Greenlight 2

What does durable power of attorney allow an agent to do?

- Gives the broker-dealer discretion over the client's account - Gives the broker-dealer custody - The agent has the authority to manage the grantor's finances if that person becomes incapacitated

Under the Uniform Securities Act, which of the following responsibilities may the Administrator NOT designate to another officer? I. The issuance of a cease-and-desist order II. Bringing an action in state court to enjoin parties III. Serving a subpoena on a witnesses and compelling their attendance

I and II only

Which TWO of the following attestations would most likely violate the USA's antifraud rules? I. "Our representative's investment acumen has been verified by the state Administrator." II. "To stay current, each of our representatives attends at least five tax planning or investment seminars per year." III. "Each of our investment experts is Series 66-certified." IV. "Our representatives are CFP accredited."

I and III; firms should refrain from using the term "expert" in public communications

Under NASAA's Statement of Policy on Unethical Business Practices, unethical activities of a broker-dealer would include: I. Exercising discretion for a limited period based on oral instructions II. Failing to segregate customers' securities III. Entering into a transaction with or for a customer at a price not reasonably related to the current market IV. Charges fees that are reasonable based on services performed

I, II, and III only

A broker-dealer need not obtain written discretionary authority with respect to a customer order if the client has specified: I. The price of execution II. The specific security III. The number of shares IV. Whether to buy or sell

II, III, and IV only; discretionary authority does not include discretion as to the price or time of the transaction

Which of the following situations would constitute an assignment of an investment advisory contract requiring client approval? I. The investment adviser is a partnership with three partners, one of whom dies II. The investment adviser is a partnership with seven partners, three of whom retire, while another dies III. The investment adviser changes from a sole proprietorship to a LLC IV. A corporation acquires 60% of the assets of the broker-dealer parent of an investment adviser

II, III, and IV only; if the adviser is organized as a partnership, the death, resignation or retirement of a minority of the partners does not constitute a change of control or management

According to the NASAA Guidelines Regarding Viatical Investments, which of the following persons are suitable to purchase viatical investments? a. Investors with a net worth of at least $250,000 b. Investors with a net worth and annual income of at least $100,000 c. Those who have at least 20% of their net assets invested in viatical investments d. Nonaccredited investors under Regulation D

a. Investors with a net worth of at least $250,000; other answers include: - Accredited investors - QIBs

Kelly, an adviser with FairTrade Investments, would like to recommend numerous individual emerging markets high-yield bond funds to some of her more aggressive accounts. Since Kelly focuses on equity investments, she would like to use an outside adviser that specializes in fixed-income investments to help in the selection process. In this situation, which of the following statements is TRUE under the UPIA? a. Kelly may delegate her investment decision-making authority as long as the manager's recommendations meet the client's objective b. Kelly may delegate her investment decision-making authority once each client signs a third-party indemnity waiver form c. An adviser may use an outside resource, provided the expert is given full documentation regarding each client, prior to making any recommendations d. Kelly is expressly prohibited from using outside experts, since any fees paid would increase a client's management cost

a. Kelly may delegate her investment decision-making authority as long as the manager's recommendations meet the client's objective

Which of the following persons would be considered an agent according to the Uniform Securities Act? a. A state official selling investment-grade G.O. bonds to qualified pension plan buyers b. A CEO selling shares of his company through an IPO to family and friends c. A CFO structuring a PIPE offering with his company's investment banker d. All of the above

b. A CEO selling shares of his company through an IPO to family and friends

Which of the following issuers would be most likely to use registration by qualification in order to register its securities? a. A local or state government unit b. A local company whose shares will be sold within the state c. A national company with outstanding securities listed on the NYSE d. A registered investment company

b. A local company whose shares will be sold within the state; registration by qualification is typically used by an issuer whose shares will be sold within one state (an intrastate offering)

An investment adviser's contract with its clients may contain all of the following provisions, EXCEPT: a. A provision detailing possible assignment of the advisory contract b. An exculpatory provision c. A provision for performance-based fees d. Termination provisions and penalties

b. An exculpatory provision

A client would like her IAR to use funds in her account to pay her electric bill while she travels. Her IAR would: a. Refuse such a request b. Be required to obtain a full power of attorney c. Be required to obtain a stock power d. Be permitted to accept the conditions in any discretionary account

b. Be required to obtain a full power of attorney

John Donner works for B and B Financial in Summerfield, Massachusetts. John is semiretired and has a second home in southern Florida, where he spends the winter months. John has put his Florida address and phone number on his business cards along with B and B's Summerfield address, because he intends to service his Massachusetts clients while he is in Florida this winter. B and B Financial does not have an office in the state. Which of the following statements is TRUE? a. Neither John nor B and B Financial need to be registered in Florida because they are only doing business with clients whose residence is in Massachusetts b. Both John and B and B need to be registered in Florida because John's Florida residence is considered an office since it is listed on his business card c. John needs to register in Florida, but not B and B Financial d. B and B Financial needs to register in Florida, but John does not since neither he nor his clients are residents of the state

b. Both John and B and B need to be registered in Florida because John's Florida residence is considered an office since it is listed on his business card

