3.25.16

All the following securities are bought at a discount EXCEPT A) CDs B) Treasury bills C) zero coupon bonds D) commercial paper

CDs

A customer has just died. If his wife asks you what amount of federal estate tax will be imposed on the transfer of their personal property to her name, which of the following responses would be best? A) The amount may be prorated over the next four years. B) The amount of tax will depend on your late husband's tax bracket. C) Consult a qualified tax specialist. D) The amount of tax will depend on the size of the estate to be transferred.

Consult a qualified tax specialist.

A federal covered investment adviser employs the services of a third-party solicitor. The Investment Advisers Act of 1940 would require the solicitor to deliver: I.a copy of the IA's brochure. II.a copy of the solicitor's brochure. III.a copy of the solicitor's script. IV.a copy of the IA's Form ADV Part 1. A) I and II. B) II and IV. C) I and III. D) I, II and IV.

I and II.

One measure of a corporation's intrinsic value is its book value per share. When performing this computation, the value of which of the following would normally be subtracted from the corporation's net worth? I.Cash II.Wages payable III.Patents IV.Preferred stock A) I and IV B) III and IV C) I and II D) II and III

III and IV

Under the Securities Exchange Act of 1934, which of the following is a securities information processor? A) TEFRA B) "The Wall Street Journal" C) FINRA D) The OTC Markets Group Inc, (formerly known as the Pink Sheets)

The OTC Markets Group Inc, (formerly known as the Pink Sheets)

In a qualified plan, if the employer makes all of the contributions, the employee's cost basis is: A) ½ of the contributions made. B) the value of the contributions. C) 0. D) the increase in value only.

0.

Kapco Advisers, a federal covered investment adviser operating on a calendar year basis, published a list of recommended securities in January 2010. A copy of this must be maintained until at least: A) 1/31/2012 B) 12/31/2015 C) 12/31/2012 D) 1/31/2015

12/31/2015

Given the following information, calculate the risk-adjusted return I.90-day T-bill rate: 4% II.Actual return: 14% III.Beta 1.40 IV.CPI 3% V.Standard Deviation 5.0 A) 11 B) 5 C) 2 D) 10

2 14-4/5=2

Exempt transactions, as defined in the Uniform Securities Act, would include all of the following EXCEPT A) liquidation of securities held in an estate by the executor B) pre-organization certificates being sold to 8 retail investors C) isolated nonissuer transactions D) an agent selling U.S. Treasury bonds to an individual client

an agent selling U.S. Treasury bonds to an individual client

Which of the following issues is most affected by credit risk? A) preferred stock. B) debentures. C) corporate zero-coupon bonds. D) common stock.

corporate zero-coupon bonds

An example of an interest-on-interest reinvestment program is A) interest left to compound on a bank insured certificate of deposit B) reinvesting the interest received on a bond C) reinvesting the earnings on a bond UIT D) reinvesting the dividends paid on a bond fund

interest left to compound on a bank insured certificate of deposit

Writing an option provides all of the following EXCEPT: A) maximum protection against loss. B) income. C) limited downside protection when long the underlying asset. D) hedging.

maximum protection against loss

If an agent feels that his secretary is underpaid and decides to split his commissions on an 80%/20% basis, this practice is: A) a violation under all circumstances. B) permitted if the secretary is also registered as an agent. C) a violation in certain states. D) permitted if the secretary is also registered as an agent and the firm's principal agrees to the arrangement.

permitted if the secretary is also registered as an agent and the firm's principal agrees to the arrangement.

According to the Uniform Securities Act, the Administrator has the power to require persons wishing to register as an agent to: A) have minimum net capital, post a surety bond, and pass an exam. B) have minimum net capital, pay filing fees, pass an exam, and post a surety bond. C) post a surety bond, pay filing fees, and pass an exam. D) post a surety bond and pass an exam.

post a surety bond, pay filing fees, and pass an exam

All of the following characteristics are advantages of a REIT EXCEPT A) liquidity B) tax deferral C) diversification D) professional management

tax deferral

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 two 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: A) wait to see if there are further causes for concern about his capabilities. B) inform your supervisor of your concerns about his memory loss. C) take detailed notes on future conversations and meetings with him. D) 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.

Under the Investment Advisers Act of 1940, which of the following would be excluded from the definition of an investment adviser? A) An individual who made recommendations regarding which types of securities would meet a client's investment objectives but who did not recommend specific securities. B) A broker/dealer that managed clients' portfolios for a fee. C) The publisher of an investment advisory newsletter that plans issues based on market events. D) A bank that charged a fee for providing investment advice.

A bank that charged a fee for providing investment advice.

Gibraltar Investment Advisers opened for business last week. Because of the clients brought over from previous affiliations of their IARs, they have started with $94 million under management for various individual and corporate clients. They also signed a contract to manage an additional $10 million for a wealthy individual. Gibraltar will begin managing that individual's portfolio at the beginning of the next calendar quarter. Which of the following best describes Gibraltar's investment adviser registration requirements? A) Gibraltar need not register as an investment adviser because it will manage funds for an institutional investor. B) Gibraltar would be eligible to register at the federal level. C) Gibraltar must register with the state(s) and then, within 90 days of the receipt of the additional $10 million, must register with the SEC. D) Gibraltar's only option is to register at the state level because it currently manages less than $100 million in client funds.

