Series 65 Set 1
Treasury notes are quoted in 32nds where each 32nd equals $.3125. The 102 in the quote equals $1,020 and the 25/32 is an additional $7.81 bringing the total to $1,027.81.
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Under the Securities Act of 1933, a registration statement for a security generally becomes effective how many days after it is filed?
20 days
According to the Investment Advisers Act of 1940, the SEC must either grant investment adviser registration or begin proceedings to determine whether registration should be denied within how many days of filing?
45
Which of the following statements regarding hedging with options is CORRECT?
A long stock position is hedged with a long put. A short stock position is hedged with a long call.
In a scheduled premium variable life insurance policy, which of the following are guaranteed?
A minimum death benefit
Under which of the following circumstances will a private placement fail to qualify for exemption from registration under the USA?
A modest commission is paid to the agents who sell the offering to noninstitutional clients.
Which of the following is an allowable early withdrawal from a traditional IRA without a tax penalty?
A wealthy individual withdraws $10,000 from his IRA to purchase his first principal residence.
Under Keogh plan provisions, a full-time employee is defined as one working at least how many hours per year?
A) 1,000
Among the responsibilities of the Federal Reserve (the Fed) is influencing the supply of money and credit in the economy. When performing this function, adjusting which of the following is not a tool at its disposal?
A) The activities of the Federal Open Market Committee B) The reserve requirements C) The discount rate
A viatical sale would generally involve
A) an individual with a terminal illness.
In general, a broker-dealer will disclose its fee schedule
A) at the time of the account opening
An S corporation is characterized by
A) flow-through tax treatment
All of the following appear on a corporation's balance sheet as fixed assets
A) furniture B) real estate D) computer equipment
Registration statements for securities
A) may be amended after their effective dates as to the amount of securities issued, provided that underwriting fees and the initial offering price have not changed
An analyst would use the discounted cash flow method in an attempt to find
A) the fair value of a security.
If a father makes a gift of securities to his 10-year-old daughter, gift taxes would be based on
A) the market value of the securities on the date of gift
Under the Uniform Securities Act, which of the following investment advisers would be required to include a balance sheet in their brochures?
An adviser who maintains custody over client funds and securities An adviser who, 6 or more months in advance, collects prepaid fees of more than $500
As defined in the Uniform Securities Act, which of the following statements is TRUE regarding an agent?
An agent represents a broker-dealer or an issuer in effecting or attempting to effect purchases or sales of securities.
Which of the following industries would tend to be the most cyclical?
Appliance manufacturers
If Maria turned 72 on August 16, 2020, when must the first required minimum distribution (RMD) be made from her IRA?
April 1, 2021
The National Securities Markets Improvement Act of 1996 (NSMIA)
B) defined the term "federal covered adviser"
Which economic concept attempts to explain why investors behave irrationally?
Behavioral finance
An agent is registered with a broker-dealer whose principal office is located in State X, but who also does business in State Y. However, the agent is only licensed in State Y and confines her business to residents of that state. The Administrator of State X has what kind of authority over this agent?
Cannot check the records of the agent in state Y because it is not State X's jurisdiction
Which of the following is a direct obligation of the U.S. government?
Ginnie Maes
An elderly widow with no independent income wishes to invest the proceeds from her recently deceased husband's life insurance. Which of the following would be the most suitable recommendation?
High-grade corporate bond mutual fund
Concerning index annuities and their method of crediting interest, which of the following is TRUE?
High-water mark with look back offers the best return during periods of high volatility.
Which of the following is TRUE of the weak form of the efficient market hypothesis?
It implies that market information cannot be used to identify future price movements.
If a customer who has granted a durable power of attorney to her son dies, which of the following statements regarding the power of attorney is TRUE?
It is canceled on the death of either principal.
Which of the following would constitute political risk that might affect a security?
New tariffs are levied against the company's major product
A money market mutual fund would be least likely to invest in which of the following assets?
Newly issued U.S. Treasury notes
Based on the Investment Advisers Act of 1940, which of the following would be excluded from the definition of investment adviser?
Persons whose advice relates solely to government securities
What generally happens to outstanding fixed-income securities when the rate of inflation slows?
Prices go up.
Under the USA, which of the following types of transactions can be entered into legally with unregistered, nonexempt securities?
Private placement offered to more than 50 institutional purchasers in the state
If a portfolio manager wished to reduce inflation risk, which of the following would be most appropriate to add to the portfolio?
Tangible assets
Under the Securities Exchange Act of 1934, which body regulates the extension of credit for nonexempt securities?
The Federal Reserve Board
State-registered investment advisers, who charge substantial prepayment of advisory fees, must include a balance sheet with their brochure.
The definition of a substantial prepayment is: more than $500, 6 or more months in advance.
Why do matched orders result in painting the tape?
The phony trades make the stock appear more frequently on stock tickers.
The terms "offer" and "offer to sell" represent any effort to dispose of a security for value.
This does not include bona fide loans, stock dividends, or dispositions pursuant to corporate statutes.
The most common collateral securing a Brady bond is
U.S. Treasury zero-coupon bonds with a maturity corresponding to the maturity of the individual Brady bond
If the U.S. dollar has fallen relative to foreign currencies, which of the following statements are TRUE?
U.S. exports are likely to rise. Foreign currencies buy more U.S. dollars.
the sec can not investigate violations of the
Uinform securities act
Oscar and Hilda, a married couple, are collecting Social Security. They speak to their financial planner for advice on taxation of those benefits. At what level do their benefits become subject to income tax?
When 50% of their benefits added to all their other income, including tax-exempt interest, exceeds $32,000
the flight to quality has ended
Yield spreads are narrowing.
