Series 65 Practice Test 10

What's the unified tax credit for estate and gift taxes

1.) 17k 2.) 12.92 million 3.) 34k 4.) 170k Explanation: Answer is B

All of the following are pass through entities, EXCEPT

1.) LLCs 2.) MLPs 3.) C-Corp 4.) REITs Explanation: Answer is C

Which of the following is the LEAST relevant risk of owning digital assets

1.) Liquidity 2.) Regulatory 3.) Inflation 4.) Market Explanation: Answer is C

According to NASAAs Model Rule on IAR CE, how many credit hours of CE must an IAR complete each year

1.) 0 if the IAR is also registered with FINRA as an associate member 2.) 10 credit hours of training on regulatory changes 3.) 6 credit hours related to products and practices and 6 credit hours related to regulatory and ethics (3 hours must cover ethics) 4.) 6 credit hours related to products and practices and 0 credit hours related to ethics if the IAR is registered with FINRA Explanation: Answer is C

Which non-qualified deferred compensation plan can be offered to managers of a government agency?

1.) 401A 2.) 401K 3.) 403B 4.) 457 Explanation: Answer is D

A customer recently purchased shares of an SEC-reporting issuer through a Regulation D private placement. From the date of purchase, how long must a customer wait before being permitted to re-sell the shares?

1.) 6 months 2.) 90 days 3.) One year 4.) 18 months Explanation: Answer is A

All of the following are non-financial investment considerations, EXCEPT

1.) A corporations dividend policy 2.) A corporations net carbon emissions 3.) A corporations DEI policies 4.) The makeup of a corporations board of directors Explanation: Answer is A

SPACs are suitable for which type of investor?

1.) A long-term investor seeking a growth investment 2.) a short-term investor seeking tax free income 3.) a riske averse investor who desires safety of principal and is willing to sacrifice returns 4.) A risk tolerant investor who is seeking large gains Explanation: Answer is D

What's a domestic settlements agreement?

1.) A power of attorney that gives an IA discretionary powers over a clients account 2.) A legal arrangement which authorizes the State Admin. to receive non-criminal legal complaints on a registrant's behalf 3.) A legal contract between 2 parties which outlines the obligations to one another after dissolution of a legal arrangement 4.) A legal contract that permits several individuals to act as one entity to achieve a desried business objective Explanation: Answer is C

Which of the following is the BEST definition of a Will?

1.) A power of attorney that permits an executor to immediately dispose of assets 2.) A power of attorney that empowers a US attorney to dispose of assets during liquidation 3.) A legal contract between 2 parties which outlines the obligations to one another after dissolution of a legal arrangement 4.) A legal contract which coordinates the distribution of assets and other legal matters after an individual dies Explanation: Answer is D

What's a SPAC?

1.) A trust that buys a basket of stocks and holds them for a predetermined period 2.) A blank check company that's formed with the intention of buying shares in another company 3.) An investment fund that invests in a pool of securities which is actively managed by an IA 4.) A security that gives the owner the right to purchase a predetermined amount of shares at a fixed price Explanation: Answer is B

Which of the following is an advantage of community property with rights of survivorship

1.) Additional powers may be added after property has been acquired 2.) It's available in every state 3.) Property is passed to the surviving owner without passing through probate 4.) Ownership is not required to be equal Explanation: Answer is C

The sale of additional shares of an SEC-reporting issuer is referred to as

1.) An IPO 2.) A reverse merger 3.) A going private transaction 4.) A secondary offering Explanation: Answer is D

Which of the following statements is TRUE regarding an offering of common shares

1.) An IPO of common stock is exempt from both state and federal registration requirements 2.) A secondary offering of common stock that's listed on a registered securities market is exempt from registration 3.) An IPO is exempt from state registration requirements, but must register under federal law 4.) A secondary offering of common stock is exempt from both state and federal registration requirements Explanation: Answer is B

Which security is given to shareholders as a part of an issuers anti-dilution policy when it intends to raise additional capital?

1.) An employee stock ownership plan 2.) Convertible bonds 3.) Warrants 4.) Preemptive rights Explanation: Answer is D

Which right is associated with common stock ownership and prevents the proportionate loss of an individuals ownership in a corporation?

