Series 66

Maximum penalties for a securities-related felony

$5,000 and 3 years imprisonment

One of your clients approaches you about setting up a trust. If your client assumes the role of grantor, what additional roles may be taken? A) Beneficiary B) Trustee and beneficiary C) Trustee D) As the grantor, no other roles may be taken

B) Trustee and beneficiary

Under the Uniform securities Act, an investment advisor contract must contain (in writing) all of the follow provisions EXCEPT: A) no assignment of the investment advisory contract may be made without the client's consent B) on the departure or death of a majority shareholder of an investment advisory corporation, the advisory agreement must be renewed to prevent an unlawful assignment of the account C) the investment adviser's compensation shall not be based on capital gains in client accounts D) the adviser, if a partnership, must notify the client of any change in the partnership's membership

B) on the departure or death of a majority shareholder of an investment advisory corporation, the advisory agreement must be renewed to prevent an unlawful assignment of the account

Which of the following types of orders would you recommend to a short seller as a potential hedge against a loss?

Buy stop

The Administrator may I. deny a registration if the registrant does not have sufficient experience to function as an agent II. limit a registrant's functions to that of a broker-dealer if, in the initial application for registration as an investment adviser, the registrant is not qualified to act as an adviser III. take into consideration that the registrant will work under the supervision of a registered investment adviser or broker-dealer in approving a registration IV. deny a registration, if it is prudent in view of a change in the state's political composition

C) II and III

Which of the following activities would have an effect on the NAV of a mutual fund? I. The sale of securities from the portfolio II. Automatic reinvestment of dividends by the shareholders III. Market appreciation of portfolio securities IV. Market decline in the value of portfolio securities

C) III and IV

Over the past year, the market, with a beta of 1.0, has returned 15%. Under CAPM, which of the following stocks would be considered overvalued? A) ACR, beta 0.9, return 13.6% B) LQR, beta 0.7, return 11% C) RJP, beta 1.2, return 17.5% D) BED, beta 1.5, return 23.5%

C) RJP, beta 1.2, return 17.5%

All of the following must be disclosed by an investment adviser EXCEPT A) a senior officer of the firm was convicted of a felony 6 years ago B) the president of the investment adviser was found liable in a civil action involving unsuitable advice in a state where the adviser does not have an office C) an investment adviser representative in the firm was fined $1,000 by FINRA for making unsuitable recommendations D) a senior officer's suspension from the securities industry

C) an investment adviser representative in the firm was fined $1,000 by FINRA for making unsuitable recommendations

Relationship of bond yields when trading at a discount

CR<CY<YTM<YTC

Relationship of bond yields when trading at a premium

CR>CY>YTM>YTC

Difference between exempt security and exempt transaction

Exempt security is a noun while expert transaction is a verb

RMD Rules

For RMD purposes, each IRA is figured separately and the distribution can be made from one or all of them. That is not the case with a 401(k) plan. Each account has an RMD that can only be paid from that account

An administrator has the power to deny, suspend, or revoke the registration of an issue if it is in the public interest and...

If the administrator of another state has revoked an issue's registration, the USA considers that just cause for denial in this state. Conviction of an officer of the issuer for a crime related to the securities industry will invariably lead to denial or revocation. Disclosure that the company is not expected to be successful is not a cause for denial; all that is required is full disclosure. Misstatements of material information would be cause for action by the Administrator, but nonmaterial, by definition, does not impact an investor's decision-making process.

Six items that are not securities

Insurance policies or fixed annuities, Interest in a retirement plan, Collectible, Commodities such as precious metals and grains, including futures and forward contracts, Condominiums used as a personal residence, Currency

Exempt Transactions

Isolated nonissuer transactions - Unsolicited brokerage transactions - Underwriter transactions - Bankruptcy, guardian, or conservator transactions - Institutional investor transactions - Limited offering transactions - Preorganization certificates - Transactions with existing security holders - Nonissuer transactions by pledges

Net Present Value

Net Present Value (NPV) is the difference between the initial cash outflow (investment) and the future value of discounted cash flows

Which of the following action by an agent would NOT constitute fraud as defined in the Uniform Securities Act?

Purchasing a security for the account of a client and then buying 100 shares of it for her own account

This is required to effectuate annual renewal of the registration of an investment adviser representative affiliated with a federal covered adviser

State licensing fee

All of the following statements are features of a straight life, fixed, single-premium immediate annuity except

The income level may drop if the underlying investments do down in value

It is not uncommon for many federal covered advisors to be affiliated with a broker-dealer. Take the case where an IAR with a federal covered adviser is also an agent with a broker-dealer. When dealing with advisory clients, all of the following are true EXCEPT

The IAR must disclose that he is liable for any losses suffered in the account due to poor portfolio performance

Exempt Securities

US and Canadian government and municipal securities - Foreign government securities - Depository institurions - Insurance company securities - Public utility and common carrier securities - Federal covered securities - Securities issued by a nonprofit organization - Securities of employee benefit plans - Certain money market instruments

It would be most accurate to refer to a 12b-1 charge as

a fee to cover distribution expenses

A basic difference between a Section 457 plan established on behalf of a governmental entity and one established by a private tax-exempt organization is that

a governmental plan must hold its assets in trust or custodial accounts for the benefit of individual participants

Issuer

any person who issues or proposes to issue a security