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Series 66 Practice Questions

Terms in this set (108)

Which of the following is a court order to a pension plan to make a qualified distribution to a third party?
A. RMD
B. Consent to Service
C. QDRO
D. ACAT
C. QDRO
All of the following are true of 457 Deferred Comp plans EXCEPT:
A. Mostly offered by local and state governments
B. Funded with Pre-Tax Salary Reduction
C. Investments grow tax deferred
D. Subject to ERISA
D. Subject to ERISA - ERISA is for private employers not government and public employers
Which of the following describes the relationship between systematic risk and expected return for assets?
A. Dividend Discount Model
B. Dividend Growth Model
C. Capital Asset Pricing Model (CAPM)
D. DCF Model
C. Capital Asset Pricing Model (CAPM)
Which of the following theories is about how risk averse investors can construct portfolios to maximize expected return based on given level of market risk?
A. Dow Theory
B. Odd Lot Theory
C. Modern Portfolio Theory
D. Short Interest Theory
C. Modern Portfolio Theory

Dow is a technical theory that predicts a bullish or bearish trend
Odd Lot Theory says that you should do the opposite of unsophisticated investors
Short Interest Theory says that every short seller is eventually a buyer and going to accelerate a bullish trend
Securities that move in no discernible pattern in relationship to each other are said to have:
A. Positive Correlation
B. Negative Correlation
C. No Correlation
D. Perfect Correlation
C. No Correlation
Which of the following correlations can be used to add diversification to your portfolio?
A. Positive Correlation
B. Negative Correlation
C. No Correlation
D. Perfect Correlation
B. Negative Correlation
By adding these securities they can add diversification in the way they interact with the market moves and add some resistance to your overall portfolio
Securities that move in the opposite direction are said to have:
A. Positive Correlation
B. Negative Correlation
C. No Correlation
D. Perfect Correlation
B. Negative Correlation
A measurement of a stock or funds volatility as compared to the market as a whole can best be described as:
A. Beta Coefficient
B. Alpha
C. Sharpe Ratio
D. Standard Deviation
A. Beta Coefficient
A stock or fund's return in excess of beta can best be described as:
A. Beta Coefficient
B. Alpha
C. Sharpe Ratio
D. Standard Deviation
B. Alpha
All of the following are EXEMPT from registration under the '33 and the USA EXCEPT:
A. Unregistered securities issued compliant with Reg D
B. Securities issued by the US treasury and Government Sponsored Enterprises
C. Municipal Securities
D. Securities issued compliant with Rule 147 Intrastate
D. Securities issued compliant with Rule 147 Intrastate
They would be required to use qualification
An IAR has calculated the value today of a future set of dividend or interest payments. The IAR has performed what type of analysis?
A. Fundamental Analysis
B. Technical Analysis
C. Discounted Cash Flow Analysis
D. Future Needs Analysis
C. Discounted Cash Flow Analysis
Future needs analysis is for insurance
If an investor uses an expected return of 10% on their initial investment to fund a college education but actual return is 8%. The future value will be:
A. Larger than Expected
B. Smaller than Expected
C. Depends on IRR
D. Depends on time weighted return
B. Smaller than Expected
Which of the following uses the present value of a stock's future distributions for valuation?
A. Sum of parts analysis
B. Price to Earnings ratio comparisons of similar companies
C. Dividend Discount Model
D. Market Price per share multiplied by outstanding shares
C. Dividend Discount Model
Which of the following bonds has the highest duration?
A. 4% bond maturing in 10 years
B. 5% bond maturing in 10 years
C. 4% bond maturing in 20 years
D. 5% bond maturing in 20 years
C. 4% bond maturing in 20 years
LONG AND LOW
All of the following are most likely access persons EXCEPT:
A. Officers of the IA
B. Directors of the IA
C. Partners of the IA
D. IAR soliciting on behalf of their firm
D. IAR soliciting on behalf of their firm
All of the following are inputs to calculate the Sharpe Ratio EXCEPT:
A. Return on Portfolio
B. Risk Free Rate
C. Standard Deviation
D. Discounted Cash Flow
D. Discounted Cash Flow
All of the following are precious metals EXCEPT:
A. Gold
B. Silver
C. Platinum
D. Copper
D. Copper
A client receives a positive email from a client. He responds and cc's 3 other of his clients.
