Ch 6 - Series 63

Brochure must be delivered

- no less than 48 hours after entering into advisory contract OR - at the time of entering into any such contract, if the client has the right to terminate the contract without penalty within 5 days

Terms for fee structure should be

standardized and uncomplicated

What three fees are not listed in the fee disclosure document?

- commision - markups/downs - advisory fees

When a broker-dealer is acting as a principal in a securities transaction, it is A) a contra party to the trade. B) earning a commission. C) acting in the capacity of a broker. D) acting in an agency capacity.

A) a contra party to the trade. That means acting as a contra party (part of the contract)

An agent is making a presentation of a mutual fund to a client. So that the client better understands the risks and expenses involved, the agent takes a yellow highlighter and uses it to mark the most important information in the prospectus. Under state and federal regulations, this is A) a prohibited practice because no markings may ever be made on a prospectus. B) permitted because it is critical that agent's disclose the risks and costs involved in any mutual fund purchase. C) a prohibited practice because, by making these marks, the agent is causing the client to ignore other relevant disclosures. D) permitted because the highlighting allows the investor to still read what it underneath.

A) a prohibited practice because no markings may ever be made on a prospectus.

As an agent of a registered broker-dealer, one of the benefits of selling a security registered with the Administrator is A) being able to deliver a prospectus containing the information an investor needs to make the investment decision. B) removal of the need for the agent to register in that Administrator's state. C) the confidence it gives the investor that a regulatory body has approved of the sale of the issue. D) the protection it gives the agent against a civil suit by a customer.

A) being able to deliver a prospectus containing the information an investor needs to make the investment decision.

An agent has a conservative investor looking for income. The agent recommends a bond of a company the investor has never heard of. To allay the client's fear of loss, the agent states that the payment of interest and principal is guaranteed by a well-known blue-chip company. Under the Uniform Securities Act, A) the agent is describing a guaranteed security. B) agents should always recommend securities that are familiar to the investor. C) a guaranteed security only guarantees payment of interest or dividends. D) the agent is possibly committing fraud.

A) the agent is describing a guaranteed security. A guaranteed security is one where the interest and principal (in the case of a bond) are guaranteed by a third party. If a guaranteed stock, it is the dividends that are the subject of the third-party guarantee. With tens of thousands of publicly traded securities, it is unlikely that a client will be familiar with most of them, but that doesn't prohibit the agent from making the recommendation if suitable.

Different types of accounts have different times for receipt of customer information. Which of the following does not correctly state the required time for the specified account? A) Written discretionary account authorization must be received by a broker-dealer before exercising discretion. B) Margin account agreements must be received before the first margin trade in the account. C) Written discretionary account authorization must be received by an investment adviser within 10 days after the initial discretionary trade. D) The options account agreement must be received within 15 days after the customer's account has been approved.

B) Margin account agreements must be received before the first margin trade in the account.

Under industry rules, customers who wish to trade options must receive a copy of the OCC's options disclosure document (ODD) A) within 15 days of account approval. B) at or before account approval. C) at or before the mailing of the next monthly statement. D) at or before the mailing of the confirmation representing the first options trade.

B) at or before account approval.

Avuncular Securities, Inc. (ASI) is a broker-dealer registered in seven states. ASI is leading a registered offering of a nonexempt security in an initial public offering in State D. As such, any advertising and sales literature A) must be filed with the Administrators of each of the seven states where ASI is registered. B) must be filed with the Administrator of State D. C) need not be filed because the security is nonexempt. D) need not be filed because the offering is registered in the state.

B) must be filed with the Administrator of State D.

All of the following actions must be completed by the time customers enter their first option trade except A) delivery of the options disclosure document (ODD). B) receipt of a completed options agreement. C) approval by a designated options supervisor. D) completion of the new account form.

B) receipt of a completed options agreement. While other option account requirements must be met no later than the time customers enter their initial options trade, under current rules, the agreement must be signed and returned by the customer within 15 days of account approval.

Differences between static and interactive content on social media include which of these? I. Only static content can be reused by others. II. Only static content needs pre-approval. III. Only static content can be changed by the person who originated it. IV. Only interactive content can be commented on by others. A) I and IV B) II and III C) II and IV D) I and III

C) II and IV Static content requires pre-approval. Interactive content can be reused by others and commented on by others. Both static and interactive content can be changed by its originator, but static can only be changed by its originator and interactive by the originator or others.

