What are the best practice exam materials for Series 66?

You have many options. The best Series 66 prep course providers' study packages come with practice exams. Here are the ones to look out for: - Kaplan Financial Education - Securities Institute of America - ExamFX - Securities Training Corporation - Training Consultants

What is the Series 66 license?

You'll get the Series 66 license once you've passed NASAA's Series 66 exam. Series 7 and the SIE exam are co-requisites for the license. Additionally, you need to pass a background check, make a payment to your state, and then apply to get the license.

Is Series 66 a state-specific exam?

No. It's not. All three North American Securities Administrators Association exams administered by FINRA don't test state-specific content. That includes the Series 66 exam. The exam tests candidates on their knowledge of offering financial and investment advice to clients. With the license, one becomes an IAR.

What kind of questions are on Series 66?

The Uniform Combined State Law has 110 multiple-choice questions. The exam tests candidates on investment vehicle characteristics, economic factors and business information, client investment recommendations and strategies, and laws, regulations, and guidelines, including prohibition on unethical business practices. The four topics are weighted differently.

How long does it take to study for the Series 66 exam?

There is no specific time frame, but generally, you can expect to spend around 70-100 hours. You can spread these hours over 4-6 weeks if employed full-time. The key is to have a Series 66 study plan and schedule your study time accordingly.

How do I prepare for Series 66?

- Check NASAA website for an outline of the Series 66 exam - Create a study calendar - Purchase the best Series 66 exam prep course - Start your studies by reading the exam manual or textbook - Reinforce your learning with other study materials - Take practice exams

Is the Series 66 exam difficult?

Yes. The exam is challenging. The content you are supposed to cover for this exam is broad. The exam covers investment vehicles, economic factors, ethical practices, customer investment recommendation strategies, and laws & regulations. You'll need to take practice questions to familiarize yourself with the exam content.

What is the passing score for Series 66?

The passing score for the Uniform Combined State Law examination is 73%. In other words, you must score 73 questions out of 100 exam questions to pass. In the unfortunate event that you fail, you can retake the exam many times until you pass.

What are the requirements for the Series 66 exam?

There are no prerequisites for Series 66. You only need to be 18 years and above. You don't need to be sponsored by Financial Industry Regulatory Authority member firm or a self-regulatory organization. Simply file Form U10, make the payment, prepare for the exam and enroll to take it.

How much do you have to study for Series 66?

You need to commit anywhere from 55 hours to 100 hours. The exact amount of time depends on how much time you have available, your test prep strategies, and your familiarity with the exam content. For example, if you are working full-time, your preparation may take longer.

Can I retake the Series 66 exam?

Yes. You can retake the exam as many times as it will take you to pass. But you'll have to wait 30 days to retake the exam. After three subsequent fails, you'll have 180 days waiting period. Remember, with each retake; you pay the full exam fee.

FREE Series 66 Practice Exams 2023 - 900 practice questions

Hello, our dear reader.

Welcome to another insightful read on the Series 66 practice exam.

In this article, we have five free Series 66 practice exams to help you test your comprehension level and familiarize yourself with the exam.

We’ve also put together practice questions on each of the four topics tested in the exam to help you further drill in key concepts.

By the end of this session, you’ll get insights into making the most of the Series 66 practice exams and why you should prioritize them in your Series 66 exam prep.

In summary, here is a peek at what we’ll cover.

An overview of our Series 66 practice exams
Making the most of Series 66 practice exams
Why take the Series 66 practice exams

Let’s get right into it.

Other free series 66 study materials:

Series 66 exam prep
Series 66 study plan
Series 66 study guide
Series 66 practice exams
Series 66 flashcards
Series 66 cheat sheet
Series 66 Exam FAQ
Best Series 66 study materials

Table of Contents

An Overview of Our Series 66 Practice Exams
Series 66 Practice Quizzes by Domains
Domain 1: Economic Factors and Business Information
Domain 2: Investment Vehicle Characteristics
Domain 3: Client Investment Recommendations and Strategies
Domain 4: Laws, Regulations, and Guidelines, including Prohibition on Unethical Business Practices
Making the Most of Series 66 Practice Exams
Why Take Series 66 Practice Exams?
The Next Step in Preparing for the Series 66
Series 66 Practice Exam FAQs

An Overview of Our Series 66 Practice Exams

We have five full-length practice exams.

You can take one at the beginning of your test preparation to act as the baseline, such that as you continue with your studies, you can compare your progress.

With every Series 66 practice exam, check your test score and the topics you failed the most.

Use the Series 66 test questions on that specific topic to polish your weak areas.

You can use flashcards and a study guide to review that topic before taking the practice questions.

Finally, remember to review the whole test when done.

Without further ado, let’s dive right in.

Series 66 Practice Exam 1

Welcome to your Series 66 Practice Exam 1

This test is designed to prepare you mentally for the actual Series 66 Exam with the same number of (100 questions) and the same time allowed (150 minutes) as the actual exam.

The Series 66 Exam is breakdown into four (4) Parts.

Here are the Four (4) Domains of the Series 66 Exam with the weightage and number of questions in this practice exam:

1. Economic Factors and Business Information [05 Questions] - 05%

2. Investment Vehicle Characteristics [20 Questions] - 20%

3. Client Investment Recommendations and Strategies [30 Questions] - 30%

4. Laws, Regulations, and Guidelines, including Prohibition on Unethical Business Practices [45 Questions] - 45%

Please click NEXT to start your Free Series 66 PRACTICE EXAM right away.

Best of Luck!

An investment of $2,000 made 10 years ago is now worth $8,000. Using the Rule of 72, the approximate compounded annual rate of return is

A) 7.2%

B) 14.4%

C) 25%

D) 40%

If an investment can be expected to return 8%, using the rule of 72, what is the present value needed to have $50,000 for a child's education in 18 years?

A) $25,000

B) $2,777

C) $12,500

D) $6,250

Which of the following statements is NOT correct?

A) Internal rate of return (IRR) is a method of determining the exact discount rate to equalize cash inflows and outflows, thus allowing comparison of rates of return on alternative investments of unequal size and investment amounts.

B) Net present value (NPV) is the difference between the initial cash outflow (investment) and the future value of discounted cash flows.

C) Net present value analysis (NPV) is a commonly used time value of money technique employed by businesses and investors to evaluate the cash flows associated with capital projects and capital expenditures.

D) Time-weighted returns show performance without the influences of additional investor deposits or withdrawals from the account.

Which of the following statements concerning equity securities is not correct?

A) Equity securities represent a lending interest in a corporation.

B) Equity securities provide a residual claim, after payment of all obligations to fixed-income claims, on the income and assets of a corporation.

C) Common stock is an equity security representing an ownership interest in a corporation.

D) Preferred stock is an equity security with an intermediate claim (between the bondholders and the common stockholders) on a firm's assets and earnings.

Which of the following statements about equity securities is NOT true?

A) Preferred stock is usually nonvoting.

B) Common stock is less sensitive to interest rate risk than preferred stock.

C) Preferred stock is an equity security while common stock is a hybrid.

D) Preferred stock pays a fixed dividend.

The primary defining characteristic of an equity security is

A) voting rights.

B) it represents ownership in a corporation.

C) the ability to keep pace with inflation.

D) it pays dividends, usually quarterly.

All of the following represent ownership in corporation except

A) preferred stock.

B) common stock.

C) mortgage bonds.

D) convertible preferred stock.

An investor in an equity security

A) is assured of a minimum rate of return.

B) has a say in the day-to-day operations of the business.

C) acquires an ownership interest in the company.

D) becomes a creditor of the company.

Investments in which of the following offer the best long-term protection against inflation?

A) Corporate bonds

B) Fixed annuities

C) Common stock

D) Government bonds

10.

A common stockholder's rights include all of the following EXCEPT

A) the right to determine the par value of the stock

B) electing the board of directors

C) the receipt of dividends, if declared by the board of directors

D) preemptive rights

11.

