c3-3 requires possession or control of fully paid and excess margin securities so customer property is not exposed to the firm's own creditors, and it requires a special reserve bank account computed under the reserve formula. Hypothecating fully paid customer securities for firm purposes is precisely what the rule forbids.15. A broker-dealer computes the amount owed to customers versus amounts receivable from customers and deposits any excess into a special account for the exclusive benefit of customers. What is this computation called?
- A. The customer reserve formula computation
- B. The trial balance reconciliation
- C. The net capital computation
- D. The margin maintenance computation
Show answer & explanation
Answer: A
The reserve formula compares customer credits against customer debits, and any net credit must be on deposit in a special reserve bank account for the exclusive benefit of customers. It is generally computed weekly, with some firms qualifying for monthly computation. The net capital computation under Rule 15c3-1 is a separate solvency test of the firm itself.16. A brokerage firm fails and a customer's securities cannot be located. What is the maximum SIPC protection per customer, and how much of that may be for cash?
- A. 500,000 dollars total, of which up to 500,000 dollars may be for cash
- B. 1,000,000 dollars total, with no separate cash sublimit
- C. 250,000 dollars total, of which up to 100,000 dollars may be for cash
- D. 500,000 dollars total, of which up to 250,000 dollars may be for cash
Show answer & explanation
Answer: D
SIPC protects customers of failed member broker-dealers up to 500,000 dollars per customer, with a 250,000 dollar sublimit on cash claims. SIPC does not protect against market losses, and it does not cover commodities futures or most fixed annuities. Separate capacities, such as an individual account and a joint account, are treated as different customers.17. A customer purchases 10,000 dollars of marginable stock in a new margin account. Under Regulation T, what is the initial margin requirement?
- A. 3,000 dollars, or 30 percent
- B. 2,500 dollars, or 25 percent
- C. 5,000 dollars, or 50 percent
- D. 10,000 dollars, or 100 percent
Show answer & explanation
Answer: C
Regulation T, issued by the Federal Reserve Board, sets initial margin at 50 percent of the purchase price for marginable equity securities. FINRA Rule 4210 then imposes ongoing maintenance requirements of 25 percent of market value for long positions and 30 percent for most short positions, and individual firms commonly set house requirements above those floors.18. A customer holds a long margin position with a market value of 40,000 dollars and a debit balance of 32,000 dollars. Using the 25 percent FINRA maintenance requirement, is the account in a maintenance call?
- A. Yes, because the debit balance exceeds 50 percent of market value
- B. No, because equity of 8,000 dollars exceeds the 25 percent of the debit balance
- C. Yes, because equity of 8,000 dollars is below the 10,000 dollar requirement
- D. No, because maintenance is measured against the original purchase price
Show answer & explanation
Answer: C
Equity is market value minus the debit balance: 40,000 minus 32,000 equals 8,000 dollars. The maintenance requirement is 25 percent of current market value, or 10,000 dollars. Because equity is below that figure the account is in a maintenance call for the 2,000 dollar shortfall. Maintenance is always measured against current market value, not the original cost.19. Under a firm's Customer Identification Program, which information must generally be obtained for a new individual customer before opening an account?
- A. Name, employer and estimated annual trading volume
- B. Only the customer's name and email address
- C. Name, date of birth, physical address and an identification number such as a taxpayer identification number
- D. Name and a signed acknowledgment of the firm's privacy notice
Show answer & explanation
Answer: C
A CIP requires collecting name, date of birth, a physical address and an identifying number, then verifying identity through documentary or non-documentary means within a reasonable time. A post office box alone is insufficient for the address element. The program also requires checking government lists and keeping records of the verification performed.20. An operations associate notices a customer wiring funds in from multiple unrelated third parties and immediately requesting withdrawals with almost no trading. What is the appropriate response?
