General Securities Sales Supervisor (Series10) Practice Exam

What is the presumptive basis for computing the mark-up on a debt security under FINRA rules?

1. The NBBO

2. Contemporaneous purchases by that dealer

3. Contemporaneous purchases by other dealers

4. The pricing of similar securities

The correct answer is: Contemporaneous purchases by that dealer

The presumptive basis for computing the mark-up on a debt security under FINRA rules is derived from contemporaneous purchases by that dealer. This method establishes a benchmark for assessing the mark-up based on the prices at which the dealer recently executed purchases of the same or similar securities. This approach provides an objective reference point, as it relies on actual transactions conducted by the dealer, reflecting the market conditions and the specific circumstances at the time of those purchases. By using their own purchase data, the dealer can justify the mark-up charged to customers, ensuring that it is reasonable and consistent with the prices they themselves paid. While other choices might involve comparisons or market conditions, they do not relate specifically to the dealer's own transactions, which make contemporaneous purchases the most relevant and reliable method for calculating mark-ups in this context.