S66 Final 2
A nurse has been participating in her employer's qualified retirement plan. Upon leaving the clinic, she wishes to know what options she has that will keep the money growing tax-deferred without current tax consequences. You would tell her that she may arrange for a direct rollover of the plan assets into an IRA she may take a distribution and roll over the plan assets into an IRA as long as it is completed within 30 days she may take a distribution and roll over the plan assets into an IRA as long as it is completed within 60 days her only option is to withdraw the funds, pay the taxes and begin a new IRA A) I and III B) II and IV C) III and IV D) I and II
A) I and III
One of your clients has recently turned 73 and has questions about RMDs. The client has a traditional IRA, a rollover IRA, and 401(k) plans from two previous employers. When computing the RMDs, the RMD from each IRA is computed and may be made from one or both of them the RMD from each IRA is computed and must be paid from that IRA both 401(k)s are combined to compute the required distribution, which may be made from one or both of them the RMD from each 401(k) is computed and must be paid from that 401(k) A) I and IV B) II and III C) II and IV D) I and III
A) I and IV For RMD purposes, each IRA is figured separately and the distribution can be made from one or all of them. That is not the case with a 401(k) plan. Each account has an RMD that can only be paid from that account.
When is an investment adviser representative (IAR) required to make disclosure to the client? The IAR, in preparing a recommendation, uses research provided by a third party with whom the IAR is not affiliated. The IAR recommends a specific insurance policy for the client's overall financial plan, where a commission will be received on that sale. Transactions recommended to a specific client are inconsistent with those for other clients with objectives that are identical to that particular client. Transactions recommended to the client are inconsistent with those for the IAR's own account. A) II and IV B) I, II, and III C) II, III, and IV D) I and III
A) II and IV
Under which of the following structures is it likely to have the largest number of owners? A) Limited liability company. B) Sole proprietorship. C) JTWROS. D) S corporation.
A) Limited liability company. S corp = 100 member LLC = unlimited
A federally chartered credit union is domiciled in Texas. The credit union is making an offering of securities in Nebraska. To comply with the Uniform Securities Act's exclusion from the definition of agent, any individual offering the security in Nebraska A) cannot sell without being an agent. B) will have to be an employee of a broker-dealer registered in Nebraska. C) will have to receive only nominal commissions. D) will have to be an employee of a broker-dealer registered in Texas.
A) cannot sell without being an agent.
In general, one of the first steps in becoming an agent for a broker-dealer is the completion of Form U4. One piece of information that is not disclosed on Form U4 is A) education background and degrees earned. B) disciplinary actions. C) employment for the previous 10 years. D) any other names used.
A) education background and degrees earned.
The board of directors of DDC omitted dividends in 2020 on their $100 par 6% noncumulative preferred stock. In 2021, a $2 preferred dividend was paid. For DDC, 2022 has been a good year, and the board wishes to pay a common dividend. How much must be paid per share on the preferred for 2022 in order to pay a common dividend? A) $16 B) $6 C) $8 D) $12
B) $6 Because this preferred stock is noncumulative, any missed dividends need not be paid before common dividends can be declared.
When must an investment adviser disclose personal securities transactions to a client? If the adviser makes trades in his own account that are inconsistent with advice given to a client If the adviser makes trades that are designed to take advantage of the impact caused by recommendations to clients Investment advisers must disclose all personal transactions to clients A) I only B) I and II C) III only D) II only
B) I and II
If an investor received a lump-sum distribution from a 401(k) plan when he left his job, he may roll over his account into an IRA within 60 days transfer his account without taking possession of the money keep the funds and pay ordinary income tax invest in a tax-exempt municipal bond fund to avoid paying tax A) I and II B) I and III C) III and IV D) II and IV
B) I and III
Which of the following statements regarding agent registration under the Uniform Securities Act are true? In the absence of any action by the Administrator, the effective date of a registration is noon of the 30th day. The Administrator may initiate a disciplinary action within two years of an agent's withdrawal of registration. The administrator may request the agent furnish a statement of assets and liabilities. If, before the effective date of the registration, the Administrator requires amendments to the application, the registration will be considered to have first been filed upon filing of those amendments. A) III and IV B) I and IV C) I and II D) II and III
B) I and IV Normally, registration of persons becomes effective at noon of the 30th day following filing. If the Administrator requires the filing of amendments, the clock starts over again with the filing of those amendments. Agents do not have financial requirements, and the Administrator has a maximum of one year after termination to initiate any actions.
