65
if an investor owned part in a mortgage that defaulted where does their claim stand?
As a general creditor on a pro rata basis
If an IA submits an order of shares to BD for multiple accounts and the pricing differs how are the prices allocated to IAs accounts?
Average cost basis
Under the Investment Advisers Act of 1940, what is the maximum fine that may be imposed for violating the act?
$10,000 or 5 years of prison
All legal actions on IA must be disclosed unless it's a civil action with a fine of less than...
$2,500
De minimus exemption for political contributions
$350 if eligible to vote and $250 if not. This only applies to individuals
Under the Uniform Securities Act, what is the maximum fine that may be imposed for violating the act?
$5,000 or 3 years of prison
How long can LEAP expiration dates be?
3 years
How long must BDs keep records?
3 years
What is the only retirement plan permitting early withdrawals with no penalty?
457 plan
How long must Investment Advisors keep records?
5 years
How many days does a mutual fund have to redeem its tendered shares?
7
Rule 72
72/interest=years needed to double
Minimum years for retaining records for BDs and IAs
BDs 3 years IAs 5 years
A corporation that sells interests in an oil and gas limited partnership to investors with the proceeds going to the issuer
A Broker Dealer
What is a prospectus?
A prospectus is a communication made in writing or by radio or television that offers a security for sale
How often must an investment company file reports with the SEC as required by the Investment Company Act of 1940?
Annually
Asset-based sales charges will generally be lowest when holding which class of mutual fund shares?
Class A shares
If investor is looking for inflation protection suggest
Common stock or TIPS
How often are unit values for variable life computed?
Daily
Interest rates are rising. An analyst would be most likely to state that the business cycle is in which stage?
Expansion
Buying stocks with high P/E ratios reflects which type of strategy?
Growth
The yield to maturity for a bond represents its
IRR
Pay-to-play
If a firm donates to political fund they cannot receive compensation from them for 2 years
A client has been contributing to a periodic payment annuity for 20 years. The M&E charge is 1.25% per year. What happens to that charge when the client annuitizes at attained age 68?
It ceases
BD must provide a risk disclosure before opening what type of account?
Margin
How often is the cash value of a variable life computed?
Monthly
What business entities have a tax filing due date of March 15?
Multiple member LLC electing to be treated as a corporation and S Corps
Are treasury bills issued at par?
No-at a discount
When an investor owns a convertible security where, upon conversion, the account value would remain the same, it is considered that the convertible and the common are selling at
Parity
An issuer would like to register its new offering in the state. Which of the following is not required in order for the registration to become effective?
Ratings are not a requirement for a security to be registered.
For a Canadian Broker to work with clients who are vacationing in the US they must
Register with the states the clients are vacationing in
alpha=
Return-[rf+(rm-rf)B]
Traders in stock index options are exposed to what type of risk?
Systematic risk
Which of the following is a characteristic of an investment-grade general obligation municipal bond?
The taxing authority of the issuing government or municipality backs the issue's repayment.
Who are Keogh plans designed for?
Those with self employed income
What is not discretion?
Time & Price alone
POD account is also known as a
Totton trust
Each client must receive the brochure no later than the entering into the advisory contract.
True
Once ABC Securities Co. begins offering a fee-based asset management program, it loses its exclusion from the definition of investment adviser. (T/F)
True
corporations have a 50% dividend exclusion on dividends received from other companies (T/F)
True
open-end companies may issue common stock only (T/F)
True
Can an admin compel testimony of witnesses?
Yes
"the flight to quality has ended." What would you expect the effect of this to be?
Yield spreads are narrowing.
Agents can use discretions only
after receiving it in writing
Consent to service of process
an agreement whereby a registrant will be bound by any legal action or subpoena served on the Administrator as if it had been served on the registrant
A viatical sale would generally involve
an individual with a terminal illness.
