Series 66
Secondary market trades are:
Non-issuer transactions
Who administers the investment advisers act of 1940?
SEC
An IAR always registers with the...
STATE (never SEC)
A password-protected website is defined as:
Sales literature
The State Administrator is supervised by the:
Secretary of State
What strategy is a variation of active portfolio rebalancing that is based on the fat that as the economy moves through the business cycle, different business sectors tend to outperform at each phase of the business cycle?
Sector rotation strategy
To qualify for registration by coordination under the Uniform Securities Act, the issuer's securities must be concurrently registered under the provisions of the:
Securities Act of 1933
Under the provisions of the Uniform Securities Act, required records for broker-dealers must be kept in accordance with the provisions of the:
Securities Exchange Act of 1934
"An investment in a common enterprise for profit, with management provided by a third party" is the definition for a(n):
Security
A customer places an order to sell 100 shares of ABC stock that he cannot deliver by settlement date. The order ticket should be marked:
Sell - short
A customer has a gain on a long stock position that he wishes to protect. The appropriate order is a:
Sell stop order
A customer could be obligated to sell stock at a later date if the customer is the....
Seller of a call
Investment companies are obligated to send their financial statement to shareholders:
Semi-annually
The only version of the efficient market theory that is widely accepted is the:
Semi-strong version
Investment advisers and investment adviser reps are outright prohibited from:
Sharing in customer accounts - prohibited from opening joint accounts with customers
An agent can open a joint account with a customer, as long as....
Sharing is proportional to capital contributed and sharing occurs in both gains and loss
Interest bearing investments are the better choice for...
Short term time horizons
Definition of investment adviser:
Someone, who for compensation: 1) gives investment advice directly or indirectly as to the value of securities, or buying and selling of securities 2) issues analyses or reports about securities as part of their business; or 3) provides advisory services in a financial planning business
The variability of an investment's return is measured by:
Standard deviation
An investment adviser representative of a Federal Covered adviser only has insurance companies as clients. Where must the adviser representative register?
State
An investment adviser representative of a Federal Covered adviser with an office in the state only has insurance companies as clients. Where must the investment adviser representative register?
State
An Investment Adviser located in State A has 3 clients - 1 each in States X, Y, and Z. The Investment Adviser places an advertisement offering its services in a local newspaper and gives a seminar about its services in State Z. The Investment Adviser must be registered in:
State A and Z
A BD in State A makes an offer of securities to a customer whose principal residence is in State B. The customer has temporarily moved to State C and has asked the post office in State B to forward the mail to the customer's address in State C. Which State Administrator(s) has (have) jurisdiction over the offer?
State A only
A Registered Investment Adviser that is headquartered in State A has offices in States A, B and C. The IARs in each state only solicit clients in that State. The RIA must comply with the record-keeping rules of:
State A only
An agent and her customer reside in State A, where the agent is registered. The agent is vacationing in State B, where her client also happens to be vacationing. While in State B, the agent makes an offer of securities to the client. Who has jurisdiction over the transaction?
State B only
Licensing of investment adviser representatives occurs at the:
State level ONLY
NASAA rules for IAs only apply to:
State-registered advisers (Advisers with less than $100MM of assets under management)
An individual who previously worked as an agent at a broker-dealer leaves the employ of that firm and wishes to start his own BD as a sole prop. In order to register in the State, the Administrator will require the filing of a(n):
Statement of financial condition
What risk should an investor in an ETN consider that would not be associated with an ETF?
Credit risk
Under the Investment Company Act of 1940, an investment adviser's contract is initially set for:
- 2 years; and is subject to renewal every year thereafter
Tax deferred annuities for employees of non-profit organizations are known as:
- 403(b) plans
Under NASAA record-keeping rules, advisers must retain records for no less than:
- 5 years - with the first 2 years records kept in the principal office of the adviser
A post-effective amendment must be done within:
- 6 months of original sale date
Under the Investment Company Act of 1940, an affiliated person:
- CANNOT borrow securities from the fund - CAN buy shares of the fund
Under the Securities Act of 1933, which of the following sign a registration statement for a new issue?
- CEO of issuer - CFO of issuer - members of the BOD of the issuer
Under the Uniform Securities Act, what securities are considered to have an issuer?
- Collateral trust certificate - equipment trust certificate
A grandfather wishes to provide a perpetuity for his 2 grandchildren. He wants to give them the amount of $1000 a month. How much principal is required assuming that it is invested at a 3% rate of return?
$400,000
A hedge fund wishes to make a seed capital investment in a start-up company under Rule 504 of Regulation D. The maximum permitted investment by the hedge fund is:
$5,000,000
Sharpe Ratio =
(Total Return - Risk Free Return) / Standard Deviation
What are the 4 entities that are EXCLUDED from the definition of a Broker-Dealer?
*they are basically firms NOT dealing with the general public* 1) Issuers; 2) other BDs; 3) Financial institutions 4) brokerage firms dealing with customers on vacation in another State
Qualified custodians under NASAA's Custody Rule are:
1) FDIC insured deposit institutions; 2) registered BDs; 3) registered futures commission merchants; 4) foreign financial institutions
Universal Life Insurance
- "flexible" policy that allows the policy owner to change both he premium payments and the death benefit - cash value can be used to buy additional insurance or to decrease premium payments - policyholder has the flexibility to change the death benefit and premium payments - PERMANENT insurance
Under NASAA rules for State-registered advisers, transactions must be recorded in customer account records no later than:
- 10 business days following the end of the quarter in which the transaction was effected
Family members in a Subchapter S Corporation count as....
"1" owner 5 brothers = 1 shareholder
EIAs come with a:
"Participation rate" - 70% would mean that the contract holder gets 70% of the rise in the S&P 500 index - most often capped to a max (70% of the S&P 500 20% rise = 14% capped at 9% so only receive 9%)
13G reports are filed by...
"Passive" investors that purchase 5% or more of a company's stock WITHOUT the intention to exercise 13D - IS intending to exercise control
A broker-dealer is allowed to place customer securities in:
"Street name" - name of the broker-dealer, NOT the customer. This way, if the customer does not pay off he loan, the BD can just sell the securities without needing a customer signature.
An individual client purchased his residence 5 years ago for $300M. For 3 of the last 5 years, the client rented out the property for income, and lived in the house of 2 of those years. The client sells the house for $500M. How much of the gain is taxable?
$0
To be registered as a BD, the Administrator typically requires the posting of a surety bond in the amount of:
$10,000
A married couple buys a house for $150M. After living in the house for 10 years, they sell it for $750M. The taxable gain is:
$100M.
Advisers that have between _________ and ____________ of assets under management have the choice of registering either at the State or Federal level
$100MM and $110MM
SEC registration is required for advisers that have over ________ in assets under management
$110MM
The maximum contribution a grandfather and grandmother can make to a 529 plan for a grandchild without gift tax consequence in 2019 is:
$150,000
A single individual buys a house for $150,000. After living in the house for 10 years, he sells it for $750,000. The taxable gain is:
$350M
A sales representative who sells unregistered securities to customers in non-exempt transactions has:
- Committed a misleading Act - is subject to buying back the security at the purchase price plus interest at the legal rate in that state, less any dividend or interest income received on that security
When comparing dollar-weighted average return to time-weighted average return for a mutual fund investor, what is true regarding the affect of cash inflow and outflow?
- Dollar-weighted average IS AFFECTED by new cash inflow/outflow - Time-weighted average IS NOT AFFECTED by new cash inflow/outflow
The index that is composed of companies in developed countries outside of the United States is the:
- EAFE
In a period of sharply falling stock prices, what will perform better - EIA or VA?
- EIA will outperform VA because they protect their positions with put options ("collar")
EIA expenses
- HIGHER than both fixed and variable annuities to pay for cost of collaring the market - High surrender fees if redeemed early
As the composition of the underlying portfolio is broadened, it can be expected that the Sharpe Ratio will:
- INCREASE - sharpe ratio = risk adjusted return / standard deviation - as composition broadens, denominator will decrease, ratio will increase
What type of annuity payment option will continue payments to another person for their life after the annuitant dies?
- Joint and Last Survivor Annuity
Tax implications of Variable Annuities:
- NOT- tax qualified - contributions not deductible - earnings build tax-deferred - distribution "build-up" is taxable at ordinary income
What is a QDRO?
- Qualified Domestic Relations Order - a judicial order in a divorce or legal separation that splits a retirement plan into ownership by the 2 divorced individuals. - a Retirement plan is in the name of only 1 person, if the divorce court in the State issues a QDRO, the wife/husband becomes an "alternate payee" with the right to receive a portion of the benefits - QDRO ONLY APPLIES TO ERISA PLANS
Which Act can be used to coordinate a securities registration filing under the provisions of the Uniform Securities Act?
- Securities Act of 1933
In a period of sharply rising stock prices, what will perform better - EIA or VA?
- VA will outperform EIA because EIA's have a cap on their performance
On an annual basis, an investment adviser must give, or offer to give, what to his client?
- a copy of the ADV part II (AKA: brochure or "disclosure document")
An investment adviser that claims that it is a "fee only" adviser could be compensated based on:
- a percentage of assets under management - a flat annual or hourly fee for all work performed for wealthy investors - a performance based fee for wealthy investors
An investment portfolio indexed to the S&P 500 Index produced a return for the year of 12% with a beta of +1. Investment Manager "A" has an actively managed stock portfolio that produced at return for the year of 14.8% with a beta of 1.4. The "alpha" produced by Investment Manager "A" is =
- a portfolio with a beta of 1.4 should return 1.4 times the benchmark index of 12% = 1.4 x 12% = 16.80%. - this manager produced a return of 14.8% so the alpha is negative, this manager did worse, producing a negative alpha of -2%.
