S66 11/22

Among the options available to replace the lost income of an employed individual who becomes unable to work due to a disability would be any of these except A) proceeds of a life insurance policy B) disability income insurance C) Social Security disability payments D) workers' compensation

A

Which of the following bonds would be the least price sensitive to changes in market interest rates? A) Zero due in one year with a YTM of 6% B) 4.5% Treasury bond due in 20 years with a YTM of 4.1% C) 10% BB bond due in 21 years with a YTM of 8.7% D) 6% AA bond due in 18 years with a YTM of 6.8%

A

The NASAA Model Rule on Business Continuity and Succession Planning requires that every investment adviser (IA) establish, implement, and maintain written procedures relating to a business continuity and succession plan. The rule requires that A) the plan be reasonable in relation to the IA's business model and size. B) all data be properly encrypted. C) double authentication methods be used to protect data. D) the adviser use offsite servers.

A The Model Rule specifically requires that the plan be based upon the facts and circumstances of the investment adviser's business model, including the size of the firm, type(s) of services provided, and the number of locations of the investment adviser. All the other choices refer to cybersecurity requirements.

If the return on Treasury bills is 3% and the equity risk premium is 4%, the expected equity returns should be A) 4% B) 1% C) 12% D) 7%

D

One of your clients will be separating from his current employer and asks you for your suggestion as to what should be done with the assets in his contributory 401(k) plan. The plan documents indicate that plan assets must be distributed upon termination. Given the following choices, your recommendation would be to A) take the cash and put it into a managed account B) take the distribution in cash and rollover the assets into an IRA within 60 days C) reconsider the decision to separate D) use a direct rollover to have the assets placed into a rollover IRA

D

The main benefit that scheduled premium variable life insurance has over whole life insurance is A) a lower sales charge. B) an adjustable premium. C) the availability of policy loans. D) the potential for a higher cash value and death benefit.

D

A wealthy individual has set up a GRAT. Should she die during the time the trust is active, how are the remaining assets in the trust taxed? A) No tax is due if the grantor should die during the term of the trust. B) The original value plus any appreciation passes to the beneficiaries and is taxed as ordinary income. C) The original value plus any appreciation passes to the beneficiaries but is subject to gift tax. D) The original value plus any appreciation is taxed as part of the grantor's estate.

D One of the risks in setting up a GRAT is that if the grantor dies during the term of the trust (usually 3-10 years), the assets put in the GRAT, plus any appreciation, are included in her estate.

True or False Regarding the general definition of private funds? They must have less than $150 million in assets in the fund.

False

Which of the following would be agents as the term is defined in the Uniform Securities Act? I. An individual representing a registered broker-dealer in the sale of securities to the general public II. An assistant to the president of a broker-dealer who accepts orders from clients on behalf of the senior partners III. A subsidiary of a major commercial bank registered as a broker-dealer that sells securities to the public IV. An issuer of nonexempt securities registered in the state and sold to the general public

I & II

What is the difference between a direct rollover of funds of a 401(k) into an IRA and a distribution of cash of a 401(k) and rollover of that into an IRA within 60 days?

There's a 20% withholding when you take it out in cash and no withholding when you do a direct rollover

True or False Regarding the general definition of private funds? They are not registered under the Investment Company Act of 1940.

True

An Administrator may summarily deny or revoke a security's exemption A) if the Administrator determines that an exemption applicable to federal covered securities is inconsistent with state securities law. B) without a hearing if the issuer is given an opportunity for a hearing after the revocation. C) if the Administrator, in a court of competent jurisdiction, proves that a security does not qualify for an exemption. D) for a federal covered security if its issuer is in violation of state law.

B

One way in which closed-end management investment companies differ from open-end investment management companies is that A) they were in existence prior to 1940. B) they trade at a price independent of their net asset value. C) their portfolio may contain common stock, preferred stock, and debt securities. D) they are federal covered securities.

B

Searching Out New Growth (SONG) is a venture capital fund. As such, all of the following statements are true except A) SONG only issues securities that are, except in extraordinary circumstances, nonredeemable. B) SONG must have less than $150 million in assets in the fund. C) SONG's investment adviser is exempt from registration. D) SONG is not registered under the Investment Company Act of 1940.

B