NASAA has created a Model Rule dealing with the creation of and delivery requirements for an investment adviser brochure. Which of the following statements correctly identify the delivery requirements? A) The brochure must be delivered to prospective and new advisory clients no later than 48 hours after entering into the advisory contract. B) Annual delivery of the brochure to existing clients must be made within 90 days of the end of the adviser's fiscal year. C) The brochure must be delivered to prospective and new advisory clients no later than entering into the advisory contract. D) The brochure must be delivered to prospective and new advisory clients at least 48 hours prior to entering into the advisory contract.

C) The brochure must be delivered to prospective and new advisory clients no later than entering into the advisory contract. The initial delivery requirement is no later than the date of entry into the advisory contract. The 48-hour rule deals with an advance delivery to avoid having to honor a five-day penalty-free withdrawal. The annual delivery date is within 120 days of the end of the adviser's year. The 90-day requirement is for the annual updating amendment to the Administrator. Important stuff ^^^

Which of the following types of compensation is an investment adviser prohibited from accepting? A) Commissions on trades effected for clients B) Annual fee based on a percentage of assets under management C) Annual fee as a fixed dollar amount D) Quarterly fee based on account performance

D) Quarterly fee based on account performance Fixed annual fees, wrap fees, fees based on a percentage of assets under management, and commissions from trades effected for clients are acceptable forms of compensation. Unless the question specifically refers to the conditions under which performance-based compensation is permitted, assume it is not.

The most common way in which to distinguish whether social media content is static or interactive is the ability for others to A) link to it. B) "like" it. C) comment on it. D) change it.

D) change it.

Broker-dealers are required to furnish clients with a fee disclosure document. All of the following are true statements about that document except A) changes to the fee schedule may be shown on the firm's website. B) it must be up to date. C) changes to the fee schedule must be announced in advance. D) it must be filed with the Administrator of the state in which the broker-dealer's principal office is located.

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

What is adoption?

Where the firm has endorsed or approved of the 3rd party post but played no part in its preparation.

Discretion difference between BD and IA

Written discretionary account authorization must be received by a broker-dealer before exercising discretion. Written discretionary account authorization must be received by an investment adviser within 10 days after the initial discretionary trade

A registered investment adviser advertises that it is offering a free six-month subscription to their advisory newsletter. Which of the following qualifiers is acceptable under NASAA's Model Rule on Unethical Business Practices of Investment Advisers, Investment Adviser Representatives, and Federal Covered Advisers? A) "Your free subscription will start once we have received your name and mailing or email address." B) "Your free subscription will start once you have furnished us with the names and addresses of three of your friends." C) "Your free subscription will start upon receipt of your completed financial profile." D) "Your free subscription will start after your third trade with our affiliated broker-dealer."

A) "Your free subscription will start once we have received your name and mailing or email address."

Different types of accounts have different times for receipt of customer information. Which of the following correctly state the required time for the specified account? I. Margin account agreements must be received before the first margin trade in the account. II. Margin account agreements must be received promptly after the first margin trade in the account. III. Options account approval must be received in writing at or before the initial options trade. IV. The options account agreement must be received 15 days before the customer's account has been approved. A) II and III B) I, III, and IV C) I and III D) II and IV

A) II and III The options account agreement must be recieved 15 days BEFORE (not after) the customers account has been approved

If an investment adviser places an advertisement in a newspaper offering a free brochure to those who call, under NASAA's Model Rule on Unethical Business Practices of Investment Advisers, Investment Adviser Representatives, and Federal Covered Advisers, what may the adviser require from callers as a condition of receiving the brochure? A) Nothing, because no obligation may be placed on the callers B) A purchase C) A financial profile D) The names of three friends who might be interested

A) Nothing, because no obligation may be placed on the callers It is unethical to offer free services unless the offer is free of any obligation, monetary or otherwise.

Typical broker-dealer fees that must be disclosed as part of a fee disclosure document would include I. a charge when a client requests proceeds of a sale be wired to her bank account. II. a commission charge when a client sells an exchange-listed security. III. the fee charged by the firm when customers transfer their accounts to another broker-dealer. IV. fees for providing advisory services when acting in the capacity of an investment adviser. A) I and IV B) I and III C) III and IV D) II and III

B) I and III If we know what charges are not included in the fee disclosure, it is easy to recognize those that are. There are three primary expenses involved with brokerage accounts that are not included in the fee disclosure template. Those are - commissions; - markups and markdowns; and - advisory fees for those firms that are also registered as investment advisers.