A company's dividend on its common stock is

A) specified in the company charter

B) voted on by shareholders

C) mandatory if the company is profitable

D) determined by its board of directors

12.

An investor holding which of the following equity securities would NOT expect to have preemptive rights?

A) Preferred stock

B) Common stock acquired in a private placement

C) Control stock

D) Common stock

13.

Which of the following statements about dividends on common stock is NOT true?

A) Corporations are contractually obligated to pay dividends to their shareholders each year

B) Only those who are owners of the stock on the record date will receive dividends

C) Dividends may be paid in cash, property, or stock

D) Dividends represent a pro rata distribution of corporate profits to shareholders

14.

A registered broker-dealer would not be able to open an account for

A) two unrelated individuals.

B) the CEO of a company whose stock is NYSE-traded.

C) a person deemed mentally incompetent.

D) the estate of a deceased individual.

15.

Among the clients of a broker-dealer could be

A) a foundation.

B) a deceased individual.

C) a minor.

D) an individual declared mentally incompetent.

16.

An investment adviser would be able to enter into an advisory contract with all of the following except

A) a minor.

B) a philanthropic foundation.

C) a closed-end investment company.

D) three brothers in a joint account.

17.

A broker-dealer would not be able to open an account for

A) a city.

B) the estate of a deceased person.

C) a deceased person

D) a trust.

18.

An investment adviser registered in 4 states would be permitted to enter into an advisory contract with all of the following prospective clients except

A) a university endowment fund.

B) a registered investment company.

C) a single parent.

D) a charitable foundation.

19.

An investment adviser registered in 4 states would be permitted to enter into an advisory contract with all of the following prospective clients except

A) a trust.

B) a bank.

C) a minor.

D) an insurance company.

20.

Which of the following actions should be taken by an agent when a client decides to open an options account?

A) Assure that an options agreement has been signed prior to the first trade taking place

B) Review with the client the risks involved when trading options before the first options trade

C) Obtain approval from the designated options supervisor to open the account no later than 1 business day after the first options trade

D) Provide an options disclosure document no later than 15 days after the first trade

21.

One major difference between the customer identification program (CIP) and the new account opening rules of the regulatory bodies is that

A) the CIP only applies to individuals while the rules of the regulators apply to retail and institutional accounts

B) the CIP requires date of birth while the regulators only require proof of legal age

C) the CIP requires a residence address for individuals while the regulatory bodies will accept a PO Box

D) the CIP requires a statement of the customer’s goals while the regulators only require current financial information

22.

Your clients, a married couple, are trying to decide whether to open an account as joint tenants with right of survivorship or tenants by the entirety. You might point out to them that one of the differences to consider is that:

A) a JTWROS account requires the consent of both parties to make a trade.

B) only the JBE account avoids probate upon the death of the first tenant.

C) any 2 people can open a JBE account, while JTWROS accounts are limited to married couples.

D) a JBE account requires the consent of both parties to make a trade.

23.

Two sisters might wish to open an account as tenants in common (TIC) rather than JTWROS in order to

A) limit the right of each party to withdraw assets from the account.

B) ensure that their respective shares go to their heirs instead of the surviving sister.

C) provide for an undivided interest in the assets of the account.

D) allow the spouse of each sister to have access to the account.

24.

Which of the following is among the items of information that must be entered on a new account form?

A) Names of other broker-dealer firms already holding accounts for the prospective customer

B) What educational degree(s) the accountholder has earned

C) Names and addresses of at least 2 of the prospective customer's neighbors as personal references

D) Names of all persons who will have access to the account

25.

All of the following actions must be completed prior to customers entering their first option trade EXCEPT

A) receipt of a completed options agreement

B) delivery of the options disclosure document (ODD)

C) completion of the new account form

D) approval by a designated options supervisor

26.

Under industry rules, customers who wish to trade options must receive a copy of the options disclosure document (ODD)

A) at or before the mailing of the confirmation representing the first options trade

B) at or before account approval

C) at or before the mailing of the next monthly statement

D) within 15 days of account approval

27.

Which of the following documents would aid an investment adviser in its responsibility to fully understand the needs of a client when making investment recommendations?

A) An investment policy statement.

B) A proxy voting policy.

C) A communications agreement.

D) A restricted list.

28.

During your training, you overhear your manager discussing the Chinese wall. This is probably referring to

A) takeout for lunch

B) internal provisions enacted to prevent material, nonpublic information from leaking from one department of the firm to another

C) the increasingly high percentage of U.S. government bonds held by the Chinese

D) a leading tourist attraction in China

29.

An agent omits facts that a prudent investor requires to make informed decisions. Under the Uniform Securities Act, this action is

A) fraudulent for exempt securities only

B) fraudulent for nonexempt securities only

C) not fraudulent if there was willful intent to omit the information

D) fraudulent for both exempt and nonexempt securities

30.

All of the following activities could result in the revocation of an agent's registration EXCEPT

A) borrowing from retail customers

B) excessively trading for the purpose of generating commissions

C) failing to state all known facts about an investment when presenting it to a client

D) making recommendations based on material nonpublic inside information

31.

Which of the following statements regarding investment adviser compliance rules is TRUE?

A) If the chief compliance officer (CCO) conducts appropriate annual compliance reviews, interim review is generally not necessary.

B) Compliance procedures should be designed to prevent violations, as well as detect existing violations.

C) The CCO must have at least 3 years’ experience in securities industry compliance.

D) Compliance procedures should review the accuracy of disclosures made to clients and investors, although it is not necessary that they review disclosures made to regulators.

32.

Fraud would include the willful omission of

A) the public offering price in a preliminary prospectus

B) any material fact

C) a material fact, but only one that might be pertinent to making an investment decision

D) any fact

33.

Under the Securities Exchange Act of 1934, which of the following statements regarding reports required to be filed with the SEC is TRUE?

A) Institutional investment managers who exercise discretion over accounts valued at $100 million or more need not file reports if all their clients are insurance companies.

B) Institutional investment managers who exercise discretion over accounts valued at $100 million or more of 13(f) securities must file reports quarterly.

C) Persons who become the beneficial owner of more than 2% of a security registered under the Securities Exchange Act of 1934 must file a report within 5 days.

D) Persons who become the beneficial owner of more than 5% of a security registered under the Securities Exchange Act of 1934 must file a report within 2 days.

34.

The SEC has enumerated specific items that must be included in Investment Adviser written compliance manuals EXCEPT

A) the advisory firm must review policies and procedures at least on an annual basis

B) the advisory firm should indicate the educational requirements necessary for employment

C) the advisory firm should implement procedures for allocating investment opportunities such as best executions among clients

D) the advisory firm must monitor the consistency of portfolios with guidelines established by clients, disclosures, and regulatory requirements

35.

Jessica is an investment adviser representative for an SEC-registered investment adviser. She lives in State X and receives a letter from a former college friend requesting a contribution to the friend's political campaign for governor of State Y. As it happens, Jessica's firm provides advisory services to State Y's employee retirement fund and Jessica actively solicits business from other state agencies. Which of the following actions would be permitted to Jessica under the SEC's pay-to-play rule without causing any concerns to her firm?

A) Donating a maximum of $350 to the campaign

B) Donating a maximum of $250 to the campaign

C) Sending a letter to the friend indicating that the rules would not permit her to contribute to the campaign

D) Donating a maximum of $150 to the campaign

36.

Protection of the investing public is one of the major objectives of the SEC. Much of the protection comes from the disclosure requirements enveloping the industry. Among the disclosure forms used is Form 13F. To come under the SEC's requirement to file a Form 13F, an institutional manager must have discretion over

A) more than 10% of the outstanding voting securities of a reporting company

B) a portfolio of at least $100 million

C) a portfolio of at least $50 million

D) a portfolio of at least $100 million of 13(f) securities

37.

