SERIES 65
A client calls to discuss purchasing a specific security that he has been following. The agent handling the account recognizes that a potential conflict of interest exists. The best course of action to follow would be to
disclose the conflict of interest and proceed if the client wishes
A client interested in fixed income is viewing different bonds with the same rating and a coupon of 5%. Using the discounted cash flow method, which bond should have the lowest market value?
12 year maturity when the discount rate is 7%
John purchased 100 shares of DEF common stock at a price of $25 per share on August 4, 2015. On December 1, 2017, with the stock selling for $29 per share, he passed away, leaving the stock to his daughter. She subsequently sold the stock nine months later for $32 per share. Her tax consequence is
$300 long-term capital gain
The dictator of a foreign nation, with whom the United States barely maintains diplomatic relations, has just placed an order for 25 armor plated limousines to be manufactured in Detroit. Upon completion and payment for this order there will be a credit to the foreign account balance of the United States debit to the foreign account balance of the United States positive impact on the U.S. GDP negative impact on the U.S. GDP
I and III
The NASAA Statement of Policy on Dishonest or Unethical Business Practices of Broker- Dealers and Agents deals with the topic of commission sharing. Under that policy, in order for two agents to be able to share in commissions, which of the following are TRUE? The client must give consent to the sharing. Both agents must be licensed with the same or affiliated broker-dealers. Administrator must approve of the sharing arrangement. The broker-dealer must agree to permit the sharing.
II and IV
Which of the following statements is TRUE regarding Social Security retirement benefits?
Social Security rewards people who wait to claim with an 8% annual increase for every year beyond full retirement age they delay receiving benefits.
An investment adviser representative would be permitted to borrow money from which of the following clients?
The Amalgamated Dock Workers Credit Union
A GTC order is entered to buy 500 LMN at 24.35. By the close, the firm has acquired 100 shares at 24.25 and 200 at 24.35. The remainder is unfilled. What is the outcome?
The customer must accept the execution for 300 shares and the remainder of the order remains open until filled or canceled.
Under the Uniform Securities Act, all of the following persons with no place of business in the state are exempt from registration as investment advisers EXCEPT
advisers who have conducted business with no more than 6 individual clients in the state within the last 12 months
As the number of stocks in a portfolio increases, the portfolio's systematic risk
can increase or decrease depending on the beta of the added stocks
An investor interested in obtaining the benefit of professional portfolio management, has been tracking a particular investment company for the past several months. In so doing, it becomes obvious that the market price of the shares moves independently from the computed NAV. This investor must be following a
closed-end fund
Under Section 401 of the Uniform Securities Act, the term agent does not include an individual who represents an issuer in effecting transactions in a security
issued by and representing an interest in or a debt of, or guaranteed by, any bank organized under the laws of the United States, or any bank, savings institution, or trust company organized and supervised under the laws of any state
Averaging techniques would include all of the following EXCEPT
maintaining a constant ratio plan
A FinCEN Form 112 would need to be filed when a client
makes a cash deposit in excess of $10,000
A 57-year-old investor who earns $26,000 contributes $6,500 to an IRA for the year 2021. What amount of the contribution will be subject to the 6% penalty levied on excess contributions?
$0
When investors tend to increase their investments in debt securities into those on the long end of the spectrum rather than those with short-term maturities, it generally leads to
an inverted yield curve
Publicly traded corporations are subject to an annual audit of their financial records. Those audits must comply with GAAP (Generally Accepted Accounting Principles). When preparing to recommend a stock to a customer, you would most likely want to see that the auditor gave
an unqualified opinion.
Under the Investment Company Act of 1940, a closed-end management investment company is required to do all of the following EXCEPT
redeem its shares upon request
Probate may be avoided by using
a TOD account
Holders of certain professional qualifications may be granted a waiver from taking the Series 65. However, that waiver would not apply to an individual holding which of the following designations?
CLU®
Holders of which of the following securities would be most likely to receive preemptive rights?
Common stock
Which of the following pooled investment vehicles would not generally be considered an alternative investment?
