S66 Missed Questions (Kaplan Qbank)

What is the maximum amount of bitcoin that will ever be in circulation?

21 million

A company with 20 million shares outstanding paid $36 million in dividends. If the current market value of the company's shares is $36, the current yield is?

5% The current yield formula is annual dividends per share divided by current market price. The dividends per share are $36 million ÷ 20 million shares = $1.80 per share. Current yield is $1.80 ÷ $36.00 = 5%.

Which of the following terms best describes ETNs and leveraged ETFs?

Alternative investments

An agent in Illinois, Missouri, and Iowa had a client move from Chicago to Detroit on July 1, 2018. On September 1 of that year, he bought 100 shares of a nonexempt security in a nonexempt transaction. On August 1, 2019, the client discovered that the agent's firm never licensed him in Michigan; therefore, he is subject to civil liability to the purchaser. The statute of limitations for this sale runs out

August, 1st 2021 2 years post-discovery

Investors with a short time horizon most likely will invest in which class of mutual fund shares?

Class C shares Class C shares may be less expensive than Class A or B shares for investors with a short time horizon. The front-end load on Class A shares and the back-end load on Class B shares make them unattractive for short-term investors. Class A shares do not convert to Class B shares; it goes the other way.

Which of the following securities are exempt from the registration requirements of the Uniform Securities Act? I. An investment contract issued in connection with an employee pension plan II. Securities issued by St. Paul's Catholic Church in Tempe, Arizona III. Securities issued by a public utility IV. Securities issued by the Canadian government

I, II, III and IV. All of the securities listed are exempt from registration under the USA.

According to the Uniform Securities Act, an offer or a sale does not exist if it is which of these? I. A reclassification of the issuer's securities II. A bona fide pledge or loan III. An act incident to a judicially approved reorganization in which a security is issued in exchange for one or more outstanding shares IV. A stock dividend of stock other than the issuer's for which nothing of value was given

I, II, III and IV. The Uniform Securities Act specifically excludes these four choices from the definitions of offer and sale.

Investing in emerging market stocks is least likely to expose your client to which of the following risks?

Interest rate risk

On April 15, ABC Advisers, Inc., made application for registration as an investment adviser with State X. Absent a denial or stop order, registration will become effective:

May 15th If no denials or stop orders are in effect and no proceedings are pending to do so, registration automatically takes effect at noon on the 30th day after the application was filed.

A profitable company reports net income of $10 million. A cash dividend of $7 million is declared. From an accounting standpoint, the other $3 million will be credited to which balance sheet account?

Retained Earnings. Retained earnings are increased to the extent that company profits (net income) are undistributed—in essence, retained. Capital surplus comes from original investors purchasing stock at a price in excess of stated or par value.

A sector fund is one where the assets are?

concentrated in a particular industry or geographical area

One reason for including commodities in an investment portfolio is because they have a high correlation to

inflation rate

In the event that a filing with the state securities Administrator is found to have material misstatements or omissions, a correcting amendment must be filed

promptly.

An employee is offered a nonqualified stock option with an exercise price of $20 per share. If the option is exercised when the current market value of the stock is $30, the employee?

taxed on $10 as if it were salary In the case of NSOs, the difference between the exercise (or strike) price and the current market value is considered salary to the employee.

The contraction phase of the business cycle is least likely accompanied by

C. An economic contraction is likely to feature increasing unemployment (i.e., decreasing employment), along with declining economic output and decreasing inflationary pressure. Watch out for the double negatives.

Which of the following statements regarding the powers of the Administrator under the Uniform Securities Act is not true? A) The administrator may issue cease and desist orders. B) Denial of registration may take place in the event of the filing of an incomplete application. C) A final order of the Administrator may not be appealed. D) In the case of noncompliance, the Administrator may apply to a court of competent jurisdiction for the issuance of an injunction.

C. Final orders of the Administrator may be appealed to the appropriate court within 60 days of the issuance of the order.

Which of the following investments is the most liquid?

C. Money market funds are the most liquid investment. In virtually all cases, they come with check-writing privileges.

Covered call writing is a strategy where an investor

sells a call on a security he owns to reduce the volatility of the stock's returns and to generate income with the premium.

An applicant for registration as an IAR in this state was convicted four years ago of a non-financially related crime in another state. Under that state's laws, the crime was a misdemeanor, but under this state's laws, it is a felony. When viewing this IAR's application, the Administrator will: A) censure the investment adviser for even thinking of employing this individual. B) treat the crime as a nonfinancial felony. C) treat the crime as any felony. D) treat the crime as a nonfinancial misdemeanor.

D. Even though the crime is a felony in the state where registration is being sought, the applicant's record shows a misdemeanor; therefore, this individual will not be subject to statutory disqualification.