A. An IAR is allowed to share communications amongst his clients
B. The IAR has not violated the customer's confidentiality
C. The IAR has violated his customer's confidentiality
D. As long as the communication is not shared with more than six there is a de minims exemption
C. The IAR has violated his customer's confidentiality
A debt to equity ratio of 1:1 means which of the following?
A. Equal debt to equity on the balance sheet
B. Equal long term debt to equity on the balance sheet
C. Equal current liabilities to current assets on the balance sheet
D. Equal fixed assets to equity on the balance
B. Equal long term debt to equity on the balance sheet
We are focused on capitalization. This consists of equity and long term debt
What is the difference between an ETN and an ETF?
A. An ETN is an equity instrument and an ETF is a debt instrument
B. An ETF trades on the secondary market and an ETN does not
C. The ETN is a debt instrument and an ETF is an equity investment
D. An ETN trades on the secondary market and an ETF does not
C. The ETN is a debt instrument and an ETF is an equity investment
All of the following need to be renewed each year EXCEPT:
A. IA Registration
B. IAR Registration
C. BD registration
D. Consent to Service
D. Consent to Service
Registrations need to be renewed by Dec 31st
Which of the following is a qualitative measure of a mutual fund's success?
A. Beta of the fund's portfolio
B. Time weighted return
C. Long tenure by the fund manager
D. Alpha of the fund's portfolio
C. Long tenure by the fund manager
This is the only QUALITATIVE measure
Which form of the efficient market hypothesis says that all technical data, fundamental data, and private information is shared by all and so there is no way to beat the market?
A. Weak Form
B. Semi Strong Form
C. Strong Form
D. Random Walk
C. Strong Form
A present value calculation was done to determine future value. The return was less than expected. The future value will be:
A. Higher than anticipated
B. Less than anticipated
C. The same as anticipated
D. Can not be determined
B. Less than anticipated
Gama Global IAs acquires another IA. Which of the following is true?
A. The clients have to honor the duration of their existing IA contract assigned to Gama Global IA
B. The clients may give oral consent to the assignment of their IA contract to Gama Global IAs
C. The clients must give written consent for the assignment of their IA contract to Gama Global IAs
D. Clients may give negative consent to the assignment of their IA contract to Gama Global IAs
C. The clients must give written consent for the assignment of their IA contract to Gama Global IAs
Which of the following mutual fund share classes would offer a breakpoint?
A. Class A
B. Class B
C. Class C
D. Class I
A. Class A
What formula is used to find the present value of an investment by using a future value that is decreased at a compound rate over time?
A. IRR
B. Standard Deviation
C. Capital Asset Pricing Line
D. Discounted Cash Flow
D. Discounted Cash Flow
Which of the following is true of a qualified dividend?
A. Taxed at the same rate interest income on a muni bond
B. Taxed at a lower rate than interest income on a corporate bond
C. It is taxed at 50%
D. It is a dividend from a stock held in a qualified retirement plan
B. Taxed at a lower rate than interest income on a corporate bond
A corporation has filed for Chapter 7 bankruptcy. In the liquidation rank the securities in priority from senior to junior:
I. Secured Bonds
II. Common Stock
III. Preferred Stock
IV. Unsecured Bonds

A. I, II, III, IV
B. IV, III, II, I
C. III, II, IV. I
D. I, IV, III, II
D. I, IV, III, II
Which of the following is NOT a fee that is paid by the 12b-1 fee?
A. Advertising
B. Sales Literature
C. Compensation paid to Associate Persons of a BD
D. Investment Management fee
D. Investment Management Fee
12b-1 fee is for promotional expenses
Which of the following is a maximum 12b-1 fee that can be charged by a no load fund?
A. .25%
B. .75%
C. 1%
D. 1.5%
A. .25%
A customer purchases a $100,000 S&P 500 Index Annuity with a 60% participation and a 5% cap rate. The S7P grew 11% in the first contract year. The next contract year the S&P fell 11%. What is the reset at the end of the second year?
