Series 66
Which of the following employer-sponsored plans allows coverage to discriminate in favor of key employees?
457 plan
A 35-year-old client purchases a variable life insurance policy. Under current regulations, the maximum sales charge permitted over the life of the policy is
9%
Under the Investment Company Act of 1940, which of the following statements about advisory contracts between an investment company and an outside adviser is TRUE?
The contract may not be unilaterally assigned to another adviser.
Which of the following best describes a global mutual fund?
The portfolio consists of securities of companies domiciled throughout the world, including the United States.
If a high-income taxpayer is subject to AMT, which of the following preference items must be added to adjusted gross income to calculate his tax liability?
interest on a private purpose municipal bond
Certain documents belonging to a federal covered investment adviser must be kept for a period of time after the enterprise closes. Those documents are
the responsibility of the investment adviser
A corporation offering securities registered under the Act of 1933 may make which of the following statements?
"The SEC has released our securities for sale to the public." "The SEC has declared this prospectus effective."
Under the Investment Advisers Act of 1940, what is the maximum fine that may be imposed for violating the act?
$10,000
Which of the following would NOT be considered to be in the business of an investment adviser?
An accountant who provides occasional investment advice but receives no separate fee for the service
Which of the following are required for an initial application for registration as an investment adviser?
I. A consent to service of process II. A fee III. Disclosure as to whether the applicant will have discretionary powers over client funds and/or securities IV. Disclosure as to whether the applicant will have custody of client funds or securities
John and Martha, both in their early 40s, were divorced on November 22, 2018. Because Martha is unemployable, the terms of the divorce require John to pay Martha $300 per month in alimony and $1,000 per month in child support for their 4 children. Given that information, which of the following statements is CORRECT?
John can deduct $3,600 from his taxable income
One of your clients has called you to discuss an interesting investment opportunity discovered on one of the LinkedIn groups she participates in. Which of the following factors might increase the likelihood that this is a scam?
The purchase money must be wired to an offshore account One of the members of the group is a principal in the company being offered Bonus shares are offered for recruiting friends into the deal
Which of the following actions by an investment adviser registered in 3 states is permitted?
Which of the following actions by an investment adviser registered in 3 states is permitted?
Limited liability is a characteristic of being an owner of
an interest in a limited partnership and shares of an S corporation
Review of an SEC-registered investment adviser's policies and procedures designed to prevent violation of the federal securities laws must take place no less frequently than
annually
If an investor wanted to verify a company's working capital, she would do so by reviewing their
balance sheet
One of your clients currently holds a short position in DEF common stock. Which of the following types of orders is designed to offer the client protection against loss?
buy stop
In reviewing prospectuses and registration statements, the SEC
does not approve or disapprove of the issue
An investor would have to pay the alternative minimum tax when
it exceeds the investors regular income tax
A client investing $50,000 into the KAPCO Growth Fund would most likely be eligible for a breakpoint if purchasing
the class A shares
Under modern portfolio theory (MPT), all portfolios that can be constructed from a given set of stocks is referred to as
the feasible set
When a will calls for property to be distributed per stirpes, it means that
the property is divided into as many equal shares as there are surviving children of the designated ancestor and deceased children who left surviving descendants
One of the major financial decisions to be made by a family is the amount and type of life insurance to purchase. The form of insurance that offers flexible premiums without a fixed cash value is
universal life
The Uniform Securities Act provides an exemption from registration as an investment adviser for which of the following persons who have no place of business in the state?
- Advisers who deal exclusively with broker-dealers - Advisers who deal exclusively with insurance companies - Advisers who deal exclusively with investment companies - Advisers who have no more than 5 clients in that state in a 12-month period
The James Henry Company (JHC), an SEC-registered securities broker-dealer with offices in Chicago and Los Angeles, limits its clientele to banks and trust companies. JHC makes a sale of U.S. government securities to the Wall Street Bank located in New York City. Which of the following statements is (are) TRUE under the Uniform Securities Act?
- The security itself is exempt from registration. - The transaction is exempt. - The broker-dealer is not required to be registered in the state of New York.
Mr. Wright died with the following assets and liabilities: $200,000 in securities left to his wife, a $650,000 home left to his wife (the home cost $150,000), a $250,000 life insurance policy with his daughter as beneficiary, and $75,000 in debts and estate expenses. What is Mr. Wright's gross estate?
The question asks for the gross estate, not the adjusted gross estate or taxable estate. The market value of all assets in which Mr. Wright possessed an incident of ownership at the time of death are included in the gross estate. The amount is therefore $1,100,000. The adjusted gross estate would be less the $75,000 of debt and expenses.
A fundamental analyst would be interested in all of the following EXCEPT
daily trading volumes on the NYSE
If an investor wished to compute the mean return of her portfolio, she is going to
find the arithmetic mean
The semi-strong form of the efficient market hypothesis (EMH) asserts that stock prices
fully reflect all publicly-available information.
Under the Investment Advisers Act of 1940, who is not excluded from the definition of investment adviser when their investment advice is solely incidental to the individual's profession?
insurance agents
When describing the differences between an investment adviser and an investment adviser representative, it would be correct to state that the investment adviser may
maintain custody of client funds and securities, whereas an IAR may not be required to be bonded, whereas an IAR may not be required to maintain a minimum net worth, whereas an IAR may not
An investment adviser representative who makes extensive use of third-party research to formulate portfolio recommendations to clients
need not disclose that fact to the clients
If a client owns 1,000 shares in a growth company and receives a 25% stock dividend, according to the Uniform Securities Act, this would be considered
neither a sale or offer
An investment adviser registered with the state is organized as a partnership. The IA may
not change its ownership structure without formally notifying its clients
Hexagon Portfolio Advisors (HPA) believes that the market is semi-strong efficient. The firm's portfolio managers most likely will use
passive portfolio management strategies
One of your clients currently holds a long position in DEF common stock. Which of the following types of orders is designed to offer the client protection against loss?
sell stop
A company has 15 million shares of stock outstanding, and the price per share is $10. The company's market capitalization is
A company's market capitalization (or market cap) is the price per share multiplied by the number of shares outstanding. If a company has 15 million shares of stock outstanding and the price per share is $10, the market capitalization is $150 million.
If your 60-year-old customer purchases a nonqualified variable annuity and withdraws some of her funds before the contract is annuitized, what are the consequences of this action?
ordinary income tax on earnings exceeding basis
