4.6

A Canadian broker/dealer is registered in Province Q. The firm has clients who vacation in several New England states and they would like to continue to do business with them while on their holidays. Under the Uniform Securities Act: A) this is permissible if the broker/dealer is properly registered in Province Q, deals only with existing clients, and registers in each of the states. B) the broker/dealer may only accept unsolicited orders from their existing clients while they are vacationing in the U.S. C) this is permissible only if the broker/dealer is registered with the SEC. D) this would only be permitted if the trades were executed through an affiliated domestic broker/dealer who is licensed in those states.

this is permissible if the broker/dealer is properly registered in Province Q, deals only with existing clients, and registers in each of the states.

If securities of an issuer registered with the state are outstanding, how long after the effective date of registration must an issuer wait before the registration may be withdrawn? A) 18 months. B) 6 months. C) 12 months. D) Only at the administrator's discretion.

12 months.

A thirty-five year-old client purchases a variable life insurance policy. Under current regulations, the maximum sales charge permitted over the life of the policy is: A) 9% per premium payment. B) 9%. C) 8.5% per premium payment. D) 8.5% of total premiums over the life of the plan.

9%.

Under the Uniform Securities Act, which of the following statements are TRUE about the authority of an Administrator? I. A cease and desist order may be issued prior to a hearing. II. A cease and desist order may be issued after a hearing. III. A cease and desist order is valid for a maximum of 30 days. A) I, II and III. B) II and III. C) I and II. D) I only.

I and II.

Over the past 5 years, a stock has had returns of +16%, +5%, -4%, +12% and +8%. The mid-range value of this stock's returns is: A) +8.2%. B) +7.4%. C) +6.0%. D) +9.0%.

+6.0%. (16-(-4) = 20/2=10 midpoint between +16 and -4

With respect to the recordkeeping rules under the USA, which of the following statements is NOT correct? A) Following termination of the business, investment advisers organized as corporations must maintain copies of their articles of incorporation for a minimum of five years. B) Investment advisers must maintain copies of all powers of attorney and other evidences of the granting of any discretionary authority by any client to the adviser for a minimum of five years. C) Broker/dealers must maintain records of electronic communications for a minimum of three years. D) Broker/dealers must maintain records of trade blotters for a minimum of three years.

Following termination of the business, investment advisers organized as corporations must maintain copies of their articles of incorporation for a minimum of five years.

An agent's recommendation for the purchase of a municipal security to a customer who wants fixed income and is in a relatively low tax bracket would in most cases be: I. unsuitable and unethical. II. a securities felony. III. grounds, in extreme cases, for suspension or revocation of the agent's license. IV. outside regulatory jurisdiction. A) II and III. B) IV only. C) I only. D) I and III.

I and III.

Broker-dealers, investment advisers, agents, and investment adviser representatives who use the internet, the World Wide Web, and similar proprietary or common carrier electronic systems to distribute information on available products and services through certain communications made on the internet, directed generally to anyone having access to the internet and transmitted through postings on Bulletin Boards, displays on home pages, or similar methods, are not deemed to be transacting business in this state for purposes of the Uniform Securities Act solely on the basis of that fact if which of the following conditions are observed? I.The internet communication contains a legend in which it is clearly stated that the broker-dealer, investment adviser, agent, or IAR in question may transact business in this state only if first registered, excluded, or exempted from state broker-dealer, investment adviser, agent, or IAR registration requirements, as may be the case. II.The internet communication contains a legend in which it is clearly stated that follow-up; individualized responses to persons in this state by the broker-dealer, investment adviser, agent, or IAR that involve either the effecting or attempting to effect transactions in securities; or the rendering of personalized investment advice for compensation, as may be, will not be made absent compliance with state broker-dealer, investment adviser, agent, or IAR registration requirements, or an applicable exemption or exclusion. III.The internet communication contains a mechanism, including and without limitation, technical firewalls or other implemented policies and procedures, designed reasonably to ensure that before any subsequent, direct communication with prospective customers or clients in this state, the broker-dealer, investment adviser, agent, or IAR is first registered in this state or qualifies for an exemption or exclusion from such requirement. IV.The internet communication does not involve either effecting or attempting to effect transactions in securities, or the rendering of personalized investment advice for compensation, as may be, in this state over the Internet, but is limited to the dissemination of general information on products and services being offered. A) I, II and III. B) I, II, III and IV. C) III and IV. D) I and II.

I, II, III and IV.

Among the many definitions found in the Securities Exchange Act of 1934 is that of "associated person of a broker/dealer". Which of the following individuals would fall into that definition? I.A registered representative possessing a Series 6 limited registration II.A university president who sits on the broker/dealer's board of directors III.The newest member of the firm's research department who has not yet passed the licensing exam IV.The receptionist at the front desk who directs visitors to the carousel where mutual fund prospectuses are available. A) I, II, and III. B) I, II, III and IV. C) I and IV. D) II and III.