- A. Contact the customer to explain that a Suspicious Activity Report will be filed
- B. Escalate to the AML compliance function for evaluation and possible Suspicious Activity Report filing
- C. Close the account without notifying anyone at the firm
- D. Take no action unless a single transaction exceeds 10,000 dollars
Show answer & explanation
Answer: B
Layering funds through a brokerage account with minimal trading is a classic money laundering pattern and must be escalated internally. It is unlawful to tip off the subject that a SAR has been or may be filed. The 10,000 dollar threshold relates to currency transaction reporting, and suspicious activity reporting has its own separate standard with no such floor.21. Which US Treasury office maintains the list of Specially Designated Nationals against which firms screen customers and transactions?
- A. The Office of Foreign Assets Control
- B. The Financial Industry Regulatory Authority
- C. The Securities Investor Protection Corporation
- D. The Municipal Securities Rulemaking Board
Show answer & explanation
Answer: A
OFAC administers economic sanctions and publishes the Specially Designated Nationals list; a match requires blocking or rejecting the transaction and reporting to OFAC. FinCEN, a separate Treasury bureau, administers the Bank Secrecy Act reporting regime including SARs and CTRs. FINRA and the MSRB are self-regulatory bodies without sanctions authority.22. A firm receives currency of 15,000 dollars from a single customer in one business day. Which report is generally required?
- A. A Suspicious Activity Report, because any currency receipt is inherently suspicious
- B. A Form U4 amendment
- C. A Currency Transaction Report, because aggregate currency exceeded 10,000 dollars in one day
- D. No report, because the threshold is 25,000 dollars
Show answer & explanation
Answer: C
A Currency Transaction Report is required for currency transactions aggregating more than 10,000 dollars by or on behalf of one person in a single business day. It is a mechanical reporting obligation and does not by itself imply wrongdoing. A SAR is filed when activity meets the suspicion standard, whatever the amount, and structuring transactions to stay below the CTR threshold is itself a crime.23. An associated person's registration is terminated. Within what period must the member file a Form U5, and what is the general record retention period for the form?
- A. Within 10 business days, retained for six years
- B. Within 30 days of termination, and the form is retained for at least three years
- C. Within 90 days of termination, retained for one year
- D. No filing is required if the person leaves voluntarily
Show answer & explanation
Answer: B
A member must file the Uniform Termination Notice, Form U5, within 30 days of terminating an associated person, and provide a copy to that person. The reason for termination must be stated accurately because it follows the individual through the CRD system, and a defamatory or inaccurate U5 is a recurring source of arbitration.24. Under SEC Rules 17a-3 and 17a-4, blotters, general ledgers and customer account records must generally be preserved for how long?
- A. Six years, with the first two years in an easily accessible place
- B. One year in any location
- C. Permanently, with no accessibility requirement
- D. Three years, with the first year in an easily accessible place
Show answer & explanation
Answer: A
The core books and records, including blotters, ledgers and customer account records, carry a six-year retention with the first two years easily accessible. Many other records, such as order tickets, communications and trial balances, carry a three-year period with the first two easily accessible. Certain organizational documents must be kept for the life of the firm.25. A firm's daily record of all purchases and sales of securities, receipts and deliveries, and cash movements is known as what?
- A. The customer statement
- B. The blotter
- C. The trial balance
- D. The stock record
Show answer & explanation
Answer: B
Blotters are the original records of entry, capturing each day's trades, receipts and deliveries of securities, and receipts and disbursements of cash. The stock record shows, for each security, who owns it and where it is physically located, in a long-and-short format that must balance. The trial balance aggregates general ledger accounts.26. A broker-dealer's stock record shows, for a given security, a long position of 10,000 shares and a short position of 9,900 shares. What does this indicate?
- A. A normal condition requiring no action
- B. That the firm must file a Suspicious Activity Report
- C. That the firm owes a customer a dividend
- D. A 100-share break that must be researched and resolved
Show answer & explanation
Answer: D
The stock record must balance: the long side shows who owns the security and the short side shows where it is located, so the two must be equal. A difference is a break, and unresolved breaks can require the firm to buy in or take a net capital charge. Researching and clearing breaks promptly is a core daily operations function.27. Securities held by a broker-dealer in its own name on behalf of customers, rather than registered in each customer's name, are said to be held in what form?
