65 test 2

If an investment adviser representative commits a criminal violation of the Uniform Securities Act, he is subject to legal action for:

5 years after the alleged violation.

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 assets will have the greatest effect on minimizing financial assistance when an individual is applying to college and using the FAFSA application?

An UTMA account *Although the exact percentages will likely not be tested, 20% of the money in an UTMA (or UGMA) account is counted, while only 5.64% of a Section 529 plan (either option) is counted. Retirement accounts are not considered assets on the application for student aid, which means the value of a Roth IRA won't hurt the individual's chances for financial aid eligibility.

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

According to the Uniform Securities Act's rules for an investment adviser with custody of customer assets,

Customer assets must not be commingled with assets of the investment adviser. Every three months, the adviser must send an itemized account statement to each customer whose assets are held in custody.

The first of the federal securities acts was the Securities Act of 1933. This act requires persons selling a new offering to their clients to:

deliver an effective (final) prospectus no later than with confirmation of the sale.

During the past year, the market price of Kapco common stock has increased from $47 to $50 per share. Over that period, Kapco's earnings per share have increased from $2.00 to $2.50 per share and their dividend payout ratio has decreased from 50% to 40%. Based on this information:

Kapco's P/E ratio has decreased. an investor holding Kapco over this period would have noticed no change in income received.

A broker-dealer must provide a risk disclosure document to a customer before opening which of the following accounts?

Margin

When using the process of registration by coordination under the Uniform Securities Act, issuers shall simultaneously submit to the state, the documents filed with the SEC under the:

Securities Act of 1933. **Under the Uniform Securities Act, an issuer registering its securities with the Securities and Exchange Commission (SEC) in accordance with the procedures found in the Securities Act of 1933 shall use the documents it submits to the SEC in its concurrent registration with states in which it plans to offer its securities.

The holding period return (HPR) on a share of stock is equal to:

The capital appreciation plus the dividend yield over the period.

A day order is entered to buy 500 LMN at 24.35. By the close, the firm has 100 shares at 24.25 and 200 at 24.35. If the remainder is unfilled, what is the outcome?

The customer must accept the execution for 300 shares, and the remainder of the order is canceled after the close.

A customer purchased new issue bonds at par two years ago. Since then, the CPI has declined by almost half and the current yield on his bonds has also declined. Which of the following best describes the value of the bonds he purchased?

They have increased in value

An investor would enter a buy stop order to hedge against a loss in

a short stock position

An agent has a new client who is prone to tergiversation. As such, it would probably make sense to

accept unsolicited orders only

How often must an investment company file reports with the SEC as required by the Investment Company Act of 1940?

annually

If your customer owns 100 shares of a volatile stock and wants to limit downside risk, you may recommend:

buying puts

The primary difference between an open-end and a closed-end investment company is:

capitalization

Formula methods of investing that involve selling equities in rising markets and buying them in falling markets would include

constant dollar plan constant ratio plan

A sale of a put option does NOT:

contain an offer of common stock

A client asks her investment adviser representative what footnotes to the financial statements are for. The best reply would be that footnotes:

contain information that doesn't have a place in the main body of the financial statements.

If a company successfully gets its 7% debenture holders to exchange their 7% debentures for 7% preferred stock, what is the effect on EPS?

decrease

he NASAA Statement of Policy on Unethical or Dishonest Business Practices of Broker-Dealers and Agents contains an extensive list of prohibited practices. However, it would not be considered a violation:

for two individuals employed by the same broker-dealer and with the same category of license to share in commissions without telling the client.

If the yield curve is positive (sloping upward), this means that long-term interest rates are:

higher than short-term rates.

A person who renders investment advice solely with respect to securities issued by the U.S. government:

is excluded from the definition of investment adviser under federal law and is, therefore, exempt from state registration requirements.

A bond's duration is:

longer for a 10-year bond with a 5% coupon than it is for a 10-year bond with a 10% coupon.

Under ERISA Section 404(c), plan participants must be able to reallocate plan assets:

once every three months

When an investment adviser representative terminates employment with a federal covered investment adviser and then registers with a different federal covered investment adviser in the state where the individual has an office:

only the investment adviser representative must notify the Administrator promptly.

An investor who is long XYZ stock would consider going long an XYZ call to:

protect against an increase in the market price of XYZ stock.

An investor is long stock in a cash account and does not expect the price to change in the immediate future. His best strategy to generate income may be to:

sell a call

One of your clients invested $10,000 into a mutual fund. The client elected to reinvest all dividends. As a consequence of this:

the investor's basis is increased by the amount of the reinvested dividends.

Under the Securities Act of 1933, securities issued by charitable organizations are exempt if:

the organization is a nonprofit company.