HESI A2: Biology (Quiz 3) Welcome to your Series 65 Practice Exam 2 This test is designed to prepare you mentally for the actual Series 65 Exam with the same number of (130 questions) and the same time allowed (180 minutes) as the actual exam. The Series 65 Exam is breakdown into four (4) Parts. Here are the Four (4) Domains of Series 65 Exam with the weightage and number of questions in this practice exam: 1. Economic Factors and Business Information [20 Questions] - 15% 2. Investment Vehicle Characteristics [32 Questions] - 25% 3. Client Investment Recommendations and Strategies [39 Questions] - 30% 4. Laws, Regulations, and Guidelines, including Prohibition on Unethical Business Practices [39 Questions] - 30% Please click NEXT to start your Free Series 65 PRACTICE EXAM right away. Best of Luck! 1. An expansionary fiscal policy would usually result in A) a government decreasing government spending to slow down economic activity. B) a government operating a balanced budget. C) a government increasing government spending to stimulate economic activity. D) a government increasing taxes in the economy. None 2. A securities analyst's stock selection method is to begin by looking for superior companies, regardless of their industry sector or the condition of the overall economy. In so doing, this analyst is using the A) optimal portfolio approach. B) bottom-up approach. C) top-down approach. D) business cycle approach. None 3. An analyst uses a stock selection method that involves analyzing a specific corporation, followed by evaluating where it fits in its industry and then viewing the overall economy. The term that best describes this method is A) efficient frontier B) bottom-up C) capital asset pricing model D) top-down None 4. Which of the following is a component of U.S. fiscal policy? A) Taxes and budgeting B) Money supply C) Reserve requirements D) Discount rate None 5. Which of the following statements best describes what will happen when the value of the American dollar rises in relationship to foreign currencies? A) Foreign goods and services will become more expensive for Americans. B) The risk of stagflation will increase. C) Shares of foreign stock will be worth more in terms of American dollars. D) Foreign goods and services will become less expensive for Americans. None 6. Which school of economists encourages a government to spend money to move the economy into an expansionary phase? A) Supply side B) Classical C) Monetarist D) Keynesian None 7. Which of the following is not a characteristic of expansionary monetary policy? A) The reserve requirement will be increased. B) Interest rates may decline. C) More funds are available for banks to lend to borrowers. D) The money supply will increase. None 8. The economic theory that says economic growth results from lower tax rates and lower government spending is A) Keynesian theory B) monetary theory C) demand-side theory D) supply-side theory None 9. Which of the following statements reflects the monetarist economic position? A) The best way to control the money supply is to raise taxes, which, in turn, will reduce the amount of money in the economy and lower prices. B) The amount of money in the economy determines the overall price level over time and, therefore, the Federal Reserve should control the growth in the amount of money in the economy in a gradual and predictable way. C) The total amount of money in the economy is the result of the level of interest rates. D) The amount of money in the economy is not significant because economic activity reflects the value of real goods and services and, therefore, the Federal Reserve should not attempt to manage the money supply. None 10. Which term refers to the taxation, expenditures, and debt management of the federal government? A) Open market operations B) Revenue code procedures C) Monetary policy D) Fiscal policy None 11. Which of the following would lead to a debit to our foreign account balance? A) U.S. residents taking vacations abroad B) Foreign governments repaying loans to U.S. banks C) An increase in exports D) Residents of other countries buying apartments here None 12. When a bank's reserve account is running low, it might choose to borrow from the Fed. When doing so, the bank will be charged A) the prime rate B) the discount rate C) the federal funds rate D) the call loan rate None 13. If the U.S. dollar has been appreciating against foreign currencies, all of the following statements are true EXCEPT A) the U.S. dollar buys more of foreign currencies B) U.S. goods become more expensive in foreign countries C) foreign goods become cheaper in the United States D) U.S. exports become more competitive None 14. A free trade agreement is entered into between Country A and Country B. As time goes on, the value of Country A's currency decreases while that of Country B increases. The effect of this will likely be that A) Country A’s imports from Country B will increase B) Country A’s exports to Country B will decrease C) Country B’s imports from Country A will increase D) the free trade agreement will be abrogated None 15. When analyzing the business