Under what circumstance would it be permitted for an investment adviser to charge performance fees (based on capital gains)?:
- allowed for "substantial" clients - net worth of at least $2.1MM or have at least $1MM under management with the adviser - adviser can use a formula stated in written contract that provides for a: *fulcrum fee: basic fee; and a *performance fee
What is a "qualified purchaser"?
- an individual/trust with at least $5MM of assets available for investment - investment manager or company with at least $25MM available for investment
The unified credit applies to:
- both estate and gift tax
The provisions of the Uniform Securities Act apply to solicitation of the public to buy or sell securities or advisory services that are made:
- by mail or telephone either INSIDE OR OUTSIDE that State and received IN that State
Regarding inspection powers, the State Administrator:
- can visit and conduct a walk-in audit of broker-dealer offices either Intra-State or inter-State if it is in the public interest or for the protection of investors
The IRR of an investment assumes that:
- cash flows generated by the investment are reinvested at the IRR
When a security is being registered in a State by coordination alongside a federal registration for that security being performed under the Securities Act of 1933, what information must be filed in the State?
- consent to service of process - copies of the prospectus - copy of the articles of incorporation and bylaws
The AIR of a variable annuity contract is set when the:
- contract is annuitized
Under the uniform securities act, an investment adviser may be formed in what legal entities?
- corporation - partnership - association
The method used by insurance companies to structure variable annuities is to:
- create a "trust" that collects payments from investors - trust can ONLY invest in open-end management companies (mutual funds)
What records MUST be retained in a state-registered investment adviser's principal office?
- customer securities positions - records of customer purchases and sales orders
Advertising and Sales Literature must be filed with the Administrator as requested EXCEPT for material covering:
- exempt securities or exempt transactions
Under the Uniform Securities Act, a person who renders investment advice solely about US Gov't Agency Securities is defined as a(n):
- federal covered adviser - NOT required to register under the Act
When calculating the value of the "taxable estate" (one valued over $11.4MM in 2019), the IRS allows the executor to deduct:
- funeral expenses; - administrative expenses; - legal fees; - claims against the estate such as unpaid bills; - mortgages against estate-owned property; - assets donated to charities from the estate; and - any estate tax liability owed to the state
An individual sells the securities of a federal chartered bank. When will this individual be excluded from the definition of an agent?
- if this individual is the employee of the bank - employee of ISSUERS that sell specified exempt securities, are EXCLUDED from the definition of an agent
A privately-held company offers a 401(k) plan to its employees. The average age of the employees is 29 and the plan offers 10 different equity strategies. According to the ERISA Rule 404(c), the plan must be amended to:
- include at least 1 of the existing equity funds in addition to a fixed income fund and a capital preservation fund
An institutional buyer is defined under the Uniform Securities Act as:
- include banks, savings and loans, trust companies, insurance companies, investment companies, pension and profit sharing plans, other financial institutions, and anyone so defined by the State Administrator by rule or order
The State Administrator has the power to do what to a federal covered adviser?
- increase the number of audits that the Administrator makes of the adviser
The Uniform Securities Act specifically excludes from registration "professionals" that are excluded from the definition of an investment adviser that are:
- lawyers - accountants - teachers - engineers
Modern portfolio theorists use CAPM to find the:
- most efficient investments
Under NASAA record-keeping rules for investment advisers, any advertisement, circular, or other communication:
- must be retained if it is circulated to 2 or more persons - can recommend the purchase or sale of a specific security and if it does not state the reasons for the recommendation, a memo must be retained indicating the reasons for the recommendation
Federal Covered Adviser definition:
- must register with SEC - large advisory firm with at least $100MM of assets under management or an adviser to an investment company - advisers to registered investment companies (mutual funds) - mid-size advisers with $25MM or more of assets that are required to be registered in 15 or more states - anyone EXCLUDED under the Investment Advisers Act of 1940 which includes: banks/bank holding companies; professionals (lawyers/accountants), broker/dealers who do not charge separately for advice; publishers of bona fide newspapers and magazines, any person who advises solely about US gov't securities
The main advantage of an ETN as compared to a structured product are:
- no liquidity risk; and - tax efficiency
When can an agent represent that a mutual fund is "no load"?
- no up front charge - no CDSC - annual 12b-1 fees < .25%
The only securities that registered agents may sell in a State are those that are:
- non-exempt and registered; - exempt from registration and therefore not registered *thus, an agent CANNOT sell unregistered non-exempt securities in a State.
The market capitalization of a company is the:
- number of common shares outstanding times the price per share
Whole Life Insurance
- offerings protection for the whole life of then insured - premium set at higher initial amount than term life, but remains level each year - AKA "straight life" - cash value is invested in the insurer's general account and grows with interest at a guaranteed min rate - unlike term, this is PERMANENT insurance
When must the commission charged on transactions be disclosed to the customer?
- on the confirmation of the transaction - no requirement to disclose at the time of trade or time of account opening
A customer buys a variable annuity and elects a payout option of Life Income with a 20 year period certain. This means that:
- payments will continue for the annuitant's life, but if he dies before 20 years elapse, payments continue to his heir(s)
Cash value of a universal life insurance policy is:
- premium payments minus cost of insurance plus interest - GENERAL account; not separate
If an agent of a broker-dealer terminates employment, notice must be given:
- promptly to the Administrator - by both the agent and the broker-dealer
During the payout period of a fixed annuity contract, the annuitant assumes:
- purchasing power risk
Term Life Insurance
- pure insurance; NO investment feature - policy pays a named beneficiary a specified amount of money if the insured dies within the term of the policy. - no cash value - non-renewable after a certain age
A person who renders advice on variable annuities for a fee; and who then sells the annuities, charging a commission, MUST:
- register as an investment adviser in that State - register as a BD in that State
Post-effective amendment:
- required to increase the size of an offering (due to increased demand)
Each State requires registration in the State if the firm or agent:
- resides in the State; or - solicits business from the public in the State
If the Required Rate of Return (RRR) is less than the Internal Rate of Return (IRR) on that security, then the:
- security should be purchased for investment
If an estate holds appreciated securities and the investment adviser is concerned that the securities are "peaking" in value, what is the best course of action?
- sell the securities immediately so that any gain can be captured without cap gains tax due
5 securities that are NOT required to be registered in a state:
1) Federal Covered Securities 2) Gov't and Muni issues 3) Securities from industries already regulated under other laws 4) Non-Profits 5) Securities offered in exempt transactions (generally don't involve the public)
Red Flags Rule
- state IAs come under the FTC's "Privacy of Customer Financial Information Rule" - the IA must: 1) designate and individual to coordinate the firm's information security program 2) identify foreseeable risks to the security, confidentiality, and integrity of customer information and assess sufficiency of safeguards to control these risks 3) assess risks and include: employee training; information systems processing, storage, disposal; and preventing and responding to attacks
An investment adviser providing advice solely about municipal securities is subject to:
- state or federal registration, depending on the amount of AUM - NOTE: not the same case as gov't which is always federal
What is TRUE about unsolicited customer transactions effected through a broker-dealer?
- the Administrator may require that the customer acknowledge the transaction with a written statement - the transaction is EXEMPT under State law - the transaction is defined as "non-issuer" transaction
The Administrator has jurisdiction if:
- the agent or client resides in the State; - the transaction occurred in the State; - the offer was directed from the State; - the offer was directed into the State; - the offer was accepted in the State
A broker-dealer registered in States A and B has an agent that is registered in State A. The agent takes an unsolicited order from a customer in State B. The agent will have to register in State B if:
- the customer is an accredited investor
What is the major benefit in the tax code regarding the sale of a residence?
- the first $250M of gain ($500M for married couple) is excluded from capital gain tax - only applies to personal property, not rental/income
If a customer purchases in a 200% leveraged ETF, the customer can lose:
- the investment amount
Key points to know about Specialists (DMM):
- there is only 1 assigned to each stock on the NYSE - must make a continuous market in the stock (act as buyer and seller if no one else willing to trade) - bid-ask quote (buys at bid) - spread (diff between bid and ask) - acts as auctioneer between floor brokers that want to buy and sell - cannot trade ahead - maintain book of open orders and fill them as AGENT, earning commission
Delivery of a brochure is NOT required when the adviser is contracting to sell (3):
- to investment companies; or - so-called "impersonal advisory services" or less than $500; or - to clients who are officers or employees of the adviser or any other person related to the adviser
Variable annuity fees:
- two layers of fees (one = cost of running the fund held in separate account; two = insurance company's mortality and expense fees added to contract)
"Rich Man Rule"
- under federal law - says that if the customer has a net worth of at least $2.1MM or you manage at least $1MM of their assets, there can be specific performance clause that would benefit you based on a gain
A registered agent CANNOT share commissions with:
- unlicensed persons - licensed individuals that work for OTHER broker-dealers
An individual has purchased a 10-year level premium life insurance policy. The insurance company would be required to pay a claim:
- upon the death of the insured within the 10 year period
Equity-Indexed Annuities
- variation of a fixed annuity - promise investors a piece of stock market gains based on the return of a broad-based index (S&P 500) - also include a min guaranteed rate of return similar to, but lower than, fixed annuity - offers an inflation hedge, but is protected from a bear market
States are NOT permitted to require the registration of a person:
- who is excluded from the definition of an investment adviser under the Investment Advisers Act of 1940 - who is registered with the SEC as an investment adviser - with no place of business in the State who gives investment advice to fewer than 6 clients who are residents of the state during the preceding 12 months
Variable Life Insurance
- whole life policy, rather than investing the cash value in the insurance company's general account, invest in a designated separate account - difference is that the death benefit can increase over the fixed amount if the separate account performs well - must be sold with prospectus
The National Securities Markets Improvement Act of 1996 requires SEC registration ONLY of investment advisers:
- with $100MM or more under management; or - to investment companies
What is the advantage of a 457 plan compared to an IRA, 401(k), or 403(b)?