The compliance rules of the Investment Advisers Act of 1940 require all of the following EXCEPT

A) independent review of an advisory firm's compliance procedures

B) written compliance policies and procedures

C) appointment of a chief compliance officer (CCO)

D) annual compliance review

38.

Under rule 206(4)-7 of the Investment Advisers Act of 1940, each investment adviser registered with the SEC is required to adopt and implement written policies and procedures designed to prevent violation of the federal securities laws. Ensuring that this is done is the role of

A) the chief executive officer (CEO)

B) the chief compliance officer (CCO)

C) the chief operating officer (COO)

D) the chief financial officer (CFO)

39.

Wealth Creation Advisers (WCA) is a federal covered investment adviser specializing in consulting to pension plans. WCA's principal office is located in State L. The governor of State L is running for re-election. If WCA were to make a $350 contribution to the campaign, under the SEC's pay-to-play rule,

A) WCA would be prohibited from rendering any advisory services to any agency of State L for 2 years

B) WCA could be subject to disciplinary action

C) WCA would be prohibited from receiving compensation for advisory services rendered to any agency of State L for 2 years

D) WCA’s contribution is within the de minimis limitation because their principal office is located in State L

40.

The Investment Advisers Act of 1940 requires advisers to prepare and adhere to a code of ethics. Which of the following is charged with the responsibility of enforcing that code?

A) Administrator of the state in which the IA has its principal office

B) Chief compliance officer of the IA

C) Each individual IAR

D) The SEC

41.

Review of an SEC-registered investment adviser's policies and procedures designed to prevent violation of the federal securities laws must take place no less frequently than

A) quarterly.

B) monthly

C) semiannually

D) annually

42.

If having discretion over $100 million or more in 13(f) securities, which of the following would be exempt from filing a Form 13F?

A) A trustee

B) An investment adviser that manages mutual fund assets

C) A natural person who exercises investment discretion over the account of any other natural person or entity

D) A natural person who exercises investment discretion over her own account

43.

All of the following statements regarding the role of the chief compliance officer of an investment adviser are correct EXCEPT

A) the chief compliance officer should have a minimum of 5 years’ experience in securities compliance in matters involving public customers or accounts

B) the chief compliance officer should be competent and knowledgeable regarding the applicable federal securities laws

C) the identity of an investment adviser's chief compliance officer must be disclosed on the Form ADV

D) the chief compliance officer should be empowered with full responsibility and authority to develop and enforce appropriate policies and procedures for the adviser

44.

Richard Alan is a longtime customer of yours and usually calls in orders identifying himself as Dick. Today, you receive a call requesting that half of the available funds in his account be wired to an offshore bank. When you say that his voice sounds different, he replies that he has a sore throat and that is why he doesn't sound like himself. Then you recall, when you answered the phone, he said that this is Mr. Richard Alan calling. At first you thought he was having fun, but now you might suspect

A) he is having financial difficulties he wishes to hide from you

B) identity theft

C) this is a different Richard Alan who is a client of the firm

D) his illness is more serious than a sore throat

45.

The federal law dealing with privacy matters for financial institutions is

A) Regulation FD

B) HIPAA

C) the ACA

D) Regulation S-P

46.

It is not uncommon to find financial planners who use their home as the base of their operations. When a financial planner who works from home is also registered as an agent of a broker-dealer, she must

A) not remain open during hours when the broker-dealer is closed

B) not use personal computers to store client information

C) have cybersecurity policies and procedures in place to protect customer data

D) ensure that her office is separate from her living quarters

47.

For purposes of safeguarding customer information, which of the following would be considered a covered account?

A) A margin account in the name of the Interglobal Hedge Fund

B) An account in the name of the State of X employee pension fund

C) An account in the name of the Wells Morgan Bank

D) A margin account in the name of Mary Beth Simmons

48.

The practice of stealing an individual's personal information for criminal activity is generally referred to as

A) an unethical business practice

B) felonious assault

C) identity theft

D) credit monitoring

49.

During your annual review with your clients, Matt and Sally Eberhart, they indicate that they think it is time to start putting away some money for college for their 3-year-old son. They ask you to describe the advantage of using an UTMA account over a Coverdell ESA. You would likely point out all of the following as advantages EXCEPT

A) there is no limit to the amount that can be contributed to an UTMA

B) withdrawals for other than qualified education expenses are not subject to any penalties

C) contributions to the UTMA are made with after-tax dollars

D) there are no earnings limits for making UTMA contributions

50.

Under the Uniform Gifts to Minors Act, Ralph wants to give some stock to his brother's son, Jose. His nephew's father, Bob, is the legal guardian. If Ralph wants to name himself as custodian, which of the following needs to be done?

A) Ralph must file the proper legal documents.

B) Ralph must receive legal permission to act as custodian.

C) Ralph must have the permission of the guardian.

D) Ralph must open the account and name himself as the custodian.

51.

The child of one of your clients is headed off for a year of graduate study at the University of Oxford in England. The Section 529 plan used to fund the child's undergraduate study still has about $20,000 in the account. Because Oxford is on the U.S. Department of Education's list of approved institutions, qualified expenses would include which of the following?

A) The full cost of an off-campus luxury apartment

B) Dues to sports clubs or societies

C) The full cost of tuition and required fees

D) Textbooks used to supplement the required reading assignments

52.

Which of the following investments could be found in an UTMA but not an UGMA?

A) Sector mutual fund

B) Real estate

C) Bonds

D) Preferred stock

53.

A tax-advantaged medical savings account available to employees enrolled in a high-deductible health plan is

A) an HSA.

B) an FSA.

C) Medicare, Part C.

D) a Section 162 plan.

54.

All of the following permit investments into various securities, such as stocks, bonds, and mutual funds EXCEPT

A) an HSA.

B) a traditional IRA.

C) a Roth IRA.

D) an FSA.

55.

Which of the following statements regarding Section 529 plans is CORRECT?

A) Qualified expenses could include tuition for attendance at a foreign university.

B) Qualified expenses would include all residence costs incurred by a full-time student.

C) Residents of some states receive a deduction on their federal income tax returns.

D) Funds not used for qualified expenses by age 30 must be distributed or rolled over.

56.

Among the benefits of an HSA is

A) funds may be used for various medical expenses once the low deductible has been met.

B) up to $10,000 per year may be accumulated.

C) funds not used for health expenses may be invested in mutual funds and other securities.

D) the amount that may be contributed is based on the number of dependents.

57.

Under UTMA, the custodian must be

A) appointed by the court.

B) a trustee.

C) an adult.

D) a member of the minor’s family.

58.

The term security would include which of the following?

A) 403(b) plans

B) Section 529 plans

C) Indentures

D) Coverdell ERAs

59.

The unethical business practice of purchasing and selling a security for the purpose of creating an appearance of market activity is known as

A) front running

B) matched orders

C) spinning

D) arbitrage

60.

If a customer would like to open a custodial UGMA or UTMA account for his nephew, a minor, the uncle can

A) open the account provided the proper trust arrangements are filed first

B) be custodian for the account only if he is also the minor’s legal guardian

C) open the account and name himself custodian

D) open the account, but he needs a legal document evidencing the nephew’s parents’ prior approval of the account

61.

An employer offers its employees the opportunity to use tax-deductible funds to pay for health costs, as long as they enroll in a high-deductible health plan. This would be a description of

A) a TSA.

B) a FSA.

C) an ETF.

D) an HSA.

62.

Under UTMA, which of the following are allowable distributions for the benefit of the minor?

A) Clothing expense for child who has gone thru a growth spurt

B) The cost to attend a summer camp

C) A percentage of housing expenses, such as the utilities for his bedroom

D) A percentage of food expense

63.

Which of the following is the beneficial owner of securities in an UTMA account?

A) The minor

B) The custodian

C) The donor

D) The guardian

64.

Construction of an investment policy statement (IPS) requires identifying the client's objectives and constraints. Which of the following would not be in the list of constraints?