cycle, you would expect which phase to occur before reaching the trough? A) Peak B) Recovery C) Expansion D) Contraction None 16. In comparing the change in the GDP from 1 year to another, to arrive at an accurate figure, each year's GDP should be converted to which of the following? A) Constant dollars B) International dollars C) Dollars in terms of gold bullion D) Dollars valued by exchange with foreign currencies None 17. If an economist were to describe defensive issues, he would probably not include companies that produce A) clothing B) tobacco products C) food products D) building materials None 18. Which of the following industries would be least cyclical? A) Heavy equipment B) Leisure products C) Supermarket chain D) Automobile manufacturing None 19. Which of the following industries would tend to be the most cyclical? A) Food producers B) Tobacco producers C) Appliance manufacturers D) Supermarkets None 20. Economists have determined that the economy is slowing down. Orders for durable goods have been declining and unemployment, while not a reason for concern, has been steadily increasing over the past year. Given the information provided, what phase of the business cycle is the economy currently experiencing? A) Contraction B) Trough C) Expansion D) Deflation None 21. Which of the following statements regarding international investing is NOT correct? A) One method to engage in international investing is through American depositary receipts. B) An international investor faces the additional risks of foreign currency risk and country risk. C) International investing offers diversification and potentially higher returns. D) An emerging market is a market in a highly developed foreign economy with stable political and social institutions. None 22. An ADR is used to A) facilitate trading in foreign securities in U.S. markets by U.S. citizens living in the United States B) reduce currency risk when investing in foreign securities C) finance foreign trade in which U.S. citizens are engaged D) facilitate trading in U.S. securities in foreign markets by U.S. citizens living abroad None 23. A client is considering the purchase of American depositary receipts (ADRs). The client is looking to further diversify her portfolio. Which of the following is not a feature of this type of investment vehicle? A) ADRs are denominated and pay dividends in U.S. dollars. B) They are not subject to exchange rate, or currency, risk. C) ADRs are both liquid and marketable. D) Information regarding the foreign company is more easily attainable than if directly purchased. None 24. Which of the following statements concerning international investing is correct? A) The rates of return on foreign securities are generally less than those available from U.S. markets. B) Information is not as readily available on foreign investments as on domestic ones. C) The addition of foreign securities to a portfolio may result in increased portfolio risk due to the different movements of foreign markets and U.S. markets. D) Foreign markets are usually mature and offer no growth advantages. None 25. An investor may expect to receive dividends from A) a put option B) an ADR C) a call option D) a warrant None 26. Which of the following is a risk faced by investors in foreign stocks that is not found when investing in domestic issues? A) Credit risk B) Exchange rate risk C) Market risk D) Business risk None 27. An American depositary receipt (ADR) is A) a certificate representing ownership of a foreign security that is on deposit at a U.S. bank B) a certificate representing ownership of a U.S. security that is deposited in a foreign bank C) a type of derivative used to speculate in foreign currencies D) a document used with interest rate swaps None 28. An analytical tool used to project the current value of a common stock using projected future dividends is A) the price-to-earnings ratio B) the dividend payout ratio C) the dividend discount model D) the future value computation None 29. A fundamental analyst would be most interested in which of the following? A) Resistance and support levels B) A P/E analysis of the stocks included in the Dow Jones Industrial Average C) A 200-day moving average D) The outstanding short interest in the market None 30. Which of the following is used in technical analysis in an attempt to modify fluctuations of stock prices over the long term into a smoothed trend? A) Consolidation B) Trend lines C) Support and resistance D) Moving averages None 31. When reviewing potential securities to select for an investor's portfolio, a technical analyst would be most likely to evaluate A) the price-to-book ratio B) the price-to-earnings ratio C) the management tenure D) the daily trading volume None 32. All the following factors support fundamental analysis while assessing a wide range of qualitative factors except A) the company’s competitive position. B) the company’s stock price trend. C) the company’s management team’s quality and experience. D) the company’s business model. None 33. Which of the following statements is TRUE? A) A stock split increases the owner’s proportionate share of the company. B) A growth company would be more likely to pay a cash dividend than a stock dividend. C) Dividends have a significant influence on the value of the corporation's stock. D) A corporation is required to pay a cash dividend to stockholders if the earnings are sufficient, especially if it is of preferred stock. None 34. During the analysis of XYZ stock, a technical analyst concludes that XYZ's support level has been broken. Being a technician, the most appropriate decision should be to A) rate the stock as a hold. B) rate the stock as a sell. C) rate the stock as a buy. D) purchase additional shares of the stock. None 35. 