A federal covered investment adviser is preparing an advertisement. Which of the following would be acceptable? I. An endorsement on radio or TV from a celebrity who is a client of the firm II. Identifying the firm's best investment recommendations for the past 6 months III. Offering to provide the firm's investment recommendations for the past 12 months IV. Promoting the firm's system of charts and formulas while mentioning their limitations and difficulties A) II and III B) III and IV C) I and II D) I and IV

B) III and IV Any mention of investment recommendations in any adviser advertisement must always include all recommendations (not just good ones) made over the course of the last 12 months. If the adviser uses charts or formulas, any mention of them must always include a statement to the effect that they have limitations and may be difficult to use. Now it gets tricky. Under the SEC's marketing rule for investments advisers (which applies in our question because this is a covered adviser), there is a distinction between a testimonial and an endorsement. That is, clients of the firm give testimonials. Endorsements are given by third parities who do not have an account relationship with the investment adviser but who are being paid to say nice things. Will the exam be this tricky? We don't know, but it is good to be prepared just in case.

Which of the following clients of a registered investment adviser is exempt from the requirement to receive annual delivery of the adviser's brochure? A) First National Bank of Bigville, a bank whose deposits are insured by the FDIC B) KAPCO Growth Fund, a mutual fund registered with the SEC C) Valued Life Insurance Company, authorized to do business in the state D) An individual receiving impersonal advisory services billed at a rate of $150 per quarter

B) KAPCO Growth Fund, a mutual fund registered with the SEC The brochure rule creates exemptions from the delivery requirement in two cases. The first is when the service rendered meets the definition of impersonal advisory services and the annual fee is less than $500. In this question, the fee is $600 ($150 per quarter times four quarters). The other is when the advisory contract is with a registered investment company such as a mutual fund.

A client is completing a new account form that contains questions about the investor's investing experience and knowledge. More than likely, what type of account is being opened? A) Discretionary B) Options C) Retirement D) Margin

B) Options

Under securities industry regulations, all of the following are prohibited when attempting to make a sale except A) an agreement by the agent to repurchase the security from the customer for the same price at a future date. B) a statement by the agent that the security will be listed on an exchange within a year after the company announced its intention to do so. C) telling a client that her stock is a sure candidate for a takeover bid. D) telling a client that he is trading commission free when, in actuality, the firm is acting as a principal and placing a markup on his trades.

B) a statement by the agent that the security will be listed on an exchange within a year after the company announced its intention to do so. pay attention to "except" dummy

When opening an account at a broker-dealer, if the most recent copy of the firm's fee schedule is not available, NASAA recommends that the client A) promptly notify the Administrator of the firm's failure to comply. B) not place any assets in the account until it is provided. C) go ahead with the account opening but refrain from trading until its receipt. D) select another broker-dealer and open the account there.

B) not place any assets in the account until it is provided.

First Securities Advisers, Inc., a subsidiary of First Securities Broker-Dealers, Inc., requires customers to have a minimum of $250,000 under management and charges them 1% in advisory fees based on the amount of assets in their accounts. Clients also pay commissions for securities transactions in their accounts at First Securities Broker-Dealers, Inc. First Securities Advisers, Inc., has A) violated the prohibition against charging performance fees. B) not violated the prohibition against performance fees. C) violated the Uniform Securities Act by charging commissions in addition to advisory fees. D) violated the Uniform Securities Act by charging excessive advisory fees. *study explanation of this one

B) not violated the prohibition against performance fees. First Securities Advisers, Inc., has not violated the prohibition against charging performance fees because it did not base its fees on a share of capital gains or losses in their clients' accounts. First Securities charged on the basis of assets under management. The 1% in advisory fees charged appears reasonable. The commissions charged by the affiliated broker-dealer have nothing to do with the question. The client would have to pay commissions wherever the transactions were executed.