The contribution limit has to be aggregated when participating in both
a 401(k) and a 403(b)
If 150 investors want to form a corporation to limit their financial liability to the amount of money they invest and do not want to be responsible for any debt that the corporation incurs, they would most likely form
a C corporation
A margin account that contains both long and short stock positions is known as
a mixed margin account
Under the Uniform Securities Act, when an IAR acting in the capacity of trustee of a family trust executes a transaction on behalf of the trust, it is
a nonexempt transaction
When, as per the Sharpe ratio, a stock exhibits superior performance, it implies
a positive alpha.
investment advisers requires that partnership articles and any amendments, articles of incorporation, charters, minute books, and stock certificate books of the investment adviser and of any predecessor, shall be maintained in the principal office of the investment adviser
and preserved until at least 3 years after termination of the enterprise.
Among the provisions of the Investment Company Act of 1940 designed to protect the interests of investors is the provision that
any change in fundamental investment policy must be approved by stockholders
Solicited transactions in a nonexempt security
are not exempt transactions.
A transaction pursuant to an offer by an issuer to no more than 10 noninstitutional persons in the state would qualify
as a private placement and would be exempt.
Under industry rules, customers who wish to trade options must receive a copy of the options disclosure document (ODD)
at or before account approval
Earned income includes salary and bonus
but not income as an owner of a limited partnership.
A call option gives the holder the right,
but not the obligation, to buy an asset at a specific price during a specific period
An investor who buys a stock and wishes to limit the potential downside risk should
buy a put
The contraction phase is characterized
by business sales falling, unemployment increasing, and the gross domestic product (GDP) growth falling.
MPT suggests that
by combining securities into a diversified portfolio, the overall portfolio risk will be less than the weighted average risk of the individual stocks.
If an analyst wished to determine the degree to which leverage was being employed by a subject company, she would most likely examine that issuer's
debt-to-equity ratio
The securities professional's ability to determine the time or price at which a specific customer order will be executed
does not constitute discretionary power
An investment policy statement would likely include
expected returns of the recommended strategy and the expected range of these returns recommended allocations among differing asset classes strategies used for selecting specific stocks in the equity portion of the portfolio
When operating a Keogh plan, a self-employed individual must make contributions for
full-time employees who are at least 21 years old and have worked for the company for 1 or more years
A fiduciary may receive compensation from the plan's sponsor for acting as a trustee,
if fees are reasonable and consistent with duties performed.
Records of an adviser must be
maintained for 5 years
The term used to describe a broker-dealer contacting a margin account client with a demand for additional funds is
maintenance margin
GNMA pass-through certificates pay principal and the interest
monthly
The statement of the maximum and minimum proposed offering prices and the maximum underwriting compensation
must be filed at least 2 full business days before the effective date, not with the initial filing.
Hugh Clark, a partner with a minority interest in ABC Investment Partners, a registered investment adviser, withdraws from the partnership to form his own separate partnership, Clark Advisers. ABC Investment Partners
must notify its clients of Clark's departure within a reasonable period
The Uniform Securities Act is under the jurisdiction of the states,
not the federal government or one of its agencies
Under ERISA, a pension portfolio manager may engage in writing covered options
only if it fits with the objectives of the plan
A broker-dealer makes a market in XYZ stock and places large orders for it on the open market either at or slightly above its current price with the aim of stabilizing the price. This unethical practice is best described as
pegging
Rebating commissions on mutual fund sales is
prohibited
A sale or offer to sell would NOT include
purported gift of nonassessable stock
An investment adviser affiliated with a broker-dealer would be considered to be maintaining custody when
receiving a check made payable to that broker-dealer
If an investment adviser wishes to engage in an agency cross transaction involving advisory clients, it would be prohibited from
recommending the trade to both sides
because mutual fund commissions are not negotiable (as are secondary market transactions), the adviser may
reduce the client's advisory fee by the commission or, with appropriate disclosure, keep the commission.
Joint account owners
share ownership of the account and must be adults.
A transactional exemption would be offered when a sale is made by
sheriff
One element of the formula used to compute the Sharpe ratio is
standard deviation
A statistical measure used to predict the volatility of a security by examining the dispersion in a set of historical returns is
standard deviation.
In contrast with a typical forwards contract, futures contracts have:
standardized terms.
Two of the major factors involved in the capital asset pricing model (CAPM) are
stock risk premium market risk premium
Owners of private activity municipal bonds might find themselves
subject to the alternative minimum tax.
Although the custodian has wide latitude in how money in this utma account may be spent, in general, it is not permitted to use it for the basic necessities,
such as food, clothing, and shelter.
The economic theory that says economic growth results from lower tax rates and lower government spending is
supply-side theory
A securities market investment theory that attempts to derive the expected return on an assetbased upon the asset's systematic risk is
the capital asset pricing model (CAPM).
In a trust, the person who establishes the trust and decides on its terms is
the grantor
Unsystematic risk is company risk,
the risk that an individual investment will perform poorly. Diversification can reduce most unsystematic risks.
When investors perceive that the risk has lessened,
they won't demand as much in return from the lower-rated instruments.
Under the USA, a private placement is considered an exempt transaction when directed
to no more than 10 noninstitutional persons in 12 consecutive months
Progressive taxes are those
where the tax rate increases as the amount being taxed increases.
Lawyers, accountants, engineers, teachers, and broker-dealers
whose advice is incidental to their profession and who do not charge a separate fee for investment-related advice are excluded from the definition under the Investment Advisers Act of 1940.
A gift of assessable stock
would be an offer or a sale