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) resistance level B) previous high C) support level D) 200-day moving average None 36. Which of the following would NOT be of interest to a technical analyst? A) Moving averages B) Volume C) P/E ratio D) Advance/decline line None 37. The type of analysis that attempts to value securities by examining general economic trends and the growth potential and productivity of individual companies is A) holding period analysis B) credit analysis C) fundamental analysis D) technical analysis None 38. A technical analyst is least likely to consider which of the following when selecting securities? A) Short interest ratio B) Trend lines C) Advance/decline line D) Corporate earnings None 39. Which of the following would be of least interest to a chartist? A) The volume of shares traded during the past month B) The advance/decline line C) The short interest D) The relationship between the current market price of an issuer's common stock and most recently reported earnings per share None 40. Which of the following might be used by an analyst to approximate a reasonable price for a common stock? A) Yield to maturity B) The dividend discount model C) Par value D) Book value per share None 41. To a technical analyst, the resistance level signifies the price at which a stock's supply would be expected to A) increase substantially. B) decrease substantially. C) cause the stock price to ""break out"". D) remain constant. None 42. If a technician believed in the importance of volume, which of the following would indicate bullish sentiment? A) Prices increase on heavy volume. B) Prices decrease on heavy volume. C) Prices decrease on light volume. D) Prices increase on light volume. None 43. In the technical analysis of the value of securities, which of the following items is NOT important? A) A prevailing market trend in response to shifts in supply and demand B) The amount of a company's past earnings C) Resistance and support levels D) The breadth of market volume None 44. 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 None 45. A fundamental analyst would be interested in all of the following EXCEPT A) statistics of the U.S. Department of Commerce on disposable income B) innovations within the automotive industry C) corporate annual reports D) daily trading volumes on the NYSE None 46. A stock has been in a downtrend for several days. When its price decreases to near $30, many investors enter orders to buy the stock and the price increases to $31. This is most likely an example of A) a change in polarity. B) a resistance level. C) a support level. D) a reversal. None 47. Which of the following is not included in fundamental analysis of a company? A) The study of the direction of the economy. B) The study of a firm's financial statements. C) The study of a company’s historical stock prices and trading volume. D) The study of a firm's position within its industry. None 48. A support level is the price range at which a technical analyst would expect A) the supply of a stock to decrease substantially. B) the demand for a stock to increase substantially. C) the demand for a stock to decrease substantially. D) the supply of a stock to increase substantially. None 49. Kellie is a senior equity analyst for a large brokerage firm. She primarily uses fundamental analysis techniques to assist her in picking stocks for her firm's clients. Today, she is reviewing the XYZ Corporation. The company is a manufacturer of computer keyboards and is currently going through an expansion phase. Which of the following techniques would Kellie be least likely to use to determine whether to buy, sell, or hold this company's stock? A) She may review the company’s stock 200-day moving average. B) She may consider trends towards tablets and smart phones. C) She may calculate the intrinsic value of the stock using one or more of the stock valuation models. D) She may examine the overall state of the economy, the computer industry, and then XYZ Corporation. None 50. An investor believes that he can study the history of security trades and security markets in order to identify buying opportunities. Furthermore, he prepares and studies charts on the past prices of the securities he is most interested in purchasing for his portfolio. He uses these charts to try to predict the future activity of a particular stock. What type of strategy is this investor using to make his investment decisions? A) Technical analysis B) Fundamental