A) Time horizon

B) Liquidity risk

C) Taxes

D) Risk tolerance

65.

Which of the following does not provide for a change of beneficiary?

A) Section 529 plan

B) Coverdell ESAs

C) Roth IRA

D) UTMA accounts

66.

When does a deliberate omission of a fact in a securities sale constitute fraud?

A) If a reasonable person would base an investment decision on the omitted information

B) Anytime the information is known by more than 15 people

C) Only when a new issue of securities is being offered

D) Only if the information was known to be true

67.

One of your clients owns shares of the NERP Corporation's senior preferred stock. He is concerned about NERP's financial solvency and wonders where he would fall in the event of NERP declaring bankruptcy. The proper response is, the client's claim is

A) after the creditors and the common stockholders.

B) after the creditors, but ahead of the common stockholders.

C) ahead of all claims because his stock has a senior claim.

D) after the secured creditors, but ahead of the unsecured creditors because of the senior claim.

68.

The STU Corporation has issued common stock, preferred stock, promissory notes, and mortgage bonds. Should STU enter bankruptcy proceedings, the order of payment against claims would be

A) the preferred stock, the common stock, the mortgage bonds, and the promissory notes.

B) the mortgage bonds, the promissory notes, the preferred stock, and the common stock.

C) the mortgage bonds, the preferred stock the common stock, and the promissory notes.

D) the promissory notes, the mortgage bonds, the preferred stock, and the common stock.

69.

One of your clients is considering allocating about 10% of her portfolio to commodities. Her current portfolio is a mix of stocks, bonds, and broad market index ETFs. Relative to her existing portfolio, you would explain to her that the primary benefit of the commodity investment is most likely

A) increased short-term performance.

B) an increase in the reliability of income generated in the portfolio.

C) commodity returns have a low or negative correlation to the other assets in her portfolio.

D) lower trading costs.

70.

One reason for including commodities in an investment portfolio is because they have a high correlation to

A) the stock market.

B) the inflation rate.

C) the bond market.

D) the U.S. dollar.

71.

Which of the following investments is least appropriate for a client primarily concerned with liquidity?

A) Direct participation program

B) Municipal bond mutual fund

C) Bank savings account

D) Preferred stocks

72.

If near-term liquidity is the only objective for a client, which of the following pairs of investments represents the most/least liquid?

A) Variable annuity accumulation unit/money market mutual fund shares

B) Common stock listed on the New York Stock Exchange/unit in a direct participation program (DPP)

C) Annuity units of a variable annuity/unit in a direct participation program (DPP)

D) 10-year corporate bonds/U.S. T-bills

73.

With respect to liquidity and potential for diversification, in comparing alternative investments to exchange-traded stocks, the markets for alternative investments are generally:

A) less liquid and provide less opportunity for diversification.

B) less liquid and provide more opportunity for diversification.

C) more liquid and provide less opportunity for diversification.

D) more liquid and provide more opportunity for diversification.

74.

Which of the following would be considered a precious metal?

A) Copper

B) Tin

C) Lead

D) Platinum.

75.

Commodity contracts are available on many different types of commodities. One of those types is precious metals. Included in the definition of a precious metal would be all of the following except

A) silver.

B) gold.

C) diamonds.

D) platinum.

76.

Commodities contracts are available on

A) platinum.

B) pearls.

C) diamonds.

D) emeralds.

77.

An investment adviser representative has several clients who are interested in adding precious metals to their portfolios. Which of the following is the IAR most likely to recommend?

A) Aluminum

B) Platinum

C) Copper

D) Nickel

78.

Which of the following statements regarding a zero-coupon corporate bond is TRUE?

A) Bonds selling at a premium have a yield lower than the coupon rate.

B) The investor reports the difference between the purchase price and maturity value as ordinary income at maturity.

C) The investor has phantom income, which must be reported on an annual basis.

D) These bonds have higher reinvestment risk as to interest than bonds paying semiannual interest.

79.

Lisa Brownard is considering investing in gold. She owns a portfolio of stocks, bonds, and money market securities. Relative to her existing portfolio, the primary benefit of the gold investment is most likely

A) the investment horizon is longer than that of stocks and bonds, balancing the duration of the portfolio.

B) gold values are tied to cyclical industries.

C) gold is a renewable resource so Brownard can profit from the investment for many years.

D) low correlation between traditional asset returns and gold.

80.

Your advisory customer calls to check on her account value at 9:00 am, but you were unavailable at the time. It is now 2:00 pm and you are able to call her back. If between 9:00 am and 2:00 pm her account value dropped from $711,500 to $710,000, what should you tell her?

A) Your account value cannot be determined until the market closes.

B) Your account has a value of $711,500.

C) Your account is valued at $710,000 at this time.

D) Your account was down to $699,700 earlier today but is up to $711,500.

81.

NASAA's Statement of Policy on Unethical or Dishonest Business Practices of Broker-Dealers and Agents prohibits excessive activity in the account of a client for the purpose of generating commissions. This activity, frequently called churning, would likely be excused

A) when the account has outperformed the S&P 500 Index

B) if the investor is considered an accredited investor under SEC Rule 501

C) when the agent has been granted discretionary authority

D) under no circumstances

82.

In an effort to make things easier for her clients, an agent redacts certain material information from sales literature relating to a sophisticated investment product her firm is offering. The agent

A) is offering better service to her clients by making the decision-making process easier

B) is properly including information necessary for an investor to make an informed investment decision

C) has violated the Uniform Securities Act by adding information to sales literature

D) is acting in a fraudulent manner by failing to include material information

83.

A customer buys 200 shares of a common stock at $30 per share. On a day when the stock's price is down $5, the customer calls her agent and inquires as to its current price, and the agent tells her the price is around where she bought it. In the next few weeks, the stock's price turns around and the customer liquidates the shares at $35 per share realizing a $5 per share profit excluding commission. In the above situation, the agent has acted

A) properly, because the interim price fluctuation did not impact the customer's results

B) properly, because he prevented the customer from losing a profit opportunity

C) fraudulently, because accurate quotes must be provided to the customer at all times

D) fraudulently, because the customer could easily discern that the price quoted by the agent did not match readily available quotes in the financial media

84.

Under the antifraud provisions of the Uniform Securities Act, agents are prohibited from all of these EXCEPT

A) failing to state nonmaterial facts

B) engaging in any fraudulent or deceitful practice in the normal course of business

C) engaging in any practice that the Administrator defines by rule as unethical

D) employing any device, scheme, or artifice to defraud

85.

An order is received from one of your clients to purchase 200 shares of GEMCO common stock at 45 GTC. Two days later, while at a luncheon meeting with a different client, you are informed by that individual that the inside scoop is that GEMCO is going to be the subject of an FBI investigation. An hour after you return from lunch, you see an execution report for the 200 shares at 44.90. Under the Insider Trading and Securities Fraud Enforcement Act of 1988, you

A) are not in violation because the order was placed before you learned of the inside information

B) are in violation because you should have called the client immediately and had the ordered canceled

C) are not in violation because the trade was the result of an unsolicited order

D) are in violation because you should have canceled the order the moment you received the tip

86.

The NASAA Model Rule on Unethical Business Practices of Investment Advisers, Investment Adviser Representatives and Federal Covered Advisers generally prohibits an IA from disclosing any confidential account information without specific consent of the client. However, disclosure would be permitted to

A) the client’s spouse when this is a joint account

B) the client’s accountant who is representing him before the IRS

C) the client’s attorney representing him in a lawsuit

D) the client’s friends on his Facebook account

87.

James Jones, quarterback for a National Football League franchise team, deliberately misstated material information in the private sale of securities he owned. Jones claims he is not subject to the antifraud provisions of the Uniform Securities Act because he is not a registered agent and, secondly, the securities involved are exempt from registration requirements of the act. Which of the following statements is TRUE?