Model Rule on investment adviser brochures, PFRS shall deliver a copy of its A) Form ADV Part 1B. B) fee disclosure document as set forth in the NASAA fee disclosure template as its brochure. C) Form ADV Part 2A Appendix 1 wrap fee brochure prior to or concurrently with the initial entry into an advisory agreement. D) brochure, which may be a copy of Form ADV Part 2A of its Form ADV or written documents containing the information required by Part 2A of Form ADV.

C) Form ADV Part 2A Appendix 1 wrap fee brochure prior to or concurrently with the initial entry into an advisory agreement. When an investment adviser's (IA's) only activity is sponsoring or participating in wrap fee accounts, its brochure is Form ADV Part 2A, Appendix 1. If PFRS offered other advisory services, then, in addition to Appendix 1, the normal brochure delivery requirements are in effect. Form ADV Part 1B is used only by state-registered IAs (as PFRS is), but that has nothing to do with the brochure rule. Likewise, the NASAA fee disclosure template is for use by broker-dealers and is not a substitute for an IA's brochure.

NASAA has created a Model Rule dealing with the creation of and delivery requirements for an investment adviser brochure. Unless qualifying for an exception, a registered investment adviser shall deliver, I. within 90 days of the end of its fiscal year, a free updated brochure and related brochure supplements, which include or are accompanied by a summary of material changes. II. within 120 days of the end of its fiscal year, a free updated brochure and related brochure supplements, which include or are accompanied by a summary of material changes. III. within 120 days of the end of its fiscal year, a summary of material changes that includes an offer to provide a copy of the updated brochure and supplements and information on how the client may obtain a copy of the brochures and supplements. IV. not later than entering into a new advisory agreement, a summary of material changes that includes an offer to provide a copy of the updated brochure and supplements and information on how the client may obtain a copy of the brochures and supplements. A) II and IV B) I and III C) II and III D) I and IV

C) II and III guess these are the two options to choose from but mean the legit same thing

Active Technicians (AT), a state-registered investment adviser serving primarily retail accounts, would be in compliance if it A) sent a brochure within 150 days of the end of AT's fiscal year. B) filed a brochure with the Administrator, noting that it was available to clients upon request. C) did not send an annual brochure to its clients because there was no material change from the previous year. D) sent a copy of Form ADV Part 1A and Part 1B within 120 days of the end of AT's fiscal year.

C) did not send an annual brochure to its clients because there was no material change from the previous year. The NASAA Model Rule dealing with brochures states that investment advisers do not have to deliver a summary of material changes or a brochure to clients if no material changes have taken place since the last summary and brochure delivery. If a brochure or summary of material changes is required, the delivery date is 120 days after the end of the adviser's fiscal year, not 150 days. If the adviser wishes to use Form ADV, it should use Parts 2A and 2B.

The NASAA Model Rule on investment adviser brochures contains one condition where verification of receipt of a readable copy of the brochure and supplements by the customer is required. That is the case A) of an annual delivery to an existing client in electronic form. B) of an initial delivery to a potential client in paper form. C) of an initial delivery to a potential client in electronic form. D) when the investment adviser will be maintaining custody of customer funds and securities.

C) of an initial delivery to a potential client in electronic form.

Broker-dealers are required to disclose the capacity in which they acted on any transaction with a retail customer. That disclosure is always made A) on the new account form. B) as part of the broker-dealer's fee disclosure statement. C) on the trade confirmation. D) at or before the time of the transaction

C) on the trade confirmation.

In a margin account, broker-dealers lend money to clients to enable them to leverage their investments. The account document that is evidence of the debtor-creditor relationship is A) the IOU agreement. B) the loan consent agreement. C) the credit agreement. D) the hypothecation agreement.

C) the credit agreement.

A state-registered investment adviser would be permitted to A) make annual delivery of the brochure within 150 days of the end of the fiscal year. B) deliver the brochure to a new client within 48 hours of entering into the contract. C) use Part 2 of the Form ADV to satisfy the brochure requirement. D) use Part 1 of the Form ADV to satisfy the brochure requirement.

C) use Part 2 of the Form ADV to satisfy the brochure requirement. Part 2 of the Form ADV may be used in lieu of a fancy brochure. The brochure must be delivered to a new client no later than the entry of the contract—the 48 hours is a "prior to" entry requirement in order to avoid having to offer a penalty-free withdrawal. The annual delivery must be made within 120 days, not 150.

