Series 66
A client and his wife purchased their home for $300,000. They have occupied their home for the last 26 years and have made $80,000 of improvements over the years. The home was recently put on the market for $800,000, but eventually sold for $770,000. Upon sale, the taxable capital gains would be how much?
$0
An investment adviser must record the personal securities transactions that are effected by its officers, directors, partners, and employees by no later than:
10 days after the end of the calendar quarter
As an investment adviser, you are required to record and keep a record of every transaction in a security for a client's account within:
10 days of the end of each quarter, excluding direct obligations of the U.S. government
Under the Uniform Securities Act, the statute of limitations for criminal violations of the Act is:
5 years
When trading on margin, clients are required to deposit:
50% of the market value of the security
Who would NOT be exempt from the definition of agent under the Uniform Securities Act?
A finance V.P. of a major appliance manufacturer who sells AAA bonds to the public
The following persons would be allowed to trade the account of an incapacitated individual, EXCEPT:
A relative named in a living will
Action Advisers creates financial plans for clients. It generally implements these plans through Packaged Products Producers (PPP), a limited broker-dealer owned by Action. PPP offers a mix of mutual funds and variable annuities, but does not engage in transactions involving individual stocks or bonds. What information must be disclosed to Action's advisory clients?
A statement that the implementation of client financial plans may be limited because of the incomplete product selection available through PPP
A limited partnership would be the least suitable for which of the following investors?
A widower investing the proceeds of his deceased spouse's life insurance policy, whose main objectives are current income and capital preservation
Under the Uniform Securities Act, an Administrator who requires the posting of a surety bond MAY: Accept cash Accept securities Use discretion as to whether the type of securities and the amount of the deposit are appropriate Disallow the deposit of cash or securities instead of a bond
Accept cash Accept securities Use discretion as to whether the type of securities and the amount of the deposit are appropriate
A client is interested in trading actively, purchasing on margin, and having broad exposure to the U.S. equity market. Which of the following investments is the LEAST suitable?
An S&P 500 Index mutual fund
A small, single-office investment advisory firm has $4 million in assets under management. The firm is located in Texas. According to the Uniform Securities Act, which of the following persons associated with the firm will NOT fall under the definition of an investment adviser representative?
An in-house accountant who tabulates investment results for client accounts
If a client executes a secondary market trade through a broker-dealer, what information must be disclosed to the client?
Any unusually excessive fees
Which of the following features is a characteristic of a Roth IRA?
Contributions are made with after-tax dollars
Buy and hold and systematic rebalancing are examples of passive approaches to asset allocation, and based on the theory known as:
Efficient Market Hypothesis
A client of an IA owns his own home and the title is in his name. If he wants to avoid probate when the property is transferred upon his death, the adviser may recommend which of the following?
File a transfer on death (TOD) deed which identifies a specific beneficiary
Which of the following statements about barbell strategies is NOT TRUE?
Gains from the short-term maturities will offset losses in the long-term maturities
When selecting a value stock, an agent would look for which of the following characteristics? High earnings per share Low price/earnings ratio Low price to book value High dividend yield
High earnings per share Low price/earnings ratio Low price to book value High dividend yield
Jack has a substantial amount of cash value built up in his variable life insurance policy. He would like to use some of it for a home renovation project. Which TWO of the following choices would be used to explain to Jack his options for accessing his cash value? If he withdraws some of his cash value, it will be treated as taxable earnings first, then a tax-free return of premiums (LIFO). If he withdraws some of his cash value, it will be treated as a tax-free return of premiums first, then taxable earnings (FIFO). If he takes a loan against the cash value, it will be taxed as earnings first, then treated as a tax-free return of premiums (LIFO). If he takes a loan against the cash value, it will be tax-free.
If he withdraws some of his cash value, it will be treated as a tax-free return of premiums first, then taxable earnings (FIFO). If he takes a loan against the cash value, it will be tax-free.