- A. Street name
- B. Bearer form
- C. Legend form
- D. Direct registration
Show answer & explanation
Answer: A
Street name registration puts the securities in the firm's nominee name while the customer remains beneficial owner, which is what makes book-entry transfer and lending mechanically possible. Direct registration records the investor on the issuer's books through the transfer agent. Bearer securities, payable to whoever holds them, are essentially obsolete in the US market.28. An issuer declares a 3-for-2 stock split. A customer holds 400 shares. How many shares does the customer hold after the split, and what happens to any fractional entitlement?
- A. 1,200 shares, with no fraction
- B. 266 shares, with a fraction paid in cash
- C. 600 shares, with no fraction arising in this case
- D. 400 shares, because splits affect only the price
Show answer & explanation
Answer: C
A 3-for-2 split multiplies the position by 1.5, so 400 shares becomes 600 with no fractional remainder. Where a split does produce a fraction, the issuer typically pays cash in lieu. Processing splits, dividends, mergers and name changes accurately is the corporate actions function, and errors there flow straight into customer statements and cost basis.29. A corporate action in which shareholders may choose between receiving cash or additional shares is best described as which type?
- A. A reorganization requiring SEC pre-approval of each election
- B. A voluntary corporate action requiring an election from the holder
- C. A mandatory action with options that the issuer selects
- D. A mandatory corporate action with no holder involvement
Show answer & explanation
Answer: B
Voluntary actions require the beneficial owner to make an election by a deadline, and the firm must solicit instructions and apply a default if none is received. Mandatory actions such as a standard cash dividend or a forward split apply automatically. Missing an election deadline on a voluntary action is a common source of customer claims against operations.30. Which entity maintains the issuer's record of registered shareholders and processes transfers of registered ownership?
- A. The market maker
- B. The introducing broker
- C. The clearing corporation
- D. The transfer agent
Show answer & explanation
Answer: D
A transfer agent maintains the shareholder register, cancels and issues certificates or book-entry positions, and distributes dividends and proxy materials on the issuer's behalf. A registrar independently verifies that no more shares are issued than authorized. Clearing corporations settle trades between firms and do not maintain the issuer's ownership records.31. A customer sells short 500 shares. Under Regulation SHO, what must the broker-dealer do before effecting the short sale?
- A. Confirm the customer holds an equal long position elsewhere
- B. Obtain written SEC approval for the short sale
- C. Wait until the security has advanced on an uptick
- D. Have reasonable grounds to believe the security can be borrowed and delivered, known as the locate requirement
Show answer & explanation
Answer: D
Regulation SHO requires a locate before accepting or effecting a short sale, along with close-out obligations for fails to deliver in threshold securities. Bona fide market making has a limited exception. The old uptick rule was eliminated and replaced by an alternative price test that restricts short selling only after a security declines 10 percent in a day.32. A clearing firm carries accounts introduced by another broker-dealer on a fully disclosed basis. Which firm generally holds customer funds and securities and issues the confirmations and statements?
- A. The introducing firm
- B. Neither; the depository holds them and issues statements
- C. The clearing firm
- D. Both firms jointly, in equal shares
Show answer & explanation
Answer: C
In a fully disclosed arrangement the introducing firm handles the customer relationship, suitability and order taking, while the clearing firm carries the account, holds assets, executes settlement and issues confirmations and statements. The allocation of responsibilities must be documented in a clearing agreement, and customers must be told which firm does what.33. What information must appear on a customer trade confirmation at or before completion of the transaction?