Which of the following is specifically excluded from the definition of an investment adviser, provided the investment advice is solely incidental to the business in which the person is engaged? A) Sports representative who advises on securities for a fee B) Pension manager C) Movie star's business manager who handles the star's investment portfolio D) Industrial engineer

D. Lawyers, accountants, engineers, teachers, and broker-dealers whose advice is incidental to their profession and who do not charge a separate fee for investment-related advice are excluded from the definition under the Investment Advisers Act of 1940.

When reading the prospectus for a fund, you notice that it states that the fund may make portfolio purchases on margin, take short positions, and use arbitrage techniques. This is most likely what type of fund?

Hedge Fund

A pension consultant who advises corporate retirement plans with assets of $135 million must register with which of the following?

The State. Under the Dodd-Frank bill, until a pension fund manager has at least $200 million in AUM, registration with the states is required. Once the $200 million level is reached, SEC registration becomes an option.

Which of the following are characteristics of newly issued warrants?

Time value but no intrinsic value. Which of the following are characteristics of newly issued warrants?

A broker-dealer registered with State A created a website two years ago to promote its services. Recently, they hired a new media person who totally redesigned the site. Under the recordkeeping requirements of the Uniform Securities Act, how long is the firm required to keep records of this?

a copy of the original web page must be maintained for three years from original use.

Which of the following is most likely to be regarded as a defensive stock?

B.

ABC Corporation has a 10% noncumulative preferred stock outstanding at $100 par value. Two years ago, ABC omitted its preferred dividend, and last year, it paid a dividend of $5 per share. To pay a dividend to common shareholders this year, each preferred share must be paid a dividend of

$10 This stock has a par value of $100 and a dividend rate of 10%. That means the annual dividend will be 10% of the $100 par, or $10. Because this is noncumulative preferred stock, the company must pay only this year's full stated dividend of $10 per share before paying dividends to the common shareholders.

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) Equipment trust certificates issued by a regulated common carrier B) 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 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) Bonds issued by the Province of Alberta

C. Securities issued by a savings and loan or building and loan are only exempt if the issuer is authorized to do business in this state. Any issue from a state or Canadian province is always exempt. Equipment trust certificates issued by any regulated common carrier are always exempt. Banks, savings institutions, and trust company securities are also exempt as long as they are organized under the laws of the United States or any state.

When comparing a time deposit account and a demand deposit account, you would expect?

Higher rate of interest paid on the time deposit account. The best example of a time deposit account is a CD. Money is deposited for a fixed length of time, generally at a fixed interest rate. Demand deposit accounts are checking accounts. Because the bank expects to have longer use of time deposit funds, interest rates are generally higher. DDAs offer the instant access of check-writing (or online payments). Typically CDs, have penalties for early withdrawal; there is no such charge on a checking account. Both are covered by FDIC up to the applicable limit.

If XYZ Mutual Fund has an expense ratio of 1.85% that includes a 12b-1 fee of 0.30%, which of the following statements are true? I. The fund may use the 12b-1 fee to pay for mailing sales literature. II. Advertising materials may state that the fund is no load. III. Management fees may be paid from the 12b-1 fee. IV. The fund's prospectus is required to disclose the fee.

I & IV. 12b-1 fees may only be used to cover promotional expenses, not fund-management expenses. The amount of the fee must be disclosed in the prospectus. Funds that charge 12b-1 fees of more than 0.25% cannot call themselves no-load funds.

The Uniform Securities Act provides for both civil and criminal prosecution. In which of these cases might an agent face civil liability? I. A sale was made of an unregistered, nonexempt security. II. During a sales presentation, the agent misstated a material fact that resulted in the prospect deciding to make the purchase. III. The agent was included in the judgment, along with the broker-dealer, for a civil infraction.

I, II, and III. These are all cases for civil, not criminal, liability. Unless it can be proven that the agent acted willfully and with knowledge, it is hard to have a criminal case.

According to the Investment Advisers Act of 1940, which of the following statements regarding Part 2 of Form ADV are true? I. It must be filed with the state Administrator. II. A balance sheet must be submitted if the adviser collects prepaid fees of more than $1,200, six or more months in advance. III. Certain minimum business and education qualifications must be met before an investment adviser can file. IV. It may be used to satisfy the brochure requirements of the act.

II and IV. An investment adviser required to register with the SEC under the Investment Advisers Act of 1940 must submit its Form ADV to the SEC. In some cases, the Form ADV will also be filed with the state Administrator, but that is state law, not a federal requirement. A balance sheet must be submitted with Part 2 if the adviser receives "substantial" prepayments of fees. Part 2 may be used as an investment adviser's disclosure brochure to clients.