66
Which investment is permitted to be held inside an IRA?
Real estate that's used for investment purposes
Which of the following terms is NOT specifically defined under the Uniform Securities Act?
Registered representative
When analyzing a structured product, which of the following risks is of the LEAST concern?
Regulatory risk (Although all securities could have losses due to regulatory risk, structured products are not typically associated with it. Structured products are created by broker-dealers and are customized to fit the needs of specific investors. They're created as unsecured bonds, which means they have credit risk. The returns on a structured product can be based on a basket of equities, debt instruments, and derivates. As a result, predicting the returns in different market scenarios is complex. In addition, most structured products are not exchange-traded, which means that they also have liquidity risk.)
Betty owns and operates Right Choice Advisers, a small investment advisory firm registered with the states of Oregon, Washington, and California. Betty decides to sell 60% of her shares to another investment adviser and retire. This transaction would require the approval of:
Right Choice's clients
When a person acquires ownership of more than 5% of a voting class of a company's equity securities registered under the Securities Exchange Act of 1934, he is required to file a:
Schedule 13D
Which of the following orders is used to sell stock, but only after it falls to a specific price?
Sell stop (A stop order is an order to either buy or sell a stock once the market price of the stock reaches a specific price—referred to as the stop price. A sell stop order is placed below the current market price and will not be executed unless the market falls to the stop price. On the other hand, a buy stop order is placed above the current market price and will not be executed unless the market rises to the stop price. Stop orders are typically used to limit a losses on existing stock positions. Sell stops can protect long stock positions, while buy stops can protect short stock positions.)
Sharon is responsible for answering phones and filing paperwork for Graceland Securities. Her title is Director of Human Resources. Under the Uniform Securities Act:
Sharon is not considered an agent since she is not involved in sales or trading
Emma, an agent, has just received a subpoena to testify at an investigative hearing. What penalty would be assessed if Emma failed to honor the subpoena?
She may be found in contempt of court.
If state rules regarding an exemption are more restrictive than federal rules, then which rules would govern?
State
If the offer originated in State A and is being broadcast on a radio or television program in State A who would have jurisdiction over an offer?
State A Administrator
Under the Uniform Securities Act, which of the following items is a security?
Stock issued by a foreign company, but listed on the NYSE
Which of the following statements is TRUE regarding surety bonds?
The Administrator may allow a deposit of cash or securities.
Which of the following statements is TRUE according to the Uniform Securities Act?
The Administrator may require a surety bond for advisers who have custody of client funds or securities.
Which of the following securities is NOT nonexempt, under the Uniform Securities Act?
The City of Pasadena, California bond, sold by an agent at Walck and Walker Broker-Dealer
If a federal covered adviser changes its fee:
The IA is required to file an amended Form ADV Part 2 with the SEC
One of the most common uses for a bypass trust is to:
Pass assets from parents their children upon the death of the second parent.
Under the Uniform Securities Act, an investment adviser who has no place of business in a state is exempt from registration if:
All of the adviser's clients are institutional investors
Under the USA, which of the following choices would NOT be considered a person?
An adult found to be mentally incompetent
According to the Uniform Securities Act, which of the following investment advisers would be exempt from registration?
An adviser with only five retail clients
An officer of GTO Company is selling his company's convertible debentures to the public. In this capacity, the officer is:
An agent of the issuer
Under the Uniform Securities Act, which of the following statements is TRUE concerning the state registration of an agent?
An agent's registration to sell securities in a given state expires at the end of the calendar year.
According to the USA, which of the following choices is not considered a security?
An endowment policy
Which of the following could be considered an investment adviser representative under the Uniform Securities Act?
An individual employed by Chelsea Asset Management who solicits clients for the firm
Any person who willfully violates SEC rules and regulations is subject to a fine and imprisonment of up to:
$10,000 and five years
Form 13F must be filed with the SEC when the market value of equity securities under an adviser's control exceeds:
$100 million
A client invested $100,000 in an Equity Indexed Annuity. The participation rate is 90% with a cap rate of 15%. In year one, the index increased by 20%. In year two, the index lost 5%. In year three, the index gained 10%. What is the value of the annuity after year three?
