4.12

The statute of limitations for criminal offenses under the USA is: A) three years. B) ten years. C) two years. D) five years.

five years.

Hedge funds are issued by A) investment companies B) Administrators C) portfolio advisers D) limited partnerships

limited partnerships

According to the Uniform Securities Act, an investment adviser may have custody of a customer's funds and securities if: A) it has received the permission of the Administrator. B) the Administrator has been informed of the custody. C) it has received permission from the SEC. D) it does not share in the capital gains of the account.

the Administrator has been informed of the custody.

A complex trust has the following income for the year: $1,500 in taxable interest, $2,000 in dividends (reinvested in the stock), and $3,000 in tax-exempt interest. In addition, the portfolio realized $3,500 in capital gains that were reinvested in the corpus. What is the distributable net income (DNI) for the trust? A) $1,500 B) $6,500 C) $10,000 D) $4,500

$6,500

The Uniform Securities Act grants exemptions to the securities of a number of issuers. If you were the Administrator, which of the following securities would NOT be eligible for an exemption in your state? A) Bonds issued by the Province of Alberta. B) Equipment trust certificates issued by a regulated common carrier. C) Debt securities issued by the ABC Savings and Loan Association, organized under the laws of a neighboring state, but not authorized to do business in your state. D) Common stock issued by the XYZ Trust Company, organized under the laws of a neighboring state, but not authorized to do business in this state.

Debt securities issued by the ABC Savings and Loan Association, organized under the laws of a neighboring state, but not authorized to do business in your state.

Rule 206(4)-1 of the Investment Advisers Act of 1940 regulates advertising by investment advisers. It would be prohibited under that rule for any adviser: I. to place an advertisement in a newspaper with photos of clients accompanied by statements claiming the adviser helped them meet their financial goals. II. to advertise past, specific investment recommendations that were or would have been profitable, unless the advertisement fully disclosed all recommendations for at least the past year (including the security recommended, the date, price, and nature of the recommendation—buy, sell, or hold—the price triggering the recommendation, and the most recent price) and included a mandated cautionary legend that past performance is no assurance of future results. III. to advertise any graph, chart, formula, or other device that consumers can use to determine when to make investment decisions while prominently disclosing the device's limitations and difficulties in its use. IV. to offer a free subscription to the adviser's quarterly market review once the subscriber has completed a detailed financial profile. A) III and IV. B) I and II. C) I and IV. D) II and III.

I and IV.

An investment adviser must meet the net worth requirements of the Administrator. When doing the computation, which of the following assets would be included: I.a sofa in the reception area. II.the value of the copyright on an investment manual authored by the investment adviser. III.the reputation of the investment adviser. IV.patents held by the investment adviser on a stock tracking software program. A) II, III and IV. B) I only. C) I, II and III. D) IV only.

I only.

In which of the following third-party transactions would an investment adviser be required to make disclosure to the client of compensation received? I. An investment adviser recommends an affiliated realtor to a client and receives compensation from the realtor. II. An investment adviser, who is also an agent for an insurance company, sells policies from the company to his clients. III. An adviser who is affiliated with a broker/dealer receives commissions on sales recommended to clients through the broker/dealer. A) I only. B) I, II and III. C) I and III. D) II only.

I, II and III.

Under the Securities Act of 1933, an accredited investor may be: I. a bank, insurance company, investment company, or employee benefit plan valued in excess of $5 million . II. a wealthy person in some cases. III. partners, officers, and directors of the issuer for a particular issue. A) I, II and III. B) II only. C) I only. D) I and III.

I, II and III.

As enumerated in the USA, exempt securities would include those issued by I.a sovereign foreign government with which the US maintains diplomatic relations II.any credit union organized and supervised under the laws of this state III.a corporation based in Toronto, Ontario whose common stock trades on the TDX Venture Stock Exchange IV.a promissory note, draft, bill of exchange, or bankers' acceptance that evidences an obligation to pay cash within 9 months after the date of issuance, is issued in denominations of at least $50,000, and receives a rating in one of the 3 highest rating categories from a nationally recognized statistical rating organization A) I, II and IV B) I and IV C) II and III D) I, II, III and IV

I, II and IV

Which of the following statements related to computing the internal rate of return (IRR) are CORRECT? I. It is the discount rate that makes the future value of an investment equal to its present value. II. In order to compute, it is necessary to know the initial cost of the investment. III. In order to compute, it is necessary to know the cash flow of the investment. IV. It is equivalent to a bond's yield to maturity. A) I and IV. B) I, II and III. C) II and III. D) I, II, III and IV.

I, II, III and IV.