A. $105,000
B. $106,600
C. $111,000
D. Can Not Be Determined
A. $105,000
11% = 11,000
11,000*60% = 6,600
5% CAP = $5,000
NO NEGATIVE RESET for the following year
Which of the following would qualify for soft dollar compensation paid by the BD to the IA?
A. Seminar Registration Fees
B. Travel to and from Seminar
C. Furniture
D. Rent (sub lease from BD to IA)
A. Seminar Registration Fees
BCD are NOT allowed to pay for
What is the benchmark for a large cap stock mutual fund?
A. DJIA
B. S&P 500
C. Wilshire 5000
D. Russell 2000
B. S&P 500
All of the following are true of a BD acting as a third party solicitor EXCEPT:
A. The BD does not have to register as an IA
B. The associated persons of the BD do not need to register as an IAR
C. The BD only needs to deliver its brochure
D. The BD needs to deliver both the BD's and the IA's brochure
C. The BD only needs to deliver its brochure
All of the following are a part of the definition of an IA EXCEPT:
A. Give investment advice
B. Holds out the un-natural person as being in the business of giving investment advice
C. Compensation will be paid
D. Whether compensation will be a flat fee or a performance based fee
D. Whether the compensation will be a flat fee or a performance based fee
(Un-natural person is a firm)
Under the USA, an agent may request a review of the State Administrator's order within how many days?
A. 30
B. 60
C. 90
D. 120
B. 60 Days
All of the following natural persons are IARs EXCEPT:
A. Solicits new business for the state covered IA
B. Supervises IAR
C. Manages client portfolios of the IA
D. The receptionist of the IA
D. The receptionist of the IA
The net worth for a state registered IA with custody is
A. $10,000
B. $35,000
C. $50,000
D. $75,000
B. $35,000
A 7% corporate bond trading with a YTM of 5% is trading at a:
A. Discount
B. Par
C. Premium
D. Parity
C. Premium
An investor is pursuing an aggressive investment strategy. Which mutual fund is most suitable?
A. ABC mutual fund with a beta coefficient of 1
B. BFD mutual fund with a beta coefficient of .8
C. XYZ mutual fund with a beta coefficient of 1.5
D. S&P 500 Index
C. XYZ mutual fund with a beta coefficient of 1.5
If an issuer will be registering their security with the SEC and a state or states which method would be used?
A. Notice of filing
B. Qualification
C. Coordination
D. Registration
C. Coordination
Which of the following must an IA consider when placing a muni bond into a client portfolio?
A. State of residence
B. Tax Bracket
C. Credit Rating
D. All of the above
D. All of the above
Which of the efficient market hypothesis says that all technical data and fundamental data is shared by all and so the only way to beat the market is with private information?
A. Weak form
B. Semi Strong form
C. Strong Form
D. Random Walk
B. Semi Strong Form
Your customer has a bond with a coupon of 7%. The CPI was 4% What was your customer's return in constant dollars?
A. 7%
B. 3%
C. 4%
D. 10%
B. 3%
Constant dollars are measured for inflation
What is the benchmark for a small cap stock mutual fund?
A. DJIA
B. S&P 500
C. Wilshire 5000
D. Russell 2000
D. Russell 2000
All of the following are true of a 457(g) plan deferred comp plan EXCEPT:
A. It is a type of non-qualified
B. It is a type of deferred compensation plan
C. It is typically offered to government employees and select employees of a corporation
D. It is governed by ERISA
D. It is governed by ERISA
All of the following are not persons EXCEPT:
A. Minors
B. Deceased Individuals
C. Persons declared mentally incompetent
D. An IAR
D. An IAR
Release IA 1092 expanded definition of IAs to include all of the following EXCEPT:
A. Financial Planners
B. Pension Consultants
C. Agents of professional athletes and entertainers
D. BD selling wrap accounts
D. BD selling wrap accounts
Both IAs and IARs may meet the de minimis to not register in a particular state. Which of the following is true of the de minimis exemptions:
A. No more than one office or place of business in the state and 6 or fewer individual retail clients in that state
B. No office in the state or place of business in the state and fewer than 6 individual retail clients in that state
C. No office in the state and all retail clients are snowbirds
D. Office or place of business in the state but all clients are institutional
B. No office in the state or place of business in the state and fewer than 6 individual retail clients in that state

C. is not a de minimis exemption
An IA must register with the state if its AUM is:
A. Below $100 million in AUM
B. Between $90 million and $110 in AUM
C. Over $110 Million in AUM
D. Below $90 million in AUM
A. Below $100 million in AUM
REGISTER WITH THE STATE NOT SEC
If an IA fails to pay renewal fees to the state which of the following is true?