- A. The registered representative's personal position in the security
- B. Whether the firm acted as agent or principal, along with the security, quantity, price and trade date
- C. The identity of the contra party in every agency transaction, without exception
- D. The firm's projected price target for the security
Show answer & explanation
Answer: B
Rule 10b-10 requires the confirmation to disclose capacity, whether the firm acted as agent or as principal, plus the security, quantity, price, trade date and commission or markup details as applicable. The contra party's identity need only be furnished on request in agency trades. Price targets and a representative's personal holdings are not confirmation content.34. A customer's account holds a free credit balance. What obligation does the firm have with respect to those funds?
- A. Promptly pay them out on demand and disclose how they are used while held
- B. Transfer them to the clearing corporation each night
- C. Invest them in the firm's proprietary account for the customer's benefit
- D. Retain them permanently as compensation for account maintenance
Show answer & explanation
Answer: A
Free credit balances are customer funds payable on demand, and firms must disclose on statements that the funds are payable and how the firm may use them, with the reserve formula ensuring an equivalent amount is protected. They are also a component of the customer credits in the reserve computation, which is why their accurate identification matters operationally.35. Property in an account with no owner contact for a statutory dormancy period must generally be turned over to a state authority. What is this process called?
- A. Netting
- B. Rehypothecation
- C. Subrogation
- D. Escheatment
Show answer & explanation
Answer: D
Escheatment transfers abandoned property to the state after a dormancy period defined by state unclaimed property law, following required due diligence attempts to reach the owner. Firms must track contact and mail returns to identify at-risk accounts. Rehypothecation is a firm's re-pledging of customer collateral, which the customer protection rule constrains.36. An operations associate is asked to open an account for a customer who wishes to grant trading authority to a third party. What document is required?
- A. A Suspicious Activity Report identifying the third party
- B. A written trading authorization or power of attorney from the account owner
- C. A verbal instruction noted in the account file
- D. A Form U4 for the third party
Show answer & explanation
Answer: B
Third-party trading authority requires written authorization from the account owner, and the firm must record it and supervise activity in the account. Limited authorization permits trading only, while full authorization also permits withdrawal of assets. A registered representative accepting orders from an unauthorized third party exposes the firm to unauthorized-trading liability.37. A customer dies holding an individual account. What is the appropriate operational treatment of open orders in the account?
- A. Execute all open orders immediately to protect the estate
- B. Cancel open orders and freeze the account pending required documentation
- C. Transfer the account to the registered representative's discretion
- D. Continue accepting instructions from the deceased customer's spouse
Show answer & explanation
Answer: B
On notice of death the firm cancels open orders, freezes the account and awaits documentation such as a death certificate, letters testamentary and any required tax waivers before releasing assets. Trading authority granted by the decedent terminates at death, so a spouse or agent may no longer instruct unless they are the legal representative of the estate.38. Two individuals hold a joint account. On the death of one, the survivor takes the entire account. Which registration is this?
- A. Transfer on death with a named beneficiary
- B. Custodial account under UTMA
- C. Joint tenants with right of survivorship
- D. Tenants in common
Show answer & explanation
Answer: C
Joint tenants with right of survivorship passes the decedent's interest automatically to the survivor. Tenants in common passes the decedent's fractional share to the estate instead. A UTMA custodial account belongs to the minor with a custodian acting for them, and a transfer on death designation applies to an individual account with a named beneficiary.39. Under the FINRA rule addressing financial exploitation of specified adults, what may a member do when it reasonably believes exploitation is occurring?
- A. Take no action, since firms have no authority to delay customer instructions
- B. Place a temporary hold on a disbursement and notify the trusted contact, subject to the rule's conditions
- C. Transfer the account to a firm officer's control indefinitely
- D. Liquidate the account and remit proceeds to the trusted contact
Show answer & explanation
Answer: B
The rule permits a temporary hold on disbursements from the account of a specified adult where exploitation is reasonably suspected, with notification and internal review requirements and defined time limits that may be extended. Firms must also make reasonable efforts to obtain trusted contact information at account opening. The rule authorizes a hold, not liquidation or seizure.40. A registered representative sells a security to a customer at a price above the prevailing market and charges an undisclosed markup well beyond industry norms. Which principle is violated?
