Orion Series 65 Unit 2
preferred stock
Among the popular methods of valuing equity securities is the dividend growth model. One could expect to see an analyst using this to value any of these EXCEPT:
A general description of the types of investment advisory programs offered by the firm
An investment adviser has engaged a website designer. What may the designer include on the website?
Records must be kept for six years.
An investment adviser registered in State G is obligated to maintain certain books and records as specified by the Uniform Securities Act. Which of the following statements regarding adviser record keeping is NOT true?
the states in which the advertising is licensed to conduct business
An investment advisory contract need NOT include
Yes
Need register as Investment Adviser: Broker-dealer that charges a fee for providing investment advice over and above commissions from securities transactions.
$900 long-term capital gain
On July 15, 2013, an employee of KAPCO Manufacturing Company receives an incentive stock option to purchase 100 shares of KAPCO common stock at $21 per share when the current market price is $19. She exercises the option on June 30, 2014 and sells her shares on August 4, 2015 at $30 per share. For tax purposes, she has a:
corporation partnership sole proprietorship unincorporated association
The Investment Advisers Act of 1940 would permit an ADV to be filed by a(n):
Preferred stockholders would not generally receive preemptive rights
Which of the following statements regarding rights is TRUE?
tactical approach to investing.
Wrap fee accounts would tend to be most suitable for investors who follow a:
the music played while customers are place on hold
A broker-dealer's cybersecurity procedures should address all of the following EXCEPT
pays past and current preferred dividends before paying dividends on common stock
A company that has issued cumulative preferred stock:
Cash Stock Stock of a subsidiary
A corporation may distribute which of the following as a dividend?
Return those securities to the sender within 3 business days after receipt
A federal covered investment adviser inadvertently receives securities from a client. The custody rules of the Investment Advisers Act of 1940 would require the adviser to
it has historically been a hedge against inflation voting rights dividends
Among the benefits of owning common stock are:
Offering to provide his investment recommendations for the past 12 months. Promoting his system of charts and formulas while mentioning their limitations and difficulties.
An investment adviser is preparing an advertisement. Which of the following would be acceptable?
quarterly
An investment adviser with custody of customer funds and securities must send the customer a statement of account activity no less frequently than:
ability of the company to continue paying the stated dividend
An investor who has purchased preferred stock with the goal of receiving steady quarterly income would be most interested in the
residual claim to assets at dissolution vote in person at the annual meeting of shareholders
Common stockholder rights include a:
have physical custody over its clients' monies and certificates
Foster Advisers operates as an investment advisor that is registered in a state where the Administrator, by rule, prohibits investment advisers from holding custody of client funds and securities. this means that Foster Advisers may NOT
the SEC.
Kapco Investment Advisers currently has $138 million in assets under management and has offices in Colorado and Utah. Kapco's only clients in Utah are 2 insurance companies domiciled in that state. Kapco has no office in New Mexico but does service the accounts of 3 middle-class individuals. Kapco recently has opened an advisory account for a pension plan for a corporation located in Montana. Under the Uniform Securities Act, Kapco would have to register with:
investors might lose more than the amount of their investment
Limited liability regarding ownership in a U.S. corporation means all of the following EXCEPT:
Yes
Need register as Investment Adviser: Investment adviser that manages $10 million in assets.
No
Need register as Investment Adviser: Publisher of a newspaper that renders general financial advice.
the individual would not be required to register as an IAR of OTA, inc
Omerta Transparent Advisers, Inc., (OTA), registered with the SEC as investment adviser, wishes to pay an individual to act as a third party solicitor to solicit or refer new advisory clients. Under the provisions of the Investment Advisers Act of 1940, which of the following statements is TRUE regarding this relationship.
NASAA allows use of oral discretion for the first 10 business days after the date of the first transaction
One respect in which NASAA treats the handling of discretionary Authorization by an investment adviser differently from the SEC is that
The Connecticut Administrator can require PPA to submit advertisements placed in his state.