A) The antifraud provisions of the USA apply to any person who acts fraudulently in connection with the offer, sale, or purchase of a security.

B) Jones's failure to accurately state material facts does not constitute fraud because the securities he sold were exempt from registration.

C) As a professional athlete, Jones is not in the securities business and is therefore not subject to the antifraud provisions of the act.

D) The antifraud provisions of the USA do not apply to Jones because he is not suitably trained nor does he have a securities license.

88.

An agent has a client who is relatively new to investing in securities, having been a bank CD purchaser most of her life. One of the client's holdings is a stock that the agent recommended, and its market price has recently fallen by over 10%. Knowing her fear of loss, the agent comforts her by continuing to report that the stock is moving upwards with the market. This action is

A) fraudulent unless the agent receives permission from a designated supervisor

B) permitted because the client is not selling anytime soon and why cause her to be upset

C) fraudulent because the agent has a fiduciary responsibility to the client to manage the account in her best interests

D) fraudulent because it is equivalent to giving fictitious quotations

89.

Which of the following would be considered when determining whether excessive trading has occurred in a client's account?

A) The number of years the account has been opened

B) The size of the companies issuing the securities

C) The nature of the client's financial objectives

D) The performance of the account in comparison to other client's accounts

90.

The head of research for your firm has just prepared a very positive report on DEF Industries, Inc. The report will be placed on the firm's website later today, and copies will be mailed to clients for whom the security is deemed appropriate. Tonight, this analyst will be appearing on CNBC and will be describing why he has issued this strong buy recommendation. As an investment adviser representative, you would

A) be permitted to contact your clients with this recommendation right now

B) be required to send your clients to the firm's website before making comments regarding this security

C) not be permitted to contact your clients until it was ascertained that the report was general public knowledge

D) be permitted to contact your clients with this recommendation tomorrow

91.

Under Rule 206(4)-7, it is unlawful for an investment adviser registered with the Commission to provide investment advice unless the adviser has adopted and implemented written policies and procedures reasonably designed to prevent violation of the Advisers Act by the adviser or any of its supervised persons. Under this rule, investment advisers are required to perform a review of the adequacy of the policies and procedures established pursuant to this section and the effectiveness of their implementation no less frequently than

A) quarterly.

B) semiannually.

C) annually.

D) biannually.

92.

Which of the following is NOT a fraudulent business practice when committed by a registered broker-dealer?

A) Conducting transactions that do not result in the transfer of ownership between buyers and sellers

B) Engaging in trades between other broker-dealers to increase or decrease the price of securities

C) Trading securities between house accounts and customer accounts to create trading volume or the appearance of interest in a security

D) Acting as agent for both buyer and seller on a transaction

93.

Under the Uniform Securities Act, which of the following statements regarding the use of material facts is TRUE?

A) Omitting material facts when selling securities is a fraudulent practice.

B) The agent must not use material facts, unless they are the only ones available.

C) The client is the final arbiter on what is material and what is not.

D) Restrictions apply only to sales as to the use of material facts, not to the purchases of securities.

94.

An agent's customer says that ABC Corporation is about to be bought out. The customer wishes to place an order to buy ABC common stock based upon this yet unreleased information, which he claims he learned from an officer in the company. How should the agent respond in this situation?

A) Discuss the matter with other, more experienced agents of the firm to evaluate the validity of the information

B) Bring the information to the attention of the firm's supervisory principal named to handle such matters in the Supervisory Procedures Manual

C) Accept the customer's order and mark it solicited

D) Bring the information to the attention of the state securities Administrator

95.

Which of the following is NOT true regarding the Securities Exchange Act of 1934?

A) The act prohibits the simultaneous purchase and sale of a security to create the appearance of trading.

B) The act prohibits the spread of false rumors to induce others to trade.

C) The act bars the use of arbitrage by broker-dealers.

D) The act proscribes the use of wash trades.

96.

Walt and Bryan are old friends who are agents with different broker-dealers. Bryan attends one of Walt's investment seminars and, at a prearranged point in the presentation, stands up and exclaims that his rich brother-in-law wisely purchased the same investment. This action is

A) only problematic if someone invests in the product and loses money

B) a dubious sales practice but not strictly prohibited

C) a legitimate sales tactic known as priming the pump

D) a deliberate attempt to mislead and deceive investors

97.

A major stockholder of XYZ Corporation makes frequent purchases and sales of this stock on the open market to give the impression that it is actively traded. This unethical practice is best described as

A) pegging

B) front running

C) wash trades

D) positioning

98.

A) when the account has outperformed the S&P 500 Index

B) if the investor is considered an accredited investor under SEC Rule 501

C) when the agent has been granted discretionary authority

D) under no circumstances

99.

An investment adviser may release confidential information about a client in all of the following instances EXCEPT

A) when the client also maintains an account at an affiliated broker-dealer

B) with the consent of the client’s spouse who is a signatory to the advisory contract

C) when the law requires such release

D) with the client's consent

100.

Bryan, an agent registered with a broker-dealer, buys 1,000 shares of XYZ Corp. in his own account. In recommending XYZ Corp. to his customers, Bryan informs them that he believes in the company so much that he put his own money in the stock. This practice is

A) an illegitimate sales tactic

B) not an unethical sales practice

C) only unethical if Bryan sells his shares after informing his clients of his intention to do so

D) only unethical if investors lose money in the investment

1 out of 100

Time is Up!

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Series 66 Practice Exam 2

Welcome to your Series 66 Practice Exam 2

This test is designed to prepare you mentally for the actual Series 66 Exam with the same number of (100 questions) and the same time allowed (150 minutes) as the actual exam.

The Series 66 Exam is breakdown into four (4) Parts.

Here are the Four (4) Domains of the Series 66 Exam with the weightage and number of questions in this practice exam:

1. Economic Factors and Business Information [05 Questions] - 05%

2. Investment Vehicle Characteristics [20 Questions] - 20%

3. Client Investment Recommendations and Strategies [30 Questions] - 30%

4. Laws, Regulations, and Guidelines, including Prohibition on Unethical Business Practices [45 Questions] - 45%

Please click NEXT to start your Free Series 66 PRACTICE EXAM right away.

Best of Luck!

A client who wishes to have $50,000 available to help fund a 3-year-old child's college education in 15 years estimates that if the portfolio can earn 7%, a deposit of $18,122.30 will be required today. This deposit is referred to as

A) the present value

B) the future value

C) the internal rate of return

D) the net present value

Which of the following statements with regards to net present value and internal rate of return is correct?

A) If the net present value equals zero, then the internal rate of return is less than the required rate of return.

B) If the net present value is less than zero, then the internal rate of return is greater than the required rate of return.

C) If the net present value is greater than zero, then the internal rate of return is greater than the required rate of return.

D) If the net present value equals zero, then the internal rate of return is greater than the required rate of return.

One of the critical components of making suitable recommendations is the ability to evaluate risk. Risk measurement tools would include all of the following EXCEPT

A) Sharpe ratio

B) beta

C) standard deviation

D) future value

A client owns an investment-grade bond that has a coupon of 7% and is priced to yield 5.4%. If similarly rated bonds are being issued today with coupons of 5%, it would be expected that the client's bond

A) has a negative net present value

B) has a positive net present value

C) will be selling at a discount from par

D) has a zero net present value

A bond is paying $100 per year in annual interest and is selling at par. If the discount rate is 10%, the net present value is

A) positive

B) the same as the coupon

C) negative

D) zero

A customer owns cumulative preferred stock (par value of $100) that pays an 8% dividend. The dividend has not been paid this year or for the 2 previous years. How much must the company pay the customer per share before it may pay dividends to the common stockholders?