- withdrawals can be made prior to age 59 1/2 without the 10% penalty tax, however regular income tax is still due. - this is because police officers/firemen might have to retire early due to disability
A stock whose price moves down 5% when the market as a whole moves up by 10% has a beta coefficient of:
-.50
Mutual funds CANNOT be called 'no load' if their 12b-1 fees exceed:
.25%
Registration of securities is valid for:
1 year - Administrator can require quarterly reports from the registrant
Upon filing a withdrawal of registration with the State, the Administrator can commence a revocation or suspension proceeding for up to:
1 year from the effective date of the withdrawal
Securities are defined as:
1) Corporate issues: - common and preferred stock - notes, bonds, debentures - collateral and equipment trust certificates - REITs - CDs - CMOs - Structured Securities - rights and warrants - voting trust certificates 2) gov't agency and muni issues; 3) investment company issues; 4) options; 5) tax shelters (LPs); 6) whiskey warehouse receipts 7) multi-level marketing schemes 8) commodity option contracts
What are the 4 'qualified custodians' under NASAA rules?
1) FDIC institution 2) Registered BD 3) Registered Commodity Futures Merchant 4) Foreign Financial Institution which holds foreign assets
Certain persons who are included under the definition of an investment adviser are EXEMPT from registration under Federal law. These exemptions are:
1) Intrastate Exemption: IA with its principal place of business in 1 state, who only renders advice to residents of that State. Cannot give advice to any security listed on national exchange. 2) Adviser to Insurance Companies
What are the 3 methods of registering securities in the State?
1) Registration by Filing - used for a company that already has securities trading in the State - application must be on file 5 business days prior to sale 2) Registration by Coordination - used when an issuer has not sold securities in the State before, but is filing a registration application with the SEC. - used for IPOs that are being SEC-registered - application must be on file for 10 business days - burden of proof on ADMINISTRATOR 3) Registration by Qualification - most difficult registration because, unlike the other two where the State accepts the Federal application, the issuer must file the specific State registration application - used by an issuer that is only selling securities in a single State, no SEC filing required - burden of proof on ISSUER
What are the 5 EXEMPT securities:
1) US and muni gov'ts, Canadian and foreign gov't 2) bank issues (CDs) 3) Trust companies 4) commercial paper issued by corporations 5) securities issued in connection with pension/profit sharing/stock option plans
What are the 3 versions of the Efficient Market Theory?
1) Weak Form: securities prices only reflect "old" information 2) Semi-Strong Form: Securities prices fully reflect all publicly available information 3) Strong Form: securities prices fully reflect all information, whether publicly available or not
Definition of "custody" includes (3 things):
1) accepting customer funds or securities; 2) acceptance of pre-paid advisory fees 6 months or more in advance of rendering services of: - $1200 or more for a fed. Covered adviser; or - $500 or more for a state covered adviser 3) an account that gives full power of attorney to the adviser, which includes allowing the adviser to withdraw funds
What are the 3 portfolio management "styles"?
1) active management 2) passive management 3) indexing
4 things that are TRUE about agents:
1) agents effect trades of securities 2) agents must be registered in each State in which they do business 3) agents can be paid a commission or a salary or not at all; and 4) independent contractors are agents that must register
The Administrator can revoke a specific exemption. If the Administrator revokes a specific exemption (ex: the exemption given to a church bond offering because affinity fraud has been a growing problem):
1) appropriate notice must be given to all parties; 2) the opportunity for a hearing will be granted; 3) written findings of fact will be provided by the Administrator
ERISA Rule 404(c) applies to retirement plans that offer "self-directed" investment, such as 401(k) plans. It requires that the plan sponsor offer:
1) at least 3 investment alternatives that are diversified; 2) participants the opportunity to diversify their account sufficiently to avoid large loss; 3) participants the opportunity to change investments with a frequency appropriate to the volatility of the investments
EXCLUDED from the definition of an investment adviser (NOT required to register with the SEC) are:
1) banks or bank holding companies; 2) lawyers, accountants, engineers, teachers; 3) BDs and their registered reps (no comp for making recommendations); 4) publishers of bona fide newspapers, magazines, or financial publications of general circulation; 5) any person who advises solely about US gov't guaranteed obligations; 6) family offices
Confirmation information includes what 7 things:
1) broker dealer name, address, telephone # 2) customer name and address 3) # shares bought or sold 4) security description 5) execution price 6) commissions for an agency trade 7) whether payment for order flow was received NO requirement for solicited/unsolicited
If a person sells securities or advisory services that result in violations of the Act, he or she is liable to all purchasers of the security or advisory services. That person must:
1) buy back security upon tender; refund losses and fees 2) pay 6% legal rate of interest 3) pay legal fees
What are the 5 typical asset classes?
1) cash/money market 2) fixed income securities 3) equities 4) commodities 5) real estate
If a customer owns a whole life policy for a number of years and wants to get out of the policy because he or she can no longer make the payments, the customer has 3 choices called the "non forfeiture" options:
1) cash: customer surrenders the policy for its cash value 2) reduced paid up: customer gives up current face value of the policy and uses the cash value to buy a fully-paid whole life policy with lower face amount 3) extended term: customer stops paying premiums and the equity is used to purchase a term life policy with the same face amount
Any material changes in filing require a prompt amendment. Changes that require a prompt amendment of the Form ADV are (4):
1) change of business name/address/phone number 2) change of business form (partnership to corporation) 3) disciplinary actions taken by administrator, state/federal court, or SRO 4) if adviser begins to take custody of client funds or securities for the first time; or for the first time will accept prepaid advisory fees of $1200 or more, 6 months or more in advance of rendering services (an adviser previously did not accept prepaid fees and now does)
What is the proper sequence when opening a new account?
1) complete new account form 2) complete order ticket for first order 3) manager sign new account form 4) execute first transaction
What are the 5 powers of the State Administrator?
1) conduct investigations (public or private) 2) subpoena persons and records 3) compel an individual to give testimony that incriminates, as long as Administrator will not use this info against that person 4) issue a cease and desist order 5) publish information about violations
Any registration statement for a securities offering includes what 6 things?
1) current balance sheet and income statement; 2) business description; 3) use of proceeds of offering; 4) offering terms; 5) legal opinion; 6) accountant's opinion
NASAA requires investment advisory firms to file an update of their Form ADV in the State within:
90 days of FYE Material changes = 30 days!!!
Order tickets cannot be entered without the following information:
1) customer name or account # 2) agents name or account # 3) buy or sell (long or short) 4) solicited or unsolicited 5) # of shares or bonds to be traded 6) description of securities to be traded 7) execution price if limit or stop order
What three documents are needed when a customer dies?
1) death certificate; 2) affadivit of domicile - letter from the state 3) letter of testamentary - will
NOT defined as a "Sale" are (4 things):
1) dividends; 2) a security interest created as the result of a loan (lien on real estate); 3) a reorganization that creates a new security; 4) securities issued through a judicially approved reorganization
IA-770 "3-prong test":
1) does this person give advice about a security? 2) is this person "in the business" of giving advice about securities? 3) is this person compensated for giving advice about securities? If yes to all 3, then person is defined as an IA and must register with the SEC
The Administrator can require that advertising and sales literature be filed unless the securities are:
1) exempt; 2) federal covered; 3) offered in an exempt transaction
Under SEC rule 202(a)(11)(G)-1 the "family office rule", what are the 3 basic requirements that must be met for the exclusion:
1) family office must only provide investment advice to clients who are apart of that family 2) family office must be wholly owned by family clients and exclusively controlled by family members or entities- not by key employees 3) family office cannot hold itself out as an investment adviser - cannot advertise or market to non-family clients
12 reasons that registration would be denied, revoked, or suspended?
1) filed incomplete/inaccurate application; 2) been convicted of willfully violating the Act; 3) been enjoined by the courts from engaging in the securities business; 4) had his registration suspended or revoked by the Administrator; 5) been convicted of misdemeanor in the last 10 years or ANY felony; 6) willfully broken a securities law within past 10 years; 7) willfully violated the securities or banking laws of a foreign jurisdiction within past 5 years 8) engaged in unethical or dishonest business practices; 9) failed to pay any and all fees; 10) failed to properly supervise employees; 11) gone out of business, can't be located, or is mentally incompetent; 12) been deemed unqualified by the State Administrator based on lack of experience, training, or knowledge
Defined as a "Sale" are (3 things):
1) gifts of assessable securities; 2) securities given with the purchase of another security, like a bonus; 3) offers or sales of warrants, rights, or convertible securities
What 5 conflicts of interest MUST be disclosed?
1) if the adviser receives an advisory fee from the customer and will also receive commission on each trade executed; 2) if the adviser receives an advisory fee from the customer and a referral fee for each trade given to executing broker; 3) if the adviser receives "soft-dollar" compensation from a BD to whom the adviser directs its portfolio trades (the BD gives the adviser "free" services such as research reports, stock quotes, etc) 4) if the adviser attends a conference where the expenses are paid by a mutual fund sponsor or other entity that offers securities 5) if the adviser allocates block trades using method other than pro-rata distribution
What are the 2 fixed annuity contract options?
