SERIES 65
The criminal penalty for violations of the Uniform Securities Act is how big of fine
$5,000
A bond purchased at $900 with a 5% coupon and a 5-year maturity has a an annual interest payment of
$50
Private placements are exempt under the USA if they are offered to no more than ___ general public (retail) investors in a 12-month period
10
Oral approval can last how many days
10 days
Qualified Tuition Programs: how often rollover to another state
12 months
The criminal penalty for violations of the Uniform Securities Act is how many years imprisonment
3 years
US T-Bills issued in what 4 maturities
4, 13, 26, 52 week
A bond purchased at $900 with a 5% coupon and a 5-year maturity has a current yield of:
5.56%
A customer has invested a total of $10,000 in a nonqualified deferred annuity through a payroll deduction plan offered by the school system where he works. The annuity contract is currently valued at $16,000, and he plans to retire. On what amount will the customer be taxed if he chooses a lump-sum withdrawal?
6,000
Which of the following best describes a 12b-1 fee?
A fee charged by some mutual funds to cover sales and distribution expenses.
How does a REIT handle pass through operating losses?
Can't pass them to investor
Acid test formula
Current Assets - Stock / Current Liabilities
Which of the following is a method for determining the internal rate of return to an investor based on cash flow in and out of the portfolio?
Dollar-weighted return
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:
End of fiscal year 2015
Home office Alabama, client in Miami feels Tennessee agent is churning. Who has jurisdiction (2)
Florida & Tennessee
Which of the following securities are exempt from registration at the state level? Bonds issued by the American Red Cross. United States Treasury bonds. American Advisers Unit Investment Trust. Common Stock in AAA Commercial Bank, member of the FDIC.
I, II, III and IV.
Which investment style does NOT take into consideration whether a specific security is under or overvalued?
Indexing
Client inherits 1,000 shares of ABC mutual fund when NAV is 9.50 and POP is $10.00 and elects to receive all distributions in cash. Two years later, sells all when NAV is 14.25 and POP is 15.00. What are the tax consequences of this sale?
Long-term capital gain of $4,750. (14.25 - 9.5) * 1,000
open-end investment companies (mutual funds) always trade based on their
NAV
Securities Act 1933 - SEC can approve new issues
No - can't approve new issues
Are bank holding companies exempt in the USA
No - not exempt
An issuer of federal covered securities, whose registration is effective under the Securities Act of 1933, would use which of the following procedures to permit sale of its securities in a specific state?
Notice filing.
One of the features of an index annuity is the ability for the principal value to increase based on the performance of the specified index. Which of the following is not used as a method to compute the amount of interest to be credited to the account?
Participation rate
Which of the following acts requires publicly traded corporations to issue annual reports?
Securities Exchange Act of 1934.
Under the Uniform Securities Act, which of the following is responsible for notifying the Administrator when an agent changes his place of employment from one broker-dealer to another?
The agent, the former employer, and the new employer.
Which of the account documents authorizes the use of the account as collateral?
The credit agreement
Paul Rogers is a participant in his employer's Section 401(k) retirement plan, having made both salary reductions as well as receiving employer matching contributions to his account over the past year. In the current year, Paul incurs a family medical emergency, causing him to take a hardship distribution from the plan. After taking this distribution, Paul comes into some found money and, instead, rolls over the amount of the hardship distribution into his traditional IRA. What is the taxable consequence, if any, of this distribution and rollover transaction?
The distribution is taxable in full as ordinary income since it is not eligible for rollover treatment.
Ethical or unethical - Continuing to exercise discretionary investment authority under an oral agreement with the client.
Unethical
Securities Act 1933 - SEC can issue stop orders?
Yes - Can Issue Stop Orders
Securities Act 1933 - SEC can review standard registration forms
Yes - Can review standard registration forms
Are foreign government bonds exempt
Yes - exempt
Does federal government fiscal policy cover taxation
Yes taxation included
To come under the SEC's requirement to file a Form 13F, an institutional manager must have discretion over:
a portfolio of at least $100 million of 13(f) securities.
Exempt transactions are not subject to the
advertising and sales literature
Investment advisers many only lend money to persons
affiliated with the firm or if adviser is in money lending business
An investment adviser renews its registration with the SEC by filing:
an annual updating amendment.
Consent of the client before completion of a trade made between the firm and a client must be made when
an investment adviser will be acting in the capacity of a principal
An agent represents whom
broker-dealer
Which of the following vehicles make use of the unified estate tax credit?
bypass trust. generation skipping trust.
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:
copy of IA brochure & copy of solicitor brouchure
Only a _____ can cite an individual to be in contempt of court.
court
The Administrator does not have the power to invoke
criminal penalties or jail time
Qualified Tuition Programs: current or future prices of enrollement
current
If a company successfully gets its 7% debenture holders to exchange their 7% debentures for 7% preferred stock, what is the effect on EPS?
decrease
the face value will fluctuate with the separate account's performance, but it will never
decrease below the original minimum face value.
The National Securities Markets Improvement Act of 1996 (NSMIA):
defined the term "federal covered adviser".