A) $0.00

B) $16.00

C) $24.00

D) $8.00

Reasons why a corporation might issue a convertible preferred stock would include

A) a lower cost to the issuer than would be incurred by the issuance of convertible bonds

B) tax savings to the issuer

C) giving those shareholders an opportunity to participate in the future success of the company

D) giving those shareholders the ability to convert into the issuer's bonds

One of the rights of being a stockholder is the ability to vote on important corporate matters, such as the election of members to the board of directors. The date that determines which shareholders are eligible to votes is

A) the election date.

B) the ex-dividend date.

C) the last day of the company’s fiscal year.

D) the record date.

Which of the following statements best describes cumulative preferred stock?

A) Owners have a continuing claim to their dividends, and all arrears must be paid before any dividends can be paid on common stock.

B) Owners are allowed to vote for directors using the cumulative voting procedures.

C) Owners receive an extra dividend, along with common shareholders, in addition to the preferred dividend.

D) Owners lose any claim to dividends that are not paid in any one year.

10.

One of the rights of those owning common stock is the opportunity to vote on issues brought up at the corporation's annual meeting. To be eligible to cast a vote,

A) ownership must be established by the record date

B) the stockholder must be a natural person

C) the company must be current on its dividends to preferred stockholders

D) the stock must be paid for in full before the annual meeting

11.

ABC Corporation has a 10% noncumulative preferred stock outstanding at $100 par value. Two years ago, ABC omitted its preferred dividend, and last year, it paid a dividend of $5 per share. To pay a dividend to common shareholders this year, each preferred share must be paid a dividend of

A) $5.00

B) $10.00

C) $25.00

D) $15.00

12.

A company that has issued cumulative preferred stock

A) forces conversion of the preferred that is trading at a discount to par, thereby eliminating the need to pay past-due dividends

B) pays past and current preferred dividends before paying dividends on common stock

C) pays the current dividends on the preferred, but not the past dividends on the preferred, before paying a dividend on the common

D) pays the preferred dividend before paying the coupons due on its outstanding bonds

13.

A client has 100 shares of GHI when the stock undergoes a split. After the split, the client has

A) greater exposure

B) no effective change in the value of the position

C) a proportionately increased interest in the company

D) a proportionately decreased interest in the company

14.

Which of the following statements regarding preemptive rights is TRUE?

Which of the following statements regarding preemptive rights is TRUE

B) Common stockholders do not have the right to subscribe to a rights offering.

C) Preferred stockholders do not have the right to subscribe to a rights offering.

D) Neither common nor preferred stockholders have the right to subscribe to a rights offering.

15.

One of the features of convertible preferred stock is that

A) the owner has the opportunity to participate in the growth of the company

B) the dividend is paid ahead of all other securities

C) the holder is able to select the conversion price

D) the owner has the opportunity to convert the stock into the issuer’s bonds

16.

Which of the following has the least exposure to inflation risk?

A) Common stock

B) Fixed annuity

C) Preferred stock

D) Cash

17.

Which of the following statements is TRUE?

A) A growth company would be more likely to pay a cash dividend than a stock dividend.

B) Dividends have a significant influence on the value of the corporation's stock.

C) A stock split increases the owner’s proportionate share of the company.

D) A corporation is required to pay a cash dividend to stockholders if the earnings are sufficient, especially if it is of preferred stock.

18.

A fundamental analyst researching a stock is concerned with all of the following EXCEPT

A) management efficiency

B) capitalization ratio

C) the stock's market price as a multiple of the company's earnings

D) volume of shares traded

19.

A technical analyst is least likely to consider which of the following when selecting securities?

A) Corporate earnings

B) Short interest ratio

C) Advance/decline line

D) Trend lines

20.

A technical analyst would be least concerned with

A) short interest

B) book value per share

C) S&P 500 index

D) advance/decline

21.

When reviewing potential securities to select for an investor's portfolio, a technical analyst would be most likely to evaluate

A) the daily trading volume

B) the price-to-earnings ratio

C) the price-to-book ratio

D) the management tenure

22.

Which of the following is not included in fundamental analysis of a company?

A) The study of a firm's financial statements.

B) The study of the direction of the economy.

C) The study of a firm's position within its industry.

D) The study of a company’s historical stock prices and trading volume.

23.

Which of the following would NOT be of interest to a technical analyst?

A) Volume

B) P/E ratio

C) Advance/decline line

D) Moving averages

24.

A fundamental analyst would be interested in all of the following EXCEPT

A) corporate annual reports

B) innovations within the automotive industry

C) daily trading volumes on the NYSE

D) statistics of the U.S. Department of Commerce on disposable income

25.

A technical analyst (chartist) with a long position in a particular stock would most likely enter a sell stop order below that stock's

A) support level

B) previous high

C) resistance level

D) 200-day moving average

26.

A customer and his spouse own shares in the ABC Fund as joint tenants with rights of survivorship. If the customer dies, what happens to the shares in the account?

A) The spouse would own all the shares.

B) The account would be frozen until the estate was settled.

C) Ownership of the shares must be determined by probate court.

D) Half the shares would belong to the spouse, and the remaining half would be distributed to the customer's estate.

27.

A client is completing a new account form that contains questions about the investor's investing experience and knowledge. More than likely, what type of account is being opened?

A) Margin

B) Options

C) Discretionary

D) Retirement

28.

The customer identification program (CIP) requires that certain information relating to new customers be obtained. Included in that requirement for individual clients who are citizens of the United States are all of the following EXCEPT

A) date of birth

B) current employment status

C) Social Security number

D) a physical address

29.

Which of the following items is NOT required under the customer identification program (CIP)?

A) Sex

B) Visa details for non-citizens

C) Physical address

D) Date of birth

30.

All of the following statements relating to an account registered as tenants in common are true EXCEPT

A) upon the death of one of the cotenants, that individual’s share of the account passes to the survivor(s)

B) this form of registration is less common for married couples than JTWROS

C) cotenants can own unequal percentages of the assets in the account

D) each cotenant has an undivided interest in the entire account

31.

In an account opened by 2 individuals as joint tenants with rights of survivorship, all of the following are true EXCEPT

A) in the event of death, the other party assumes full ownership of the account

B) stock certificates may be delivered in the name of either party

C) mail may be directed to the joint owner agreed upon by both parties to the account

D) orders may be entered by either party

32.

All the following information must be obtained from new individual customers EXCEPT

A) Social Security number

B) date of birth

C) physical address

D) educational background

33.

Ms. Abbot has a joint account with her sister. She enters a sell order in the account and instructs that the proceeds check be made out to her only. If your firm sends the check but makes it payable to both Ms. Abbot and her sister, this is an example of

A) the proper joint account procedure

B) an unfortunate error that can be reconciled with the broker-dealer through a process called reclamation

C) an unlawful practice because the transaction was unauthorized

D) not following instructions, a prohibited practice under the Uniform Securities Act

34.

Which of the following individuals may NOT open a joint account?

A) Business colleagues

B) Two spouses

C) Parent and a minor

D) Three sisters

35.

A woman wants to buy from an agent who is not registered in her state. She decides to use a friend's address in the state in which the agent is licensed. This action is

A) acceptable because the agent can do business only with those who have a residence address in those states in which he is registered

B) not acceptable because there are no circumstances under which you are permitted to use someone else's address as yours

C) not acceptable because the other party does not know you are using the address

D) acceptable as long as she has her friend's permission to use the address

36.

When does a customer have to receive the OCC Options Disclosure Document?

A) With the confirmation of his first options transaction

B) At or prior to the time the account is approved for options trading

C) Within 15 days of account approval

D) Within 5 business days of the first options trade

37.

The federal legislation that requires broker-dealers to verify the identity of any person opening an account is

A) the Uniform Securities Act of 1956

B) the Insider Trading and Securities Fraud Enforcement Act of 1988

C) the Securities Exchange Act of 1934

D) the USA PATRIOT Act of 2001

38.

Although all new accounts must be approved by a designated supervisor before any trading activity may take place, there is one type of account that must be approved by a specially qualified supervisor. That would be

A) a margin account

B) an options account

C) an IRA

D) a discretionary account

39.