I, II, and III.

Under the Securities Act of 1933, when registering securities with the SEC, who must sign the registration statement? I. The chief executive officer (CEO). II. The chief operating officer (COO). III. A majority of the board. IV. The chief financial officer (CFO). A) I, II, III and IV. B) I, II and IV. C) I, III and IV. D) I and IV.

I, III and IV.

An investor purchases zero-coupon bonds issued by the U.S. Treasury due to mature in 18 years at $100,000. Which of the following might describe the primary reason for selecting that investment vehicle? I. The investor is 65 years old and needs the reliability of current income. II. The investor is 45 years old and has purchased these in an IRA rollover account and wants the assurance of funds for retirement. III. The investor is 30 years old and has a newborn child and wishes to assure funds for a college education. IV. The investor is 20 years old, has just received an inheritance, and wishes to shelter income for as long as possible. A) II and III. B) III and IV. C) I and II. D) I and IV.

II and III.

Two brothers are interested in forming a business together. They have three initial concerns: 1) how to maximize their benefits despite the fact that the business is expected to lose money for at least the first year or so; 2) making sure that the business will be able to continue in the event one of the brothers dies; and 3) minimizing their personal liability for the obligations of the business. On the basis of the brother's concerns, which form of business is appropriate for the situation? A) General partnership. B) LLC. C) Limited partnership. D) C corporation.

LLC.

A portfolio manager using index options is trying to reduce which of the following types of risks? A) Selection. B) Systematic. C) Purchasing power. D) Financial.

Systematic.

Under the Securities Exchange Act of 1934, which of the following is TRUE regarding the jurisdiction of the SEC over a person who violates the rules of the Municipal Securities Rulemaking Board? A) The SEC has the authority to investigate such violations even if the person is a financial institution. B) The SEC has the authority to investigate such violations only if the person is a financial institution. C) Only the MSRB has the authority to investigate violations of its rules. D) The SEC has the authority to investigate such violations unless the person is a financial institution.

The SEC has the authority to investigate such violations unless the person is a financial institution.

If a public customer plans to purchase stock in a company that has been listed on a stock exchange for the past year in a regular way secondary transaction, when must the customer receive the prospectus? A) Before the settlement date. B) No later than three days from the settlement date. C) Before the order entry. D) There are no prospectus delivery requirements for this transaction.

There are no prospectus delivery requirements for this transaction.

Those investors wishing to examine a document that would probably give them the most information about an issuer's current and planned operations would seek out the: A) balance sheet. B) Form 10-K. C) annual report. D) investor's brochure.

annual report.

You have a new client who has just been made head of the Engineering Department at the local state university. With the new position comes a substantial increase in pay and she would like to discuss the various options available in her 403(b) plan. You would tell her that choices in her plan could include all of the following investments EXCEPT A) commercial paper B) annuity contracts C) CDs D) mutual funds

commercial paper

Using the powers granted under the Uniform Securities Act, the Administrator would have the right to deny the registration of a broker/dealer: A) if the broker/dealer's membership in the NASD was revoked because of a violation of NASD rules, but only if the activity involved was a violation of the Uniform Securities Act. B) if the broker/dealer had agents registered in the state. C) if the broker/dealer's membership in the NASD was revoked because of a violation of NASD rules. D) if the broker/dealer's net capital only met SEC requirements, but not those of the state.

if the broker/dealer's membership in the NASD was revoked because of a violation of NASD rules.

The Securities Exchange Act of 1934 covers all of the following EXCEPT: A) trading on exchanges. B) issuance of corporate securities. C) issuance of financial reports by corporations. D) trading of corporate securities.

issuance of corporate securities

Under the Investment Advisers Act of 1940, an investment adviser who has custody of clients' funds and securities must: A) annually perform a physical inventory of all clients' funds and securities and file an affidavit with the SEC. B) keep the clients' securities and funds segregated and identified. C) annually provide each client with an itemized list of the securities and funds and their location. D) maintain a surety bond in an amount determined by the SEC.

keep the clients' securities and funds segregated and identified.

Prohibited investments in an IRA would include all of the following EXCEPT A) stamps B) gems C) municipal bonds D) artwork

municipal bonds

A fiduciary, acting in accordance with the UPIA, would choose investments on the basis of all of the following EXCEPT: A) other resources of the beneficiaries. B) needs for liquidity, regularity of income, and preservation or appreciation of capital. C) general economic conditions. D) transaction costs.

transaction costs.