analysis C) Tactical asset allocation D) Ratio analysis None 51. When using the dividend discount model, A) ​​​the degree of accuracy in forecasting the price of preferred stock is less​ than​ that ​obtained by using the dividend growth model B) future expected dividends are discounted to compute the present value of the stock C) best results are obtained from stocks that pay irregular dividends D) the discount rate is generally lower than the expected rate of return None 52. Which of the following analyze corporate financial statements and trends in sales and income? A) Market timers B) Fundamentalists C) Technicians D) Chartists None 53. One respect in which an LLC differs from an S corporation is that A) there is no statutory limit on the number of investors in an LLC B) an LLC can be formed with as little as a single investor C) there is more favorable tax treatment afforded to members of an LLC D) not only income, but losses, if generated, pass through to investors in an LLC None 54. An S corporation is characterized by A) flow-through tax treatment B) limited lifetime C) more than 100 shareholders D) unlimited personal liability None 55. 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 partnership form of business structure would enable Suzie to maximize her sale price C) the corporate form of business structure would be the easiest for ultimate transfer of ownership D) the corporate form of business structure would be the least expensive to form None 56. Under the provisions of the Internal Revenue Code, which of the following business forms is not required to file a separate tax return? A) S corporation B) Limited partnership C) LLC D) Sole proprietorship None 57. A man is planning to start his own glass-sculpturing business. He wants to be able to deduct his anticipated losses for the first 2 years. He anticipates that the enterprise will borrow money from lenders and is willing to personally guarantee the debt. He also wants to attract other investors but does not want to give up control of the day-to-day business decisions. What business form do you recommend? A) Limited partnership B) S corporation C) General partnership D) C corporations None 58. Among the advantages of forming an S corporation rather than a C corporation for a new business enterprise is A) shareholders’ losses are limited to the amount of their investment B) any losses flow through to the investors C) unlike the C corporation, which is limited to 100 investors, there is no such limit for an S corporation D) the ease in raising substantial amounts of capital. None 59. 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) an S corporation C) a general partnership D) a proprietorship None 60. A form of business structure that exposes all personal assets of the owner to creditors is A) the LLC B) the limited partnerships C) the C corporation D) the sole proprietorship None 61. The type of business organization in which one person owns the entire business and there is no legal distinction between that individual and the business is A) a corporation B) a sole proprietorship C) a limited partnership D) a general partnership None 62. A feature of which of the following business entities is limited liability but no flow-through of earnings or losses? A) Sole proprietorship B) Corporation C) Limited partnership D) LLC None 63. Which of the following is NOT a characteristic of a corporation? A) It is considered an entity apart from its owners. B) Ownership interests are evidenced by shares of stock. C) Owners have no personal liability for corporate debts. D) Existence terminates when an owner dies. None 64. 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) An S form of corporation B) A general partnership C) A limited liability company (LLC) D) A sole proprietorship None 65. If an investment adviser's client wishes to save current income taxes by placing certain investments in a charitable trust, ethically, the investment adviser should A) recommend the client consult with a qualified attorney B) refuse to discuss the trust with the client because the adviser is not an attorney C) help the client draft the appropriate documents following a discussion of the advantages of the arrangement D) urge the client to consult with an attorney who pays a referral fee to the investment adviser None 66. With respect to taxation, an investment adviser representative should NOT A) explain the taxable status of particular investments B) draft tax and estate documents to ensure compliance with current law to provide substantial after-tax returns C) discuss the tax implications of investments D) consider tax implications as a way of improving a client's after-tax returns None 67. One of your clients dies. You could legally take instructions regarding the individual's estate from A) a CPA who prepared the deceased’s tax return B) the spouse of the deceased C) a person with durable power of attorney D) the administrator in intestacy None 68. A professional tennis player comes to you seeking advice on setting up a trust. She is interested in giving to charity and also wants discretion as to when income is