Tombstone advertisements are specifically __________ from the definition of prospectus
excluded
Exempt or not exempt: Investment Company Registered under Investment Company Act of 1940
exempt
Exempt or not exempt: US Treasury Bonds
exempt
Exempt or not exempt: nonprofit bond
exempt
Exempt or not exempt: securities issued by commercial bank
exempt
Transactions involving issuers and underwriters, pension trusts, and other financial institutions are
exempt
railroad equipment trust - exempt or non-exempt
exempt
stock is listed on the New York Stock Exchange, exempt or non exempt
exempt
Fee reimbursement, fee discount, and fee waiver. Which is permitted
fee discount
An administrator can do what to investment advisors regarding client funds
forbid taking custody
A day order is entered to buy 500 LMN at 24.35. By the close, the firm has 100 shares at 24.25 and 200 at 24.35. If the remainder is unfilled, what is the outcome?
has to accept 300 shares
how can records of the investment adviser's business be stored during the first two years?
has to be on site
An exempt security does not
has to be registered with SEC
Tactical allocation strategy has what type of transaction costs
higher
A registrant's registration may be canceled by the Administrator:
if the Administrator is unable to locate the registrant.
When asked about annual renewable term insurance, you would reply that it has what type of premium
increasing
What type of investor not included in in private placement calculation
institutional investor
Shareholder approval is not necessary to authorize the fund to
invest consistent with the fund's objectives.
he USA defines an issuer as a person that
issues or proposes to issue a security
Warrants are
long-term options to buy stock
clients may or may not waive an adviser's compliance with the rules.
may not
Which of the following individuals may not open a joint account?
minor
One would look at the average maturities when doing a cash flow analysis for
mortgage-backed pass-through securities
What does an ADR American Depositary Receipt do
negotiable certificate of title to a number of shares in a non-US company
A fixed annuity contract. Is it a security?
no
Can an agent be a firm
no
Is it an issuer? a corporation selling certificates of interest in a mining lease.
no
The sale of preorganization certificates is exempt if (2)
no commission + no more than 10 subsribers
net purchases have what type of impact on the net asset value of the fund's shares.
no impact
Is it permissable to use RIA
no it is not permissable
Qualified Tuition Programs: does control go to the student later
no, control stays with parent
A transaction is on behalf of the issuer is this exempt or non exempt
non exempt
issuer transaction-that is, one for the benefit of the issuer-will is exempt/non-exempt
non-exempt
A famous tennis player offers to record a testimonial for an investment adviser for use in a television commercial. Under the Uniform Securities Act, the investment adviser may:
not use the testimonial.
However, time or price discretion are only good for
one day
borrowing money from a client who was the agent's college roommate is
prohibited because not in money lending business
What is front running
purchase a stock for her own account knowing that a large institutional buy order is about to be processed for that same stock.
Under the Uniform Securities Act, before a corporation can issue a security in a state, that security must be:
registered in the state or exempt from registration in the state.
The antifraud statutes of the USA apply only to
securities
Alice Allison, an agent with Winmore Securities, a registered broker-dealer, introduced some of her clients to an old college friend who was raising funds for a new start-up venture. Those who invested in the deal did so by having Alice transfer funds from their account at Winmore to the start-up. Alice did not charge or receive any compensation for doing this. Because of this limited role, Alice did not notify her supervisor at Winmore. Under the NASAA Statement of Policy on Dishonest or Unethical Business Practices of Broker-Dealers and Agents, Alice has engaged in the unethical business practice of
selling away
An agent is discussing an equity index annuity purchase with a client. The agent explains that there are several which she feels are equally suitable for the client, but one of the companies is offering a trip for 2 to Las Vegas for reaching certain sales goals. She continues by stating that this sale will put her over the goal and win her the trip. If the client purchases that annuity, the agent
should pack her bags for the trip; she earned it
The statistical measurement that indicates how much an investment's returns have fluctuated, compared to its average return, over a given period of time is known as:
standard deviation.
required to effectuate annual renewal of the registration of an investment adviser representative affiliated with a federal covered adviser?
state licensing fee
One major difference between the customer identification program (CIP) and the new account opening rules of the regulatory bodies is that
the CIP requires date of birth while the regulators only require proof of legal age
If a security trades in the over-the-counter (OTC) market, it means that:
the security trades anywhere other than on an exchange.
The statute of limitations for civil cases is ______ years after the event
three
The statute of limitations for civil cases is ___ years after discovery
two
If an agent recommends the purchase of a technology company with an impressive growth record, but fails to inform the client that the company's technology will become obsolete pending the approval of a competitor's patent, the agent has:
violated the Uniform Securities Act.
A prospectus is a communication made in
writing
Bonds issued by the Canadian national government. Is it a security?
yes
Is it an issuer? a partnership selling partnership interests.
yes
Is it an issuer? Investment company
yes
Is it an issuer? a governmental agency borrowing money for short-term needs.
yes
A security that your client has been following has a historical average annual return of 11% and a standard deviation of 6%. Knowing this, it would be expected that 95% of the time, your client could expect a return within the range of:
−1% and +23%.