1) installments for designated period: annuitant specifies the period of time over which he wishes to receive the annuity 2) installments for designated amount: annuitant specifies the dollar amount he wants in each payment
NOT defined as "securities" are:
1) insurance or endowment policies or contracts; 2) fixed annuity contracts; 3) commodity futures contracts; 4) retirement plans
6 persons that are EXCLUDED from the definition of Investment Adviser:
1) investment adviser representative (IARs) 2) banks, savings and loans, trust companies 3) broker-dealers that give advice but are not separately compensated for doing so 4) publishers of newsletters, magazines, etc. (don't give advice based on specific situations) 5) professionals (lawyers, attorneys, accountants, teachers, engineers) who give advice incidental to their practice; 6) federal covered advisors
A firm that has no office in the State is EXEMPT from registration if the firm (2 things):
1) is a Canadian Broker-Dealer that only deals with clients temporarily vacationing in the US; or 2) has 5 or fewer clients living in the state within the last 12 months. - "de minimis exception"
Examples of "exempt transactions" (11):
1) isolated non-issuer transactions: 1 or 2 transactions in a 12 month period; 2) non-issuer transactions in securities already registered under 1933; 3) non-issuer transactions in securities traded on designated stock exchanges; 4) non-issuer transactions on securities registered under investment company act of 1940; 5) fiduciary transactions; 6) unsolicited trades; 7) real estate transactions secured by a mortgage; 8) issuer/underwriter transactions; 9) transactions with financial institutions; 10) private placements (security offered to no more than 10 persons in a 12 month period - DIFFERENT than fed law) 11) offers or sales of pre-organization subscriptions
What are the 6 EXEMPT transactions for the ISSUER? (Does not apply to broker-dealers):
1) isolated transactions with someone other than the issuer; 2) transactions between issuers and underwriters; 3) transactions with institutions (like banks) because they are sophisticated; 4) covered transaction - federal private placement offerings under Reg D 5) covered transaction - sales to qualified buyers (people/family owned businesses with at least $5MM in investments, pre-existing trusts, anyone else with at least $25MM to invest) 6) an employee who coordinate the stock repurchase plan of a publicly traded corporation where his work is done for as part of his or her regular job function and no commissions are paid
BDs and IAs: Internet communications shall NOT be deemed "transacting business" in the State where the communication was received if:
1) it is general info on products and services; 2) there is a legend indicating the transactions can only be effected if that person is registered in the state or comes under exemption; 3) NO follow-up communications can be made to people accessing the web-site UNLESS that person has complied with state registration requirements; 4) there is a procedure designed to ensure compliance with the above requirements
To register in the State, Broker-Dealer's and Investment Advisers need what 3 things:
1) min net capital/net worth (all assets - all liabilities - intangibles. If adviser is individual, value of ALL personal property (home, car) is deducted. If adviser is partnership/corporation, items used in business are included and NOT deducted) 2) surety bond coverage (usually $10,000) 3) pass qualifying exams
NASAA, under Model Rule 502(c) Requires that advisory contracts (9 things):
1) must be in writing 2) must have a fixed life 3) must detail all fees 4) must detail the refund or early cancellation policy 5) cannot be assigned without customer permission 6) cannot guarantee a fixed/min rate of return 7) cannot allow for compensation based on gain or loss 8) management change/change in partners is considered to be "involuntary assignment" - REQUIRES notice to customer and customer consent 9) cannot contain hedge clauses that eliminate the adviser's liability for negative results
NASAA Rules Require the following Info for Investment Adviser order tickets:
1) name of the person who recommended the transaction; 2) name of the person who placed the order; 3) date of order entry; 4) name of account for which the order was entered; 5) name of BD or bank to which the order was sent for execution; and 6) whether the order was discretionary
3 market indicators used by contrarisans:
1) odd lot sales and purchases 2) short interest level 3) put/call ratio
EXEMPT from registration as an Investment Adviser in a State is any person that has no place of business in the State and whose only clients are (9):
1) other investment advisers; 2) federal covered advisers; 3) broker dealers; 4) banks, trust companies; 5) insurance companies; 6) employee benefit plans with assets of at least $1MM; 7) government agencies; 8) anyone else designated by the State 9) any adviser with NO place of business in the state with NO MORE THAN 5 clients over a 12 month period - de minimis exemption
What are the 4 deductions that are NOT allowed when computing AMT:
1) personal exemption; 2) standard deduction; 3) state and local tax deduction; 4) miscellaneous deductions, such as tax preparation fees
EIAs base the annuity payments on the performance of a broad-based index. The most common methods of measuring index performance are the (3):
1) point-to-point method: compares index value at the purchase date to the value at the end date 2) annual reset method: measures the return achieved each year over the total life and adds interest to the annuity based on the annual reset 3) high-water-mark method: looks at the index value yearly as of the anniversary date of purchase, and bases the interest added on the highest index value over the product life versus the value at date of purchase
NASAA states customers should inquire about the firm's cyber:
1) preparedness and security compliance 2) confidentiality 3) security safeguards
If the Administrator postpones/suspends registration, the Administrator must:
1) promptly inform the applicant and the employer that the order was entered and why; and 2) schedule a hearing within 15 calendar days, if requested
In the case of damages for a person that has bought that security but no longer owns it, the person may:
1) recover the difference between original paid price and price sold 2) 6% interest at legal rate 3) receive attorney fees
Defined as "Federal Covered Securities" are (4 things):
1) securities listed on national exchange (NYSE, Amex, NASDAQ) or an exchange with similar requirements or a senior security of an exchange listed issuer; 2) issues of a registered investment company; 3) securities sold to qualified purchasers (person with at least $5MM, adviser with at least $25MM) 4) securities sold in exempt transactions, like Reg D
To take customer of the customer's assets, what 6 steps must be taken?
1) the Administrator must be notified that custody is being taken on Form ADV 2) the securities must be held by a qualified custodian (FDIC, Registered BD, Registered commodity futures merchant, foreign financial institution) 3) the customer must be notified promptly in writing as to which qualified custodian is holding their assets 4) the customer must receive a quarterly statement 5) the custodian must be audited annually on a surprise basis and the audited results must be filed with Administrator 6) if the customer sends: - a check or security in error and it is returned within 3 days, no custody - a check made out to a "third party" and it is forwarded to the payee within 3 business days, no custody
The rule on delivery of the brochure is that either:
1) the brochure must be delivered 48 hours prior to entering into either a verbal or written contract with the customer to provide advisory services; OR 2) if the brochure is delivered at the time that the contract is signed, the customer has 5 business days to terminate the agreement without penalty
Agents of BDs and IAs: Internet communication by BD agents or IA agents shall NOT be deemed "transacting business" in the State where the communication was received if:
1) the communication prominently discloses the affiliation of the agent with the firm; 2) the BD or IA retains responsibility for reviewing and approving the content of any internet communication and authorizes the distribution of info on the products and services offered; and 3) the agent cannot exceed the scope of authority granted by the BD or IA in the internet communication
The Administrator is empowered to revoke the registration of an investment adviser if the Administrator determines that (3 things):
1) the firm is no longer in business 2) the adviser if judged in a court of law to be mentally incompetent 3) the Administrator cannot find the adviser after a reasonable search
An offer made in a newspaper with a general, regular, and paid circulation is not considered to be made in the State if:
1) the newspaper is not published in the state; 2) or if the newspaper is published in the state, but has more than 2/3 of its circulation outside the state, during the last 12 months
If a brokerage firm's branch is located in a bank where deposits are being taken, NASAA requires what 3 things:
1) the physical location where the member's services are conducted should be in a distinct area from where bank deposits are being taken 2) the member firm's name should be clearly displayed 3) at, or prior to, account opening, the member must give verbal AND written disclosure that: - the account is NOT FDIC insured; - securities are NOT bank deposits and they are NOT guaranteed; and - securities are subject to investment risk and MAY lose value
Securities cannot be offered or sold in a State unless either:
1) the security is registered in the State under the Act; or 2) the security is Federal Covered; or 3) the security or transaction is exempt under the Uniform Securities Act
6 things that are required to be on the registration application:
1) type of business (corp, partnership, sole prop) 2) address 3) qualifications 4) fingerprints 5) financial condition and history 6) any injunctions, administrative orders, convictions for misdemeanors related to banking, securities, commodities, theft or ANY felony
NASAA says that Investment Advisers must have written authorization within _________ business days of the customer's verbal authorization
10
If a 13d filing is required, notice must be filed with the SEC within:
10 business days
The NASAA (state) rule for IAs says that discretion can be exercised with VERBAL authorization for up to:
10 business days before written authorization is required
In an initial public offering, a member who acted as manager or co-manager CANNOT issue a research report on that company within how many days following the effective date:
10 calendar days
Firms acting as managers/co-managers of an underwriting cannot issue a research report on that company for:
10 days following an IPO; and 3 days following a secondary offering
For offers of pre-organization certificates to be exempt under the Uniform Securities Act, the number of subscribers is limited to how many people?
10 people
Under the Uniform Securities Act, a private placement is an offer where no commissions are paid, made to no more than:
10 persons in a 12 month period
A block trade is a trade of at least:
10,000 shares
An investment in common stock provides dividends equal to 4% per year and expected long term capital gains equal to 8% per year. For a lower-earning investor in the 30% tax bracket, the after-tax rate of return is=
10.20% Dividends = 4% x (100-15%) = 3.4% Cap gains = 8% x (100-15%) = 6.8% 3.4 + 6.8 = 10.20%
a feature of life insurance products that allows the ability to "exchange" them without tax consequence for either a different type of insurance policy or an annuity
1035 exchange
Investment advisers must send the updated form ADV to its clients within _________ days of year end if there is a ________.