Kapco Advisers registers with the Administrator on April 1. Pete Patel, an IAR with Kapco, registers on the same day. Both of them file renewal papers, accompanied by the appropriate fees, on March 31 of the following year. Which of the following statements are true? Kapco's renewal was timely. Kapco's renewal was late. Patel's renewal was timely. Patel's renewal was late. A) I and IV B) II and IV C) II and III D) I and III
B) II and IV Regardless of when initial registration occurs, the renewal date for all professionals is December 31. LO 10.c
Registering with a state Administrator is required for which of these? An adviser who only provides impersonal investment advice through newspaper columns, magazine articles, or financial publications of general and regular circulation Investment adviser representatives of federal registered advisers who have natural person clients and have a place of business in the state An investment adviser who has no place of business in the state and has five advisory clients in the state A person who is an officer of a federal registered investment adviser who has no natural person clients A) I only B) II only C) II and III D) I, II, III, and IV
B) II only
Under the Investment Advisers Act of 1940, if an investment adviser's advertising describes an investment system, the description must include which of these? The length of time the system has been used The difficulties and limitations of using the system The performance history of the system A) II and III B) II only C) I and III D) I, II, and III
B) II only
A day order is entered to buy 500 LMN at 24.35. By the close, the firm has 100 shares at 24.25 and 200 at 24.35. If the remainder is unfilled, what is the outcome? A) The customer may reject the incomplete order unless the remainder can be filled within 3 business days. B) The customer must accept the execution for 300 shares, and the remainder of the order is canceled after the close. C) The customer may demand that the firm deliver the remaining shares at 24.35. D) The customer may reject the incomplete order unless the broker-dealer can guarantee filling the remainder by the end of the day.
B) The customer must accept the execution for 300 shares, and the remainder of the order is canceled after the close
Under the UTMA, which of the following statements is not true? A) An UTMA account may have only one custodian for only one minor. B) The maximum amount of money an adult can give to a minor in any one year is $17,000 C) Only an adult can make a gift to a minor. D) Once a gift is given to a minor, it cannot be reclaimed.
B) The maximum amount of money an adult can give to a minor in any one year is $17,000
A pension consultant who advises corporate retirement plans with assets of $135 million must register with which of the following? A) SEC B) The state C) Either the state or the SEC D) Both the state and the SEC
B) The state Under the Dodd-Frank bill, until a pension fund manager has at least $200 million in AUM, registration with the states is required.
Under the Uniform Security Act, all of the following persons with no place of business in the state are exempt from registration as an investment advisers EXCEPT: A) advisers who deal exclusively with investment companies registered under the Investment Company Act of 1940. B) advisers who have conducted business with no more than 6 individual clients in the state within the last 12 months. C) advisers who deal exclusively with federal covered investment advisers located in the state. D) advisers who deal exclusively with savings banks located in the state.
B) advisers who have conducted business with no more than 6 individual clients in the state within the last 12 months.
The Sharpe ratio measures a stock's A) excess return earned compared to its unsystematic risk. B) excess return earned compared to its total risk. C) excess return earned compared to its systematic risk. D) return earned compared to its total risk.
B) excess return earned compared to its total risk.
The Investment Company Act of 1940 requires certain types of investment companies to compute their net asset value on a regular basis. Excluded from this requirement are A) open-end management investment companies. B) face-amount certificate companies. C) closed-end management investment companies. D) unit investment trusts.