An investment adviser's advertising is permitted to state, A) "We have developed a charting system for timing the market that makes investing simple for anyone." B) "The Administrator has approved of the adviser's qualifications." C) "All of our employees who render advice are RIAs." D) "We are offering our monthly stock market report free of charge for the next six months to the first 100 people who email us their name and address."

D) "We are offering our monthly stock market report free of charge for the next six months to the first 100 people who email us their name and address." If, in fact, the offer is free, this is a permitted statement. The initials RIA are prohibited, as is making any kind of statement relating to approval of qualifications by the Administrator. Any advertisement mentioning a chart or formula must always describe the limitations and difficulties of using that chart or formula.

Perpetual Investment Returns (PIR), a registered investment adviser in four states, has had no material changes to the information in its Form ADV Part 2 from the previous year. That means PIR is A) required to deliver a copy of its brochure to existing clients within 120 days of the end of its fiscal year. B) not required to deliver a copy of its brochure to those receiving impersonal advisory services at an annual charge of less than $500. C) not required to deliver a copy of its brochure to prospective and existing clients. D) not required to deliver a copy of its brochure to existing clients.

D) not required to deliver a copy of its brochure to existing clients. those receiving impersonal advisory services at a cost of less than $500 per year do not require brochure delivery at all i believe

Authorized Retirement Investments (ARI) is a registered broker-dealer. ARI publishes a list of securities it approves for inclusion in IRAs. This means A) the broker-dealer has consulted with the regulatory bodies and has received approval from them to recommend these securities for IRAs. B) the broker-dealer has committed an unethical business practice because use of the word approved is prohibited. C) an agent for the broker-dealer can place these in clients' IRAs, knowing that the suitability requirements have been met. D) the broker-dealer has evaluated these securities and believes they would be suitable for inclusion for retirement planning.

D) the broker-dealer has evaluated these securities and believes they would be suitable for inclusion for retirement planning. Approved is an odd word in this industry. It can never be used with reference to any regulator commenting on the status of a security or an individual. However, a broker-dealer (BD) creating an approved list of securities is not unethical or prohibited, as long as it is clear that it is the BD and not any regulator granting the approval. Even though the firm has listed these securities as suitable for IRAs, that does not relieve the individual agent of verifying the suitability for each client for whom they are recommended.

If fees structures change, BDs must notify clients at least _________ ahead

30 days

Which of the following statements may be made by an issuer selling securities to the public that are registered with the Administrator? A. The Administrator has cleared this issue for sale to the public. B. The Administrator has passed on the adequacy of the information provided in the prospectus. C. The Administrator has approved the accuracy of the information contained in the prospectus. D. The Administrator has affirmed the merits of the security as an investment.

A. The Administrator has cleared this issue for sale to the public.

NASAA has created a Model Rule dealing with the creation of and delivery requirements for an investment adviser brochure. Which of the following statements correctly identify the delivery requirements? A) The brochure must be delivered to prospective and new advisory clients at least 48 hours prior to entering into the advisory contract. B) The brochure must be delivered to prospective and new advisory clients no later than 48 hours after entering into the advisory contract. C) Annual delivery of the brochure to existing clients must be made within 120 days of the end of the adviser's fiscal year. D) Annual delivery of the brochure to existing clients must be made within 90 days of the end of the adviser's fiscal year.

C) Annual delivery of the brochure to existing clients must be made within 120 days of the end of the adviser's fiscal year. The annual delivery date is within 120 days of the end of the adviser's year. The 90-day requirement is for the annual updating amendment to the Administrator. The initial delivery requirement is no later than the date of entry into the advisory contract. The 48-rule deals with an advance delivery to avoid having to honor a five-day penalty-free withdrawal.

A margin account is a type of brokerage account in which the broker-dealer lends the investor cash to purchase securities using marginable securities in the account as collateral. Which of the account documents authorizes the use of those securities as collateral for that loan? A) The secured agreement B) The loan consent agreement C) The hypothecation agreement D) The credit agreement

C) The hypothecation agreement

A client of an investment adviser representative of a federal covered investment adviser wishes to place a favorable comment on the investment adviser's website. This action A) should be happily accepted by the investment adviser. B) might be considered entanglement. C) would be considered a testimonial and require that disclosure be made of any compensation received by the client. D) would need to be reviewed by the SEC.