120 ; material change
An adviser that takes custody must file a copy of its surprise audit results with the State Administrator within:
120 days of completion of exam
The Reg T requirement to buy a long term equity option is 75%. The "loan value" of the long term option is:
25%
To register an issue by filing, the issuer must be: - in business for the past ______ years - profitable for the past ______ of _______ years
3 years 2 of 3 years
Any civil suit must be brought no later than...
3 years after the contract of sale was executed; and such suits cannot be brought later than 2 years after the discovery of the facts constituting the violation
An agent's registration becomes effective:
30 days after filing in the State
To be eligible for social security benefits, an individual must have worked at least how many quarters?
40 - 10 years
Under the Investment Advisers Act of 1940, an SEC registration application as an investment adviser must be granted; or a proceeding must be initiated denying registration, within:
45 days
A non-qualified retirement plan that is established by a non-profit organization is a:
457 plan
The Brochure Rule under NASAA requires that the brochure be given to customers:
48 hours prior to entering into a written or verbal contract to provide advisory services
Proceedings seeking criminal penalties cannot start later than _______ years after the date of the alleged violation
5
The Brochure Rule under NASAA states that the customer can sign the contract and be given the Brochure and Supplement, and then has _________ business days to terminate without penalty.
5
Registration of securities in a State by Filing becomes effective:
5 business days after the filing with the State is completed
Violations of the Investment Company Act of 1940 are punishable by:
5 years in jail and $10,000 fine
To be defined as a diversified management company, the maximum percentage of the portfolio's assets that can be invested in a single issuer is:
5%
Withdrawal of an investment adviser becomes effective in....
60 days
If any person disagrees with a final order of the Administrator, he or she may obtain a review in the appropriate court. A written petition must be submitted to the court no later than...
60 days after the entry of the order
If an existing customer of an agent moves to another State in which the agent is not registered, the agent (and BD) must register in that State within:
60 days of the customer becoming a resident of that State
A management company's Board of Directors CANNOT consist of more than what percentage of affiliated persons?
60%
Social Security ages
62 - early retirement; REDUCED benefit 67 - full retirement 70 - late retirement; INCREASED benefit
The interest rate that is used as the "risk free" rate of return is the:
90 day t bill rate
For an adviser to charge a performance fee, the Investment Advisers Act of 1940 requires which minimum financial standards from customers?
= deposits $1MM or more with the adviser = customer with $2.1MM or higher net worth
Which of the following is NOT permitted in a defined contribution plan? A) mandatory employee contribution B) mandatory employer contribution C) voluntary employee contribution D) voluntary employer contribution
A
All of the following business forms have an unlimited life EXCEPT: A) general partnership B) limited liability company C) S corporation D) C corporation
A - any partnership has a limited life
The rate of return that an individual investor earns over time in a mutual fund, including the timing of cash inflows and outflows, is the:
Dollar weighted average return
An investment adviser directs its trades to a BD paying non-discounted rates. In return, the BD provides the adviser with proprietary investment analysis software that it has developed. This is:
A soft-dollar arrangement
An individual is being paid to sell securities and is being compensated on a commission basis. The commissions are being paid by both the broker-dealer and the issuer. The person is defined as a(n):
Agent of both the issuer and the broker-dealer
When the customer annuitizes, the customer is required to select an:
AIR in order to determine the initial payment under the contract
Which of the following are deductible from a taxable estate? I) funeral and admin expenses II) claims against the estate III) state death taxes IV) mortgages against real property owned by the estate
ALL OF THE ABOVE
Trading Away is...
ALLOWED - where a client who usually places trades with one executing broker, instead, places trades with another executing broker. - many times employed by a hedge fund that knows that one broker is good at executing equity trades; but another broker is good at executing fixed income trades
Variable Annuities: as interest payments, dividend payments, and capital gains are realized from the securities held in the separate account, they are:
AUTOMATICALLY REINVESTED - cannot be distributed until the contract is completed
Modern portfolio theorists would make investments in securities that lie:
Above the efficiency frontier
Instead of buying "shares" of the separate account, the contract holder purchases:
Accumulation units
Under the Uniform Securities Act, the person empowered to enforce the Act is the:
Administrator
A non-password protected website is defined as:
Advertising
Under the Uniform Securities Act, if an agent withdraws his or her registration, the withdrawal becomes effective:
After 30 days
What two parties MUST notify the Administrator if an agent of a BD is terminated?
Agent and ex-employer
_________ is the excess return of an investment as compared to the risk-adjusted return of the market
Alpha
If an investment adviser, for the first time, takes a $1200 prepaid advisory fee, more than 6 months in advance of services rendered:
An ADV part 2A along with a a balance sheet must be filed by the adviser promptly
"State" is defined under the Act to be:
Any state, territory, possession of the United States, District of Columbia, and Puerto Rico
Agent definition:
An individual that represents a Broker-Dealer or an issuer in the trading of securities.
Total Return =
Annual income + annual cap gain / original investment
Value of a perpetuity =
Annual payment received / market rate of interest
Under NASAA rules, the Form ADV filed with the State must be updated:
Annually within 90 days of fiscal year end
Investment Adviser Representative definition:
Any individual employed by an Investment Adviser who performs the following services for a State registered or a Federal Covered Adviser: 1) makes recommendations or gives advice about securities; 2) manages accounts and portfolios for customers; 3) solicits, offers, or negotiates the sale of investment advisory services; 4) supervises the employees who perform those functions
NASAA Investment Adviser Advertising Rules (4):
Apply to state-registered investment adviser advertising 1) cannot contain testimonials; 2) cannot state that any research report is free unless this is offered without condition; 3) cannot contain false or misleading statements; 4) can include a list of prior recommendations with performance as long as ALL recommendations over that period (1 year min) are included
The Administrator is empowered to amend or rescind any rule of the Uniform Securities Act:
As he deems necessary to carry out the provisions of the Act
12b-1 fees are assessed by investment companies:
As shares are held
Under the Uniform Securities Act, the definition of "guaranteed" means that the security is guaranteed by another party:
As to payment of dividends or interest; and as to principal amount
You are NOT an agent unless you are:
Associated with a broker-dealer
Firms that are EXCLUDED from the definition of a "Broker-Dealer" are...
Automatically exempt from having to register in the State
ROI =
Average annual CF / initial investment
All of the following are components of the CAPM model EXCEPT: A) risk free rate of return B) alpha C) beta D) expected rate of return
B
BD in State A offers securities to a customer in State B, but the mail was forwarded by the post office to State C where the customer is temporarily residing. Who has jurisdiction/
ONLY State A
The Uniform Securities Act subjects agents and BDs who violate the Act's provisions to all of the following EXCEPT: A) civil liability B) civil penalties C) criminal liability D) criminal penalties
B
The alternate payee under a QDRO can be all of the following EXCEPT: A) spouse B) sibling C) child D) dependent
B
Registration by Qualification becomes effective:
On a date set by the Administrator
An application to register securities may be filed by all of the following EXCEPT a(n): A) Broker-dealer B) agent C) Issuer D) person on whose behalf the offering is to be made
B (also cannot be filed by investment advisers)
All of the following are exempt transactions under the Uniform Securities Act EXCEPT non-issuer transactions in stocks listed on the: A) AMEX B) Tokyo Stock Exchange C) Pacific Stock Exchange D) NASDAQ Stock Exchange
B - any foreign exchange
If a cease and desist order is not obeyed, the Administrator has the power to...
Bring action in state court seeking an injunction
Administrators can require minimum Net Capital and Net Worth for:
Broker-Dealers
Under the Uniform Securities Act, in a civil suit brought by a purchaser against a seller that is alleged to have violated the Uniform Securities Act, the burden of proof rests with the:
Buyer of the securities (plaintiff)
BD "suitability" standard VS. IA "fiduciary" standard
BD's: can only recommend suitable investments to customers and when recommending that a customer buy a security, the BD can be the one selling that security OUT OF ITS INVENTORY (PRINCIPAL) to the customer - earn commission IA's: can only take the SAME SIDE of the trade as the client. If an IA recommends that a client buy a stock, the IA cannot be the one selling it to the client (NO PRINCIPAL) - earn flat fees, NOT commissions
Under the Investment Company Act of 1940, the investment adviser's contract must be renewed by a majority vote of the funds:
BOD or the outstanding shares
BD in State A offers securities to a customer in State B. Who has jurisdiction?
BOTH state A and B
If an investment adviser is appointed by a trustee to manage the financial assets of the trust, the adviser has a fiduciary responsibility to the:
Beneficiary
The measure of stock price volatility relative to the market is =
Beta
An agent places an order to sell 10,000 shares of ABC stock at the market close. This is known as:
Block trading
Under the Securities Exchange Act of 1934, credit extended to customers for the purchase of securities is controlled by the:
Board of governors of the federal reserve
The only way to get cash out of a variable policy without a potential tax consequence is to...
Borrow against the policy (loan of up to 95%)
At the initial registration of a broker-dealer, which of the following individuals would automatically be registered as an agent of that broker-dealer?
Both the officer and director of the broker-dealer
An analyst evaluates individual companies within an industry focusing on the company's business model, management, product line, growth prospects and historical performance, to accumulate information that will be used to make recommendations of investments to be included in customer portfolios. This is an example of:
Bottom-up investment strategy
An investment adviser has placed an order with the underwriter for 250,000 shares of XYZ stock, a new company that will be listed on NASDAQ. The adviser will allocate this purchase to its largest discretionary accounts. This action is:
Breach of fiduciary duty. Securities in single block must be allocated equally among clients
A period certain annuity is used most often to...