Ponzi Planning Associates (PPA), is an investment adviser registered in the tri-state area of New York, New Jersey, and Connecticut. PPA's principal office is located in Jersey City, NJ. Which of the following statements is Correct?
there is a material change to any information contained in a broker-dealer's application for registration that is on file with the state.
Prompt notification to the Administrator must be made when
convertible bonds
Registration as an investment adviser is required for any firm in the business of giving advice on the purchase of:
The act specifically exulted accountants, lawyers, any professional engineer (aeronautical, civil, mechanical, or others), and teachers. Economists are not included in this listing.
The Investment Advisers Act of 1940 excludes certain persons from the definition of an investment advisor if their performance of adversary services is solely incidental to their professions. This exclusion would apply to all of the following EXCEPT:
Changes to be made in a partnership with notification to clients within a reasonable period of time. compensation based on average assets of the management over a particular time period
The Investment Advisers Act of 1940 would permit investment advisory contracts to provide for
an investment adviser
The Uniform Securities Act contains a number of definitions. A person who is in the business of rendering investment advice for compensation is known as:
False.
True or False: An adviser may not sell securities to its customers from its own proprietary account.
A financial planner or other person who provides investment advisory services to other for compensation
Under the Uniform Securities Act, registration with the state could be required of which of the following?
must notify the administrator of the net worth discrepancy by the close of the next business day must file a financial report with the Administrator by the first business day following notice
A registered investment adviser has discretionary authority over client accounts. Its accounting department has just discovered that the firm's net worth is $8,500.
prompt filing of an amended ADV with the SEC indicating the change in contact person
ABC Advisers is a federal covered IA. John Oldman has been responsible for keeping the firm's Form ADV updated for the last 40 years. John has suddenly announced his immediate retirement. This would require
domestic trading of foreign securities
ADRs are used to facilitate
removal of voting rights
All of the following are considered to be risks of owning common stock EXCEPT:
advisers maintaining discretion over client accounts must have net worth of $35,000
All of the following statements regarding the USA's minimum financial requirements of an investment adviser are correct EXCEPT:
The adviser must supply prompt notification to the Administrator by immediately updating its Form ADV.
An investment adviser registered with the sate wishes to take custody of client's funds or securities which of the following statements best describes NASAA rules regarding notification to the Administrator?
improper hedge clause
An investment adviser runs an advertisement in the business section of the local newspaper. The ad describes the nature of the firm's model portfolio and indicates that it has outperformed the overall market by 800% over the past 10 years, and, therefore, they guarantee that their clients will more than keep pace with inflation. At the bottom of the ad, in smaller print is the following statement: Results are not guaranteed. Past performance is not indicative of future results. These results are not normal and nanotechnology be expected to be repeated. This is an example of a(n)
quarterly
An investment adviser takes custody of a client's funds and securities. Client account statements must be sent no less frequently than
If the firm changes the location of safekeepings, all affected clients must be notified promptly
If an investment adviser registered under the Investment Advisers Act of 1940 maintains custody of customer funds or securities, which of the following is TRUE?
Agent servicing the customer's accounts Broker-dealer maintaining the account Customers Investment adviser in an advisory account.
Protection of customer confidential information is an obligation of the
This is the term used in both the federal and state law. OSJ is a FINRA term and has no relevance to investment advisers. In fact, it may be the home office or executive office, but the exam will be looking for their definition.
Seven Seas Strategic Advisers (SSSA) maintains a place of business in 11 states and is registered with the SEC. As defined in the Investment Advisers Act of 1940, the office from which control of the actives of SSSA takes place is known as the:
none of its clients because the balance sheet requirement is only acquired for a firm that collects fees in excess of $1,200, 6 or more months in advance.
Smith & Jones is a registered investment adviser under the Investment Advisers Act of 1940. It has 1,000 active clients. The firm maintains custody for 200 of their clients and exercised investment discretion for 400 of them. When preparing its brochure for annual distribution, it would need to include an audited balance sheet prepared by an independent accountant for:
The SEC has entered an order barring the executive Vice President of the firm from association with any firm in the investment business. BJS has just been fined $3,500 by the NYSE.