Manning Dual Growth Fund has specifically directed you, as the fund's adviser, to direct all transactions through Ole Miss Brokerage, a firm with which the fund's board of directors has had a long and successful relationship. Ole Miss's commission schedule is significantly higher than that of Low Cost Trading, the firm that you usually use for trade executions. As adviser, what action should you take? a. Conduct the larger trades through Low Cost, but inform the client in writing of the switch b. Try to obtain a rate reduction by allocating the trades between the two brokerage firms c. Conduct the fund's executions through Ole Miss Brokerage d. Conduct the trades through Low Cost, since it is in the best interest of your client

c. Conduct the fund's executions through Ole Miss Brokerage; an IA is required to follow customer's

An investment adviser representative has discretionary authority over a client's portfolio. The client's objective is conservative growth. According to the UPIA, which of the following statements is TRUE regarding the use of equity derivatives in his portfolio? a. Equity derivatives are not appropriate in a conservative portfolio b. Equity derivatives would be acceptable if the investor provided prior written authorization for the strategy c. Equity derivatives strategies may be appropriate as part of a conservative portfolio d. Equity derivatives strategies may be appropriate for conservative portfolios, provided the strategy is used exclusively to reduce the overall level of risk in the portfolio

c. Equity derivatives strategies may be appropriate as part of a conservative portfolio; UPIA does not make any categorical restrictions of specific investments

Under the Uniform Securities Act, all the following transactions are classified as exempt, EXCEPT: a. Transactions in equity securities between an issuer and an underwriter b. The pledge of securities to collateralize a loan c. The sale of U.S. government securities to a public customer d. Unsolicited transactions in nonexempt securities

c. The sale of U.S. government securities to a public customer; the security is exempt however there is no specific exemption for transactions involving a public customer

Which of the following statements is NOT TRUE concerning agency cross trades? a. A client must provide written authorization for such activities b. Such trades should be unsolicited for at least one side of the trade c. The trades are summarized annually to clients d. A client may provide verbal authorization for up to 10 days

d. A client may provide verbal authorization for up to 10 days

A wealthy, retired executive whose health is failing, would like her nephew, an IAR, to manage her affairs. Which of the following documents would be required, for her nephew to have investment authority currently, and retain control over the account in the event his aunt becomes incapacitated or deceased? a. Full power of attorney and designation as executor b. Full power of attorney and durable power of attorney c. Durable power of attorney d. Durable power of attorney and designation as executor

d. Durable power of attorney and designation as executor

Opie Hughes, a salesperson with Exim Financial, has done extensive research on Norton Industries and is very enthusiastic about the company's prospects. Based on his research, Opie believes the stock could easily double short-term and plans on sending out an e-mail blast to all of his customers recommending purchase of the issue. How would you evaluate Opie's plan of action? a. Opie may send out the e-mail with the approval of his manager b. Opie may send out the e-mail with a risk disclaimer c. Opie must file the group e-mail and await approval from his compliance department, since this form of communication is considered retail communications d. Opie should reconsider his plan, since the stock may not be appropriate for all of his clients

d. Opie should reconsider his plan, since the stock may not be appropriate for all his clients

Which of the following statements is TRUE regarding research reports prepared by others? a. Third-party research that is used to reach an independent conclusion by a broker-dealer or investment adviser must disclose the source provider b. Research obtained from an outside source that is publicly available does not need to disclose the name of the provider c. Third-party research may be distributed to clients provided the source of the report is disclosed and the report does not make a buy or sell recommendation of an individual security d. Research obtained from an external source and distributed to clients must disclose the name of the source

d. Research obtained from an external source and distributed to clients must disclose the name of the source; the key to this question is that the research reports are prepared by others

After many years of failing to establish a viable practice, Jan Edworz has decided to close her small investment advisory practice. The firm currently has a sizable surety bond posted with the state Administrator and Jan would like to use these funds to purchase a retirement residence. Jan will be required to maintain her firm's bond with the Administrator for: a. 10 business days following the receipt of a Letter of Release from the Administrator b. The latter of six months from the firm's withdrawal date, or December 31 of the year in which the resignation occurred c. One year following the firm's withdrawal date d. Three years following the firm's withdrawal date

d. Three years following the firm's withdrawal date