B) face-amount certificate companies. The concept of NAV makes no sense with a FACC.
If general interest rates increase, the interest income of an open-end bond fund whose sales exceed redemptions will likely A) not be determined from the information given. B) increase. C) decrease. D) remain unchanged.
B) increase. The primary portfolio holding of a bond mutual fund is bonds. When sales exceed redemptions, the fund has a net cash inflow (just like when your income exceeds your expenses). When that continuous flow of "new" money in invested in these higher yielding bonds, the fund's interest income increases.
Broker-dealers are required to furnish clients with a fee disclosure document. All of the following are true statements about that document except A) it must be up-to-date. B) it must be filed with the Administrator of the state in which the broker-dealer's principal office is located. C) changes to the fee schedule may be shown on the firm's website. D) changes to the fee schedule must be announced in advance.
B) it must be filed with the Administrator of the state in which the broker-dealer's principal office is located.
Under adverse market conditions, it is not unusual for mutual fund investors who had been investing on a regular basis to cease or reduce their level of financial commitment. This can have the effect of A) reducing the operating expense ratio of the fund. B) net redemptions. C) a reduction in the fund's net operating income due to a reduction in sales charges received. D) reducing the NAV of the fund as the demand for new shares wanes.
B) net redemptions. in adverse market conditions, not only do some investors stop putting money in, they also liquidate their holdings.
NASAA has rules that apply exclusively to brokerage services conducted by broker-dealers on the premises of financial institutions where retail deposits are taken. One of those rules states that at or prior to the time that a customer's securities brokerage account is opened by a broker-dealer on the premises of a financial institution where retail deposits are taken, certain disclosures must be made by the broker-dealer orally and in writing. All of the following disclosures about the securities products purchased or sold in a transaction with the broker-dealer are required except A) the securities are not insured by the FDIC. B) that customers have the option of doing their banking business at the same window as their securities trading. C) investments carry risks including loss of principal. D) the securities are not obligations of the financial institution.
B) that customers have the option of doing their banking business at the same window as their securities trading. Wherever practical, broker-dealer services shall be conducted in a physical location distinct from the area in which the financial institution's retail deposits are taken.
Suzie McQueen has a very successful interior design shop she has run as a sole proprietorship. She has just celebrated her 60th birthday and has been giving thought to an eventual sale of the business. She wants your opinion on whether she should incorporate or change to a partnership. You might respond that A) the partnership form of business structure would enable Suzie to maximize her sale price B) the corporate form of business structure would be the least expensive to form C) the corporate form of business structure would be the easiest for ultimate transfer of ownership D) the partnership form of business structure would be the easiest for ultimate transfer of ownership
B) the corporate form of business structure would be the least expensive to form In general, the corporate form of business leads to the easiest transfer of ownership. Because Suzie would probably own 100% of the stock, all she would have to do is sell that stock to a new purchaser and the corporation could continue just as before.
For larger accounts, a broker-dealer is least likely to waive its normal fee for A) safekeeping of funds or securities in the account. B) transferring the account to another broker-dealer. C) wiring funds to the client's bank. D) the annual account maintenance charge.
B) transferring the account to another broker-dealer. spite
Corporate debt securities (such as commercial paper) are exempt from registration under the Securities Act of 1933 if their maturities do not exceed how many days? A) 90 days B) 365 days C) 270 days D) 30 days
C) 270 days
Which of the following is an improper activity under the Uniform Securities Act? A) An investment adviser collects a commission on the sale of insurance products that he recommended, disclosing that a commission would be earned. B) An investment adviser charges a customer a fee for advice leading to the sale of a security, receives a commission on the sale, and discloses the amount of the commission to the customer. C) A dealer charges commissions for securities it sells from its inventory and discloses the amount of the commission to the customer. D) An investment adviser charges two customers two different fees for a similar service.
C) A dealer charges commissions for securities it sells from its inventory and discloses the amount of the commission to the customer.