$125,350 (An Equity Indexed Annuity is credited with the lesser of the participation rate or the cap rate, based on the performance of an index such as the S&P 500. In year one, the index increased by 20%. 90% of the gain is equal to 18%, but since the annuity can't be credited with more than the cap of 15%, the value of the annuity would be $115,000 (1.15 X $100,000). Many Equity Indexed Annuities have a floor of zero, thus a negative return in the index will not cause the value of the annuity to decline. Therefore, in year two, the value of the annuity would remain the same. In year three, the index increased by 10%. 90% of the gain is 9%, which is less than the cap rate, so the annuity would be credited with 9%, or $125,350 (1.09 X $115,000).)
On October 25, Thomas purchased 10 listed ABC Corporation Jan 40 puts and paid a $5 premium on each put. The current market price of ABC Corporation is $48 per share. What's the breakeven price for Thomas' put options?
$35
During the first quarter, TJG common stock paid a $.75 dividend. The stock's price fell from $75 per share at the beginning of the quarter to $67.50 per share at the end of the period. Based on these results, what is the stock's annualized total return?
-36% (The total return for a security is found by taking the ending value minus the beginning value plus any income. In this example, the ending value of the stock was $67.50 minus the beginning value of $75.00 plus $0.75 in dividends. Dividing this sum by the beginning value of $75.00 will equal a 9% loss for the quarter. Multiplying this by four quarters will equal an annualized loss of 36%.)
Its can exercise discretionary control for up to ____ business days based on oral discretion from a client.
10
Section 3(c)(1) is available to hedge funds that has _____ or fewer owners
100
Under Rule ____, securities sold within the borders of one state are exempt from federal registration.
147
A customer enters a sell stop-limit order for 100 shares at 18.50. The last round-lot sale that took place before the order was entered was 18.88. Round-lot sales that took place after the order was entered occurred at 18.25, 18.38, 18.50, and 18.63. The trade was executed at:
18.5
With reference to the Uniform Securities Act, when does an agent's registration become effective?
30 days after filing the application
The mutual fund must pay the investor within ___ days of receipt of the redemption.
7
An investment adviser (IA) only has one client. The IA is NOT provided an exemption from the registration requirements of the Investment Advisers Act of 1940 based on which of the following clients?
A Section 3(c)(7) private fund (hedge fund) that has $200 million of assets under management
Which of the following choices is a broker-dealer in State B?
A broker-dealer registered in State A, where its only office is located, which has three individual clients in State B
Under the Uniform Securities Act, which of the following is exempt from registration as a broker-dealer in State B?
A broker-dealer whose only office is in State A, but deals only with institutional clients in State B
Which of the following persons would be considered an investment adviser under the Investment Advisers Act of 1940?
A brokerage firm that offers wrap accounts to its customers
Under the Uniform Securities Act, which of the following transactions is considered a sale?
A gift of assessable stock
Which of the following persons would meet the definition of an investment adviser according to SEC Release 1092?
A lawyer who holds himself out to the public as a provider of financial planning advisory services
Which of the following choices is NOT a characteristic of equity-indexed annuities?
A rate of return that is determined by the subaccounts that the contract owner selects
Which of the following will a syndicator of a blind pool real estate investment trust include in the investment policy statement?
A statement which breaks down the contributions made by limited partners (Blind pool real estate investment trusts (REITs), which are more commonly referred to as "non-traded" REITs, are pooled investments in real estate. However, unlike a traditional REIT, blind pool REITs give the investment manager broad authority over investment choices. The specific location and timing of the investments will not be disclosed in the investment policy statement. Although the investment policy statement of a blind pool REIT will not provide significant insight into the REIT's investments, the syndicator must disclose the break down of contributions made by limited partners. (18565))
A firm acting in the capacity of a dealer/market maker will:
Add markups or markdowns to all client trades
Who authorizes cease-and-desist orders? A court of competent jurisdiction or an Administrator?
Administrator
According to the Investment Advisers Act of 1940, which of the following individuals would need to register as an investment adviser?
An individual who sells a market timing newsletter that advises clients when to buy and sell exchange-traded options
Under the Uniform Securities Act, which of the following statements is TRUE concerning the registration of an investment adviser?
An investment adviser who does not maintain an office in a state who has seven clients who are residents of that state is not exempt from registration.