A. The IA has a grace period
B. The registration will expire Dec 31
C. The registration will expire Jan 1st
D. The fees will be debited from the IA's bank account by the state admin
B. The registration will expire December 31st
The net worth for a state registered IA without custody is:
A. $10,000
B. $35,000
C. $50,000
D. $75,000
A. $10,000
BD make money from all of the following EXCEPT:
A. Commissions on issuer and non issuer securities transactions
B. Mark ups when selling securities from inventory
C. Mark downs when buying into inventory
D. Fees from Investment Advice
D. Fees from Investment Advice
Difference between Mark up and Down is spread
Mark Ups = Ask
Mark Downs = Bid
All of the following are exempt issuers under the USA Except:
A. US Government and Agencies
B. Municipalities
C. Canadian Government and its provinces
D. Mexico and its Provinces
D. Mexico and its Provinces
The easily accessible record keeping for an Investment Advisor is:
A. 3 years
B. 4 years with 2 years at principal office
C. 5 years with 2 years at principal office
D. 6 years
C. 5 years with 2 years at principal office
Which of the following are true of an access person?
A. The access person must file quarterly transactions reports with the IA's CCO
B. The access person must send duplicate confirm and statements to the IA's CCO
C. The access person can not have accounts with a BD not affiliated with the IA
D. Every natural person who is employed by the IA is an access person
A. The access person must file quarterly transactions reports with the IA's CCO
Which of the following describes the personnel?
A. Form ADV Part 1A
B. Form ADV Part 1B
C. Form ADV Part 2A
D. Form ADV part 2B
D. Form ADV Part 2B
2A is about the firm
2B is about the personnel
BD must register with all of the following EXCEPT:
A. SEC
B. FINRA
C. States in which the BD has an office
D. States in which the BD has no office and has no retail clients in the state
D. States in which the BD has no office and has no retail clients in the state
Mother buys 100 shares for $3,000. She dies. At the time of her death the market value for the 100 shares was $5,000. The daughter inherits the shares and sells several years later for $9,000.
A. The daughter's cost basis is $3,000
B. The daughter's cost basis is $5,000
C. The daughter's cost basis is $4,000
D. The daughter's cost basis is $2,000
B. The daughter's cost basis is $5,000
A BD must register with a state in which of the following circumstance?
A. No office in the state and only calls on issuers
B. No office in the state and only calls on other BD
C. No office in the state and has fewer than 6 retail clients
D. No office in the state and is a Canadian BD calling on Canadian snowbirds
C. No office in the state and has fewer than 6 retail clients
Federally Covered securities include all of the following EXCEPT:
A. NYSE listed security
B. NASDAQ listed security
C. Mutual Fund
D. Non-NASDAQ OTC security
D. Non-NASDAQ OTC security
For which of the following would a notice filing be most appropriate?
A. Bank Stock
B. Intrastate Offering
C. Open end investment company
D. Security issued by a common contract carrier
C. Open End Investment Company (mutual fund)
Which of the following are not sales under the USA?
I. Gifts of Non-Assessable stock
II. Stock dividend or stock split (with no payment)
III. Liquidation of securities that were pledged in a bona fide loan
IV. Securities issued from an approved merger or business reorganization
A. I &III
B. II & IV
C. I, II, III
D. I, II, III, IV
D. I, II, III, IV
Administrator has jurisdiction over all of the following offers EXCEPT:
A. Originated in the Administrator's state
B. Directed into the Administrator's state
C. Accepted in the Administrator' state
D. Check was drawn on a bank in the Administrator's state
D. Check was drawn on a bank in the Admin's state
Warren Buffett uses fundamental analysis for valuation of securities and has performance better than the market. What form of the efficient market hypothesis says this is possible?