Affray Compassionate Finance Company (ACFC) is offering $100 million of 150-day commercial paper for sale in State L. The paper is available in minimum denominations of $100,000 and has been rated AA by a leading rating organization. Whom of the following would be required to register as an agent in State L in order to legally sell this security in the state? A) An investment adviser who recommends this security to clients B) None of these (Because this security is exempt from registration, offers and sales can be made without registration as an agent.) C) An agent of a broker-dealer registered in the state D) An employee of ACFC who receives a 1% commission on sales
C) An agent of a broker-dealer registered in the state
All of the following situations are exempt transactions complying with the requirements of the Uniform Securities Act except A) the executor of an estate liquidates 1,000 shares of IBM held by the estate. B) Broker-Dealer A has put together a syndicate of 15 insurance companies and pension funds to purchase the entire issue of XYZ Corporation's preferred stock. C) Broker-Dealer B offers a private placement to 15 regular public customers and closes the offering at the end of 30 days. D) Mammoth Mutual Fund purchased 250,000 shares of common stock in a nonissuer transaction.
C) Broker-Dealer B offers a private placement to 15 regular public customers and closes the offering at the end of 30 days. Under the Uniform Securities Act, an unregistered private placement may be offered to no more than 10 prospective purchasers, with the exception of financial institutions and other broker-dealers
Which of the following is considered the most accurate method of measuring GDP? A) Actual dollars B) Eurodollars C) Constant dollars D) As a function of GNP
C) Constant dollars Explanation Constant dollars are mathematically adjusted to remove the effects of inflation, so when economists compare the gross domestic product of one period with that of another, they measure economic activity rather than inflation.
Under current federal tax law, which of the following would have an effect on the amount of taxes your client would pay? Age Citizenship Marital status as of the last day of the year Residency A) I, III, and IV B) II and IV C) I, II, III, and IV D) I and III
C) I, II, III, and IV
Which of the following statements regarding brokerage and advisory activities under the USA are true? It is not unlawful for an investment adviser or broker-dealer to employ any device, scheme, or artifice to defraud in the sales of securities to institutional investors because the USA is designed to protect individual investors. Under the USA, it is unlawful for an investment adviser to deceive a person when not providing advice to that person. Sanctions for both investment advisers and broker-dealers include administrative proceedings, judicial injunctions, and civil and criminal prosecutions. It is unlawful for any person, whether technically defined as an investment adviser or not, to deceive another person for compensation as to the value of securities. A) I and III B) I and II C) III and IV D) II and IV
C) III and IV
Under NASAA's Statement of Policy on Dishonest or Unethical Business Practices of Broker-Dealers and Agents, what factor is not considered when determining whether excessive trading has occurred? A) The frequency of trading B) The amount of trading C) The length of time the account has been open D) The financial condition of the account and the financial resources and goals of the client
C) The length of time the account has been open
Included in the definition of derivative would be all of the following except A) rights. B) futures. C) leveraged ETFs. D) options.
C) leveraged ETFs.
Active Technicians (AT) is a state-registered investment adviser. In its brochure supplement, it would include information relating to each of the following individuals except A) those providing investment advice and having direct contact with institutional clients in the state. B) those exercising discretion over assets of clients in this state, even if no direct contact is involved. C) members of AT's board of directors who are active in the firm's business. D) those providing investment advice and having direct contact with retail clients in the state.
C) members of AT's board of directors who are active in the firm's business. Unless the individual has direct contact with clients (retail or institutional) or exercises discretion, a copy of the Part 2B brochure supplement for each individual is not required.
An investment adviser (IA) registered with the state is organized as a partnership. The IA may A) change its ownership structure without formally notifying its clients. B) assign their contracts without client notification. C) not change its ownership structure without formally notifying its clients. D) not change its ownership structure under any circumstances.
C) not change its ownership structure without formally notifying its clients. An investment adviser that is organized as a partnership, as opposed to a corporation, must notify its clients of changes in its ownership structure. An investment adviser organized as a corporation need not notify its clients of an organizational change.