C) would be considered a testimonial and require that disclosure be made of any compensation received by the client. Testimonials for investment advisers and their representatives posted by clients are a permitted practice as long as proper disclosures are made. One of the most important of those is if the person supplying the testimonial was compensated. The SEC does not review investment adviser advertising. Entanglement is when the IA posts to its website or social media content prepared in conjunction with a third party. Although the IA is happy to see favorable comments posted on its website, care should be taken to ensure that all of the required disclosures are made.

It would not be a prohibited practice under the Uniform Securities Act for an agent to tell a client that A) her commissions are structured so she makes money only if the client makes money. B) the fact that she passed her licensing exams is ample proof of her qualifications. C) registration of securities implies tacit approval of the Administrator. D) registered nonexempt securities may properly be sold in the state.

D) registered nonexempt securities may properly be sold in the state. trick q with the not

Part 2A vs Part2B

Part 2A - Advisers Part 2B - Bodies (the people who work there)

Fees should be disclosed by BDs

when a customer account is opened

BDs must send an updated brochur annually and summary of materual changes within _______

within 120 days of the end of its fiscal year

Under the Uniform Securities Act, the Administrator has the authority to I. issue stop orders. II. approve new issues. III. review standard registration forms. A) I and III B) I, II, and III C) I and II D) II and III

A) I and III

As called for on the NASAA Model Fee Disclosure Template, which of the following is not required to be disclosed on a broker-dealer's fee chart? A. The commission schedule B. The account maintenance fee C. Charges to wire funds D. Postage and mailing charges

A. The commission schedule

what does acting as a conta party mean

acted as a principal in the trade.

If a security is registered, can you say an Administrator approves of the issue?

no

Is a PO Box is ever acceptable?

no, they need a physical adress

List of typical reasons for fees

- Issuance of stock certificate - Transferring an account - Wiring funds - Margin account interest - Account maintenance fees - Safekeeping of funds/securites - Late settlement fees - Postage and handling

Delivery of brochures don't have to be made to

- clients who recieve only impersonal advice and who pay less than $500 in fees per year - client who is an investment company registered under the Investment Act of 1940

Under the Uniform Securities Act, which of the following is not required to be in writing in an advisory contract? A) The method used for computing the adviser's compensation B) The amount of prepaid fees to be returned in the event of contract termination C) The names and titles of all principals in the advisory firm D) The terms of the advisory contract

C) The names and titles of all principals in the advisory firm

For larger accounts, a broker-dealer is least likely to waive its normal fee for A) transferring the account to another broker-dealer. B) wiring funds to the client's bank. C) safekeeping of funds or securities in the account. D) the annual account maintenance charge.

A) transferring the account to another broker-dealer.

A state-registered investment adviser must deliver a copy of its brochure to a new advisory client A. no later than the time of signing the advisory agreement. B. at least 48 hours before entering the advisory agreement. C. no later than 48 hours after entering the advisory agreement. D. within 120 days after the end of the adviser's fiscal year

A. no later than the time of signing the advisory agreement.

Required broker-dealer disclosures include all of the following except A. the firm's net profit for the year. B. the capacity in which the firm acted in a securities transaction. C. conflicts of interest. D. fees

A. the firm's net profit for the year.

An agent with your firm is so confident that a stock will double within the next two months that he is offering his customers a guarantee that anything less than a 50% increase will be added to their account from his personal funds. Under the Uniform Securities Act, A. this is a dishonest and unethical practice and could lead to disciplinary action. B. this is a fair way to treat his customers. C. this is unfair because with a 100% predication, a 50% payout is unreasonable. D. if the agent does not back up his guarantee, he will be liable to potential incarceration

A. this is a dishonest and unethical practice and could lead to disciplinary action.

The Uniform Securities Act mandates that contracts between investment advisers and their clients I. be in writing. II. provide that no discretion may take place without prompt notification to the client. III. disclose the method of compensation. IV. include steps the adviser plans to take to reach the client's objectives. A) II and IV B) I and III C) III and IV D) I and II

B) I and III Any contract must disclose the method of compensation. The USA requires that initial and renewal contracts be in writing. If discretion is to be exercised, it requires consent of the client, not notification. The contract is not required to describe any of the investment adviser's plans for reaching the client's goals.