The BJS Advisory Service maintains no custody of customer funds or securities, requires no substantial prepayments of fees, and does not have investment discretion over clients' accounts. Which of the following would have to be promptly disclosed to clients?
False.
True or False: An administrator may not prevent custody of securities or funds if an adviser notifies the Administrator before taking custody.
True.
True or False: Under USA antifraud provisions, an investment adviser is bound by the restrictions that apply to sales practices when engaged in sales activities.
True.
True/False: A state-registered investment advisory maintaining custody of a customer's securities or funds and exercising discretion in the account is generally required to maintain a minimum net worth of $35,000.
False.
True/False: An administrative employee who receives specific compensation for offering investment advisory services is not an investment advisor representative.
False.
True/False: An employee of an investment advisory firm is an investment adviser representative if his duties are confined to clerical activities.
True.
True/False: An employee of an investment advisory firm is an investment adviser representative if his duties involve making investment recommendations.
False.
True/False: An investment adviser representative must register with the SEC if she has clients with assets of $110 million or more under management.
30
Under Regulation S-P, if an investment adviser sends a customer an initial privacy notice that contains an opt-out provision, the firm may NOT disclose nonpublic, personal information about that customer for how many days from mailing?
provide each new client with a disclosure statement or brochure no later than when entering into the advisory agreement
Under the Investment Advisers Act of 1940, a registered investment adviser who provides investment advisory services to individuals must
records must be maintained for period of 2 years from the end of the fiscal year in which the last entry was made
Under the Investment Advisers Act of 1940, all of the following are true regarding adviser recordkeeping EXCEPT
disclose, in their brochure supplements, the educational background, business experience, and disciplinary history (if any) of the supervised persons who provide advisory services to the clients
Under the Investment Advisers Act of 1940, an investment adviser is required to
Putting the adviser's own. interests before those of the customer
Under the Investment Advisers Act of 1940, an investment adviser would be prohibited from engaging in which of the following practices, even if disclosed in writing to the customer?
The investment advisor receives a customer check made payable to an unrelated third party and the check is not forwarded to the third party within 3 business days of receipt
Under the NASAA Model Rules, an investment adviser is deemed to have custody of customer funds or securities when:
economist
Under the Uniform Securities Act, all of the following persons may provide investment advice incidental to their normal business without requiring registration as an investment adviser EXCEPT a(n):
A clerk employed by a state registered investment advisory firm
Under the Uniform Securities Act, which of the following is NOT an investment adviser representative?
the annual updating amendment has not been filed for the current fiscal year, and mail addressed to the investment adviser is returned with notation "no forwarding address available." An investment adviser doing business in 10 states has been enjoined by a competent court of jurisdiction in one of those states form engaging in the securities business
Under which of the following circumstances would the SEC be permitted to cancel or revoke an investment adviser's registration?
FDIC insured banks and savings associations Registered broker-dealers
What type of qualified custodians do NASAA rules permit to hold investment advisory client's funds or securities?
soft-dollar compensation
When an investment adviser with discretion over a client's account directs trade executions to a specific broker-dealer and uses the commission dollars generated to acquire software that analyzes technical market trends, it is known as
Currency Market
Which 2 of the following risks would be of greatest concern to the holder of an ADR?
The adviser receives the proceeds of sales in the customer's account
Which of the following advisers would be deemed to have custody of customer funds or securities as defined in the Investment Act of 1940?
Making an untrue statement of material fact in a registration application with the SEC Stating that the firm's ability and qualification have been approved by the U.S. government Representing that the firm is an investment counselor when it does not normally render investment advice.
Which of the following are unlawful or prohibited practices for an investment adviser under the Investment Advisers Act of 1940?
Adviser A charges an annual fee of 0.05% of the value of the client's account, due on the first day of the clients fiscal year.
Which of the following arrangements is legal under the Investment Advisers Act of 1940?