Perpetual Pecuniary Rewards (PPR) is an investment adviser registered in several states. PPR is affiliated with Perpetual Rewarding Investments (PRI), a broker-dealer registered with the SEC and the same states as PPR. Through that affiliation, clients of PPR can enter into a wrap program with an annual fee between 1% and 1.75%, depending on the account's assets. When opening a new wrap account, PPR must provide the client with a written disclosure statement containing at least the information A) contained in PRI's Form BD filed with the state of residence of the client. B) contained in Form ADV, Part 2A C) required by Appendix 1 of Form ADV, Part 2A. D) required by Appendix 1 of Form ADV, Part 1A.
C) required by Appendix 1 of Form ADV, Part 2A. The required disclosure statement for wrap fee programs must contain at least the information in Appendix 1 of Form ADV, Part 2A. It is important to remember that wrap fee clients receive Appendix 1, not the Form ADV, Part 2A that non-wrap advisory clients are given.
In an account opened by 2 individuals as joint tenants with rights of survivorship, all of the following are true except A) mail may be directed to the joint owner agreed upon by both parties to the account B) orders may be entered by either party C) stock certificates may be delivered in the name of either party D) in the event of death, the other party assumes full ownership of the account
C) stock certificates may be delivered in the name of either party Explanation In a JTWROS account, each party has an equal, undivided interest in the account. Upon the death of 1 party in a 2-party account, the other party assumes full ownership of the account. Orders may be entered by either party, and mail may be directed to either party. However, disbursements of cash or securities must be in the name of all parties to the account.
A potential investor in mutual funds is bewildered by the different share classes. You are asked for advice. When comparing Class A, B, and C shares, it would be fair to state that all of the following are features unique to Class A shares except A) low or no 12b-1 charges. B) rights of accumulation. C) the method of calculating the redemption price. D) breakpoints.
C) the method of calculating the redemption price. Any mutual fund, regardless of the class, computes the redemption price using the forward pricing rule.
One of the differences between broker-dealers and investment advisers (IAs) is the disclosures that must be made when the IA is acting as a principal or agent in a transaction with an advisory client. In the case of a firm registered in both capacities, those disclosures would not be required when A) the transaction is in an exempt security. B) cleared with the Administrator. C) there is a transaction with a client of both entities but the trade is not based upon advisory services rendered. D) approval is granted by an officer of the firm.
C) there is a transaction with a client of both entities but the trade is not based upon advisory services rendered. Under those conditions—where a firm is registered as both a broker-dealer and an IA—the disclosure requirements incumbent upon IAs do not apply when the transaction is solely related to the firm's capacity as a broker-dealer.
All of the following factors have an inverse relationship to a bond's duration except A) yield to maturity. B) current yield. C) time to maturity. D) coupon rate.
C) time to maturity.
NASAA's Model Rule on Unethical Business Practices of Investment Advisers, Investment Adviser Representatives, and Federal Covered Advisers would consider the adviser to be engaging in an unethical business practice if he loaned money to a client other than one A) who was in the money-lending business. B) who was an immediate family member of the adviser. C) who was an affiliate of the adviser. D) borrowing under the same terms and conditions as the client could find at a commercial bank.
C) who was an affiliate of the adviser. Loaning money to a client is prohibited unless the investment adviser (IA) is a financial institution engaged in the business of loaning funds or the client is an affiliate of the IA.
Defalcator Investment Advisers (DIA), registered in States A, K, and R, would be required to provide a balance sheet as part of its brochure if it charged fees of A) $500 for the next three months of advisory service. B) $500 for the next six months of advisory service. C) $1,000 for the next three months of advisory service. D) $1,000 for the next year's advisory service.
D) $1,000 for the next year's advisory service. State-registered investment advisers, who charge substantial prepayment of advisory fees, must include a balance sheet with their brochure. The definition of a substantial prepayment is more than $500, six or more months in advance. The correct choice is the only one meeting both requirements. Remember, it isn't $500 or more, it is more than $500 and it must be for at least six months of service to count.