If an agent participates in a joint account with a client, the agent may:
Initiate transactions in the account
Which of the following is/are regulated under the Investment Company Act of 1940? Investment companies investing money into other investment companies The firm that serves as a mutual fund's custodian and holds its assets The minimum rate of return required to remain registered as a fund The performance of the investment company
Investment companies investing money into other investment companies The firm that serves as a mutual fund's custodian and holds its assets
What is the benefit of discounting the cash flows of a fixed-income security?
It compares the price of a bond against the sum of the present values of the bond's future payouts
Ed and Stephan want to start a Web site design business. They are trying to decide what the best way is to organize the business. They want to protect their personal assets from any debts that the business incurs, but they also want to avoid being double-taxed on their profits. Based on these objectives, the BEST organizational structure for them to adopt would be a:
Limited liability company
According to the Investment Advisers Act of 1940, when must an access person submit a transaction report?
No later than 30 days after the end of each calendar quarter
When considering the tax consequences of trading securities within a trust, the trustee should examine:
Other taxable income that is generated by the trust
According to AML procedures, which TWO of the following details is a broker-dealer required to obtain when opening an account for a non-U.S. person? Current employer Passport number and issuing country Current address Telephone number
Passport number and issuing country Current address
All of the following statements regarding the Capital Asset Pricing Model (CAPM) are TRUE, EXCEPT it:
Predicts future values for the stock
Which of the following securities is NOT considered exempt under the Uniform Securities Act?
Securities issued by an automobile company
An investment adviser has computed investment returns from clients over the past three years. Which of the following methods would be most useful for calculating the variance of returns that the clients have attained?
Standard Deviation
A broker-dealer is required to have in place a business continuity plan that addresses all the following issues, EXCEPT: How the firm will communicate with regulators Mission-critical systems That the firm may not deviate from the plan That the plan must be reviewed by the firm annually
That the firm may not deviate from the plan
In completing Form BD, all the following information is required, EXCEPT:
The Social Security number if the applicant is a corporation
Which of the following should NOT be considered by an investment adviser that is managing the assets of a trust?
The grantor's tax situation
Which of the following statements are TRUE of both variable life insurance and variable annuities? The investment risk is borne by the contract owner. The product must be sold with a prospectus. Partial surrenders are first treated as a tax-free return of principal. If the contract owner dies, the beneficiary receives any proceeds tax-free.
The investment risk is borne by the contract owner. The product must be sold with a prospectus.
When using a solicitor, investment advisers must provide their clients with a separate written solicitor disclosure document. According to the Investment Advisers Act of 1940, all of the following are required to be included in the disclosure, EXCEPT:
The performance history of the investment adviser
Under the Uniform Securities Act, which of the following sales is considered a non-issuer transaction?
The sale of an outstanding security on the New York Stock Exchange
Under the Securities Exchange Act, a customer confirmation is NOT required to disclose:
The time of the trade execution
Which TWO of the following statements are TRUE regarding investment advisers with $135 million of assets under management? They must register in any states in which they will conduct business. They are exempt from state registration. They must register with the SEC. They must register with the SEC only if their clients are all retail investors.
They are exempt from state registration. They must register with the SEC.
Which TWO of the following are considered exempt reporting advisers (ERAs)? Venture capital advisers Private fund advisers with assets under management of less than $150 million Family office advisers Private fund advisers with assets under management exceeding $150 million
Venture capital advisers Private fund advisers with assets under management of less than $150 million
According to NASAA's Statement of Policy on Unethical Business Practices, all of the following information must be disclosed in an investment advisory contract, EXCEPT:
Whether the contract may be assigned to another registered investment adviser without the client's consent
Bob is a business manager for professional athletes. As manager, he negotiates their contracts, pays their bills, and provides them with tax advice. When trying to minimize their tax liabilities, Bob will periodically provide advice relating to securities. He considers this advice to be incidental to the business management service he provides. According to the Investment Advisers Act, would Bob be considered an investment adviser?
Yes, SEC Release 1092 states that the Advisers Act applies to people who provide investment advice to athletes and entertainers
You have been approached by Steven to provide investment advice. Steven was recently named as executor of his uncle's estate and wants your assistance managing the investment portfolio pending disposition. Which of the following statements is TRUE?
You may accept the assignment