- A. The fair prices and commissions requirement, historically the 5 percent policy
- B. The customer identification program
- C. Regulation SHO
- D. The net capital rule
Show answer & explanation
Answer: A
FINRA requires markups, markdowns and commissions to be fair and reasonable in light of all relevant circumstances. The historical 5 percent policy is a guideline rather than a ceiling, and factors such as security type, availability, price and transaction size all bear on fairness. Excessive undisclosed markups are a recurring enforcement theme, especially in thinly traded debt.41. An associated person wants to accept a gift from a vendor seeking the firm's business. Under FINRA's gifts rule, what annual limit generally applies per person?
- A. 50 dollars per recipient per year
- B. There is no limit if the gift is disclosed
- C. 500 dollars per recipient per year
- D. 100 dollars per recipient per year
Show answer & explanation
Answer: D
The FINRA gifts rule caps gifts in relation to the business of the recipient's employer at 100 dollars per person per year, and firms must keep records of gifts given and received. Ordinary and usual business entertainment is treated separately from gifts. Promotional items of nominal value bearing the firm's logo are generally excluded from the cap.42. A customer complaint is received in writing alleging a sales practice violation. What is the firm's basic obligation?
- A. Record the complaint, retain it, and report it to FINRA in accordance with the reporting rule
- B. Take no action unless the customer files an arbitration claim
- C. Forward it directly to the SEC and take no internal action
- D. Resolve it verbally with the customer and destroy the correspondence
Show answer & explanation
Answer: A
Written customer complaints must be recorded in a complaint file, retained, and reported to FINRA under the reporting rule within the required quarterly or event-driven timeframes, with certain categories requiring prompt disclosure. Complaints may also require Form U4 amendment for the associated person. Destroying complaint correspondence would violate both the books and records and reporting obligations.43. Which self-regulatory organization writes the rules that govern broker-dealer conduct in municipal securities, even though it has no examination or enforcement arm of its own?
- A. The Federal Reserve Board
- B. The Securities Investor Protection Corporation
- C. The Financial Industry Regulatory Authority
- D. The Municipal Securities Rulemaking Board
Show answer & explanation
Answer: D
The MSRB writes municipal securities rules but relies on FINRA, the SEC and bank regulators to examine and enforce them against dealers. It also operates the EMMA system for municipal disclosure. SIPC provides customer protection in liquidations and writes no conduct rules, and the Federal Reserve sets margin requirements under Regulation T.44. Which market participant quotes both a bid and an offer and stands ready to buy and sell a security for its own account?
- A. An introducing broker
- B. A market maker
- C. A transfer agent
- D. A custodian bank
Show answer & explanation
Answer: B
A market maker commits capital by quoting two-sided markets and trades as principal, earning the spread while providing liquidity. An introducing broker routes customer orders and does not carry positions or accounts. Transfer agents maintain issuer shareholder records, and custodian banks safekeep assets for institutional owners.45. A stock is quoted 24.10 bid, 24.18 ask. A customer places a market order to sell 100 shares. Ignoring commissions, at approximately what price should the order execute?
- A. 24.18, the ask
- B. 24.28, the ask plus the spread
- C. 24.14, the midpoint
- D. 24.10, the bid
Show answer & explanation
Answer: D
A customer selling at market hits the bid, which is the price at which market participants are willing to buy. A customer buying at market lifts the offer. The eight-cent difference is the spread, which is compensation to the liquidity provider and an implicit cost to the customer on every round trip.46. Which type of order becomes a market order only once the security trades at or through a specified price, and carries no price protection thereafter?
- A. A stop order
- B. A stop-limit order
- C. A limit order
- D. A fill-or-kill order
Show answer & explanation
Answer: A
A stop order is dormant until the stop price is touched, at which point it becomes a market order and may execute far from the trigger in a fast market. A stop-limit converts to a limit order instead, protecting price but risking non-execution. A fill-or-kill requires immediate complete execution or cancellation.47. US Treasury bills are issued at a discount and mature at face value. How is the investor's return realized?
