Test Geek Final Missed Questions

A client has 25 yrs. to retire and has $50k to invest. He wants to have $80,000 in today's dollars when he retires. What's the best allocation?

100% Stocks - The best way to grow the investment in 25 years.

A client enters an order as follows: Sell stop 100 shares of LTC at 45 limit 45.50. Following the entry of that order, trades occur in the following sequence: 47; 46; 45.12; 44.97; 45.28; 45.97; 46.05. More than likely, the client received

45.97 The stop order is triggered at 44.97 and limit is satisfied above 45.50

An investor, age 55, seeks a conservative investment with moderate income. She is not an experience investor and does not like risk. An agent would most likely recommend

A money market - the only choice that provides income with safety of principal.

Which of these efficient market hypotheses dictates that future performance cannot be based upon historical data?

A stock's price currently reflects all known information about the stock which means all historical data is already priced into the stock. This is the strongest form of Efficient Market Hypothesis.

An agent of a B/D sells unregistered common stock to an Insurance Company that has no office in the state. According to the Uniform Securities Act, this would be:

An exempt transaction - Sales of unregistered securities to an financial institution is an exempt transaction. Whether the institution has an office in the state is inconsequential.

A retiree is turning 72 in November, 2021. When would they be required to take a minimum distribution?

April 1, 2022 - The retiree will turn 72 in 2021. You must take distribution no later than April 1, the year after the year you turn 72. In this case, 2022

An investor who is short 100sh of XYZ and would like to protect against risk would

Buy a call - they sold stock they don't own you need to call it to give it back

Because of liquidity issues involving portfolio holdings, most "country" funds are

Closed end funds - increase the liquidity of purchasing international investments

When comparing exchange-traded funds (ETFs) to mutual funds, some features available in ETFs that are NOT found in the mutual funds would include the ability to: I correlate to a specific index. II sell short. III be bought and sold on margin. IV represents an entire portfolio, or basket of securities.

II & III Since ETF's trade on the exchange, they can be treated like any stock such as being purchased on margin or sold short.

With regard to the NASAA Statement of Policy on Dishonest and Unethical Business Practices of Broker/Dealers and Agents, proscribed actions would include I. Accepting an order from a 3rd party after written trading authorization has been received II. Forwarding a written complaint from a customer to the appropriate supervisory person III. Offering to repurchase a security at its original cost if it does not increase in value IV. Borrowing money from a client who was your college roommate

III & IV Prohibited actions under the policy would be guaranteeing a client against loss by agreeing to repurchase a security at its cost and borrowing money from a client who is not in the money-lending business.

An IA hires a solicitor to recruit clients. According to the Investment Adviser act of '40,what records would the IA be required to keep?

If an adviser solicitor is hired to attract clients, the client is required to be given an adviser solicitor brochure and is the obligation of the IA to maintain records of this disclosure

Which investment is most tax efficient? A. Corporate bond fund B. Growth fund C. Index Fund D. Government Bond Fund

Index funds - are passively managed therefore there is very little trading within the portfolio and therefore very little taxable gains.

A 68 year old woman is seeking preservation of capital with a secondary objective of income. Which of the following would be most appropriate? A. Savings account B. Money Market C. Certificate of Deposit D. Municipal Bond

Money market - they are safe and provide income

A federally covered advisor has its home office in State A. It solicits 5 customers in State B and holds a seminar in state C. Which of the following is true?

Need not register in any State - only the IAR has to register in a state

A customer has inquired about a covered call. Which option would you recommend?

Sell a call

An investor is long 100sh of XYZ. She fears a near-term correction but overall she remains bullish. Which of the following may allow her to profit from this situation?

Sell a call - In hedge strategies, the option always follows the risk direction of the stock, to generate a profit (income), you would then sell the option

According to Efficient Market Hypothesis, information based on company financials and economic factors is considered to be

Semi strong - you know all public info

Which of the following best depict/show time weighted return?

The volatility of security holdings - Time-weighted return measures a portfolio manager's return excluding investors inflow and outflow of cash

An agent recommends a tax-free, fixed income security to a customer based on their tax rate. The customer believes another taxable investment would give them a better return. The agent could compute the equivalent taxable yield by

To find the equivalent taxable yield you must divide the tax-free yield by the compliment of the investor's tax bracket (100% - Tax bracket)

The offering of a Unit Investment Trust would be regulated under which of the following?

U.I.T.'s, like mutual funds issue new shares to the public (that's why prospectuses are required). All new offerings are covered under the Securities Act of '33.

With life insurance, a "Capital Needs Analysis" maybe helpful for all of the following, except

future life insurance needs, you don't need insurance to buy insurance

MidWest Advisers has $175 million in AUM and has offices in 10 Mid-western states. Regarding recordkeeping requirements, the IA must meet those of

the SEC - With $175 million in AUM, MidWest is a federal covered adviser. As such, all financial requirements, bonding, recordkeeping, etc., requirements are those of the SEC, not any of the states.