distributed to the beneficiaries, her parents. Which trust do you advise she use? A) Charitable lead trust B) Simple trust C) Complex trust D) Charitable remainder trust None 69. An estate account is opened with Family Asset Protectors (FAP) a registered investment adviser. Management decisions regarding the account must be made at the direction of the A) attorney with guardianship over the surviving children B) investment adviser C) estate’s executor or administrator D) estate creditors None 70. The distributable net income (DNI) of a simple trust would not include A) dividends received. B) interest received on municipal bonds. C) interest received on corporate bonds. D) realized capital gains. None 71. As a registered investment adviser, you have managed $10 million of a customer's funds for several years. The customer asks you to prepare a trust for his children, to transfer $3 million of his funds into the trust, and to trade the trust with the same objectives as the existing account. You should A) prepare the trust, transfer funds, and begin investing B) explain to the customer that trusts cannot be traded C) refer the customer to an attorney that can set up the trust D) tell the customer to contact a tax specialist None 72. Increasingly, many institutional investors, especially those in the philanthropic arena, are using ESG factors when considering where to invest their funds. Those factors are most accurately described as A) exchange, sales, and general. B) exchange, sensitivity, and growth. C) earnings, systematic, and governmental. D) environmental, social, and governance. None 73. Because a trust account is managed for the beneficial interest of the beneficiary, the investment adviser representative handling the account can A) arrange to have the trust’s funds pledged to support a loan for the trustee B) have funds withdrawn from the account at the direction of the beneficiary C) place the securities in the trust fund in a noncustodial brokerage account D) have a check drawn on the account payable to the trustee for trustee expenses None 74. In a trust, the person who establishes the trust and decides on its terms is A) the fiduciary B) the trustee C) the grantor D) the beneficiary None 75. One of your clients has named you as the trustee for a trust he has established. The beneficiary of the trust approaches you with a request for a disbursement that is contrary to the provisions of the trust document. In accordance with the provisions of the Uniform Prudent Investor Act, you should A) do nothing B) follow the terms of the trust C) follow the wishes of the beneficiary D) contact the grantor None 76. Which of the following would be used to provide end-of-life instructions once a person becomes incapacitated? A) An incapacitated will B) A living trust C) A durable power of attorney D) A living will None 77. A trust document's investment policy emphasizes that the fiduciary must follow SRI. When you are asked by the trustee to explain what that means, you would reply, A) socially responsible investing. B) sustainable reasonable investing. C) safe responsible investing. D) systemic responsible investing. None 78. An investment constraint that is unique to private foundations is the requirement to A) distribute 5% of its assets each year as qualifying distributions. B) invest 5% of its assets each year in qualifying investments. C) have a board of directors. D) have an investment policy statement. None 79. When comparing a private equity fund to a public one, it would be incorrect to state that the private fund has A) stronger governance. B) higher risk. C) less liquidity. D) lower reporting costs. None 80. During a trip to visit grandchildren, one of your clients suffers a massive heart attack and dies, intestate. Directions for handling the account could only come from A) the person appointed as administrator of the estate B) the person with a durable power of attorney C) the spouse D) the person named as executor of the estate None 81. Which of the following would be used to provide end-of-life instructions once a person becomes incapacitated? A) Incapacitated will B) Living trust C) Durable power of attorney D) Living will None 82. The type of trust created by a will that becomes operative at death is A) a Q-tip trust B) a revocable trust C) a living trust D) a testamentary trust None 83. One of the ways in which a simple trust differs from a complex trust is that simple trusts A) may retain income. B) may make distributions from the corpus of the trust. C) must distribute their distributable net income each year. D) are easier to prepare. None 84. Which of the following would likely be stressed in a socially responsible fund? A) Avoidance of foreign securities B) Lower than average expenses C) Higher-than-average returns D) Ethical and moral investing None 85. Mr. Hawkins sets up a revocable trust for the benefit of his adult daughter, Madeleine. His wife may draw from it only if she needs to. Income on the trust will be taxed to A) Mr. Hawkins as the donor B) the trust because it is a separate legal entity C) Mrs. Hawkins as the contingent beneficiary