Series 66 01/18/22
According to the Investment Advisers Act of 1940, the SEC must either grant investment adviser registration or begin proceedings to determine whether registration should be denied within how many days of filing?
45 days
A fundamental analyst would be most interested in which of the following? A) A P/E analysis of the stocks included in the Dow Jones Industrial Average B) A 200-day moving average C) Resistance and support levels D) The outstanding short interest in the market
A P/E analysis of the stocks included in the Dow Jones Industrial Average
According to NASAA's Statement of Policy on Unethical or Dishonest Business Practices of Broker-Dealers and Agents, in which of the following situations has an agent acted improperly in placing a client's order?
A client asks the agent to buy 1,000 shares of a specific high-quality technology stock this week for her nondiscretionary account. The agent places an order promptly for 1,500 shares because the market has begun to take off. By the end of the day, the stock is 5 points higher than the purchase price.
Ineligible investments in an IRA would include all of the following EXCEPT A) American Silver Eagles B) cash value life insurance C) Kruggerands D) stamps
A) American Silver Eagles A limited group of coins, especially the "eagles" minted by the U.S. Treasury Department, are eligible for investment in an IRA.
Under the provisions of the USA, all of the following transactions are exempt EXCEPT A) a transaction pursuant to an offer directed by the issuer to no more than 10 individual investors in the state within a 12-month period, as long as no payment is made B) liquidation of a security pledged as collateral for a loan C) transactions by executors D) transactions in preorganization certificates if no commission is paid, no subscriber makes any payment, and the number of subscribers does not exceed 10
A) a transaction pursuant to an offer directed by the issuer to no more than 10 individual investors in the state within a 12-month period, as long as no payment is made
Before taking any disciplinary action with respect to a registration under the Uniform Securities Act, the Administrator must always do which of the following? I. Obtain the approval of the appropriate state court II. Find that the action is in the public interest III. Cite a cause listed in the act
B) II and III
Under the brochure rule of the Investment Advisers Act of 1940 A) each client must be offered a written disclosure statement at least 48 hours before signing a contract B) each client must be delivered a written disclosure statement no later than at the time of agreement to contract for the adviser's services C) each client must be delivered a written disclosure statement no later than 48 hours after signing the contract D) each client must be offered a written disclosure statement at the time of signing the contract
B) each client must be delivered a written disclosure statement no later than at the time of agreement to contract for the adviser's services
In order to be in compliance with the rules, an investment adviser would have to disclose that the firm was acting in a principal capacity when A) the trade is being executed by an officer or partner of the firm B) purchasing shares directly from advisory clients C) directing securities transactions to an affiliated broker-dealer D) engaging in an agency cross transaction
B) purchasing shares directly from advisory clients
Jason, a recently divorced individual, is currently 55 years old and has built up approximately $400,000 in several initially funded and rollover individual retirement accounts (IRAs). He now wants to take an early distribution from one of these IRAs. Which one of the following distributions will escape the imposition of a tax penalty for early withdrawal? A) A distribution made upon separation of service from Jason's current Employer B) A distribution made on account of financial hardship as determined by Jason's financial planner C) A distribution made in payment for higher-education costs of Jason's granddaughter D) A distribution made to Jason's ex-wife under a qualified domestic relations order (QDRO)
C) A distribution made in payment for higher-education costs of Jason's granddaughter
Which of the following incorrectly states the relationship between NPV, IRR, and required return? A) If NPV = 0, then IRR = required return. B) If NPV < 0, then IRR < required return. C) If NPV > 0, then IRR < required return. D) If NPV > 0, then IRR > required return.
C) If NPV > 0, then IRR < required return.
Anyone who represents an issuer in effecting transactions between the underwriter and the issuer: A) must be registered as an investment adviser. B) must be registered as an administrator. C) must be registered as an agent. D) is excluded from the definition of agent under the Uniform Securities Act.
D) is excluded from the definition of agent under the Uniform Securities Act.
In order to compute an investor's real rate of return on a common stock holding, all of the following are necessary EXCEPT A) dividends B) inflation rate C) appreciation D) marginal tax bracket
D) marginal tax bracket
ABD Corporation's income statement reports net sales of $100 million; cost of goods sold, $60 million; administrative costs, $20 million; and interest on debt, $5 million. Based on this information, ABD's gross margin is A) 15% B) 20% C) 35% D) 40%
D) 40% Gross margin, sometimes referred to as gross profit on the exam, is computed by subtracting the cost of goods sold (COGS) from the net sales (or revenues) and dividing the remainder by the net sales
Palpable Retirement Options (PRO) is a sole proprietorship investment adviser registered in States M and P. The owner of PRO is also a registered agent with Magnificent Financial Futures (MFF), a large broker-dealer registered with the SEC and many states. After a hearing conducted by the Administrator, PRO's owner has been found guilty of selling away to clients in state M. What effect might that have on MFF?