An ETF tracking an index
All of the following social media sites are considered to be predominately used for personal rather than business communications EXCEPT
Your client wishes to begin a self-funded retirement plan that will enable him to make contributions until he is 75 years of age with no required minimum distributions. Which of the following would be your recommendation?
Roth IRA
Parker and Mary have recently divorced. For Mary to receive Social Security benefits based on Parker's earnings, which of the following conditions must exist?
The marriage must have lasted at least 10 years.
An investor begins contributing $600 on the 3rd day of each month to a purchase plan for the KAPCO Total Return Fund. For the first six months, the per share prices were $10 $12 $15 $20 $12 $8 What is this investor's breakeven point?
$11.80 per share.
An index annuity has no cap on gains, but guarantees a minimum return of 2.75% with a 75% participation rate. If the index being tracked increases by 12%, what is the rate of return to the investor?
9%
A corporation may benefit by attaching warrants to a new issue of debt securities from
a decrease in the company's interest costs
Wrap fee account programs offered by broker-dealers are often an attractive option for clients looking for advice and trade execution all in a single package. Shirley Schwartz is both an agent and an IAR. Prior to placing one of her brokerage clients into one of these, Shirley should be reasonably assured that her client
will be able to use enough of the services offered to justify the program's fees
Under the NASAA Brochure Rule Requirements for Investment Advisers, an investment adviser, unless qualifying for an exemption, must deliver
within 120 days of the end of its fiscal year a free, updated brochure and related brochure supplements which include or are accompanied by a summary of material changes.
If a customer enters a market order to buy 100 shares of GFT, the trade will be executed at the
lowest offer
The characteristics of an exchange-traded futures contract would include all of the following EXCEPT
a high likelihood that the contract will be exercised
John and Jane have a net worth of $20,000 and total assets of $150,000. If their revolving credit and unpaid bills totals $8,000, how much are their total liabilities?
$130,000
A corporation with a 10%, $100 par cumulative preferred paid $5 to preferred stockholders last year. This year the company wants to pay common dividends. How much must it pay each preferred share outstanding before paying common shareholders?
$15
Investment advisers must disclose any material disciplinary action to all current and prospective clients. The broadest definition of material would include any actions taken against the firm or management persons by a court or regulatory authority within the past 10 years. Fines levied by any SRO require disclosure if they were in excess of
$2,500.
An individual who is licensed with the Administrator as an agent of a broker-dealer wants to offer wrap fee programs sponsored by the firm. In order to do so, it would be necessary to
register with the state as an investment adviser representative
When a prospective client opens a new brokerage account, the broker-dealer's fee disclosure document would be least likely to contain
the commission schedule
Under certain conditions, investment advisers registered with the state must maintain a specified minimum net worth. Under NASAA's Model Rules, assets included in the computation of the net worth of an adviser structured as a sole proprietorship would exclude all of the following EXCEPT
the sofa in the office reception room
ERISA regulations apply to the retirement plans of which of the following? ABC Corporation, listed on the NYSE DEF Corporation, privately held among nine shareholders City of Detroit employee's retirement benefit plan FBI employee's retirement benefit plan
I and II
When an agent is recommending an investment in an emerging market foreign security, disclosure must be made to the client that the investment is subject to market risk political risk currency risk liquidity risk
I, II, III, and IV
For a profitable and rapidly growing firm, holders of preference shares are leastlikely to benefit from the firm's growth if the preference shares are
cumulative.
A popular strategy for income investors who wish to take advantage of potentially higher interest rates when reinvesting maturing securities is
laddering
A client calls and tells her adviser that she has read about how to avoid estate taxes by transferring all her assets into an irrevocable living trust and would like the adviser's opinion on the matter. The adviser's most appropriate and ethical response should be to
recommend the client consult with a qualified legal professional
A power of attorney is a legal document that conveys certain powers from one party to another. Which of the following will survive the mental incompetence of a client?
Durable power of attorney
A registration statement has been filed using the process known as Qualification. Under normal circumstances, this registration will become effective
when the Administrator says so