A corporation is planning an offering of common stock and has filed its registration statement with the SEC. At this time, which of the following actions taken by a registered representative would NOT be a violation of the Securities Act of 1933?
Attempting to obtain indications of interest from customers concerning the offering
Investment advisers who have custody of client assets, or who receive substantial prepayment of advisory fees, or who have full discretion over client accounts, are required to provide an _____________ _____________ _____________ _____________ to their clients.
Audited annual balance sheet
A brokerage firm executes an existing customer's order by locating a contra-party and charges the client a commission for executing the trade. In what capacity was the firm acting?
Broker
According to the Uniform Securities Act, when does the registration of a financial professional become effective?
At noon on the 30th day after filing
Chris is a customer who has very little understanding of financial markets. Chris has custodial power over his children's accounts and is concerned that his lack of investment experience could hurt his children's investment returns. He is considering allowing a third party to assume control of the accounts through a limited power of attorney. Under the UPIA, who can he delegate discretion to?
Any competent person
Which of the following option strategies is the BEST hedging strategy if a client is short 1,000 shares of common stock?
Buy calls
When comparing active investment strategies to a buy-and-hold investment strategy, which of the following statements is TRUE?
Buy-and-hold strategies are easier to manage and minimize taxes.
An agent in Maine calls a prospective client in New Hampshire and recommends the purchase of a security. Under the Uniform Securities Act, the offer is made in:
Both Maine and New Hampshire
An investment adviser offers a choice between a wrap-fee program and a traditional asset-based fee (fee plus commission). When working with a client, what must the investment adviser disclose?
Both choices (a) and (b) explained orally and in writing
Under NASAA's Statement of Policy on Unethical Business Practices of Investment Advisers, all of the following activities are considered violations, EXCEPT:
Exercising discretion for 10 business days based on oral instructions
According to ERISA 404(c) guidelines, which of the following actions is considered a prohibited practice?
Failing to properly diversify the plan
An investment adviser with no place of business within a state will not be required to register with the Administrator under which of the following conditions?
The adviser will provide advice to four individual clients.
Which of the following terms is not pertinent when determining whether a firm meets the investment adviser definition?
Commission
In a holdings report that's filed by an access person of an investment adviser, the information must be:
Current as of a date that's no more than 45 days prior to the date on which the report is submitted
Under the Uniform Securities Act, when do the registrations of broker-dealers, agents, and investment advisers expire?
December 31
All of the following are access persons of an investment adviser, EXCEPT:
Employees who have access to public information regarding securities' prices
A security issued by a U.S. municipality is considered a(n):
Exempt security
Under the Uniform Securities Act, which of the following issuers are NOT exempt from registration with the state Administrator?
For-profit corporations
A broker-dealer receives an order to purchase a block of securities for an institutional client. The broker-dealer feels as though the order will create an upswing in the stock price and therefore buys call options on the subject security. What is the term for this action?
Front-running
According to the Investment Advisers Act of 1940, an advisory fee that increases and decreases based on the performance of a portfolio compared to a benchmarking index is called a(n):
Fulcrum fee
Which of the following measures the volatility of an option's premium?
Gamma and theta (Gamma and theta are both measures of the volatility of an option's premium. Gamma is used to measure the option's delta sensitivity to changes in the underlying stock price, while an option's delta measures the amount by which an option's premium will change when the underlying stock price changes. Theta is a measure of how quickly an option's time value decreases. Duration and convexity are measures of a bond's volatility. Alpha and beta are measures of non-systematic and systematic risk and can be applied to any investment. Expected return and standard deviation are both used in the Modern Portfolio Theory.)
One of your largest clients has consistently picked profitable stocks for his account. He has just indicated his desire to buy 10,000 shares of a Pink Sheets stock. Considering the client's successful track record, you decide to purchase a significant number of shares ahead of completing your client's buy order. Under which of the following conditions is this action acceptable?
Generally, this action is prohibited.
According to blue-sky laws, which of the following activities is prohibited or fraudulent?