An investor is trying to decide whether to purchase $10,000 face amount of a U.S. Treasury bond or a highly rated corporate bond. The price of the Treasury bond is 102.20 while the price of the corporate bond is 99 3/8. If the investor decides to purchase the Treasuries, disregarding commissions, the price difference is A) $28.25. B) $282.50. C) $32.50. D) $325.00.
D) $325.00. The first step is remembering that Treasuries are quoted in 32nds. That means that 102.20 is 102 and 20/32 which is 102 5/8. Subtract 99 3/8 from 102 5/8 to get 3 2/8 or 3 1/4. On a $1,000 bond, that is $32.50. Then, note that this investor is purchasing 10 bonds, so the difference in price is $32.50 times 10 or $325.
The statute of limitations for criminal offenses under the USA is A) 10 years. B) 3 years. C) 2 years. D) 5 years.
D) 5 years. Remember the sequence 5-5-3: 5-year statute of limitations, $5,000 maximum fine, and imprisonment for up to 3 years.
An investor has her agent enter a sell stop order at 60, limit 60. Following the order entry, trades occur at 62.12, 60, 59.95, 60.06, 61. More than likely, the investor received A) 59.95 B) 60 C) 61 D) 60.06
D) 60.06 This is really two orders. The first is to "stop" at 60. That is, once the stock trades at 60 or lower, enter my order. That second order is a sell, but with a limit of 60. So the first time the stock hits 60 (or less) is the trade at 60. That triggers the sell limit. The next trade is a 59.95. Because the limit order is saying, "Get me 60 or higher, the 59.95 is not an acceptable price." But, the next trade, 60.06 will meet the client's goal of receiving no less than 60.
According to the Uniform Securities Act, which of the following would be defined as an investment adviser representative? John, who opens an investment advisory firm where he devotes his time exclusively to management responsibilities as the sole proprietor of the firm Paul, who works for a firm soliciting investment management accounts on behalf of several different investment managers Margaret, who works as a commission sales agent for a broker-dealer Mark, an employee of AAA Broker-Dealers, who solicits brokerage clients for commissions on the basis of research conducted by his firm's securities analyst A) II and III B) II and IV C) I and IV D) I and II
D) I and II
When would it not be considered an unethical and dishonest business practice for an agent registered with a broker-dealer to divide or otherwise split the agent's commissions, profits, or other compensation from the purchase or sale of securities? As long as the other person is also registered as an agent for the same broker-dealer As long as the other person is also registered as an agent for a broker-dealer under direct or indirect common control As long as the arrangement is in writing As long as the client has approved of the sharing arrangement A) I, II, and III B) III and IV C) I, II, III, and IV D) I and II
D) I and II NASAA's Statement of Policy on Unethical or Dishonest Business Practices of Broker-Dealers and Agents permits commission sharing as long as the agents are properly registered with the same broker-dealer or one under common control. There is no requirement for the arrangement to be in writing, and the customer has no say so in this matter.
An agent's recommendation for the purchase of a municipal security to a customer who wants fixed income and is in a relatively low tax bracket would in most cases be unsuitable and unethical a securities felony grounds, in extreme cases, for suspension or revocation of the agent's license outside regulatory jurisdiction A) I only B) II and III C) IV only D) I and III
D) I and III
Mary Huggins is the ex-wife of Charlie Huggins. They were married for 12 years and then finalized a divorce. Charlie is now 70 and has begun taking his Social Security benefits. Mary remarried last year. It would be correct to state that A) Mary is entitled to Charlie's Social Security benefits only when she reaches full retirement age. B) Mary is entitled to Charlie's Social Security benefits or those of her new husband, whichever is the greater. C) Mary is entitled to full spousal benefits because they were married for at least 10 years. D) Mary is not entitled to any of Charlie's Social Security benefit.