When does a customer have to receive the OCC Options Disclosure Document?

A) Within 5 business days of the first options trade

B) Before accepting the customer’s first order to trade options covered by the ODD

C) Within 15 days of account approval by the firm's designated options supervisor

D) With the confirmation of the first options transaction

40.

If a new joint tenants with rights of survivorship account is opened by two related individuals, all of the following statements are true EXCEPT

A) in the event of death, the decedent's interest in the account goes to the other party

B) mail may be sent to either party (with the permission of each party)

C) orders may be given by either party

D) checks may be drawn in the name of either party

41.

Obtaining all of the following complies with the regulations regarding customer identification programs (CIPs) EXCEPT

A) a PO Box, instead of a physical address, if it is the primary mailing address

B) taxpayer identification number

C) date of birth

D) name

42.

One of the portions of the USA PATRIOT Act of 2001that affects the opening of an account for a new customer is

A) the requirement to obtain suitability information

B) the “know-your-customer rule”

C) the customer identification program

D) the Transportation Security Administration (TSA)

43.

A feature of which of the following business entities is limited liability for owners, as well as flow-through of income?

A) General partnership

B) Sole proprietorship

C) Limited partnership

D) C corporation

44.

If a businessowner's goal is to establish an entity that features ease in raising capital, which of these entities is the most appropriate?

A) A sole proprietorship

B) A general partnership

C) An S form of corporation

D) A limited liability company (LLC)

45.

Which of the following types of businessowners has unlimited liability for the business's debts?

A) Limited partner

B) Member of a limited liability company (LLC)

C) Owner of a sole proprietorship

D) Shareholder of a corporation

46.

A feature of which of the following business entities is limited liability but no flow-through of earnings or losses?

A) Sole proprietorship

B) LLC

C) Corporation

D) Limited partnership

47.

An advantage of structuring a business operation as an S corporation rather than a C corporation would be

A) limited liability

B) simplicity when raising capital through a public offering

C) the C corporation is limited to a maximum of 100 shareholders while no such limit exists for the S corporation

D) avoiding double taxation

48.

Under the provisions of the Internal Revenue Code, which of the following business forms is not required to file a separate tax return?

A) LLC

B) S corporation

C) Limited partnership

D) Sole proprietorship

49.

If 150 investors want to form a corporation to limit their financial liability to the amount of money they invest and do not want to be responsible for any debt that the corporation incurs, they would most likely form

A) a C corporation

B) a general partnership

C) an S corporation

D) a proprietorship

50.

Which of the following business accounts does not require considering the suitability of the owners?

A) S corporation

B) General partnership

C) C corporation

D) Sole proprietorship

51.

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 be the easiest for ultimate transfer of ownership

B) the corporate form of business structure would be the easiest for ultimate transfer of ownership

C) the corporate form of business structure would be the least expensive to form

D) the partnership form of business structure would enable Suzie to maximize her sale price

52.

There are many different legal ways to structure a new business entity. One of these is the general partnership. Among the benefits of using this structure would be

A) substantial capital can be raised with little effort and low cost

B) ease of formation

C) the 50% dividends received exclusion

D) limited liability

53.

An S corporation is characterized by

A) limited lifetime

B) more than 100 shareholders

C) unlimited personal liability

D) flow-through tax treatment

54.

Small corporations that satisfy certain criteria can elect not to pay income tax at the corporate level but instead pass their earnings through to their shareholders. These corporations are known as

A) C corporations

B) R corporations

C) S corporations

D) Q corporations

55.

A form of business structure that exposes all personal assets of the owner to creditors is

A) the C corporation

B) the sole proprietorship

C) the LLC

D) the limited partnerships

56.

The responsibility for administering the Investment Advisers Act of 1940 lies with

A) the Investment Advisers Association (IAA).

B) the SEC.

C) FINRA.

D) the Administrator.

57.

Under the Uniform Securities Act, a person whose business model is selling reports on a subscription basis concerning specific securities to investors based on their individual objectives will be defined as

A) an agent

B) an investment adviser

C) a broker-dealer

D) a journalist

58.

Under the Uniform Securities Act, which of the following is an investment adviser?

A) The Trust Department of ABC Bank provides investment advice to its clients.

B) Jill is an attorney specializing in estate planning who, as a side job, structures portfolios for the beneficiaries of her deceased clients at a reduced fee.

C) Jane advises customers regarding the value of gold and silver coins.

D) Tom writes a newspaper column that analyzes and recommends securities.

59.

As defined in the Uniform Securities Act, the term person would include I. a limited partnership II. a political subdivision III. an unincorporated association IV. the executor of an estate for a deceased individual

A) The release establishes 3 criteria in defining an investment adviser. First, the person must provide advice, reports, or analyses concerning securities. Second, the person must be in the business of providing securities-related advice or analyses. Third, the person must receive compensation. Investment advising does not have to be the person's principal business. They need only hold themselves out as advisers and provide investment advice on a frequent or regular basis.

B) I, II, III, and IV

C) I and IV

D) I, II, and III

60.

Which of the following factors determine(s) whether a person is considered an investment adviser under the Investment Advisers Act of 1940? I. The specificity of the advice II. The business engaged in III. Whether compensation is received

A) I, II, and III

B) II only

C) I and III

D) I and II

61.

All of the following have legal standing as persons under the Uniform Securities Act EXCEPT

A) ll of the following have legal standing as persons under the Uniform Securities Act EXCEPT

B) unincorporated organizations

C) trusts where the interests of the beneficiaries are evidenced by a security

D) minor children

62.

Which of the following is NOT a person as defined by the Uniform Securities Act?

A) A small unincorporated investment club.

B) XYZ Dry Cleaners, Inc., whose shareholders all work on the premises and also offer financial advice to customers who request it.

C) A child prodigy for whom his mother, as custodian, opened an account at a major securities firm.

D) Guelph, a small city outside of Toronto, Ontario, that maintains an investment account at a brokerage house to invest surplus funds.

63.

The purpose of the Investment Advisers Act of 1940 is to provide

A) standards at the federal level for the regulation of investment advisers

B) minimum standards of performance for those registered as investment advisers

C) regulation for investment companies and their operations

D) standards among the various states for the regulation of investment advisers

64.

Under the Uniform Securities Act, an accountant who charges hourly fees for securities recommendations in the regular course of his accounting practice is

A) included in the definition of an investment adviser because he is compensated for giving investment advice in the regular course of business

B) not included in the definition of an investment adviser because he is an accountant

C) not included in the definition of an investment adviser because he receives an hourly rate instead of a commission

D) included in the definition of an investment adviser because accountants are not among the professionals excluded from the definition

65.

Under the Uniform Securities Act, which of the following is included in the definition of an investment adviser?

A) Publisher that receives a yearly subscription fee for a newsletter that provides nonspecific investment advice

B) A broker-dealer who receives a flat fee for analyzing a customer's investment objectives and recommending a portfolio of securities

C) Antiques dealer who receives a fee for advising customers as to the value of antiques and rare coins

D) Bank that offers investment counseling to its high-net-worth customers

66.

A federal covered registered investment adviser who receives compensation for advice and whose business is primarily as an investment adviser may describe its business as investment counsel if

A) it maintains custody of customer funds and/or securities

B) it receives SEC approval to use the definition

C) a substantial part of his business is providing investment supervisory services

D) it maintains its registration by filing an updating amendment to its Form ADV annually

67.

Which of the following statements is not true of investment advisers under the Uniform Securities Act?

A) Only written advice concerning investments is covered by the act.

B) A natural person may register as an investment adviser.

C) Compensation is a key factor in determining whether a person is required to register as investment adviser.

D) Investment advice includes advice regarding the value of securities, as well as recommendations to buy or sell.

68.