Guaranteeing to reimburse a client due to any losses incurred
XYZ broker-dealer is located in State A, where it maintains its corporate headquarters. Under the Uniform Securities Act, XYZ would not meet the definition of a broker-dealer in State B if it:
Has no office in State B and only sells securities to an investment company located in State B
Section 3(c)(7) is available to _______ funds that limit their purchasers to qualified clients (i.e., clients with $5 million of investable assets)
Hedge
_________ _______ are exempt from registration with the SEC and there is a lack of regulatory oversight.
Hedge funds
According to the Investment Advisers Act of 1940, the definition of an investment adviser includes which of the following choices? I. Pension consultants II. Broker-dealers III. Bank holding companies IV. U.S. government securities advisers
I
A client of a broker-dealer's agent is interested in adding a pharmaceutical stock to her portfolio, but is unsure of which one of three stocks to choose. The client is leaving for a one-day business trip and fears that the most appropriate time to buy may be while she's unavailable. Which of the following orders may the agent accept from the client without written discretionary authority? I. "Buy 500 shares of SureCure whenever you think the price is right." II. "Enter a market order for 500 shares of TriCare whenever you think it's appropriate." III. "Buy 500 shares of whichever pharmaceutical stock seems to be the best value when the market opens."
I and II only
Which TWO of the following statements are TRUE regarding a broker-dealer acting as a dealer/market maker? I. The broker-dealer buys for or sells from its own inventory. II. The broker-dealer earns commissions for executing transactions. III. The broker-dealer is acting as a principal. IV. The broker-dealer is acting in an agency capacity.
I and III
Which TWO of the following types of insurance have fixed premiums? I. Whole life insurance II. Universal life insurance III. Variable life insurance IV. Variable universal life insurance
I and III (Universal life policies, including variable universal life, have flexible premiums. Variable universal life is sometimes called flexible-premium variable life insurance. Whole life and variable life insurance policies have fixed premiums.)
Which of the following practices are violations of the Uniform Securities Act? I. Executing trades for the firm's account prior to executing client trades II. Reporting inside information to an immediate supervisor III. Inducing trades for the purpose of increasing commissions
I and III only
Under the Uniform Securities Act, which of the following securities is/are exempt? I. Bonds issued by a Canadian province II. Illinois General Obligation bond III. Insurance company common stock IV. Securities issued by a not-for-profit educational association
I, II, III, and IV
Which of the following choices would be considered a person under the USA? I. A customer II. A broker-dealer III. An estate IV. An issuer
I, II, III, and IV
Which of the following records must be kept by an investment adviser? I. A written agreement between the adviser and client II. A copy of each communication sent to 10 or more individuals III. All documents needed to demonstrate the calculation of return IV. A copy of the investment adviser's code of ethics
I, II, III, and IV
According to the Investment Advisers Act, a financial planner's compensation may consist of which of the following choices? I. An hourly fee II. An overall fee for developing a financial plan III. Commissions on insurance products
I, II, and III
If an agent resigns from their broker-dealer and is subsequently hired by another broker-dealer, who is required to notify the Administrator? The broker-dealer that the agent resigned from The broker-dealer that now employees the agent The agent Any one of the above mentioned persons
I, II, and III
Which of the following actions may be taken by the Administrator? I. Limit or restrict the functions or activities of the registrant II. Administer an oath III. Cancel registration if the registrant cannot be located after a reasonable search
I, II, and III
Which of the following securities are NOT exempt from the antifraud provisions of the Uniform Securities Act? I. Municipal bonds II. Securities issued by a corporation and listed on the Toronto Stock Exchange III. Debt issued by a manufacturing company
I, II, and III
Which of the following statements is TRUE according to the Business Standard Test referred to in SEC Release 1092? I. A person is in the business of providing advice if the person holds him- or herself out to be in the business of providing advice. II. A person is not in the business of providing advice if the advice given occurs rarely or in isolated nonperiodic instances. III. A person is in the business of providing advice if separate or additional compensation is received for providing investment advice.