D) Mary is not entitled to any of Charlie's Social Security benefit. When a couple has been married for at least 10 years, the ex-spouse is entitled to full spousal Social Security benefits unless remarried.
Form PF must be filed by A) state-registered private fund managers, regardless of the amount of assets under management. B) SEC-exempt reporting advisers. C) SEC-registered advisers with no more than $150 million in private fund assets under management. D) SEC-registered advisers with at least $150 million in private fund assets under management.
D) SEC-registered advisers with at least $150 million in private fund assets under management.
An investor has been comparing several different mutual funds with the same objectives. When making the decision as to which fund to purchase, which of the following factors would be the most important? A) The date of the annual shareholders meeting B) The exchange on which the fund is listed C) The net asset value per share D) The fund manager's tenure
D) The fund manager's tenure Because investors in mutual funds invariably purchase in a dollar amount rather than by the number of shares, the NAV per share is not a factor.
Which of the following statements is true concerning variable life separate account valuation? A) Unit values are computed monthly and cash values are computed daily. B) Unit values are computed weekly and cash values are computed monthly. C) Unit values are computed monthly and cash values are computed weekly. D) Unit values are computed daily and cash values are computed monthly.
D) Unit values are computed daily and cash values are computed monthly.
Damon is an agent with ABC Investment Planning, a registered broker-dealer and investment adviser. Under what circumstances would Damon not have to obtain client consent when ABC Investment Planning is acting in a principal capacity? A) When the client has given ABC blanket permission to engage in this type of transaction B) Never C) Only if the client terminates the advisory relationship D) When the trade that is made is unrelated to the advisory relationship
D) When the trade that is made is unrelated to the advisory relationship
Gervaise, an investment adviser representative with a federal covered investment adviser, spots several existing advisory customers. They invite Gervaise to join them for some spirits, and the invitation is warmly accepted. After about an hour, some of these customers and their friends ask Gervaise if it would be possible to have a lesson on what specific stocks should be considered under current market conditions. To make this presentation, Gervaise A) must not receive any compensation, direct or indirect. B) must be registered in this state because the advice being given is specific rather than general. C) does not have to be registered in the state because, as a representative of a covered adviser, registration is required only in those states where a place of business is maintained. D) does not have to be registered in the state as long as the only participants are the existing customers without their friends.
D) does not have to be registered in the state as long as the only participants are the existing customers without their friends.
The powers of the Administrator include the ability to determine A) surety bond requirements for investment advisers who do not exercise discretion or maintain custody. B) minimum net worth requirements for agents who exercise discretion. C) maximum net capital requirements for broker-dealers. D) minimum net worth requirements for investment advisers.
D) minimum net worth requirements for investment advisers.
Transparent Investment Advisers, Inc. (TIA), is registered in three states and has $55 million in assets under management. TIA maintains custody of customer securities. TIA's chief financial officer reports that the net worth of the firm has suddenly fallen to $28,000. This requires TIA to A) issue $7,000 of stock. B) borrow $7,000 from the owners. C) obtain a surety bond in the amount of $7,000. D) obtain a surety bond in the amount of $10,000.
D) obtain a surety bond in the amount of $10,000. must have a minimum net worth of $35,000. If the net worth should fall below that amount, the firm must immediately obtain a surety bond rounded to the next $5,000 to meet that level.
One respect in which an investment adviser differs from a broker-dealer is that of fiduciary responsibility to the client. Therefore, the investment adviser will have greater concerns about various non-financial needs and attitudes of the client when making recommendations. Included in those concerns would be all of these except A) the client's attitudes toward the environment. B) the client's marital status. C) the client's time horizon number and age of dependents. D) the client's retirement plan vested balance.
D) the client's retirement plan vested balance. The vested balance in the client's retirement plan is a critical factor in determining what additional (if necessary) will be necessary to meet retirement goals, but is a financial rather than non-financial consideration. The other choices can't be measured in terms of dollars and cents.