An adviser whose only clients are insurance companies An adviser who maintains offices in only one state, advises only residents of that state (none of whom is a private fund), and gives advice relating to only tax-exempt municipal bonds.
Which of the following investment advisers are exempt from registration under the Investment Advisers Act of 1940?
A firm whose exclusive business is placing their client's assets into model portfolios
Which of the following investment advisers would be permitted to use the term investment counsel?
An investment advisory firm with $85 million in assets under management that opens an office in the state.
Which of the following is required to register as an investment adviser with the state securities Administrator?
Common stock Preferred stock
Which of the following represent(s) ownership in a company?
The adviser receives its fee each year in advance in the amount of $900. the client's securities are held by a broker-dealer with whom the adviser as an affiliate relationship.
Which of the following state registered ivnesmtnet advisers would be required to furnish an audited balance sheet as part of its disclosure statement?
Free offers must be free of cost or any other obligation. Past specific recommendations may be shown, but only if they include all recommendations for at least the previous 12 months and are very clear that past performance is not any assurance of the future.
Which of the following statements is(are) TRUE regarding advertising by an investment adviser?
If the solicitation involves anything other then impersonal advisory services, disclosure must be made to the client regarding any affiliation between the adviser and the solicitor. The agreement must be in writing. The solicitor must not be subject to statutory disqualification.
Which of the following statements regarding cash referral fees to solicitors are CORRECT under the Investment Advisers Act of 1940?
A hedge clause that limits the investment adviser's liability for losses caused by conditions and events beyond its control, such as war, strikes, and natural disasters, would generally be acceptable to the Administrator
Which of the following statements regarding the use of a hedge clause by an investment adviser is CORRECT?
Warrants have longer terms than rights.
Which of the following statements regarding warrants is TRUE?
Convertible
Which of the following types of preferred stock is most influenced by the price of an issuer's common stock?
Callable
Which of the following types of preferred stock typically has the highest stated rate of dividend (all other factors being equal)?
A bank offering advice through its trust department A person whose only clients are individuals and whose only advice deals with securities which are direct obligations of the U.S. government
Which of the following would be excluded from the definition of investment adviser under the Investment Advisers Act of 1940?
Obtaining special reports dealing with economic projections from the broker The user of the research analysis provided by the broker
Which of the following would justify an investment adviser's use of a full-service broker?
A broker-dealer making a separate charge for investment advice. A civil damages attorney who advertises that she is available to assist clients in suggesting appropriate investments for their successful claims. A finance teacher at a local community college who offers weekend seminars on comprehensive financial planning at a very reasonable price.
Which of the following would meet the definition of investment adviser under the Uniform Securities Act?
Rent
Which of the following would not be included in the safe harbor provisions of Section 28(e) of the Securities Exchange Act of 1934?
ABC Investment Advisers, organized as a partnership with 5 equal partners, admits 2 additional partners on a proportionate basis, but fails to obtain consent of its clients. JKL Investment Advisers, organized as a corporation with 5 equal shareholders, has 3 of them sell their shares to the remaining 2 owners, but the firm fails to obtain consent of its clients.
Which two of the following statements regarding investment advisory contracts demonstrate compliance with the Uniform Securities Act?
It must be delivered no later than 48 hours before entering into an advisory contract. It must be delivered no later than upon receipt of a client's funds. It must accompany the ADV part 1A when being delivered to new clients. An investment adviser must deliver to each client, a copy of the most recent ADV part 2A no later than at the time of entering into the advisory agreement.
With regard to the brochure rule of the Investment Advisers Act of 1940, which of the following are exempt from the delivery requirements of the rule?
As long as XYZ meets the net worth requirement of State A, it can register in any other state.
XYZ Advisers has its principal office in State A. XYZ maintains custody of customer securities and they wish to open an office in State B. they have been informed that the Administrator in State B requires all investment advisers that take custody to maintain a minimum net worth of $65,000. Which of the following statements is CORRECT?