Bridge a gap between early retirement and when social security payments start
A customer wishes to make an investment that provides income along with high liquidity and high marketability. The BEST recommendation is: A) limited partnership units B) long term corporate bonds C) preferred stocks D) growth stocks
C
All of the following items would be EXCLUDED from the computation of an investment adviser's net capital EXCEPT: A) goodwill B) marketing rights C) conference room furniture D) copyrights
C
An investment adviser has just submitted a U-4 registration application for a newly hired salesperson to be registered as an Investment Adviser Representative of the firm. This individual can start soliciting potential clients:
Once the State Administrator approves the application
Which of the following is MOST likely to fluctuate for an annuitant during the payout period of a variable annuity? A) death benefit B) mortality risk C) investment return D) expense risk
C - during the payout there is no death benefit - mortality risk and expense risk are guaranteed by insurer
Which of the following is EXCLUDED from Adjusted Gross Income on a tax return? A) Salary and commission income B) social security payments received C) municipal bond interest income D) municipal bond capital gains
C (because not federally taxable)
A person with no office in the State is solely engaged in the business of giving investment advice to insurance companies for compensation. Under the Uniform Securities Act, this person would be EXEMPT from the Act's:
Registration provisions
If a complaint is received by a State Administrator alleging that a Federal covered adviser stole funds from a customer, the State Administrator can do all of the following EXCEPT: A) conduct and investigation B) issue a cease and desist order C) revoke the registration of the advisor D) refer the matter to the SEC
C - cannot revoke bc not registered with state
The business form that is the LEAST advantageous from a taxation standpoint is a(n):
C Corporation
For a family limited partnership account, who gets the termination benefits?
Remainder beneficiary
Only ________ liability can be offset by rescission
Civil
What is the document, signed by an applicant for registration, that appoints the Administrator as the person allowed to accept "service of process" for that registrant in a lawsuit?
Consent to service of process
A portfolio manager who believes that an extremely large short interest in NYSE listed issues is bullish would be called a:
Contrarian
If a customer stops making payments on a whole life policy, all of the following are permitted EXCEPT: A) taking the cash value of the contract as a lump sum B) taking a reduced paid-up whole life policy C) using the equity to purchase a term life policy D) using the equity to purchase a non-participating policy
D
An investor buys a bond. At the end of the first year, the bond is worth $1,300. During the year, the investment paid $20 in interest and had a capital gain of $250. What is the Total Return?
Cost of the investment is not given. To calculate = 1,300 - 250 = 1,050 Total return = (annual income + capital gain)/amount invested = (20+250)/1,050 = 25.71%
Registration for Broker-Dealers and agents is done through:
CRD
What can/can't a broker-dealer charge for?
Can: clerical services (safekeeping of securities) Can't: charge for recommendations
In order to establish a retirement financial plan to meet a customer's goals, the most important consideration is:
Capital needs
SEC rule 12b-1 allows open-end management companies to:
Charge distribution fees against net assets
All of the following can be filed electronically with the State EXCEPT: A) registration application information B) signature requirement C) payment of fees D) answer to a subpoena
D
All of the following can be the same person in a trust EXCEPT: A) grantor B) trustee C) beneficiary D) executor
D
All of the following media can be used to store data under Uniform State Law EXCEPT: A) Mircrofiche B) Digital storage C) CD-ROM D) Audio tape
D
All of the following orders must be retained as a record by BDs EXCEPT: A) executed orders B) unexecuted orders C) canceled orders D) subscription orders
D
To register as a BD, the Administrator can require all of the following EXCEPT: A) min dollar amount of net capital B) min dollar amount of surety bond coverage C) passing a written exam D) meeting min experience requirements
D
Under the provisions of the Uniform Securities Act, NAFTA and GATS, the State Administrator has the power to designate all of the following non-issuer transactions as "exempt" EXCEPT: A) trades effected on the Toronto Stock Exchange B) trades effected on the American Stock Exchange C) trades effected on the Mexico Stock Exchange D) trades effected on the London Stock Exchange
D
The principal benefit of establishing a living trust is:
Removal of assets held in the trust from the decedent's estate, avoiding probate
What type of real estate can be held in an IRA?
Rental property; business property
Whether a trade is solicited or not is required on an ___________________ but not on a ____________________
Required on order ticket; not required on trade confirmation
A trader would buy a security if the expected rate of return was greater than the:
Required rate of return
The Dividend Discount model values common stock by discounting future dividends by the:
Required rate of return
All of the following business forms give a "flow-through" tax benefit and LIMITED liability to owners EXCEPT: A) limited partnership B) S corp C) LLC D) General partnership
D - General partnerships have UNLIMITED liability
Required "Chinese Walls" are between:
Research and Investment Banking, Retail sales, trading AND Investment Banking and Research, retail sales, trading
Unless varied by the Administrator, each registration application expires:
December 31st of each year
A federal covered registered investment adviser completes a notice filing with the State on October 1st. This will expire:
December 31st of the current year
What type of employee benefit plan given to executives has no limit on the amount of contribution that can be made annually?
Deferred compensation plan
PBGC only covers...
Defined benefit plans! DOES NOT COVER defined contribution plans
The ________ of an option contract measures how fast the price of the option moves in response to a price movement in the underlying stock
Delta
If dual registration is allow (registration with 2 different broker-dealers at the same time), it must be:
Disclosed on the registration application
Under ERISA, a "top heavy" retirement plan is one that...
Disproportionately favors upper level employees by giving them excessive retirement benefits that are not available to lower level employees. - if a plan is deemed to be "top heavy", then the contributions will NOT be tax deductible, making the plan non-tax qualified
If an adviser has no office in the State and it effects business with 5 or fewer clients in the State....
Does not have to register under the "de minimis" exception
What is the plan that is offered by corporate issuers that gives shareholders the ability to reinvest cash dividends paid by the company in additional shares of that company?
DRIP - Dividend ReInvestment Plan - similar to automatic reinvestment of dividends at NAV of mutual fund
What is the term for private trading platforms that are usually run by broker-dealers for institutions that wish to avoid attempting to have very large orders filled on public exchanges?
Dark pools
When assets are inherited, the tax basis in the asset is the value at:
Date of death
Donna Dixon posts a website offering to provide financial plans for individuals that complete an on-line questionnaire and submit it to her. For this, she charges a fee of $150 per plan. She receives responses from 32 individuals, receiving 8 responses from individuals who reside in 4 different States. What is true?
Donna is defined as an investment adviser and is required to register in each state
People who represent Issuers (NOT Broker-Dealers) in the trading of EXEMPT securities are
EXCLUDED from the definition of an agent Example: an individual that conducts a new issue general obligation bond offering for a municipality is not required to register in the State. Opposite: an individual associated with a Broker-Dealer that offers a new issue of general obligation bonds to the public IS REQUIRED to be registered in the State
An Investment Adviser wants to change its approach and management style, focusing more on growth funds and emerging company stocks and less on strategies that provide stable income. In order for the Investment Adviser to do this:
Each customer must approve the change by signing a new advisory agreement
The market theory that states that technical and fundamental analysis is of no use in selecting stocks for a portfolio is known as the:
Efficient Market Theory
A BD is a syndicate member in a negotiated underwriting of revenue bonds issued by the City of Jacksonville, FL. If the issue is oversubscribed, under NASAA rules, it would be unethical for the bonds to be sold to:
Employees of the BD that are Florida residents
Which action can ONLY be taken in a court of law?
Enjoining a person from engaging in the securities business
The State Administrator is empowered to require the filing of advertising and sales literature relating to offers of which of the following?
Equity securities - CANNOT require gov't, munis, or agency because these are exempt
Investment Advisers with NO place of business in the State who do not deal with the general public are...
Exempt from registration
The sale of securities by issuers to financial institutions is a(n):
Exempt transaction (does not involve the public)
Under the Uniform Securities Act, if a broker-dealer receives an unsolicited customer order to buy a security for a customer, this is an:
Exempt transaction, whether the security involved is exempt or non-exempt
CAPM is used to calculate the:
Expected rate of return
The portfolio return measure that calculates a mean rate of return from a probability distribution of all potential rates of return is:
Expected return
Broker-dealer advertising is governed by:
FINRA rules
The SEC has jurisdiction over:
FINRA, MSRB
An adviser whose only remuneration comes from charges paid by the customer, and does not receive payments from third parties for customer referrals or trade executions, either in the form of commissions or soft dollars. What is this?
Fee only adviser - "cannot be compensated from the sale of products that it sells"
An agent registered under the Uniform Securities Act has his registration revoked by the Administrator. The Administrator may NOT revoke any future applications of the person to be a(n):
Financial and Operations Principal
An agent who has passed his or her examination, but whose registration is not yet effective in the State, may sell:
Fixed annuity investments NO: mutual funds, exempt securities, corporate bonds
As a condition of registration, the Uniform Securities Act requires that BD records be kept on file for:
For the time period prescribed by Federal Law
The Securities Exchange Act of 1934 requires investment managers that discretion over $100MM or more of customer assets to file what form?
Form 13F
What is the form used for the investment adviser registration application with the SEC?
Form ADV
The States in which an investment adviser is registered would be found in:
Form ADV Part 1
An exempt reporting adviser must file:
Form ADV with the SEC
If an investment adviser ceases operations, what form must be filed with the SEC?
Form ADV-W
What form is used for the BD application used for both Federal and State registration?
Form BD
Annual renewal of registration as an agent or an investment adviser in each State is made by filing:
Form U-4 within 30 days of the date that renewal statements are sent out
What form terminates the individual's registration within 30 days by the former employer?
