Series 65: Unit 17 Exam

What is the net worth of a customer with the following personal balance sheet? Cash $20,000 Municipal bonds $75,000 401(k) account value $150,000 Salary $80,000 per year Cars $30,000 Home $250,000 Miscellaneous (jewelry, etc.) $50,000 Personal loan $10,000 Car loan $20,000 Mortgage $150,000 Monthly mortgage payment $1,500

$395k

If a new client has $200,000 to invest and wants to retire in 15 years, which of the following client information is least necessary for an adviser to recommend a suitable investment program? A. The age of the client B. Tolerance toward risk C. Current income and cash flow requirements D. The projected annual income needed during those retirement years

Current income and cash flow requirements

Investment advisers must recognize the difference between their client's goals and objectives and their client's investment constraints. Which of the following would be considered an objective rather than a constraint? A. Time horizon B. Income in retirement C. Tax concerns D. Changes to laws and regulations

Income in retirement

Otto and Lucy set up a 529 plan to save funds for the college education of their daughter, Marangue, who is 14. What is the most suitable investment for the largest portion of their contribution? A. An intermediate-term bond fund B. A large-cap stock fund C. A long-term bond fund D. A growth stock fund

An intermediate-term bond fund

When preparing a client's personal profile, it is generally accepted that there both financial and nonfinancial considerations are evaluated in order to issue appropriately suitable recommendations. Which of the following would not be included in the list of financial considerations? A. Risk tolerance B. The client's marginal tax bracket C. Income from rental properties D. Vested interest in the employer's 401(k) plan

Risk tolerance

All of the following are reasons why broker-dealers and investment advisers gather information about their customers except A. to maintain accurate customer records. B. for use in advertising. C. to comply with BSA requirements. D. to use in determining suitability.

For use in advertising

Which of the following would be considered an investment constraint rather than an investment goal? A. Liquidity B. Growth of capital C. Current income D. Capital preservation

Liquidity

A 45-year-old investor wants the greatest possible monthly income with the preservation and stability of capital as secondary objectives. Which of the following investments would you recommend? A. Long-term bond fund B. Growth and income fund C. Money market mutual fund D. Growth mutual fund

Long-term bond fund

Which of the following best describes the determination of a client's risk tolerance? A. The client's net worth B. The client's ability and willingness to take risk C. The client's ability to take risk D. The client's willingness to take risk

The client's ability and willingness to take risk

One of your clients excitedly calls to inform you that his daughter has just been accepted for the coming year into the engineering program at one of the most respected universities in the country. She has been given a generous scholarship, but that will leave the family short by about $100,000 for the four-year program. You check the client's college savings account and see that the current value is $25,000. The client offers to add another $25,000 and asks you if you think the account performance over the next four years can provide the necessary funds. You would probably reply that A. the goal seems attainable if the client is willing to assume the necessary risk. B. his daughter should consider attending a community college instead. C. this is wonderful news and you are pleased that the client has selected such a worthwhile goal. D. the short time horizon is an investment constraint that will make reaching this goal highly unlikely.

The short time horizon is an investment constraint that will make reaching this goal highly unlikely

Gathering information about a prospective advisory client would probably not be done by A. use of a questionnaire. B. a chat over a lunch. C. using a third-party interviewer. D. a personal interview.

Using a 3rd party interviewer