Series 65: Unit 17

An investment adviser is conducting the initial meeting with a new advisory client. Which of the following is least necessary when gathering information necessary to fulfill the engagement? Collecting personal financial information Determining which securities to purchase for the client's investment portfolio Inquiring about the number of dependents Inquiring about the age or dates of birth of dependents

B

When preparing a client profile, it is prudent to investigate the prospect's non-financial considerations. Included would be that client's: age. attitudes. experience with investments. Values. I, II, III, & IV I & III I, II, & IV II & IV

A

A 74-year-old widower has been your client since his early 50s. He is a well-informed investor and has always seemed capable of understanding most investment concepts you have presented. At least twice a year, the 2 of you meet to evaluate his current financial situation and objectives. In your last meeting, it seemed to you that he was distracted and somewhat forgetful. It would be appropriate for you to do all of the following except inform your supervisor of your concerns about his memory loss ask him to invite a friend or family member to accompany him to appointments with you wait to see if there are further causes for concern about his capabilities take detailed notes on future conversations and meetings with him

C

Which of the following is generally not an appropriate product for retirement planning? Life insurance Bonds Commodities Mutual funds

C

A 66-year-old individual plans to retire in four years. At this time, savings include $100,000 equity in the home, $45,000 in an IRA, and anticipated Social Security payments of $1,560 per month. The individual would like to be able to travel extensively, buy nice gifts for their grandchildren, and live in a nice retirement village. Which of the following is the most likely investment constraint facing this individual? Liquidity Laws & regulations Time horizon Taxation

C. With four years to go and $145,000 in claimed assets, there isn't much time for them to grow to a level commensurate with the cash flow that will be needed for this individual's goals. There is no liquidity problem with the IRA—this investor is past the 10% penalty age. There don't appear to be any laws or regulations that would have an impact, and the income does not appear to be at a level where taxation is a primary concern.

A family balance sheet includes only ______ and__________, not income like salary, dividends or interest, or amounts paid for expenses.

assets and liabilities

An investor who claims to be aggressive but is unwilling to sustain losses is actually __________

conservative

In order for an individual to receive Social Security benefits based on the earnings of the ex-spouse, the couple must have been married for at least 1 year 10 years 5 years 2 years

B

One of your clients has received sales literature on a lifecycle fund. A common name for this kind of fund is Asset allocation Target date Growth/income Balanced

B. Because the target date fund changes its allocation as the investor's life moves ahead

When interviewing a new client, the discussion leads to the damage done to the environment by oil spills. The client mentions the names of some large petroleum companies and says that she does not want stocks like that in her portfolio. In so doing, she is expressing nonfinancial consideration; her knowledge. financial consideration; those companies don't pay dividends. nonfinancial consideration; her values. financial consideration; she already has enough money.

C

Based on reports indicating a likely slowdown in economic activity, the portfolio manager of the UVW mutual fund has reduced the fund's exposure to equities and increased the cash. UVW is most likely A growth fund A money market fund An asset allocation fund A balanced fund

C. Although most funds are able to adjust a portion of their portfolios, it is the asset allocation funds where this is the purpose of the fund. The manager's job is to allocate the fund's assets into and out of equity, debt, or cash as market conditions dictate.

An individual has just received a bonus of $12,473 and wishes to generate some income without risking loss of capital. Assuming the client is in a low tax bracket, which of the following would be the most suitable choice? Growth stocks Public utility stocks Insured municipal bonds Bank-insured CDs

D

John and his sister, Alice, open a margin account as JTWROS. John contributes $50,000, and Alice contributes $25,000. They have agreed that Alice will trade the account, and they will share in the profits and losses equally. As their agent, you would gather information regarding suitability for both, because information regarding all owners is relevant. Alice, because she will be trading the account. John, because he has made the larger contribution. either, because in a JTWROS account the owners share equally.

A

If a client wanted an investment that would eliminate interest risk as to principal, you would recommend 91-day T Bill A bank insured CD Preferred stock TIPS

B

As part of your annual review for clients, you perform a net worth computation. You have computed a specific client's net worth at $500,000. This client calls you and asks what his net worth will be after withdrawing $4,000 from his savings account to pay off credit cards, taking another $6,000 to deposit to his IRA and buying a $25,000 home theater system using store credit. You would respond that the client's net worth is now $500,000 $466,000 $475,000 $491,000

A

When performing a capital needs analysis for a client, factors to be considered would include the client's projected earnings the projected inflation rate projected market volatility the client's age I, II, & IV I, II, III, & IV I & II III & IV

A. A capital needs analysis is used to help determine the proper amount of life insurance that will provide for the family's needs in the event of premature death of the primary breadwinner. The agent would factor in the client's projected earnings until retirement and, in order to do that, would need to know the current age. In addition, to be sure to allow for enough to keep up with the rising cost of living, the projected inflation rate is needed. However, market volatility does not impact the analysis because the amount of the selected death benefit will remain constant, regardless of changes to the market.

A client is interested in investing in a mutual fund that will provide current income without the risk of large swings in the portfolio's value. The client is in a high-income tax bracket and has a moderate risk tolerance. Which of the following funds is most appropriate for this client? Intermediate-term municipal bond fund Long-term municipal bond fund High-yield bond fund Money market fund

A. Current Income: Municipal bond funds typically provide regular interest payments. Tax Efficiency: Interest from municipal bonds is often exempt from federal income tax and, in some cases, state and local taxes, which is beneficial for high-income earners. Moderate Risk: Intermediate-term municipal bonds generally have less interest rate risk compared to long-term bonds, leading to more stable portfolio values.

An individual with a very low risk tolerance would find which of the following to be the most appropriate recommendation for meeting a specific goal in six years? Income fund Commodity features A balanced fund A bank-insured CD

D. Commodity futures are for speculators, not conservative investors. An income fund or a balance fund has the problem of being subject to market fluctuation

If you have an aggressive portfolio, you're mostly invested in ______

stocks