Form U-5
Under Uniform State Law, Investment Advisers CANNOT be compensated based on:
Gain or loss in an account
Term life, whole life, and universal life premiums are deposited to the insurance company's:
General account
The rate of return that considers compounding of returns of the time horizon of an investment is:
Geometric rate of return
Under the NASAA Statement of Policy on unethical practices, written discretionary authority need not be obtained by an investment adviser if the customer:
Gives verbal discretionary authority and a written power of attorney from the customer is obtained within 10 days
Under the Uniform Securities Act, all of the following persons with no place of business in the State are EXEMPT from registration as an investment adviser EXCEPT advisers that:
Have more than 5 clients in the state in the preceding 12 months
If the Investment Adviser Rep (IAR) of a Federal Covered adviser is physically located in the state, then:
He/she must register in the State
Another name for the RRR is the:
Hurdle rate
ABCD stock has a Beta of +2. The Expected Market Rate of Return is 7% and the Risk-free rate of return is 2%. What is the Expected Return of ABCD stock?
Risk premium = 7% - 2% = 5% x 2 (beta) = 10% Expected return = 2% + 10% = 12%
A client of an investment adviser wishes to invest in an index which consists of small cap issues. The investment adviser would recommend the:
Russell 2000
Cash payments made to investors from which of the following investments are subject to the lower 15% maximum tax rate? I) common stocks II) preferred stocks III) convertible bonds IV) non-convertible bonds
I and II only CASH DIVIDENDS - NOT interest
Under the Uniform Securities Act, which of the following persons are EXCLUDED from the definition of a "Broker-Dealer"? I) an issuer of securities II) an agent of an issuer of securities III) an agent of a broker-dealer IV) a person who has a place of business in the State that only effects securities transactions with institutions
I, II, III
Which actions taken regarding a universal variable life insurance policy could result in tax liability? I) Cash surrender II) Partial withdrawal III) loan of up to 95% IV) payout of death benefit
I, II, IV
Margin accounts CANNOT be offered by:
IA's or banks
There is NO surety bond requirement to be registered as an....
IAR
There is NO surety bond requirement to be registered as an:
IAR (There is a surety bond requirement for: broker-dealers and their agents and for investment advisers)
Registration for investment advisers and IARs is done through:
IARD
NSMIA only applies to...
IAs (Investment Advisers)
Which business form allows for both limited liability and flow through of gain and loss?
S corporation
The tax rate on the last dollar of income earned is called the:
Marginal tax rate
Which of the following terms describe Equity-Indexed Annuities? I) investment product II) insurance product III) Principal protected IV) not principal protected
II and III
Limit order display rule:
Market makers in securities that receive customer limit orders that are better priced then their "displayed quote", must show the better priced quote in the market
Being EXEMPT:
Means that they do fall under the definition (not excluded) but are not required to register
The appropriate index that could be used to benchmark a portfolio of Mid-cap stocks is the =
S&P 400 Index
A registered investment adviser if one that is registered with (the):
SEC
Federal Covered advisers are required to register with:
SEC
Limit order display rule example:
If a market maker's quote is: Bid - 15, Ask - 15.50 (4 x 3) - the market maker is willing to buy 400 shares at $15; and sell 300 at $15.50 If the market maker receives a customer limit order to BUY 200 shares at $15.20, the market maker must update its "bid quote" to: - Bid - 15.20, Ask - 15.50 (2 x 3) If the market maker then receives a customer limit order to SELL 400 shares at $15.30, the market maker must update its "ask quote" to: - Bid - 15.20, Ask - 15.30 (2 x 4)
When could a private placement (REG D) offering be advertised?
If the offering is ONLY made to accredited investors
If an agent changes his place of employment from one BD to another, the registration must be transferred:
Immediately/Promptly
If a non-resident agent engages in conduct prohibited under the Uniform Securities Act, that individual can be subpoenaed:
In either the agent's or Administrator's State
A Federal Covered Adviser can be audited by the State Administrator:
In the event the Administrator suspects fraud
What is a benefit of investing in precious metals?
Inflation protection *when there is high inflation, precious metals' tend to increase with inflation, whereas stock and bond prices fall
What rate would NOT be used to find the present value of a TIPS?
Internal Rate of Return of the bond's cash flows Coupon rate WOULD be used
The quantitative method of evaluating investments that finds the interest rate that discounts periodic cash inflows and outflows to a present value of "0" is =
Internal rate of return
The yield to maturity of a bond is the SAME as:
Internal rate of return
If a representative that transacts business in a State terminates employment with an investment adviser, notice must be given to the Administrator by the:
Investment adviser
If a representative that transacts business in a State terminates employment with a Federal covered adviser, notice must be given to the Administrator by the:
Investment adviser representative
The "suitability" standard does NOT apply to:
Investment advisers -investment advisers are fiduciaries and should be investing alongside their customers
An adviser that only sells its services to other investment advisers or mutual funds....
Is NOT required to be registered in a State
A person who renders advice on fixed annuities for a fee; and who then sells the annuities, charging a commission:
Is not required to register as a BD, investment adviser, or agent
A security is exempt from registration in a State if it is sold in a(n):
Isolated non-issuer transaction
Issuer vs. non-issuer transaction
Issuer: transaction is one where the proceeds from the offering go to the issuer Non-issuer: proceeds do not go to the issuer
If a firm has an office in a State...
It MUST register in that State - no ifs, ands, or buts
If an investment adviser has no place of business in a State, and only deals with "professional investors" in that State, then:
It is EXEMPT from registration in that State
If a State-registered investment advisor accepts $500 or more of advisory fees, 6 months or more in advance of rendering services:
It is considered to have taken custody of client funds
A couple has been recently married, both for the second time. They are both age 40, and each has 2 kids from their prior marriage. They want to open a brokerage account that will ensure that the kids get assets from their natural parent. In order to accomplish this, the account should be opened as a:
Joint account with tenants in common
For variable annuities, distributions taken prior to annuitization are taxed on a:
LIFO basis
When an inherited asset is sold, any gain or loss is always treated as:
LONG TERM
When the market price of a security has reach equilibrium, transaction costs (commissions) will be:
LOWER
For single individuals, choosing either Head of Household or Qualifying widow with dependent child status will result in...
LOWER tax bill
If a couple is married and only 1 works; or if 1 has very high income and 1 has very low income; then choosing "Married - Filing Jointly" will result in...
LOWER tax bill
Dividend yield =
Latest annual dividend / current market price
The person named as the executor over an estate would be found in the:
Letters testamentary (last will and testament)
Equity investments are the better choice for...
Long term time horizon
The use of dollar cost averaging over a long time frame results in a:
Lower average cost per share
The tax rate of the last dollar income earned is called the:
Marginal tax rate
A company that has a market cap between $1 billion and $4 billion is considered to be:
Mid cap
The Prudent Investor Act requires that fiduciaries manage the assets of their beneficiaries based upon:
Modern portfolio theory - DIVERSIFICATION
A money manager that believes that a company that reports higher than expected earnings will continue to generate superior returns and stock price appreciation is a follower of:
Momentum investing
The amount of commission charged to a customer to effect a securities transaction:
Must be disclosed on the trade confirmation
A CPA who acts as a solicitor for an investment adviser, referring clients to that adviser for a fee:
Must be registered in the State
An individual who represents an issuer selling federally covered investment company securities:
Must register as an agent in the State if compensation is being paid for this activity
OTCBB and Pink Sheet issues:
Must still be state-registered AND federally registered
Dollar cost averaging is most often used with...
Mutual fund purchases because investing in the same fixed dollar amount periodically in mutual funds buys both full and fractional shares
"Average cost" accounting cannot be used for individual stocks, but is allowed for...
Mutual fund shares
Only __________________ have sales loads and 12b-1 distribution fees
Mutual funds (open-end management companies)
The Uniform Securities Act is administered by:
NASAA
State-registered investment adviser advertising is governed by:
NASAA rules
A portfolio characterized by high growth and low dividend paying stocks would be invested in the:
NASDAQ Composite Index - heavily weighted in younger high tech growth companies with smaller market caps
If a non-working spouse claims social security benefits, this will:
NOT reduce the benefit that will be paid to the working spouse
When an expansion is expected, the yield spread will:
Narrow
A customer opens an account at a brokerage firm to purchase securities in an offering. The customer must receive the disclosure document/prospectus:
No later than the confirmation of the sale
A BD agent is registered in State A. You are an agent in State B, registered with the same BD. You happen to be a personal friend of a client of the agent registered in State A. Your friend calls you, saying that he has tried to contact his agent in State A to place an order, but he cannot reach him. He knows that you work for the same BD and asks you to place the order for him. Can you execute the trade for the client?
No, you must reject the trade because you are not registered in State A
When performing a suitability determination, the customer informs you that she will not invest in any companies that produce or market tobacco or alcohol products. This is an example of:
Non-financial considerations
An issuer has filed a registration statement in the State proposing to offer 500,000 shares in a combined primary and secondary distribution, consisting of 300,000 newly issued shares and another 200,000 shares being offered by the officers of the firm. Under Uniform State Law, the 200,000 shares being sold by selling shareholders are:
Non-issuer distribution
The main difference between JTWROS and Tenants by Entireties is what happens when...
One of the account owners is sued. Tenants by Entireties: treaties the ownership of the account as one entity so if one of the owners is sued and a judgment is obtained, the assets in the account CANNOT be seized. JTWROS: joint tenants are not considered to be a single legal entity. If a single spouse was sued and a judgement was obtained, the creditor could get 50% of the assets in the account.