A. Weak Form
B. Semi Strong Form
C. Strong Form
D. Random Walk
A. Weak Form
Your customer believes the efficient market hypothesis in the strongest form. What investment would be most suitable?
A. Global Fund
B. International Fund
C. Index Fund
D. Sector Fund
C. Index Fund
All of the following are true about criminal penalties of the USA except:
A. Fines up to $5,000
B. Jail up to 3 years
C. Right of rescission
D. 60 days to appeal
C. Right of Rescission
Civil NOT Criminal
Allows BD to approach investor and say they were in the wrong and they can rescind their trade
Fee changes made by a BD notice customers at least how many days in advance?
A. 30 days
B. 60 days
C. 90 days
D. 120 days
A. 30 days
A registered person use of which of the following would be misrepresentation?
A. John Smith, CFP
B. John Smith, MBA
C. John Smith, CFA
D. John Smith, IAR
D. John Smith, IAR
Which of the following is prohibited in the investment advisory contract?
A. The advisory fee
B. Formula for computing advisory fee
C. Duration of the contract
D. Hedge clauses
D. Hedge Clauses
Clauses that waive rights given to investors
Which of the following describes the firm?
A. Form ADV Part 1A
B. Form ADV Part 1B
C. Form ADV Part 2A
D. Form ADV Part 2B
C. Form ADV Part 2A
If there are material changes to the brochure since the last annual update how many days from year end to deliver the updated brochure?
A. 30 Days
B. 60 Days
C. 90 Days
D. 120 Days
D. 120 days
Contents of the solicitor's brochure include which of the following?
I Name of the solicitor
II Name of the federally covered IA
III Nature of the relationship between solicitor and IA
IV Compensation

A. I & III
B. II & IV
C. I, II, IV
D. I, II, III, IV
D. I, II, III, IV
All of the following are accredited investors EXCEPT:
A. A natural person with a net worth of $1,000,000 exclusive of their primary residence
B. A natural person with $200,000 in annual income for the last two years and the expectation of $200,000 this year
C. A married couple filing jointly with $300,000 in annual income for the last two years and the expectation of $300,000 this year
D. A series 7 or 65 not in good standing or without an active registration with a BD or an IA
D. A series 7 or Series 65 not in good standing or without an active registration with a BD or an IA
Which of the following are money laundering red flags?
I. Transactions that are commercially illogical
II. Source of funds
III. Cross border transactions
IV. Avoidance of triggering CTR

A. I and II
B. II and IV
C. I, II, III, IV
C. I, II, III, IV
The solicitor's disclosure brochure and agreement must include which of the following EXCEPT:
A. The agreement between the IA and the third party solicitor must be in written form
B. A statement that the solicitor will be paid by the IA
C. The additional amount of the IA fee that will be charged if the third party solicitor is used
D. If the solicitor's brochure describes the nature of the relationship between the solicitor and IA the IA's brochure need not be delivered
D. If the solicitor's brochure describes the nature of the relationship between the solicitor and the IA the IA's brochure need not be delivered
Trusts are used for all of the following EXCEPT:
A. Estate planning
B. Avoid probate
C. Lower estate taxes
D. Less paperwork than a will
D. Less paperwork than a will
What is the difference between Class A shares and Class B shares?