Gibraltar would be eligible to register at the federal level.

Which of the following statements about the annual gift tax exclusion are TRUE? I.The annual exclusion is the amount that an individual may give to another individual each year without incurring a gift tax. II.The annual exclusion is currently (2015) set at $14,000. III.A separate annual exclusion is available for each donee. A) II and III. B) I and II. C) I and III. D) I, II and III.

I, II and III.

An investor with a well-established portfolio would like to add some more speculative investments in an effort to increase his returns. Which of the following would be appropriate? I. Corporate bonds. II. Options. III. Commodities. IV. Large capitalization stocks. A) I, II, III and IV. B) I and II. C) II, III and IV. D) II and III.

II and III.

When comparing the similarities shared by C corporations, S corporations, and LLCs, it would be accurate to state that I.operating profits and losses flow through to the owners II.owners enjoy limited liability III.registered personnel opening a brokerage account for any of these would follow similar suitability procedures IV.the Uniform Securities Act considers each of these to be a person A) II and IV B) I and II C) II, III, and IV D) III and IV

II and IV

Which of the following statements about wrap fee arrangements is NOT true? I.Information on Appendix 1 of Form ADV Part 2A must also be contained in client disclosure documents. II.Non-material changes to wrap fee disclosure must be disclosed to the Administrator within 90 days of fiscal year end. III.Material changes must be filed promptly with the Administrator. IV.Wrap fee disclosure statements need not be filed with the Administrator. A) I and III. B) IV only. C) I only. D) I, II and III.

IV only

One of the most significant risks taken by bond investors is interest rate risk. All of these steps could be used to mitigate the effects of this risk EXCEPT: A) buying bonds with short-term maturities. B) laddering the portfolio. C) holding bonds to maturity. D) buying bonds of highest quality.

buying bonds of highest quality

When discussing the purchase of a scheduled premium variable life insurance policy with a client, it would be CORRECT to state that: A) by surrendering the policy, its cash value may be obtained. B) if a policy loan exceeds the policy cash value, the deficiency must be remedied within ten business days to keep the policy from lapsing. C) you will receive a statement of your death benefit no less frequently than semiannually. D) premiums will vary based upon performance of the separate account.

by surrendering the policy, its cash value may be obtained.

All of the following statements regarding 529 plans are true EXCEPT: A) contributions to a 529 plan may be subject to gift taxation. B) the assets in the account are controlled by the account owner, not the child. C) states impose very high overall contribution limits. D) eligibility is affected by the income level of the contributor.

eligibility is affected by the income level of the contributor.

Under the Investment Advisers Act of 1940, an adviser is required to be registered with the SEC if: A) the adviser's advice relates solely to securities issued or guaranteed by the U.S. government. B) the adviser's clients are investment companies registered under the Investment Company Act of 1940. C) the adviser is the publisher of a news magazine of general and regular circulation. D) the adviser's clientele is exclusively federal credit unions and the adviser has less than $100 million in assets under management.

the adviser's clients are investment companies registered under the Investment Company Act of 1940.

Following the advice of its portfolio managers, The Rising Tide hedge fund executes most of its securities transactions through Momentum Securities, a registered full-service broker/dealer. In order to compensate for the commissions charged, Momentum Securities allows employees of Rising Tide to use its furniture and facility at a discounted rate. Under the soft-dollar provisions of Section 28(e) A) this would fall under the safe harbor B) as long as the discounted rate reflected the volume of business done by Rising Tide, this would be permitted C) this would not fall under the safe harbor D) this would not fall under the safe harbor provisions unless the employees were those who directed the transactions to Momentum Securities

this would not fall under the safe harbor

Abel Kane is an agent for Garden City Securities, a broker/dealer registered with the SEC and all 50 states. It would be considered an unethical or dishonest business practice for Mr. Kane to I.fail to make prompt delivery of certificates when requested by the customer II.fail to obtain written authorization for a discretionary account prior to the first trade in that account III.accept an order from a client's spouse without written trading authorization prior to receiving the order IV.share commissions with another agent registered with Garden City Securities A) I and IV B) III and IV C) I, II, and III D) II and III

II and III

Under the Investment Company Act of 1940, which of the following statements regarding the renewal provisions of an investment adviser's contract is NOT true? A) The renewal must be approved by either a majority vote of the board or a majority vote of the outstanding shares as well as a majority vote of the noninterested members of the board. B) The renewal must state the adviser's compensation. C) The contract must be terminable upon not more than 60 days notice. D) The renewal may be executed orally, provided it is done within 2 years of the initial contract.

The renewal may be executed orally, provided it is done within 2 years of the initial contract

The registration requirements of the Securities Act of 1933 would not apply to which of the following? I.Stocks and bonds issued by insurance companies. II.Fixed annuities and other fixed insurance contracts. III.Securities issued by foreign governments. A) I only. B) III only. C) II and III. D) II only.

II only

A broker/dealer registered with State A created a website 2 years ago to promote their services. Recently, they hired a new media person who totally redesigned the site. Under the recordkeeping requirements of the Uniform Securities Act, A) there are no requirements for storage of electronic data B) a copy of the original website page must be maintained for three years from original use C) copies of both the original and the new website page must be maintained for five years after original use D) a copy of the new website page must be maintained for a period of three years from the use of the original site

a copy of the original website page must be maintained for three years from original use