Under the Investment Advisers Act of 1940, if an investment adviser has an impaired financial condition, this must be disclosed to customers:
Only by investment advisers that take custody of customer funds; or those that accept prepaid advisory fees of $1200 or more
BD in State A offers securities to a customer located in State B who is temporarily on vacation in State C. Who has jurisdiction?
Only states A & B
If a customer chooses to stay with one investment vehicle instead of investing in another, any excess return on the other investment is a(n):
Opportunity cost
An investment adviser representative wants to share in the gain and loss of a customer account. Under NASAA rules, this is:
PROHIBITED - IAs and IARs are held to a fiduciary standard
If the investment adviser is an "index manager" this means that the investment adviser is a(n):
Passive manager
Under the Uniform Securities Act, the definition of "guaranteed" means that the security is guaranteed by another party as to:
Payment of dividends, interest, or principal
When is dual registration permitted?
Permitted for an agent to be registered with a number of broker-dealers that are under "common control" Ex: Prudential may have a separate mutual funds broker-dealer and a separate general securities broker-dealer. Agents of Prudential can be associated with both broker-dealers without violating State law.
A customer borrows funds at 4% and uses the proceeds to make an investment yielding 5%. This is an example of:
Positive financial leverage
Under the Investment Adviser Act of 1940, the term "investment counsel" may only be used by an investment adviser if the:
Primary business of the adviser is the rendering of investment advice
Registration by Qualification would most likely be used for a(n):
Primary offering from a new company
The disadvantage of owning a mutual fund that invests in common stocks is the risk of loss of:
Principal
A customer wishes to buy 1 share of Walt Disney Company stock, which she intends to frame and give to her 6 year old nephew as a present. The stock is trading for $25 per share; however, the commission for executing the trade will be $100 since this is an odd lot. What must be done?
Prior to buying the share, the fact that the commission will be unusually high must be disclosed
Soliciting orders for unregistered non-exempt securities is...
Prohibited
A "hedge clause" included in an advisory contract that permits the adviser to transfer the contract to another adviser without needing customer's approval is:
Prohibited practice under NASAA rules
If an omission or misstatement of material fact is found in a filing made with the Administrator, a correcting amendment must be filed:
Promptly
Under the provisions of the Uniform Securities Act, the investment adviser must notify the Administrator of the termination of an agent's employment:
Promptly
Under NASAA rules, a customer MUST sign and return the margin agreement:
Promptly after the initial transaction in the account
Under NASAA rules, the customer must sign the margin agreement...
Promptly, after the first trade
The State Administrator, as a condition of registration int he State as an investment adviser, can require the:
Publication of an opening announcement in a local newspaper
An offering of fractional interests in oil and gas programs would be registered in a state by:
Qualification
An investment adviser is a private fund adviser that is not required to register with the SEC. In order to maintain its exempt adviser status, it can only solicit investors who are:
Qualified
Under the provisions of the Investment Advisers Act of 1940, if an adviser takes custody of customer funds or securities, account statements MUST be sent to the customer:
Quarterly
A registration application is considered to be "complete" when the proper documents and the filing fee are:
RECEIVED (not sent) by the Administrator
Internal Revenue Code Section 1031 permits the like-kind exchange of:
Real assets
A RIA with 25 clients in State A is expanding to States B, C, and D. It currently has 6 clients in State B, but has not opened an office in that State. It currently has 3 clients in State C, where a small office has been opened. It has 5 clients in State D, and is considering opening an office there. In which States is the RIA required to register?
States A, B, C
An agent of a broker-dealer effects a securities trade for a customer privately, where the transaction is neither known to the broker-dealer nor is it recorded on the books of the broker-dealer. This individual is defined as a:
Statutory broker-dealer
An active portfolio manager generates a return of 18.80% on her equity portfolio that has a beta of 1.40. The expected return of the benchmark market index (beta of 1) is 12%. Assuming that the risk-free rate of return is zero, what is the alpha achieved by the manager?
Step 1: find the excess actual rate of return = actual portfolio return - risk free return = 18.80% - 0 = 18.80% Step 2: find the excess return of the benchmark index over the risk-free rate of return = market index return - risk free return = 12% - 0 = 12% Step 3: to compute alpha, we must compare the rate of return that the benchmark index would have given if it had the same "beta" as this portfolio = 1.4 x 12% = 16.80%. Step 4: actual excess rate of return - expected risk-adjusted excess return of the benchmark = 18.80% - 16.80% = ALPHA of +2%
"When a representative has reasonable grounds for believing that his or her recommendation is appropriate for the client, based on the client's financial situation and needs, investment objectives, risk tolerance and other security holdings" is the definition for what?
Suitability
Under State law, if an investment adviser will NOT take custody of a client's funds, there is ________________________. If the adviser WILL take custody, it must have a minimum net worth or minimum ________________ of $___________.
Surety bond requirement; surety bond coverage of $35,000
Market risk is the same as:
Systematic risk
An adviser to a mutual fund foresees an economic slowdown and believes that sit-down chain restaurants are going to underperform. The adviser sells those stocks out of the fund's portfolio and holds the proceeds as cash, pending reinvestment. This is an example of:
Tactical asset allocation
The big benefit to variable annuity contract holders is that reinvested dividends and capital gains build:
Tax-deferred
The advantage of forming a business as a LLC as opposed to forming it as a C Corporation is:
Tax-treatment that is the same as for a partnership or sole prop
An order place to buy or redeem mutual fund shares is filled at:
That day's closing NAV
If the IAR of a Federal Covered Adviser is NOT physically located in the State, and the Federal Covered Adviser files notice in the State, then:
The IAR must register in the State
Federal covered adviser advertising is governed by:
The Investment Advisers Act of 1940
Federal covered investment advisers are defined under what act?
The Investment Advisers Act of 1940
Under the Uniform Securities Act, the registration application of an investment adviser must include:
The adviser's financial condition and business history
The Adviser's Brochure (Form ADV Part 2A) must disclose:
The availability or any discounts
One cannot solicit to trade securities or to offer advisory services via email UNLESS:
The one soliciting (along with his/her firm) is registered in the state
What happens to the rate of return calculation on a non-callable bond if the rate of interest stays the same and the time intervals lengthen?
The rate of return declines
A customer has a free credit balance at a BD. The customer makes a verbal request over the phone that the BD pay the amount of the balance immediately, in check form. What should be done with this request?
The request should be honored as given. Free credit balance is an uninvested cash balance that the customer can request that the firm pay at any time.
A client at your firm has an individual account. She dies without a will. What happens?
The rules of intestate succession are followed
Section 529 plans are established by:
The state
College students are considered to be residents of:
The state where their home is; NOT the state where they are going to college
An agent of a BD publishes a web page that offers a free suitability determination to each customer that fills out a form electronically. Furthermore, if the customer agrees to open an account, the site states that: "the first month of trading will be free". What is true regarding this communication?
This communication is permitted only if the BD and the agent are registered in each State where a customer completes the web form
In addition to required order ticket information, SEC rules require:
Time stamps of order receipt, execution, and/or cancellation
When must a RIA send a notice of change in ownership?
To each client, when the RIA changes its business form from a partnership to a sole prop
A viatical settlement permits one:
To invest in another person's life insurance policy - policyholder gets immediate cash in exchange for sale and transfer of life insurance policy ownership rights
To register in the State, Agent's and Investment Adviser Representative's (IARs) need:
To pass a qualifying exam
If a passively managed fund either underperforms or over-performs the benchmark index, this is called the:
Tracking error
Example of non-issuer transaction
Trade of 100 shares of stock on an exchange floor
A violation of the Uniform Securities Act will NOT occur if statements made about a security are:
True, but omit non-material facts
What form is filed by regulators when they take disciplinary or legal action against a BD, agent, investment adviser or investment adviser representative?
U-6 Form
Statute of limitations (for US and foreign) imposed under the Uniform Securities Act for actions that will cause denial of registration by the Administrator:
US: 10 years Foreign: 5 years
"Vacationing" in another State is usually defined if the customer is there for:
Under 30 days Over 30 days the customer is a "resident" where the agent and broker-dealer must be registered
A company has a lower P/E ratio than similar companies with similar growth prospect in the same industry. This is a possible indication that the stock is:
Undervalued
What type of flexible insurance policy has a savings component?
Universal life
There are 5 possible filing statuses- 3 if the person is unmarried and 2 if the person is married. These are:
Unmarried: - single; - head of household; - qualifying widow(er) with dependent child(ren) Married: - married filing jointly; - married filing separately
Under NASAA rules, within 120 days of fiscal year end, each customer must be sent a(n):
Updated brochure and brochure supplement
The P/E ratio of a stock measures:
Valuation
During times of inflation, what is true of variable annuities and fixed annuities?
Variable - which are invested in equity accounts, have a GREATER return potential to investors in times of inflation Fixed - LOSE value as inflation increases
Which form of efficient market theory would be used by those who believe that future prices cannot be predicted by past performance?
Weak form
An Investment Adviser falls below the minimum net capital required by the State on Monday. The IA must file a report with the Administrator no later than:
Wednesday of that week - notice given next day (Tuesday), report filed Wednesday
What type of life insurance policy has fixed premiums, guaranteed cash value, and a guaranteed death benefit?
Whole life
Variable life insurance policies are a variety of what?
Whole life insurance policies
When a recession is expected, the yield spread will:
Widen
A Federal Covered Adviser discovers a material error in its Form ADV. When must Form ADV be amended with the State to correct the error?
Within 30 days
A Canadian agent lives in British Columbia. The agent has a client who is on holiday in the United States for a month during the winter. Can the Canadian agent affect trades for the client while that client is in the United States?
Yes
A person who is interested in a long-term bond investment strategy would:
not be concerned with volatility