- A. Through semiannual coupon payments
- B. Through quarterly dividends declared by the Treasury
- C. As the difference between the discounted purchase price and the face value at maturity
- D. Through a variable rate reset every 90 days
Show answer & explanation
Answer: C
Treasury bills are zero-coupon instruments with maturities of one year or less, purchased below par and redeemed at par, with the difference constituting interest. Treasury notes and bonds pay semiannual coupons, and TIPS adjust principal for inflation. Treasury interest is exempt from state and local income tax but subject to federal tax.48. An operations associate is processing a customer's purchase of a mutual fund. At what price is the order executed under forward pricing?
- A. The average net asset value over the preceding five days
- B. A price negotiated between the customer and the distributor
- C. The next net asset value computed after the order is received
- D. The net asset value computed at the close of the prior business day
Show answer & explanation
Answer: C
Forward pricing requires that purchase and redemption orders receive the next NAV calculated after the order is received, which is why late trading, allowing orders after the cutoff to receive that day's price, is unlawful. NAV is normally computed once each business day after the close. Preventing late trading is a specific operational control.49. A customer's account is charged interest on a debit balance carried in a margin account. Which document must the customer have received explaining the terms of margin borrowing?
- A. The options disclosure document
- B. The margin disclosure statement and the credit agreement
- C. The official statement
- D. The Form ADV Part 2
Show answer & explanation
Answer: B
Margin customers must receive a margin disclosure statement describing the risks, including that the firm may sell securities without contacting the customer, and must sign a credit agreement setting the interest terms. The options disclosure document is required before options trading, an official statement accompanies municipal offerings, and Form ADV is an investment adviser document.50. Before a customer's first options transaction, what must the firm deliver, and by when must the options account agreement be returned?
- A. Nothing, because listed options are exempt from disclosure requirements
- B. The options disclosure document at or before account approval, with the agreement returned within 15 days of approval
- C. The options disclosure document within 30 days after the first trade
- D. A prospectus for each option contract before every trade
Show answer & explanation
Answer: B
The options disclosure document, Characteristics and Risks of Standardized Options, must be furnished at or before approval of the account for options trading, and the signed options agreement must be returned within 15 days of approval. Listed options do not have a prospectus; the ODD serves that disclosure function for the standardized contracts.51. Which organization issues, guarantees and clears listed options contracts in the United States?
- A. The Options Clearing Corporation
- B. The Financial Industry Regulatory Authority
- C. The Depository Trust Company
- D. The Securities Investor Protection Corporation
Show answer & explanation
Answer: A
The OCC is the issuer and central counterparty for listed options, standing between buyer and writer so neither faces the other's credit risk, and it handles exercise assignment. DTC is the depository for securities positions, FINRA regulates broker-dealer conduct, and SIPC protects customers in a member liquidation.52. A customer exercises a long equity call option. What is the standard settlement for the resulting stock position relative to the exercise date?
- A. The stock trade settles on the standard equity settlement cycle following exercise
- B. The stock position settles five business days after exercise
- C. No stock position results; only cash is exchanged
- D. The stock position settles the same day the option is exercised
Show answer & explanation
Answer: A
Exercise of an equity option produces an actual stock transaction that then settles on the ordinary equity cycle. Options themselves settle the next business day for premium purposes. Index options are cash settled rather than delivering securities, which is a distinction operations must reflect in position and money movement processing.53. A firm delivers securities to a counterparty but the counterparty does not deliver payment on settlement date. From the delivering firm's perspective, what has occurred?
- A. A fail to receive on the cash side, arising because delivery versus payment did not complete
- B. A short sale requiring a locate
- C. An escheatment event
- D. A corporate action requiring an election
Show answer & explanation
Answer: A
Settlement normally occurs delivery versus payment, so securities and cash move simultaneously and neither side has unsecured exposure. When one leg does not complete, a fail arises and the firm must age, monitor and resolve it, with net capital charges applying to aged fails. Persistent fails in threshold securities also trigger close-out obligations under Regulation SHO.54. A firm lends fully paid customer securities to another broker-dealer. What is required of the firm?