A. Class A shares are no load and Class B are not
B. Class B shares are no load and Class A shares are not
C. Class A have a contingent deferred sales charge and Class B shares charge upfront sales charge
D. Class A shares charge upfront sales charge and Class B shares have a contingent deferred sales charge
D. Class A shares charge upfront sales charge and Class B shares have a contingent deferred sales charg
Partnership interest in the IA that changes control
A. Minority partner retiring transfers partnership interest to a new partner
B. Minority partner transfers their partnership interest to their living trust
C. Minority partner with a 31% partnership interest acquires a 20% partnership interest from a retiring partner
D. Minority partner leaves the firm and keeps their partnership interest
C. Minority partner with a 31% partnership interest acquires a 20% partnership interest from a retiring partner
12b-1 fees may include all of the following EXCEPT:
A. Printing costs of promotional material
B. Advertising Costs
C. Compensation to associated persons
D. Investment Advisory fees
D. Investment Advisory Fees
All of the following are true of LOI EXCEPT:
A. LOI are for 13 months
B. LOI can be backdated 90 days
C. With a LOI the investor gets the reduced sales charge with their initial investment
D. With a LOI whether the investors get the reduced sales charge with their initial investment or when they cross the breakpoint varies from fund to fund as stipulated in the prospectus
D. With a LOI whether the investors get the reduced sales charge with their initial investment or when they cross the breakpoint varies from fund to fund as stipulated in the prospectus
Client dies and leaves IRA to relatives. All of the following are true EXCEPT:
A. A copy of the death certificate is required
B. Notification is made to the BD
C. Reference to the designation beneficiary form may be made
D. If the account was registered as TOD no paperwork is necessary. The account will transfer automatically
D. If the account was registered as ToD no paperwork is necessary. The account will transfer automatically
What can create a tracking error in an index fund?
I. Investment Advisory fees
II. Securities Lending Fees
III. Cash balances
IV. Rebalancing of the fund's portfolio

A. I and III
B. II and IV
C. II, III, IV
D. I, II, III, IV
D. I, II, III, IV
An IAR is named trustee of their client's estate. All of the following are true EXCEPT:
A. This is now considered custody of the client's monies and securities
B. This causes no change in the custody
C. The client is known as the grantor
D. The trustee is a fiduciary to the estate
A. This is now considered custody of the client's monies and securities
What are 3(c)1 and 3(c)7 requirements for a private fund under the Investment Company Act of 1940? EXCEPT
A. Must have 100 or fewer investors for 3(c)1
B. Investors must be accredited for 3(c)1
C. Investors must have $5,000,000 in assets for 3(c)7
D. These private funds must register the fund with the SEC
D. These private funds must register the fund with the SEC
An asset's book value is:
A. Purchase price minus depreciation
B. Asset's current market price
C. Value of similar assets
D. Purchase Price
A. Purchase price minus depreciation
A technical analyst would look at which of the following?
A. Balance Sheet
B. Income Statement
C. Economic forecast
D. Supply and demand of the stock in the secondary market
D. Supply and Demand of the stock in the secondary market
What are the employer's requirements in administering a 401(k) EXCEPT?
A. Chance for employees to change asset allocation quarterly
B. Three investment choices for the employees
C. One of the investment choices must be the employer's stock
D. Employees are immediately vested on their own contribution
C. One of the investment choices must be the employer's stock
An investment Advisor uses third party research. All of the following are true EXCEPT:
A. The use of third party research as a basis of a recommendation need not be disclosed
B. The use of third party research if distributed to clients must be attributed and disclosed
C. The investment advisory firm can claim extensive research capabilities based on the number of subscriptions to third party research
D. Soft dollars may be used to purchase third party research
C. The investment advisory firm can claim extensive research capabilities based on the number of subscriptions to third party research
A firm fails to follow its own Written Supervisory Procedures (WSPs).
A. The firm can not be held accountable for not meeting its internal house requirements in WSPs
B. The firm can be held accountable by the regulatory authorities for not meeting its own house requirements as spelled out in the WSPs
C. As long as it's employees have signed an attestation that they read and understood the WSPs the firm can not be deemed to have failed to train and properly supervise its employees
D. WSPs need not cover cyber security and social media as long as those issues are covered in the firm's continuing ed plan
B. The firm can be held accountable by regulatory authorities for not meeting its own house requirements as spelled out in the WSPs
All of the following are true of a private fund EXCEPT:
A. The funds are federally covered
B. The funds are exempt from registration with the SEC
C. The funds are exempt from registration under the USA
D. the IA is never required to register under the Investment Advisor Act of 1940
D. The IA is never required to register under the Investment Advisor Act of 1940
UITs have all of the following characteristics EXCEPT:
A. They are subject to the Investment Company Act of 1940
B. The assets are professionally selected
C. They have passive management
D. They can be purchased on margin
D. They can be purchased on Margin
UITs are considered to be a new issue and new issues cannot be purchased on margin
When a BD trades for its own account the transaction is known as:
A. Agency trades
B. Riskless Trades
C. Principal Trades
D. Dual agency trades
C. Principal Trades
Which of the following is a non issuer transaction?
