Unit 6 Series 65

If an investment adviser has engaged a website designer, what may the designer include on the website?

A general description of the types of investment advisory programs offered by the firm

Your high-net-worth advisory client has a large cash position in his money market account and is considering using the cash to purchase an investment property. You believe that the real estate investment will not provide the same returns that can be realized by investing in bonds, so you prepare a proposal that estimates the income stream and potential capital growth of a portfolio of convertible bonds currently in the firm's inventory. The recommendation is quite suitable for the client based on his current objectives. If the transaction is completed and you fail to disclose that the bonds were sold in a proprietary transaction and receive client consent, you would have

Committed a prohibited practice

ABC Securities, a registered broker-dealer, has a wholly owned subsidiary, ABC Real Estate Ventures. ABC Real Estate Ventures is in the business of structuring limited partnership offerings designed to afford qualified investors an opportunity to earn income from commercial property. If an agent representing ABC Securities were to recommend one of these programs to a qualified client,

Disclosure of the potential conflict of interest must be made

Which of the following statements regarding the Investment Advisers Act of 1940 and the adviser's brochure is CORRECT?

Each client must receive the brochure no later than the entry into the advisory contract.

The SEC has determined that advertising regarding past recommendations made by investment advisers is misleading if I. results do not reflect the deduction of fees II. actual market conditions during the referenced period are not disclosed III. the advertisement did not reflect performance for a minimum period of 3 years IV. the advertisement did not disclose that it applied to only a specific group of clients

I, II, and IV

Under the USA, when one is referring to a security that is guaranteed, the guarantee applies to I. capital gains to be expected by holding the specified security II. dividends to be paid on the specified stock III. interest and principal payment on the specified bond IV. reimbursement by the firm for any losses suffered while holding that security

II and III

In their advertising campaigns, investment advisers are prohibited from doing all of the following EXCEPT

Offering free services

It would be permissible for an investment adviser to make which of the following statements?

Past appreciation of all accounts over the past three years has exceeded 20%.

Which of the following circumstances would require an investment adviser to notify all clients of the firm?

The investment adviser hires another partner for the firm.

An agent tells a customer that by investing in U.S. Treasury bonds, he is guaranteed to make money. Under the NASAA Statement of Policy on Dishonest or Unethical Business Practices of Broker-Dealers and Agents, which of the following statements is TRUE?

This is unethical because it constitutes a guarantee against market risk.

Damon Raymond is an agent with ABC Investment Planning, a registered broker-dealer and investment adviser. Under what circumstances would Damon not have to obtain client consent when ABC Investment Planning is acting in a principal capacity?

When the trade that is made is unrelated to the advisory relationship

All of the following activities and communications would fall outside the definition of a recommendation EXCEPT

a broker-dealer sends an email to its more conservative clients stating this would be an excellent time to invest in public utility stocks, and includes a list of those paying the highest dividends

One of the concerns about social media is the opportunity for affinity fraud. This occurs when

fraudulent offers are aimed at groups of people who share a similar interest

An investment adviser representative has uncovered an unusual investment opportunity that he believes is perfect for one of his clients. When presenting the recommendation to the client, it becomes clear that the client is concerned about the potential of loss. To alleviate that concern, the IAR tells the client that he agrees to repurchase the security from the client anytime within the next 6 months at the original purchase price. In so doing, the IAR

has committed the unethical business practice of guaranteeing against loss.

As a fiduciary, the investment adviser representative owes his clients an affirmative duty of utmost good faith, and full and fair disclosure of all material facts. This affirmative duty of disclosure is required by the IAR in all of the following situations EXCEPT

he has donated funds to a nonprofit medical research institute that owns securities that the investment adviser representative has recommended

Broker-dealers are required to furnish clients with a fee disclosure document. All of the following are true statements about that document except

it must be filed with the Administrator of the state in which the broker-dealer's principal office is located.

All of the following statements are true regarding investment advisory contracts under NASAA's Model Rule on Unethical Business Practices of Investment Advisers, Investment Adviser Representatives, and Federal Covered Advisers EXCEPT

the contract must be written in 10-point type or larger

All of the following statements regarding the disclosure investment adviser brochure rule of the Uniform Securities Act are true EXCEPT

the disclosure brochure must be signed by an officer or partner of the firm

For larger accounts, a broker-dealer is least likely to waive its normal fee for

transferring the account to another broker dealer

A securities salesperson may indicate to a prospective customer that the SEC has approved a securities issue

under no circumstances