Which of the following are exempt securities under the Uniform Securities Act? I. Common stock, not listed on any regulated exchange, purchased by an open-end investment company. II. Preferred stock issued by an insurance company authorized to do business in this state. III. Municipal bonds issued by Toronto, ON. IV. Private placements. A) I and II. B) II, III and IV. C) II and III. D) I and III.

II and III.

XYZ Corporation has been in business for more than 20 years. They need additional capital for expansion, and they determine that a public offering in their home state and neighboring states is appropriate. Which method of securities registration would most likely be used to register this initial public offering? A) Registering by qualification. B) Registering by notification. C) Registering by coordination. D) Providing notice filing to those states in which shares are to be issued.

Registering by coordination.

For a given amount of principal, which annuity option would produce the largest monthly income stream? A) Life with term certain. B) Straight life. C) Joint and 50% survivor. D) Joint and 100% survivor.

Straight life.

A federal covered registered investment adviser who receives compensation for advice and whose business is primarily as an investment adviser may describe its business as investment counsel if: A) a substantial part of his business is providing investment supervisory services. B) it receives SEC approval to use the definition. C) it maintains its registration by filing an updating amendment to its Form ADV annually. D) it maintains custody of customer funds and/or securities.

a substantial part of his business is providing investment supervisory services.

Under the USA, a person who has passed the appropriate NASAA examination but whose license is pending may participate in: A) prospecting for new clients in person. B) aiding the firm's research department. C) prospecting for new clients by mail. D) accepting unsolicited orders.

aiding the firm's research department.

The Investment Advisers Act of 1940 provides for a general exclusion from its definition of investment adviser for all of the following EXCEPT: A) a publisher of a major national newspaper. B) a trust company. C) a lawyer who provides investment advice as an incidental part of his practice. D) an agent for an athlete who gets paid for providing investment advice to the athlete.

an agent for an athlete who gets paid for providing investment advice to the athlete.

A deceased client's trust account has over 90% of its value invested in a single common stock whose recent performance has been outstanding, resulting in a very large unrealized capital gain. Under the Uniform Prudent Investors Act, the investment adviser handling the account would be acting with proper fiduciary responsibility by A) exchanging a portion of that stock for a suitable security held in the adviser's trading account B) selling all of that stock in order to rebalance the trust's assets C) liquidating a portion of that stock to take advantage of the tax savings offered by the stepped-up basis at death D) continuing to hold that stock position if it is felt that it meets the objectives of the trust

liquidating a portion of that stock to take advantage of the tax savings offered by the stepped-up basis at death

Long-term Financial Solutions, Inc. (LTFCI), a federal covered registered investment adviser, files a Form ADV-W indicating the business is closing. It is being acquired by another federal covered adviser, Goldin and Sylver Advisers, LLC. As the successor firm, Goldin and Sylver Advisers A) is under no obligation to maintain any of LTFCI's corporate records B) must keep copies of the LTFCI corporate charter for at least three years after LTFCI's termination C) must notify all clients of LTFCI that their advisory contracts have been assigned D) must keep copies of the LTFCI corporate charter for at least five years after LTFCI's termination

must keep copies of the LTFCI corporate charter for at least three years after LTFCI's termination

All of the following are characteristics of exchange-traded funds EXCEPT A) they generally have a lower expense ratio than comparable mutual funds B) they are typically designed to track an index C) they are redeemable securities D) they are priced by supply and demand continuously during the trading day

they are redeemable securities

A primary purpose of filing the annual updating amendment to the Form ADV is to: A) provide a set of audited financials. B) disclose the amount and location of securities or funds of clients that are being held by the adviser or a qualified custodian. C) verify that the investment adviser still qualifies for SEC registration. D) ensure that full disclosure has been made in the adviser's brochure.

verify that the investment adviser still qualifies for SEC registration.

Under which of the following circumstances will a private placement fail to qualify for exemption from registration under the USA? A) The seller reasonably believes that individual purchasers are buying for investment purposes rather than immediate resale. B) The offer is directed to only five individuals during any 12-month period. C) A modest commission is paid to the agents who sell the offering to noninstitutional clients. D) A bank holding company purchases the offering for trading purposes rather than investment purposes.

A modest commission is paid to the agents who sell the offering to noninstitutional clients.

Under the Uniform Securities Act, which of the following statements are TRUE regarding private placements? I. They are offered to no more than 10 persons in a state in a 12-month period. II. They may be offered to an unlimited number of institutional investors. III. Institutional buyers need not be purchasing for investment. A) II and III. B) I and III. C) I and II. D) I, II and III.

II and III.

Many parents prefer to use a Section 529 Plan over a Coverdell ESA to finance their child's education plans because I.contribution limits are higher II.funds may be withdrawn tax-free if used for qualified secondary education expenses III.there are no earnings limits IV.529 contributions are tax deductible on the federal level A) III and IV B) I and II C) I and III D) I, II and III

I and III