A. A company sells shares in an IPO to expand its business
B. Mutual fund selling Class A shares
C. Mutual fund selling securities from its portfolio
D. A private fund selling partnership interests
C. Mutual fund selling securities from its portfolio
All of the following are true of accredited investors EXCEPT:
A. They can either be natural or unnatural persons
B. They must meet certain criteria
C. They can purchase private placements under Reg D
D. The definition is a federal and not a state one
A. They can either be natural or unnatural persons
ALWAYS natural persons
All of the following are mandatory in a Margin account EXCEPT:
A. New account Form
B. Credit Agreement
C. Hypothecation Agreement
D. Loan consent form
D. Loan Consent Form
This form is optional
All of the following are true of closed end funds EXCEPT:
A. May have a higher POP than the NAV
B. May issue preferred stock and issue bonds to make additional investments in their specialty
C. Must meet redemption requests
D. Typically trade supply and demand
C. Must meet redemption requests
All of the following are true of dollar cost averaging EXCEPT:
A. It requires fixed dollars invested regularly
B. It results in a lower avg cost than avg price of the fun shares over the same time period
C. It guarantees a profit over any long time horizon
D. When selling shares purchased using dollar cost averaging shareholder has choices about what shares to redeem or sell
C. It guarantees a profit over any long time horizon
An agent's registration is still pending. The agent can't do which of the following?
A. Begin sales efforts by contacting potential customers to inform them of his or her pending effective date
B. Help the mailroom in fulfilling requests for requested information
C. Complete administrative tasks requested by the firm
D. Fill in for the receptionist by answering phones and welcoming prospects and clients to office
A. Begin sales efforts by contacting potential customers to inform them of his or her pending effective date
Why is an investor's experience important?
A. Helps determine their investment objectives
B. Helps determine their investment goals
C. Helps determine their risk tolerance
D. Helps determine their time horizon
C. Helps determine their risk tolerance
What asset must an agent disclose to the BD?
A. Mutual Funds
B. Government Securities
C. Limited partnership interest
D. OTC stocks
D. OTC Stocks
What best describes a firm's net worth?
A. Assets minus liabilities equals net worth
B. Allowable assets minus liabilities equals net worth
C. Liquid assets minus customer related liabilities equals net worth
D. Fixed assets minus long term debt equals net worth
A. Assets minus liabilities equals net worth
Stop orders can be used for all of the following EXCEPT:
A. Stop a loss
B. Protect a profit
C. Establish a stock position
D. To get a specified price or better
D. To get a specified price or better
This is a LIMIT ORDER
Mother buys 100 shares for $3,000 gifts it to her daughter. At the time of the gift the market value of the 100 shares was $5,000. The daughter sells several years later for $9,000.
A. Daughter's cost basis is $3,000
B. Daughter's cost basis is $5,000
C. Daughter's cost basis is $4,000
D. Daughter's cost basis is $2,000
A. Daughter's cost basis is $3,000
When accepting an order from a third party which of the following is true?
A. Requires written authorization
B. Oral authorization is permitted if from a trusted contact person
C. Requires supervisory approval
D. Third party authorization is never acceptable
A. Requires written authorization
Which of the following is true?
A. A firm may commingle customers monies and securities
B. A firm must segregate customers monies and securities
C. A firm may commingle the firm's monies and securities with that of its customers
D. A firm does not need to segregate its monies and securities from its customer monies and securities if proper safeguards are in place
A. A firm may commingle customers monies and securities
The IA or BD must segregate their funds from customers
Which of the following is the most suitable investment for the IRAs of a young couple with a combined annual income of $42,000?
A. Stock in a growth fund
B. Initial public offerings of small companies
C. Options on large-cap common stock
D. Partnership interests in an oil and gas drilling company
A. Stock in a growth fund
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