S66 10/24
Associated Wealth Managers (AWM) is registered with the SEC as a registered investment adviser. As a consequence, if there have been any material changes, AWM must send a copy of its brochure, or a summary of the changes, to A) all clients within 120 days of the end of its fiscal year. B) a client within 7 days of receiving a request. C) all clients within 60 days of the end of its fiscal year. D) all clients within 90 days of the end of its fiscal year.
A
The concept of creating a model portfolio, through asset allocation principles, that both increases return and reduces risk is known as A) portfolio optimization B) corrective adaptation C) risk reduction fundamentals D) rebalancing
A
The return that will be earned over the life of a fixed annuity A) will always be at least equal to the guaranteed minimum specified in the contract B) may decrease over time due to the increase in surrender charges C) is tied to an investment index such as the Standard & Poor's 500 D) is tied to a portfolio of common stocks selected by the annuity owner
A
Which of the following is not included in the definition of broker-dealer as found in the Uniform Securities Act? A) Banks B) Investment advisers C) Credit unions D) Attorneys
A
Which of these is not considered to be a systematic risk? A) Default risk B) Purchasing power risk C) Market risk D) Exchange rate risk
A
All of the following statements regarding a Section 529 QTP are true EXCEPT A) the plan owner can rollover any unused funds to a member of the beneficiary's immediate family without incurring any tax liability as long as the rollover is completed within 60 days of the distribution. B) agents selling a Section 529 Plan must deliver a currently effective prospectus. C) a beneficiary may be covered under both a Coverdell ESA and a Section 529 QTP. D) the plan owner can rollover the assets into a different plan no more frequently than once every 12 months.
B
An investment adviser (IA) is a member of a country club and provides substantial fee reductions to those members who become clients. The adviser justifies this because these club members are known for great referrals. The IA charges regular clients a fee that is larger for the same services because they are not members of the country club. Is this permissible? A) It is not permissible because all clients must be charged at the same rate. B) It is permissible as long as proper disclosure is made in the adviser's brochure. C) It is permissible as long as the offer is not published as an inducement to join the country club. D) It is not permissible because the firm is charging other clients fees that are excessive in nature compared with the fees charged to country club members.
B
Kellie is a senior equity analyst for a large brokerage firm. She primarily uses fundamental analysis techniques to assist her in picking stocks for her firm's clients. Today, she is reviewing the XYZ Corporation. The company is a manufacturer of computer keyboards and is currently going through an expansion phase. Which of the following techniques would Kellie be least likely to use to determine whether to buy, sell, or hold this company's stock? A) She may consider trends towards tablets and smart phones. B) She may review the company's stock 200-day moving average. C) She may examine the overall state of the economy, the computer industry, and then XYZ Corporation. D) She may calculate the intrinsic value of the stock using one or more of the stock valuation models.
B
An investor purchases 100 shares of Shilaf Baby Products, Inc. (SBPI) at $60 per share. SBPI pays quarterly dividends of $.55. One year after the purchase, SBPI is at $66 per share, and after the second year, its market price is $63 per share. If the investor were to close out the position at this time, the total return would be A) 8.67%. B) 12.33%. C) 6.83%. D) 17.33%.
B Total return combines income and gains. In this question, the total income for the two-year holding period is, $440 ($.55 per quarter = $2.20 per year x 100 shares). The sale is at $63 which is a $3 per share gain. That makes the total return $440 + $300 which equals $740. Dividing that by the original $6,000 cost results in a total return of 12.33%.
A grantor retained annuity trust is a planning tool designed to pass assets to beneficiaries (usually children) in a way to minimize A) excise taxes. B) property taxes. C) estate taxes. D) income taxes.
C
When comparing a private equity fund to a public one, it would be incorrect to state that the private fund has A) less liquidity. B) higher risk. C) stronger governance. D) lower reporting costs.
C
True or False? Regarding Section 529 QTP, agents selling a Section 529 Plan must deliver a currently effective prospectus.
False
True or False? The following is a restriction of the operations of a registered open-end investment company under the Investment Company Act of '40: - No registered investment company may commence a public offering with less than $1 million of capital.
False
Which of the following statements is true regarding the jurisdiction of the SEC under the Securities Exchange Act of 1934? I. The SEC has jurisdiction over exchanges and SROs. II. The SEC has jurisdiction over broker-dealers, investment advisers, and associated persons that are required to be registered under federal law. III. The SEC has jurisdiction over banks and savings and loans regarding their securities activities.
I & II
Under which of the following circumstances does NASAA allow an investment adviser to charge performance-based fees? I. The client must initially have $1.1 million under management or a net worth in excess of $2.2 million. II. Compensation paid in this way must be for gains reduced by losses. III. Disclosure must be made that the fee arrangement may create an incentive for the investment adviser to make investments that are riskier or more speculative than would be the case in the absence of a performance fee.
I, II, & III
According to the Uniform Securities Act, which of the following is an investment adviser representative? I. A clerical employee of the AAA Investment Management Company, an investment advisory firm registered in the state that offers investment portfolio services to the public II. An employee of AAA Investment Management Company who is properly registered under the USA and supervises analysts who provide research to clients III. An employee of a federal covered adviser with an office in the state who offers investment advice to the public IV. An agent of a broker-dealer with strong investment opinions who sells securities only on a commission basis
II & III
Which of the following are restrictions on the operations of registered open-end investment companies under the Investment Company Act of 1940? I. No registered investment company may commence a public offering with less than $1 million of capital. II. No investment company may own more than 3% of the voting stock of another registered investment company. III. No investment company may purchase portfolio securities on margin.
II & III
Which of the following statements regarding the right of rescission are TRUE? I. A purchaser has the right to invoke the right of rescission by offering to sell purchased securities back to the seller. II. The broker-dealer that sold the security may offer the right of rescission by offering to repurchase securities previously sold to the buyer. III. If a letter of rescission issued by a broker-dealer is not accepted or rejected within 30 days of its issue, rescission rights are terminated.
II & III
Under SEC Release IA-1092, the term investment adviser does not include which of the following? I. A broker-dealer who charges for investment advice II. A publisher of a financial newspaper III. A person who sells security analyses IV. A CPA who, as an incidental part of his practice, suggests tax-sheltered investments to wealthier clients
II & IV
True or False? Regarding Section 529 QTP, a beneficiary may be covered under both a Coverdell ESA and a Section 529 QTP.
True
True or False? The following is a restriction of the operations of a registered open-end investment company under the Investment Company Act of '40: - No investment company may own more than 3% of the voting stock of another registered investment company.
True
The statistical measurement of the total risk of a security or portfolio is known as A) beta. B) standard deviation. C) duration. D) Sharpe ratio.
B
Included in the Investment Advisers Act of 1940 are a number of different recordkeeping requirements. Wealth Preservation Specialists is a covered adviser that is organized as a partnership. If the firm were to dissolve, partnership agreements must be kept for A) three years after the dissolution. B) five years after the dissolution. C) the lifetime of the firm. D) five years from the date of organization.
A
It would not be considered an unethical business practice under NASAA's policies for an investment adviser to charge which of these? I. Fees as well as commissions II. Fees based on an hourly rate III. Fees based on a percentage of the change in value of funds from quarter to quarter IV. Fees based on a percentage of the aggregate value of funds under management
I, II, & IV