I, II, and III
Which of the following statements are TRUE concerning certain federal covered securities? I. The Administrator may require the issuer to pay a filing fee II. The Administrator may bring enforcement action if fraud is involved III. The Administrator may require the issuer to file a consent to service of process IV. The Administrator will grant the registration after a final review of the filing
I, II, and III only
Under the Investment Advisers Act of 1940, which of the following situations would NOT be a violation of soft-dollar practices? I. An investment adviser uses a broker-dealer to execute transactions that provide the adviser with market data services. II. An investment adviser uses a broker-dealer to execute transactions that provide the adviser with trading software used to route orders to a market center. III. An investment adviser uses a broker-dealer to execute transactions that provide the adviser with assistance concerning its compliance responsibilities. IV. An investment adviser uses a broker-dealer to execute transactions that provide the adviser with third-party research.
I, II, and IV
What powers does the Uniform Securities Act provide the Administrator during an investigation of a violation? I. Subpoena records located outside the state II. Subpoena witnesses located outside the state and compel their testimony III. Only subpoena records or witness located in the state IV. Refer violations to the Attorney General to initiate criminal prosecutions
I, II, and IV
Under the Investment Advisers Act of 1940, which of the following statements is/are TRUE concerning an investment adviser's use of a solicitor? I. The cash fee paid to a solicitor must be disclosed. II. A partner, officer, director, or employee cannot perform solicitation activities. III. The solicitor must provide the client with a separate written disclosure that sets forth the solicitor's relationship with the adviser and any differential in advisory fees charged over the adviser's usual fees. IV. The adviser must receive from the client a signed acknowledgment of receipt of the solicitor's written disclosure brochure.
I, III, and IV
According to the Uniform Securities Act, which of the following statements is/are TRUE concerning private placements? I. The offer may not be made to more than 10 persons in that state during any 12-month period. II. The offer may not be made to more than 35 persons in that state during any 12-month period. III. The offer may be made to any number of institutional investors during any 12-month period. IV. Commissions may not be paid if the buyers are non-institutional customers.
I, III, and IV only
If the dollar is increasing against foreign currencies, which TWO of the following results would most likely occur? I. An improvement in the U.S. balance of trade II.A worsening of the U.S. balance of trade III. An increase in imports into the U.S. IV. Increased exports by the U.S.
II and III
Selling away is allowed if an agent completes which of the following steps? I. Provides oral or written notification to her supervisor II. Provides written notification to her firm III. Receives her firm's written permission IV. Notifies the state securities Administrator or the SEC
II and III
Without discretionary authority, an agent may execute a client's order if the client specifies which TWO of the following details? I. The price of execution II. The particular security to be bought or sold III. Whether to buy or sell IV. The time the trade should be executed
II and III
A client is seeking a yield of 6.8%. An investment adviser has located two bonds with similar credit quality, duration, and the client s desired yield. After performing discounted cash flow analysis on each bond, the adviser has determined that Bond A is trading at a discount to its present value, while Bond B is trading at a premium to its present value. Which of the following statements is NOT TRUE? I. Bond A is priced attractively and should be purchased. II. Bond B is priced attractively and should be purchased. III. The investor will earn an annual interest rate greater than 6.8% on Bond B. IV. The investor will earn an annual interest rate greater than 6.8% on Bond A
II and III only (Discounted cash flow (DCF) analysis evaluates the present value of all coupon payments and the repayment of a bond's principal at a present value, based on a rate of return. This makes it possible to evaluate a bond's value against the investor's desired rate of return. The sum of each of the discounted cash flows, plus the present value of the bond's principal, determine the total value of the bond. By comparing this value to the current price of the bond, the adviser will be able to determine if the bond is an attractive investment for a client. If a bond is trading at a discount to its present value, the investor will earn more than the interest rate that has been used to calculate the present value. Conversely, a bond that is trading at a premium to its total present value will be worth less than the price of the bond. (The investor would be overpaying for the bond.))
A futures contract is different than a cash forward contract because the futures contract is: I. A personal transaction between the buyer and the seller II. For a standard amount of the commodity rather than for a specific amount and quality of the cash commodity III. Not negotiated by open outcry in the trading pits and not subject to the rules of a futures exchange IV. May be offset on the exchange where the contract was established
II and IV
Which of the following choices is a custodian's primary goal under the Uniform Prudent Investor Act?
Investing with an eye toward the risk/reward profile of the entire account
Which of the following is TRUE regarding management companies?