As defined in the Uniform Securities Act, an investment adviser

A) is any person who, for compensation, engages in the business of advising issuers on methods of raising capital

B) is any person who, for compensation, engages in the business of executing transactions in securities for others

C) must be organized as a corporation or a partnership

D) is any person who, for compensation, engages in the business of advising others as to the value of securities

69.

The term "investment counsel" can be used by investment advisers

A) with a primary business of rendering investment advice

B) who are registered with the SEC under the Investment Advisers Act of 1940

C) who are also registered as broker-dealers

D) who are also attorneys

70.

Registration as an investment adviser is required for any firm in the business of giving advice on the purchase of

A) apartments undergoing a conversion to condominiums

B) rare convertible automobiles

C) gold coins

D) convertible bonds

71.

Which of the following investment advisers would be permitted to use the term "investment counsel"?

A) A professional providing a market timing service with an annual subscription fee of $995, with this service attempting to maximize profits by suggesting entry and exit points for over 100 listed stocks

B) A firm whose exclusive business is placing clients' assets into model portfolios

C) An investment adviser who has been admitted to the bar in the state in which the firm's principal office is located

D) A financial planner offering a wide range of services to his clients, including tax planning, estate planning, insurance planning, and investment advice

72.

Which of the following statements best describes an investment supervisory service as described by the Investment Advisers Act of 1940?

A) An investment advisory firm offers nondiscretionary services on a non-client-specific basis.

B) An investment adviser sends monthly newsletters to 200 clients offering nonspecific advice.

C) An investment adviser provides continuous advice based on the client's individual needs.

D) No actions are taken in client accounts without first being approved by a senior supervisory person.

73.

Under the Investment Advisers Act of 1940, which of the following is TRUE about the use of the term "investment counsel" by investment advisers?

A) Advisers may use the term only if they are attorneys.

B) Advisers may use the term without restriction as long as they are registered.

C) Advisers may use the term only if their principal business is acting as an investment adviser and a substantial part of their business consists of providing continuous advice based on a client's individual needs.

D) The use of the term is prohibited under any circumstances.

74.

Under the Securities Act of 1933, the term "person" would NOT refer to which of the following?

A) An unincorporated amateur athletic club

B) A nonprofit, charitable corporation

C) A deceased individual

D) A subdivision of a government

75.

Blue-sky laws pertain to all of the following EXCEPT

A) the regulation of securities trading in other countries

B) the registration of securities within a state

C) the registration of securities salespeople in a state

D) the regulation of securities transactions in a state

76.

An investment adviser whose primary business is the rendering of investment advice providing investment supervisory services is entitled to use the term

A) investment counsel

B) financial planner

C) pension consultant

D) senior adviser

77.

Which of the following does NOT meet the compensation test for defining investment advisers under SEC Release 1A-1092?

A) An insurance agent sells a life insurance policy and receives a commission on that policy. During the sale of the insurance policy, the agent provides some securities investment advice

B) A real estate agent advertises that she will give free advice regarding investing the proceeds from the sale of any home she lists

C) Subscription payments received by a publisher of a newsletter providing impersonal securities-related advice

D) Your next-door neighbor recommends the purchase of a certain security from his broker, which you eventually do

78.

Under SEC Release IA-1092, a financial planner would not be considered an investment adviser when

A) he is a licensed insurance agent and credits the commission earned on the sale of insurance policies included in a comprehensive financial plan against the fee charged for the plan

B) he does financial planning as part of offering a wrap fee program as a licensed agent of a broker-dealer

C) there is an up-front fee charged for creating a comprehensive financial plan, even when the plan is not put into place

D) the extent of his planning is limited to wills, estates and trust creation

79.

Which of the following persons does NOT meet the definition of providing investment advice as a business outlined in SEC Release IA-1092?

A) Accountant who charges clients an additional fee for providing investment advice

B) A management consultant whose only investment advice is suggesting to a couple of small business clients who had invested their surpluses in speculative securities that they should find something less risky

C) A financial planner who provides specific investment advice as part of his fee- based services and also makes specific securities recommendations to his clients in his capacity as an agent for a broker-dealer

D) Attorney who advertises the availability of investment advice

80.

Harrison is a Certified Financial Planner (CFP®) with an office in the state and a telephone directory listing under the category "Financial Planners." Harrison has, for fees, written more than 100 comprehensive financial plans for various individual clients. However, only 20% of the plans' content entails advice regarding securities and investments. Which of the following statements best describes Harrison's status as an investment adviser under the USA?

A) Harrison is not required to register as an investment adviser because his securities advice is purely incidental to his overall planning activities.

B) Harrison is required to register as an investment adviser because he holds a recognized financial planning credential.

C) Harrison is not required to register as an investment adviser because he holds a recognized financial planning credential.

D) Harrison is required to register as an investment adviser because he regularly offers advice and receives compensation for advice concerning securities and investments, and holds himself out as a financial planner.

81.

Which of the following statements describes a person who provides investment advice on a regular basis but does not charge fees, yet would be considered an adviser under Release IA-1092?

A) The secretary of the U.S. Treasury, as part of his official duties, comments on conditions in the financial markets and their future investment implications.

B) A retired chief investment officer of a well-known investment management company, without compensation, writes a column in a general circulation newspaper commenting on the value of investing in equity securities; many readers find his advice useful and become clients of his former investment management company.

C) A wealthy college professor gives free lectures on sound investment practices and makes specific securities recommendations based on a quantitative model he has developed.

D) A financial planner sold his business and spends his time consulting with pension plans on whether to retain or hire new investment managers based on their performance. He does not charge fees; however, those managers retained as a result of his recommendations routinely provide him with noncash benefits such as vacations, computers, and office space.

82.

Under the SEC Release IA-1092, who of the following would be considered to be in the business of rendering investment advice?

A) A financial planner who charges no fee for developing a financial plan, but takes commissions on recommended trade

B) An individual who provides investment advice to family members, but receives no compensation

C) An accountant who provides investment advice to clients as an incidental part of the business

D) An agent who receives no separate compensation for investment advice but who takes commissions on recommended trades

83.

Which of the following would be excluded from the definition of investment adviser under the Uniform Securities Act?

A) A finance teacher at a local community college who offers weekend seminars on comprehensive financial planning at a very reasonable price

B) The publisher of a weekly newsmagazine, sold on newsstands, that contains at least 5 stock recommendations per issue

C) A civil damages attorney who advertises that he is available to assist clients in suggesting appropriate investments for their successful claims

D) A broker-dealer charging a separate fee for investment advice

84.

What is the official designation of the person or agency that enforces the USA in each state?

A) Registrar

B) Administrator

C) Issuer

D) Transfer agent

85.

Under the Uniform Securities Act, which of the following statements is TRUE about an investment adviser who does not have an office in a state and solicits no more than 5 clients in that state?

A) He must file a consent to service of process.

B) He is exempt from the advertising requirements in the state.

C) He is not liable for violations of the antifraud provisions.

D) He is not required to register as an investment adviser in that state.

86.

Which of the following would NOT be considered to be in the business of an investment adviser?

A) A person who provides investment advice but is compensated only through commissions on the sale of stock

B) An accountant who provides occasional investment advice but receives no separate fee for the service

C) A person compensated for investment advice, although this service is not a primary part of the business

D) A person compensated for investment advice, but who provides the advice only to institutions

87.

When, if ever, would a broker-dealer be required to register as an investment adviser?

A) If it charges distinct fees for investment advice or management

B) Always

C) Never

D) If it is not registered with the SEC

88.

Which of the following is NOT considered to be in the business of investment advising?

A) A person who prepares reports about securities in general

B) Insurance agents who discuss the merits of whole life insurance verses nonsecurities financial instruments and who receive commissions on the sale of life insurance only

C) An insurance agent who provides investment advice regularly, but such advice represents a small portion of her business

D) A financial planner who provides advice on many types of financial instruments, including securities, and receives commissions on the sale of life insurance

89.

Which of the following must register as an investment adviser und

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