1.) Anti-dilution 2.) Inspection 3.) Voting authority 4.) Section 10b-5 plans Explanation: Answer is A

Why is manager tenure important when comparing 2 different pooled investments

1.) Because it is easier to predict future performance with funds thhat frequently change managers 2.) Because some investors believe that manager tenure can be used to estimate a manager's ability and predict positive returns in the future 3.) Because funds that have long tenured managers will have lower IA fees 4.) Because manager tenure is a good way to estimate the risk-adjusted returns for retail and institutional shareholders Explanation: Answer is B

Through which process can an ETF shares be arbitraged to minimize the difference in the ETFs NAV and the market price?

1.) By purchasing and selling shares of the underlying portfolio at the ETFs NAV 2.) Since ETFs are exchange-traded, the difference between the market price and NAV cannot be arbittraged 3.) By issuing puts on shares of the ETF 4.) By allowing authorized participants to use creation and redemption units of the ETF Explanation: Answer is D

If an ERISA plan participant fails to specify how her savings are invested, the plan sponsor must

1.) Choose a suitable investment for the particpant 2.) Purchase the highest yielding instruments that are backed by the full faith and credit of the US treasury 3.) Invest in an FDIC insured CD 4.) Place the funds in a qualified default investment alternative Explanation: Answer is D

All of the following are examples of digital assets, EXCEPT:

1.) Cryptocurrency 2.) Blockchains 3.) NFTs 4.) Stable coins Explanation: Answer is B

Which of the following statement is TRUE regarding payment for order flow

1.) Custodians will pay introducing firms for their retail customers orders 2.) Clearing brokers will pay introducing firms for their retail customers orders 3.) Clearing brokers will send their retail customer orders to a custodian for safekeeping 4.) Payment for order flow is prohibited, however, payment for custodial services is permitted Explanation: Answer is B

What's an environmental concern for ESG investors

1.) DEI policies for employees 2.) The diversity of a company's board of directors 3.) Net carbon emissions 4.) Executive pay Explanation: Answer is C

Which of the following is a precursor to inflation?

1.) Decreasing supply costs 2.) High unemployment 3.) Low unemployment 4.) Tight monetary policies Explanation: Answer is C

When reviewing soft dollar arrangements, what's a fund manager required to do?

1.) Disclose the conflict of interest with the SEC or Admin. 2.) Confirm that the term of the contract with the broker-dealer doesn't exceed 36 months 3.) Ensure that the added benefits justify the larger commissions and fees paid by the adviser's clients 4.) Waive its fiduciary responsibility before entering the contract Explanation: Answer is C

Which of the following is a benefit of owning a MLP

1.) Double taxation 2.) Exchange-listing 3.) Exempt from registration 4.) Availability for all industries Explanation: Answer is B

Which of the following statements is TRUE regarding the pricing of ETF shares

1.) ETFs must be purchased at the next calculated NAV plus a sales charge 2.) ETFs do not have a NAV 3.) ETFs can be bought at a premium or a discount to their NAV 4.) ETFs can only be sold at a discount to their NAV Explanation: Answer is C

What type of broker-dealers send orders to a market maker in order to execute orders for retail customers

1.) FINRA member firm 2.) Custodian 3.) Clearing broker 4.) Introducing broker Explanation: Answer is D

Which of the following statements is TRUE regarding the characteristics of ESG investing

1.) Fiduciaries should prioritize investment returns over all other considerations 2.) Fiduciaries must utilize both financial and non-financial factors before investing 3.) Fiduciaries should prioritize economics, sharpe ratios, nd good returns before non-financial considerations 4.) Fiduciaries must always minimize risk, even if it means sacrificing returns Explanation: Answer is B

Which type of offering will likely be more volatile in the aftermarket?

1.) Follow-on offerings 2.) Secondary offerings 3.) IPOs 4.) Closed-end offerings Explanation: Answer is C

Which funds are the most easily comparable?

1.) Funds that are issued by the same fund family 2.) Funds with similar sales charges 3.) Funds with similar manager tenure 4.) Funds with similar investment styles Explanation: Answer is D

Which of the following is a right that's given to shareholders of an issuer?

1.) Guaranteed profits 2.) Seniority to creditors in liquidation 3.) Voting on corporate elections 4.) Tax-deductible dividends Explanation: Answer is C

An individual currently has $100 to invest. She has calculated that the future value of her investment will be either $130 under favorable market conditions or $80 under unfavorable market conditions. Which of the following statements about the investor's future projections is TRUE?