- A. Nothing, because fully paid securities may be lent at the firm's discretion
- B. Conversion of the customer's account to a cash account
- C. A written fully paid lending agreement with the customer and collateral maintained for the loan
- D. Prior approval of each loan by the SEC
Show answer & explanation
Answer: C
Fully paid securities may be lent only under a separate written agreement with the customer that discloses the risks, including loss of SIPC protection on the loaned securities and loss of voting rights, and the firm must maintain collateral. This is distinct from margin securities, where the customer's hypothecation agreement permits lending within regulatory limits.55. Under Regulation S-P, what must a broker-dealer provide to customers regarding personal financial information?
- A. Nothing, because broker-dealers are exempt from privacy requirements
- B. A quarterly report listing every party that received the customer's data
- C. Written consent before any internal use of customer information
- D. An initial and annual privacy notice, with an opportunity to opt out of certain information sharing
Show answer & explanation
Answer: D
Regulation S-P requires initial and annual privacy notices explaining information collection and sharing practices and offering an opt out from sharing with nonaffiliated third parties, subject to exceptions for servicing and legal requirements. It also requires policies to safeguard customer records, which underpins operational controls over data handling and disposal.56. An operations associate is unsure whether an unusual instruction from a registered representative is permissible. What is the appropriate action?
- A. Escalate to a supervisor or compliance before processing
- B. Refuse it without explanation and take no further step
- C. Process it and document the concern afterward
- D. Process it, because the representative owns the customer relationship
Show answer & explanation
Answer: A
Operations personnel are a control function, and the Series 99 registration exists because those roles can prevent or enable misconduct. Escalating before processing preserves the ability to stop an improper transaction; documenting only after the fact does not. Silent refusal without escalation leaves the underlying issue unaddressed and unsupervised.57. A firm must reconcile its records of securities positions against the depository's records. How often is this reconciliation typically performed for active positions?
- A. Every three years, in line with records retention
- B. Only when a customer disputes a statement
- C. Annually, at the fiscal year end
- D. Daily, so breaks are identified and resolved promptly
Show answer & explanation
Answer: D
Position reconciliation against depository and custodian records is a daily control, because an unresolved difference can mean securities are missing, misallocated or double counted, with net capital and customer protection consequences. Delaying reconciliation makes breaks exponentially harder to research as subsequent activity layers on top of the original discrepancy.58. A customer's Regulation T payment obligation is not met by the required date and no extension is obtained. What is the standard consequence?
- A. The position is liquidated and the account is frozen for 90 days
- B. The trade is cancelled as though it never occurred
- C. The firm must absorb the loss with no customer consequence
- D. The account is closed permanently
Show answer & explanation
Answer: A
When payment is not made and no extension is granted, the firm sells out the position and the account is frozen for 90 days, meaning the customer must have cash in the account before any further purchase. The freeze is a Regulation T consequence rather than a punishment imposed by the firm, and it applies regardless of the size of the shortfall.59. Which statement best describes the difference between a cash account and a margin account?
- A. A margin account requires full payment, while a cash account permits borrowing
- B. The two are identical except for the interest rate charged
- C. A cash account requires full payment for purchases, while a margin account permits borrowing part of the purchase price from the firm
- D. A cash account permits short selling, while a margin account does not
Show answer & explanation
Answer: C
In a cash account the customer pays in full for every purchase, and short selling is not permitted because it requires borrowing securities. A margin account extends credit against collateral, requires a credit agreement and hypothecation agreement, and permits short sales. Retirement accounts are generally cash accounts with limited exceptions.60. A firm receives a customer's check made payable to a third party rather than to the firm or the customer's account. What is the appropriate operational response?