Investors will liquidate open-end fund shares at their NAV, but closed-end fund shares may be liquidated below their NAV. (Open-end management companies (i.e., mutual funds) must always be bought and sold at their net asset value (NAV) plus any applicable sales charges. However, closed-end fund shares are exchange-traded. Closed-end funds will have a NAV, but investors will buy and sell their shares at the current price that's available on the exchange. In other words, closed-end fund shares may trade at either a premium or discount to their NAV.)
A loss from a limited partnership's operations is passed through to a limited partner. On the limited partner's personal tax return, this loss:
Is considered a passive loss and may only be deducted against passive income
Which of the following statements is TRUE regarding the Consent to Service of Process?
It is used for receiving and processing noncriminal complaints.
Which of the following statements is TRUE of an investment adviser that maintains custody of client funds or securities?
It must initiate Form ADV-E.
Under the Uniform Securities Act, ___________, ___________, ___________, and ___________ are specifically excluded from the definition of an investment adviser.
Lawyers, accountants, teachers, engineers
The last dollar that a client earns would be taxed at their:
Marginal tax rate
Investors often use financial futures to hedge portfolios against which of the following types of risk?
Market risk (Financial futures can be bought and sold for stock indexes, foreign currencies, and bonds. Similar to how put options can hedge a stock position, stock index futures can hedge the market risk for a portfolio that tracks an index. Investors will sell futures contracts and profit when the market falls. The subsequent profit on futures will offset the portfolio's losses. Business risk is typically minimized through investing in an uncorrelated portfolio of stocks (i.e., through diversification). Political risk and event risk cannot be directly hedged, since there are no financial futures that address those risks.)
According to the National Securities Markets Improvement Act (NSMIA), state Administrators are allowed to set:
Minimum financial requirements not to exceed those set by the SEC
The Uniform Securities Act is the ________ law governing state registration requirements.
Model
An offer to sell a security was directed by an agent in Nebraska to a client who lives in Kansas, but who is visiting a relative in Oklahoma. The customer accepts the offer and agrees to make payment upon their return to Kansas. Under the Uniform Securities Act, which Administrator(s) have jurisdiction over the transaction?
Nebraska and Oklahoma (An Administrator has jurisdiction over any offer that originates from their state, or is directed into and received in the state it was directed into, or was accepted in their state. It does not matter where payment is made. The offer originated in Nebraska, so its Administrator has jurisdiction. The offer was directed into Kansas but was not received there, so its Administrator has no jurisdiction. The offer was accepted in Oklahoma, so its Administrator would have jurisdiction over the offer as well.)
Are accounting fees permitted under a soft-dollar arrangement between an investment adviser and a broker-dealer?
No
Are transactions directed to a maximum of 15 retail (non-institutional) investors exempt from the antifraud provisions of the Uniform Securities Act (USA)?
No
Are transactions with financial institutions exempt from the antifraud provisions of the Uniform Securities Act (USA)?
No
Are unsolicited nonissuer transactions exempt from the antifraud provisions of the Uniform Securities Act (USA)?
No
Are unsolicted transactions involving a private placement exempt from the antifraud provisions of the Uniform Securities Act (USA)?
No
Does the Investment Advisers Act of 1940 allow an investment adviser to use a broker-dealer to execute transactions that provides the adviser with assistance concerning its compliance responsibilities?
No
Under SEC Release 1092, would a marketing firm whose investment advice is solely incidental to its profession be exempt from the definition of investment adviser?
No
Does the Uniform Prudent Investor Act (UPIA) specifically ban the type or class of an investment?
No (The UPIA looks at the portfolio as a whole and makes an assessment as to the risk/reward trade-off of the investments selected when determining if an asset mix is acceptable for a given account. The standard of prudence is applied to the whole portfolio as opposed to individual investments.)
A firm is located in State Y and has been hired by a pension plan to evaluate its investment manager. The investment manager's office is in State Z. The firm will be advising the pension plan whether it should retain the investment manager or hire a new one. Under the Uniform Securities Act, is the firm required to register as an investment adviser in State Z?
No, because the firm has no place of business in State Z and is servicing an institutional investor.