The administrator cannot deny registration of an agent due to only...
being under investigation
Current ratio
current assets/current liabilities
An increase in the earnings per share growth rate from one reporting period to the next is called
earnings momentum.
an admin of state a can only enforce subpoenas in state b is violation occurred in state a (T/F)
false
A client owns an investment-grade bond with a coupon of 5% that is priced to yield 6.7%. If similarly rated bonds are being issued today with coupons of 7%, it would be expected that the client's bond
has a negative net present value
a general partner in a DPP does not have
limited liability
If investor is in low tax bracket never suggest
municipal bond
Selling a share of an open end investment company would price by
next computed NAV
If investigations are of serious violation must they be open to the public?
no
is it required to file fee schedule with the administrator?
no
Rule 506b under Reg D
no more than 35 nonaccredited investors
nonqualified variable annuities are taxed how?
partially tax free (return of capital) partially taxed (gains)
If IRR > RRR then NPV is...
positive
bid price
price you are offered when you want to sell
CAPM
rf+B(Rm-Rf)
If a group of money managers were having a discussion and the term LIBOR was mentioned, the topic would most likely be
short-term borrowing rates
total risk is measured by
standard deviation
A sell stop order is also called a
stop loss
What is the statute of limitations for civil liability?
the earlier of 3 years after the date of the sale or 2 years after discovery of the violation
An employee covered by a defined benefit pension plan would be least concerned with
the investment performance.
The value of a variable annuity during the accumulation period is determined by
the number of accumulation units owned multiplied by the value of each unit
The CAPM is most commonly used to determine the investor's...
Expected return
it is unnecessary for the prospectus to disclose the management fee (T/F)
False
Life insurance with greatest amount of coverage and lowest initial premium
annual renewable term
if a stock is listed on the NYSE
then it is federally covered and does not need to be registered with the state
an investment company must have $5 million capital before its securities can be offered to the public (T/F)
False; $100,000
no more than 50% of the board of directors of an investment company may be officers or employees of the company or investment advisers to the company (T/F)
False; no more than 60%
A bond's yield to maturity reflects its
IRR
Are treasury bills callable?
No
Can fliers be mailed in a state the investment group is not registered in?
No
Do Preferred stockholders have the right to subscribe to a rights offering?
No
If solicitation is for impersonal services does a disclosure statement need to be required?
No
A transactional exemption would be offered when a sale is made by
a sheriff
If a private fund advisor is exempt from state registration they must
have only qualified clients
A firm is registered as an investment adviser under the Investment Advisers Act of 1940. It has decided to raise its annual management fee from $1,500 to $1,800 and require that it be paid 1 year in advance instead of quarterly. The firm would
now come under the requirement to include a balance sheet as part of its brochure
persons who advise but are excluded
only issue US treasury incidental in their career as an aeronautical engineer
Federal covered advisor is either...
registered with SEC or exempt from being an IA
selling a share of a closed end investment company would price by
supply and demand for shares
Is an agent automatically registered in a state that their employer is?
No
Is there a de minimus exemption for BD's?
No
When does registration become effective for an IA?
No later than noon on the 30th day after application
rebalancing is a characteristic of what type of investment?
Passive
Who files form PF?
SEC registered advisors with over $150 million in private funds
When does commercial paper not need to be registered?
When the denomination is below $50,000. When the duration is under 270 days and it is in the 3 highest ratings
Are federal covered securities exempt from registration under the USA?
Yes
Are treasury bills issued in book entry form?
Yes
Can an admin appoint an officer who has the power to subpoena records, administer oaths, or require production of documents and books?
Yes
Can an admin deny registration of a securities professional who has been convicted of an felony in the last 10 years?
Yes
If solicitation is for other than impersonal services must a disclose document be given?
Yes
If the solicitation is given for personal services must a signed statement of receipt of brochure and disclosure document be received?
Yes
Is it possible to need to pay state filing fees on federal covered securities?
Yes
would a gift of warrants be considered an offer to sell?
Yes
IA can use discretions only
if received in writing within 10 days after discretionary action
When would you have to aggregate contributions
if you had a 401k and 403b or you have an IRA and roth IRA