The Uniform Securities Act defines a guaranteed security as one with a third party guarantee. That guarantee extends to all of these except A) the principal repayment at maturity on debt securities. B) the invested capital on equity issues. C) the dividends on equity securities. D) the interest on debt securities.

B) the invested capital on equity issues As stated in the Uniform Securities Act, guaranteed means guaranteed as to payment of principal, interest, or dividends. There are no guarantees on the growth or avoidance of loss on an equity security.

LMN Securities, a broker-dealer registered with the SEC and more than a dozen states, has just become a member firm of the New York Stock Exchange. It would be permitted for LMN to tell its customers that A. the membership in the NYSE is a testimony to the integrity of the firm. B. they are now members of the NYSE. C. they are now federal covered and will no longer have to register in those states where they do not maintain a place of business. D. this adds one more level of approval of the firm's business

B. they are now members of the NYSE.

Which of the following statements regarding Form ADV Part 2 is true? A) It must always accompany the investment adviser's brochure. B) It must be delivered no later than receipt of the client's funds. C) Unless there are no material changes, it must be delivered to clients annually. D) It must be delivered no later than 48 hours prior to entering into an investment advisory contract.

C) Unless there are no material changes, it must be delivered to clients annually.

As a general matter, the regulators do not treat posts by customers or other third parties as the firm's communication with the public. Under certain circumstances, however, third-party posts may become attributable to the firm. Whether third-party content is attributable to a firm depends on whether the firm has (1) involved itself in the preparation of the content or (2) explicitly or implicitly endorsed or approved the content. Where the firm endorses or approves of the material but has no part in its creation, it is known as A) entanglement. B) retail communication. C) adoption. D) usage.

C) adoption.

Which of the following statements accurately describes the time limits for investment adviser documents? I. Filing of the annual updating amendment to Form ADV with the appropriate regu-latory body is within 90 days of the end of the adviser's fiscal year. II. Filing of the annual updating amendment to Form ADV with the appropriate regu-latory body is within 120 days of the end of the adviser's fiscal year. III. Delivery of the investment adviser's brochure to the customer is due within 90 days of the end of the adviser's fiscal year. IV. Delivery of the investment adviser's brochure to the customer is due within 120 days of the end of the adviser's fiscal year. A. IV only B. I and II C. I and IV D. II, III, and IV

C. I and IV

Under the Uniform Securities Act, which of the following may an agent lawfully tell a customer? A) "I am registered with both the SEC and the state, meaning that I have received the approval of all the proper authorities." B) "This security is such a safe investment, it doesn't have to be registered; it's exempt." C) "If this security hasn't increased in value in six months, I'll buy it back from you for what you paid for it." D) "This security is not registered, but it doesn't have to be. It is an exempt security."

D) "This security is not registered, but it doesn't have to be. It is an exempt security."

As a general matter, the regulators do not treat posts by customers or other third parties as the firm's communication with the public. Under certain circumstances, however, third-party posts may become attributable to the firm. Whether third-party content is attributable to a firm depends on whether the firm has (1) involved itself in the preparation of the content or (2) explicitly or implicitly endorsed or approved the content. Where the firm has involved itself in the preparation of the content, it is known as A) adoption. B) fraud. C) preparation. D) entanglement.

D) entanglement.

When a BD is acting as an agent (broker) they are __________ and recieve ______________

They are connecting seller and buyer recieve a commision

If a securities professional is registered, can they say an Administrator has approved of you or your registration?

hell nah, all you can say is you are a registered BD

Active Technicians (AT) is a state-registered investment adviser. In its brochure supplement, it would include information relating to each of the following individuals except A) those providing investment advice and having direct contact with retail clients in the state. B) those providing investment advice and having direct contact with institutional clients in the state. C) those exercising discretion over assets of clients in this state, even if no direct contact is involved. D) members of AT's board of directors who are active in the firm's business.

members of AT's board of directors who are active in the firm's business. Unless the individual has direct contact with clients (retail or institutional) or exercises discretion, a copy of the Part 2B brochure supplement for each individual is not required. This would include officers and members of the board of directors. Of course, if any of these individuals have direct client contact or exercise discretion, a supplement for them would need to be prepared.

The fee structure should be available

on the BDs website

When a BD is acting as a principal (dealer) they are _____________ and recieve ___________

selling or buying for their own inventory recieve a markup or markdown