Under the Uniform Securities Act, an employee of a municipal issuer selling securities to the public is considered:
Not an agent
An adviser charges its clients a fee that's based on the dollar value of assets under management. The firm has seen the value of assets under management increase over the last 12 months due to its successful asset allocation model. One of its clients, whose account increased in value during this period, contacts the firm to complain that the fee he is being charged increased and that he never signed a contract which allows for a performance-based fee. Which of the following statements is TRUE?
The adviser's fee percentage that is based on assets under management did not change; therefore, no violation has occurred.
An investment advisory firm has created a brochure which contains the same information that's found in its Form ADV Part 2. One of the firm's IARs has given this brochure to one of his new clients at the time that she verbally agreed to a contract. He had not previously provided her with any other documents. Which of the following statements is TRUE regarding the IAR's actions?
The advisory firm is in compliance with the Brochure Rule of the Investment Advisers Act.
The limited registration provision available to Canadian broker-dealers conducting business in a state permits which of the following actions?
The broker-dealer transacts business with existing clients who are temporarily in a state.
When sharing in the profits of a customer's account, whose approval is required?
The client's
A state Administrator has suspended a broker-dealer. Which of the following statements concerning the broker-dealer is TRUE?
The firm may apply to the state court for a review of the order.
For a qualified dividend, what's the minimum and maximum tax rate?
The minimum rate is 0% and the maximum rate is 20%.
Net short-term capital gains are taxed at:
The ordinary income rate
Which of the following statements is TRUE of variable annuities?
The product must be sold with a prospectus.
A broker-dealer registered in Georgia sells a security listed on Nasdaq. The transaction takes place in the secondary market between two clients who are Georgia residents. According to the USA, which of the following statements is TRUE?
The security is not required to be registered in Georgia
An investment adviser may NOT receive which of the following forms of compensation for directing brokerage commissions?
The travel cost of flying to London to attend an economics conference
For how long must broker-dealers and investment advisers maintain their books and records according to the Uniform Securities Act?
Three years for broker-dealers and five for investment advisers
Which of the following choices would not meet the definition of an exempt transaction?
Transactions between an issuer and retail investors
True or False: Agents of the same firm are permitted to share commissions on a trade.
True
An investment advisory firm has four partners. One of the partners has earned a Certified Financial Planner (CFP) designation, while the other three partners are attending CFP classes, but have not yet earned the certification. The advisory firm has published an advertisement that states, All of our planners have participated in the CFP certification program. Is this ethical? Why or why not?
Unethical; it misleading by implying that all of the partners are CFPs
According to the Disclose or Abstain Principle, an IA must disclose all of the following actions, EXCEPT:
Using contracts that include hedge clauses.
William is an agent with a broker-dealer and is registered presently in three states. One of William's clients informs him that he is moving to a state where neither William nor his firm is registered. Which of the following statements is TRUE regarding William's registration in the new state?
William is not eligible to register in the new state until his broker-dealer is registered in that state .
Under the Uniform Securities Act, what is the statute of limitations on taking action to recover damages on transactions made in violation of a state registration provision?
Within three years of occurrence or two years of discovery, whichever comes first
Are non-issuer transactions effected through a broker-dealer on an unsolicited basis exempt from the antifraud provisions of the Uniform Securities Act (USA)?
Yes
Are nonissuer transactions of a security filed under the Investment Company exempt from the antifraud provisions of the Uniform Securities Act (USA)?
Yes
Are transactions between an issuer and an underwriter exempt from the antifraud provisions of the Uniform Securities Act (USA)?
Yes
Does the Administrator has the authority to begin an investigation outside of their state?
Yes
An investment advisory firm has three partners and ten associates. While all of the partners have earned a CFP (Certified Financial Planner) designation, the associates are attending CFP classes, but have not yet earned the designation. The advisory firm has published an advertisement that states, All of our partners have completed the CFP certification program. Is this acceptable? Why?
Yes, because the statement is literally true.
Robert works part-time for JJ Financial Planning, where he develops financial plans for clients. He asks clients a series of questions about their current finances and investment objectives, and uses their answers to create customized financial plans. These plans often include recommendations that they purchase insurance or variable annuities, opening IRAs or other types of retirement accounts. Robert charges a fee for the plans, but he does not earn commissions for selling clients variable annuities and insurance to implement their plans. Is Robert an investment adviser representative?
Yes, he is an investment adviser representative.
