Fraud Awareness Quiz

	NASAA - CSA INVESTMENT FRAUD AWARENESS QUIZ
The North American Securities Administrators Association (NASAA) is a membership organization of the 66 state, provincial and territorial securities administrators in the 50 states, the District of Columbia, Canada, Mexico, and Puerto Rico. In the United States, NASAA is the voice of the 50 state securities agencies responsible for grass-roots investor protection and efficient capital formation. The Canadian Securities Administrators (CSA) is the umbrella organization representing the 13 provincial and territorial securities commissions.

1. Which of the following phrases should raise your concern about an investment?
	a. High rate of return
	b. Risk-free
	c. Your investment is guaranteed against loss
	d. You must invest now
	e. All of the above
2. Securities laws protect investors by requiring companies to:
	a. Show profits before they can sell stock
	b. Provide investors with specific information about the company
	c. Pay dividends
	d. Repay investors who have lost money
3. In which situation are you taking the least amount of risk?
	a. Buying a Certificate of Deposit (CD), in United States, or a Guaranteed Investment Certificate (GIC), in Canada, from a bank
	b. Investing with someone you know through your church or community association
	c. Investing offshore
	d. Investing with someone who contacted you by phone
4. A fellow book club member tells you about an investment opportunity that has earned returns of 20% during the past year. Your investments have been performing poorly and you’re interested in earning higher returns. This person is your friend and you trust them. What should you do?
	a. Ask your friend for more information about the investment so that you can understand the risks before you make a decision
	b. Invest only a small amount to see how things go before making a larger investment
	c. Call your securities regulator to see if the investment has been registered or is properly exempted for sale
	d. a and c
5. Which of the following should you rely upon when making an investment decision?
	a. Testimonials of other investors
	b. Advertisements and news stories in the media or on the Internet
	c. Technical data that you don’t really understand
	d. Information filed with your securities regulator
6. Ways to protect yourself from investment fraud include:
	a. Read all disclosure documents about an investment
	b. Seek advice from an independent and objective source
	c. Be skeptical and ask questions
	d. Never write the check/cheque for an investment in the name of your salesperson
	e. All of the above
7. When dealing with a securities salesperson who is considered reputable, you should do all the following except:
	a. Request copies of opening account documentation to verify that your investment goals and objectives are stated correctly
	b. Open and review all correspondence and account statements when you receive them
	c. Verify your written account statements with information you can obtain online
	d. Allow the salesperson to manage your assets as they see fit because they are the expert
	e. Evaluate your salesperson's recommendations by doing your own independent research
8. Which of the following are frequently used to defraud the public?
	a. Short-term promissory notes
	b. Prime bank investments
	c. Offshore investments to avoid taxes
	d. Nigerian advance fee letters
	e. All of the above
9. The role of government securities regulators is to:
	a. Sell shares to investors
	b. Act as an association for securities dealers and advisers
	c. Regulate securities markets, the investment industry and protect investors
	d. All of the above
10. You have been working closely with your securities salesperson for years. Recently your salesperson asked you to invest in a product that he/she is really excited about, however, the recommendation seems very different from financial products you have invested in previously. Which of the following should you do?
	a. Agree to make the investment because you have done business with your salesperson for years and trust them implicitly
	b. Check with your securities regulator to see if they have any information on the investment product
	c. Check with your securities regulator to see if the securities salesperson is authorized to sell the product in question
	d. Rely upon the written material the salesperson gives you
	e. a & d only
	f. b & c only
11. An investment is likely to be legitimate if:
	a. The promotional materials and company website look professional
	b. The company has a prestigious office location
	c. Other investors are receiving quick up-front returns
	d. The company has an official-sounding name
	e. None of the above
12. Who insures you against investment losses?
	a. No one; this is the risk you take when you invest
	b. My securities regulator
	c. The company selling the investment
	d. The Securities Investor Protection Corporation (SIPC) in United States or the Canadian Investor Protection Fund (CIPF) in Canada Find answers on the left