- A. Decline the item and escalate, because third-party payments raise money laundering and misappropriation concerns
- B. Return it to the customer without any internal record
- C. Deposit it into the firm's operating account
- D. Deposit it into the customer's account and note the third party in the file
Show answer & explanation
Answer: A
Third-party items are a standard red flag because they obscure the source of funds and can facilitate layering or misappropriation, so firms generally prohibit them and require escalation. Even when ultimately legitimate, the item must be documented and reviewed. Returning it silently defeats the surveillance purpose of the control.
More in this family
Explore more FINRA Series exams
In the same family
- General Securities Representative Exam (Series 7)Practice questions →
- Securities Industry Essentials (SIE)Practice questions →
- Financial and Operations Principal Exam (Series 27)Practice questions →
- Private Securities Offerings Representative Exam (Series 82)Practice questions →
- Investment Company and Variable Contracts Products Representative Exam (Series 6)Practice questions →
- Research Analyst Exam (Series 86/87)Practice questions →
- Uniform Securities Agent State Law Exam (Series 63)Practice questions →
- Registered Options Principal Exam (Series 4)Practice questions →
- Investment Company and Variable Contracts Products Principal Exam (Series 26)Practice questions →
- General Securities Principal Sales Supervisor Module Exam (Series 23)Practice questions →
- General Securities Principal Exam (Series 24)Practice questions →
- Supervisory Analyst Exam (Series 16)Practice questions →
2026 statistics
Key facts: Series 99 exam
The Series 99 is administered by FINRA, with 50 scored questions, a 1 hour 30 minutes time limit and a passing score of 68%.
This free Series 99 practice test has 60 original questions written to FINRA's official content outline, last checked against it on July 18, 2026. Every question shows a worked explanation, and nothing here requires a signup.
As of 2026, the Series 99 exam fee is $100.
Every free resource for this exam
Get a free Series 99 study plan
A week-by-week plan plus new practice questions, straight to your inbox.
Official sources
Primary documents used to verify the exam details shown on this page.
- Securities Industry Essentials (SIE) Exam OverviewFINRAfinra.org
- Series 99 Exam OverviewFINRAfinra.org
- Prepare for Your Test Center AppointmentFINRAfinra.org
- FINRA Rule 1240 — Continuing Education RequirementsFINRAfinra.org
- Series 99 Operations Professional Exam OverviewFINRAfinra.org
- FINRA Qualification Exams OverviewFINRAfinra.org
Last verified against the official exam content outline:
Frequently asked questions
Are these Series 99 practice questions like the real exam?
Yes, they are written to match the multiple-choice format and topic coverage of the actual Series 99, spanning operations functions, regulatory requirements, and professional conduct. They mirror the way the real exam frames scenarios, such as trade settlement problems and customer account situations. No practice set is identical to the live exam, but these are built to feel familiar on test day.
How many Series 99 practice questions should I do before test day?
Most candidates benefit from working through several hundred practice questions across multiple sessions rather than cramming them all at once. Do a small diagnostic set early to find weak spots, then rotate through topic-focused sets daily as you study. In the final week, take full-length timed sets so you experience realistic exam pacing.
How should I use the answer explanations?
Read the explanation for every question, including the ones you get right. The explanations tell you why the correct answer works and why the distractors fail, which is where most of the learning happens. When you miss a question, note the underlying rule or concept and revisit that topic before your next session instead of just memorizing the answer.
How do I know I'm ready to sit for the Series 99?
You're in good shape when you consistently score above the passing threshold on full-length, timed practice sets across all topic areas, not just your strong ones. The passing score on the real exam is 68, so aim to beat that with a comfortable margin on multiple attempts. If one content area keeps dragging your score down, target it before booking your exam date.
Are these Series 99 practice questions really free?
Yes, the practice questions on this page are completely free, and you don't need to create an account or hand over an email address to use them. You can start answering immediately and come back as often as you like. Free practice is a low-risk way to gauge where you stand before investing in a full prep course.