Disciplinary action brought by the Administrator of State M if it is found that MFF failed to supervise its agent's activities because the agent's violation occurred in State M, only that state's Administrator has jurisdiction. Selling away is the prohibited practice of an associated person, such as an agent, engaging in private securities transactions without the knowledge and consent of the employing broker-dealer. This violates the NASAA Statement of Policy on Dishonest or Unethical Business Practices of Broker-Dealers and Agents. This is not a federal violation which is why the SEC doesn't get involved here.
Which of the following statements are TRUE of a discretionary account at a broker-dealer? It must be approved by a designated supervisory individual of the firm. It must be reviewed frequently to minimize the chances that the account has been churned. A discretionary order may be placed once the customer has placed a power of attorney in the mail. It must be approved by the Administrator of the state of residence of the client. A) III and IV B) II and IV C) I and III D) I and II
I and II
According to the Investment Advisers Act of 1940, which of the following statements regarding registration of investment advisers is TRUE? State registration is a requirement for federal registration. An investment adviser must be registered with the SEC to be registered at the state level. A) Neither I nor II B) II only C) Both I and II D) I only
I only
Which of the following are exempt from registration under the Uniform Securities Act? I. Preferred stock issued by ZXZ Corporation, whose common stock is traded on the New York Stock Exchange II. Common stock issued by a national bank III. Equipment trust certificates issued by a railroad company regulated by a state or federal agency IV. A debenture traded in the over-the-counter market issued by a corporation whose common stock trades on the NYSE
I, II, III, and IV
Which of the following investment adviser compensation arrangements is (are) permitted under the Uniform Securities Act? I, The value of a client's account at the start of the year is subtracted from the value at the end of the year. The adviser's compensation is 5% of the difference. II. The adviser charges an annual fee of $2,000, but the agreement calls for a waiver of the fee if the client's portfolio value has not increased by at least $20,000. III. The adviser charges a fee of 1% of the average value of the account portfolio during the year. IV. The adviser charges a flat fee of $1,000 if the client's portfolio assets are $100,000 or more or $2,000 if the client's assets increase to $200,000 or more.
III and IV
Mountain High Securities is a broker-dealer registered in Wyoming and Colorado with its principal office located in Colorado. With reference to the Uniform Securities Act, it would be correct to state that
Mountain High Securities must meet the recordkeeping requirements of the SEC For BDs registered in more than one state must be registered with the SEC because they are dealing in interstate commerce. Unlike investment advisers, BDs register with both the SEC and the states (unless it is an intrastate BD).
Which of the following is least likely to be considered an investment constraint when preparing an investment policy statement? A) Risk tolerance B) Liquidity needs C) Legal and regulatory factors D) Tax concerns
Risk Tolerance
Under current federal tax law, which of the following would have an effect on the amount of taxes your client would pay? Age Citizenship Marital status as of the last day of the year Residency
all of the above
In general, one of the first steps in becoming an agent for a broker-dealer is the completion of the Form U4. One piece of information that is not disclosed on the Form U4 is A) employment for the previous 10 years. B) any other names used. C) education background and degrees earned. D) disciplinary actions.
education background and degrees earned.
The compliance rules of the Investment Advisers Act of 1940 require all of the following EXCEPT A) written compliance policies and procedures B) independent review of an advisory firm's compliance procedures C) appointment of a chief compliance officer (CCO) D) annual compliance review
independent review of an advisory firm's compliance procedures
Long Range Planning (LRP) is a covered investment adviser doing business in all 50 states. Fred Fergus is an IAR with LRP and splits his time between an office in State A and State D. Fred has retail clients as follows: 16 clients in State A 12 clients in State B 6 clients in State C 4 clients in State D Fred would have to register as an IAR in
states A &D when employed by a covered adviser, the only time that state registration is required is when the individual functioning as an IAR has a place of business in the state. Had this been an IAR with a state-registered adviser, registration in all of the states would have been required (the de minimis would not cover State D because there is a place of business there).
A banner on a broker-dealer's website is considered
static content
The management style that is most similar to buy and hold is
strategic management
Under the provisions of the Securities Exchange Act of 1934, the SEC may suspend trading on a national exchange by notifying A) the president of the United States. B) the chairperson of a joint House/Senate committee on banking. C) the Board of Governors of the Federal Reserve Bank. D) the president of that exchange.
the president of the United States.