1.) If market conditions are favorable, the investor will have a $20 gain 2.) The discount rate must be the same for both the favorable and unfavorable market conditions 3.) The present value of the investment is $105 4.) If market conditions are unfavorable, the investor will have a $20 loss Explanation: Answer is D

SPAC shares are originally issued

1.) In an SEC-registered IPO 2.) In a regulation D private placement 3.) Using the regulation A safe harbor 4.) In a sale that's conducted under Rule 147 and registered with the State Admin. Explanation: Answer is A

Which of the following BEST defines the term "finder" in securities markets

1.) Individuals who attempt to find potential investors for private companies 2.) Unregistered individuals who solicit IA services 3.) A broker-dealer that clears and settles stock market transactions 4.) An attorney who refers illegal activity to the State Admin. Explanation: Answer is A

What type of broker executes orders for retail investors on a registered securities exchange

1.) Introducing broker 2.) Exchanging dealer 3.) Clearing broker 4.) Custodian Explanation: Answer is C

Which of the following BEST defines the income related monthly adjustment amount

1.) It's the increase in social security benefits due to rising living costs 2.) Its an adjustment in monthly income received from a variable annuity 3.) Its the methodology that's used to calculate the payout from a trust account 4.) Its an increase in Medicare premiums for individuals with income over a certain limit Explanation: Answer is D

Which of the following is an advantage of investing in real estate

1.) Large capital expenditures 2.) Tax deductions 3.) Lower volatiltiy 4.) Loss of liquidity Explanation: Answer is B

If taken by an individual, which action would require her to be registered as an IAR

1.) Providing advice regarding real estate transactions for a fee of 1% of the transaction 2.) Charging a fee for advice on the most appropriate varaiable annuity 3.) Soliciting the sale of mutual funds which include a front-end load 4.) Creating a free website and providing general commentary on the municipal bond market Explanation: Answer is B

What's the difference between quantitative and qualitative analysis?

1.) Qualitative analysis relies on metrics that are able to be counted or measured 2.) Qualitative analysis relies on descriptive judgements rather than objective measurements 3.) Quantitative analysis is the only method thats approved by the prudent investor standard 4.) Quantitative analysis often uses narratives, while qualitative analysis does not Explanation: Answer is B

Which of the following is the BEST explanation of the difference between progressive and regressive taxes

1.) Regressive taxes will result in lower income individuals paying proportionately more in tax than higher income individuals 2.) Regressive taxes assess higher marginal rates on lower income individuals 3.) Progressive taxes assess the same tax rate for all taxpayers 4.) Progressive taxes assess higher rates on lower income individuals Explanation: Answer is A

An individual recently signed an advisory contract with an IA. the individual runs a consulting business by herself and wants advice on the best retirement account to set up. Her business earns 300k per year and she wants to maximize contributions into the plan in order to retire earlier. what type of account best fits her needs?

1.) Roth IRA 2.) Individual (solo) 401k Plan 3.) 529 plan 4.) Simple 401k plan Explanation: Answer is B

When evaluating the performance of different mutual funds, which benchmark should be used

1.) S&P 500 2.) Dow Jones Industrial Average 3.) A benchmark that most closely matches the investment objectives of the mutual funds 4.) The real return on a risk-free asset Explanation: Answer is C

All of the following are methods of comparing actively managed pooled investment returns, EXCEPT

1.) Sales charges 2.) manager tenure 3.) Independant ratings 4.) Benchmark returns Explanation: Answer is A

All of the following are exempt from the gift tax, EXCEPT

1.) Securities 2.) Medical expenses 3.) Tuition 4.) Gifts to a spouse Explanation: Answer is A

In a qualified retirement account, which of the following is NOT an acceptable qualified default investment alternative

1.) Securities by the employer 2.) A target date mutual fund 3.) a balanced mutual fund 4.) a product that's managed by an IA Explanation: Answer is A

Which of the following assets being placed in a DAF will provide the greatest estate planning benefit

1.) Securities with a large capital gain 2.) US treasury bonds 3.) farm equipment 4.) cash Explanation: Answer is A

All of the following investments are permitted in a 401k plan, EXCEPT:

1.) Shares of ETFs 2.) Mutual Fund Shares 3.) Employer's stock 4.) Real Estate Explanation: Answer is D

What financial arrangement exists when a market maker or exchange pays a broker-dealer or the routing of the broker-dealers customer orders

1.) Soft-dollar arrangement 2.) Payment for order flow 3.) layering 4.) spoofing Explanation: Answer is B

Which of the following statements is TRUE regarding digital assets?

1.) Some digital assets are securities 2.) All digital assets are securities 3.) Digital assets are exempt from anti-fraud provisions 4.) Digital assets are exempt from registration with state Admin. Explanation: Answer is A. Some digital assets are securites. Digital assets must meet four part Howey Test to meet definiton of security

Which gift is exempt from the annual exclusion for the gift tax

1.) Stock given to a child that has a FMV of $20k 2.) 40k of cash that's given to a friend 3.) 180k of cash that a married couple gives to their relatives 529 plan 4.) 25k payment for college tuition Explanation: Answer is D

What's restricted stock?

1.) Stock that's been registered with the SEC 2.) Stock that can never be resold 3.) Stock that was purchased in an IPO 4.) Stock that's not been registered with the SEC Explanation: Answer is D

How is a corporation permitted to borrow from a bank?

1.) THrough a revolving credit facility 2.) By issuing preferred stock 3.) By issuing bonds 4.) Through credit cards Explanation: Answer is A

What's the maximum number of shares of control or restricted stock that an investor is permitted to sell in a 90 day period?

1.) The greater of 4% of the outstanding shares or the average weekly trading volume over the last week 2.) The greater of 1% of the outstanding shares or the average weekly trading volume over the last 4 weeks 3.) The lesser of 10% of the outstanding shares or the average weekly trading volume over the last 12 weeks 4.) The lesser of 5% of the outstanding shares or 10% of the publicly traded shares Explanation: Answer is B

ETF shares are bought and sold at

1.) The next calculated NAV plus a sales charge 2.) The best available price on the exchange on which the ETFs shares are listed 3.) The resulting value of the net assets of the fund divided by the number of outstanding shares of the ETF 4.) The strike price of the ETF minus the market price of the underlying shares Explanation: Answer is B

Which of the following is a characteristic of designating an asset as a community property with rights of survivorship

1.) The primary beneficiary is not required to be a spouse 2.) The owners must be married 3.) Assets will be owned separately until the death of the primary owner 4.) Ownership is equitable, but not necessarily equal Explanation: Answer is B

What's an IPO?

1.) The sale of stock of a company that's not currently filing reports with the SEC 2.) An offering of stock of a company that current in its form 10K filings 3.) A type of exempt transaction 4.) An issuance of stock for a company that's currently listed on a registered securities market Explanation: Answer is A

What's the purpose of an IRMAA

1.) To increase Medicare premiums for high income individuals 2.) To decrease medicare premiums for low income individuals 3.) To increase social security benefits for the elderly 4.) To regulate whos eligible to receive social security benefits Explanation: Answer is A

SPACs are typically

1.) Unit investment trusts 2.) Open0end management companies 3.) Blank check companies 4.) A pool of US government agency securities Explanation: Answer is C

What type of employer may establish a solo 401k plan

1.) a business with no employees 2.) a general partnership 3.) a corporation with fewer than 10 employees 4.) a business with no subsidiaries Explanation: Answer is A

Gifts that exceed the annual gift tax exclusion are:

1.) always taxable 2.) never taxable 3.) taxable if the excess gift takes the donor over the lifetime gift tax exclusion 4.) only taxable if the gift is made to a 529 plan Explanation: Answer is C

What type of broker-dealer segregates and holds customer assets for safekeeping

1.) custodian 2.) introducing broker 3.) clearing broker 4.) market maker Explanation: Answer is A

As an IAR, when does the use of donor advised funds make the most sense

1.) for retirement planning 2.) For educational savings 3.) For generating investment income 4.) For estate planning Explanation: Answer is D

According to NASAAs Model Rule on IAR CE, when must an IAR complete her continuing education credits?

1.) once every 5 years 2.) twice per year 3.) only if a regulatory action has been taken against the IAR 4.) Annually Explanation: Answer is D

All of the followign accounts allow for non-deductible contributions, EXCEPT

1.) solo roth 401k plans 2.) 529 plans 3.) traditional IRAs 4.) Non-qualified annuities Explanation: Answer is C

As it relates to gift and estate taxes, what is portability?

1.) the ability to double the annual gift tax exclusion for married couples 2.) The ability to use the gift tax exclusion on state income taxes 3.) The ability to exclude charitable donations from the gift tax 4.) The ability for a surviving spouse to use the deceased spouses unused lifetime gift tax exclusion Explanation: Answer is D