D) Madeleine as the primary beneficiary None 86. As with all investors, it is important that trusts have an investment policy statement (IPS). If the beneficiary of a trust requests that the trustee use trust assets to enter an order that is considered a prohibited transaction under the IPS, the trustee should A) contact the grantor of the trust. B) amend the IPS and process the order. C) follow the beneficiary’s instructions. D) follow the trust’s IPS and refuse the order. None 87. Which of the following is most commonly used when the author wants to express end of life wishes? A) A testamentary trust B) A living will C) A living trust D) A revocable trust None 88. One of your clients approaches you about setting up a trust. If your client assumes the role of grantor, what additional roles may be taken? A) Beneficiary B) Trustee and beneficiary C) As the grantor, no other roles may be taken D) Trustee None 89. A customer has just died. If his wife asks you what amount of federal estate tax will be imposed on the transfer of their personal property to her name, which of the following responses would be best? A) The amount of tax will depend on your late husband's tax bracket. B) The amount of tax will depend on the size of the estate to be transferred. C) Consult a qualified tax specialist. D) The amount may be prorated over the next 4 years. None 90. A living will is used to A) eliminate, or at least reduce, estate taxes. B) ensure that the author’s assets are properly distributed after death. C) express the author’s end-of-life wishes. D) avoid the cost and time of probate. None 91. When advisory clients wish to structure their portfolios to support companies that engage in social or environmental policies that they agree with, it is known as A) asset allocation B) program-related investing C) engineered investing D) impact investing None 92. Which of the following persons are included in the definition of investment adviser? A) A publisher of a bona fide newspaper, news magazine, or business or financial publication of general and regular circulation B) A financial planner or other person that provides investment advisory services to others for compensation C) A bank whose deposits are insured by the FDIC D) Any person that the Administrator excludes by rule or order None 93. Under the Uniform Securities Act, investment advisers are exempt from registration in a state where they have no office if they direct business communications with no more than 5 retail clients within A) 6 months B) 12 months C) 30 days D) 2 years None 94. The Uniform Securities Act's definition of investment adviser would include A) An investment adviser representative of an advisory firm who makes securities recommendations on a regular basis for compensation B) Any person who is a federal covered investment adviser C) A person who, on a regular basis for compensation, offers specific investment advice to clients as to the value of securities D) A temporary employee hired to assist in administrative responsibilities of an advisory firm None 95. Under all of the following circumstances, the USA requires investment advisers with no place of business in the state to register EXCEPT A) when an adviser only provides investment advice to 401(k) plans with assets of $250,000 or more B) when an adviser only provides advice to registered investment companies C) when an adviser has maintained assets of $100 million or more for 7 out of the last 10 years D) when an adviser with numerous clients in the state has not been subject to disciplinary action within any state within the last 10 years None 96. The Uniform Securities Act would NOT provide an exemption from registration as an investment adviser to an investment adviser who A) has no place of business in the state and limits clientele to banks and insurance companies B) has no place of business in the state and limits clientele to broker-dealers C) is an out-of-state investment adviser and directed business communications to fewer than 12 clients in the state in the past 12-month period D) has no place of business in the state and limits clientele to other investment advisers None 97. Under the Uniform Securities Act, all of the following persons with no place of business in the state are exempt from registration as an investment advisers EXCEPT A) advisers who deal exclusively with federal covered investment advisers located in the state B) advisers who deal exclusively with savings banks located in the state C) advisers who deal exclusively with investment companies registered under the Investment Company Act of 1940 D) advisers who have conducted business with no more than 6 individual clients in the state within the last 12 months None 98. What is the official designation of the person or agency that enforces the USA in each state? A) Issuer B) Registrar C) Transfer agent D) Administrator None 99. An investment adviser has its home office in Wisconsin. Its only business is with trust companies, large employee benefit plans, and insurance companies. It has no place of business in Colorado but provides investment advice to two Denver banks, both chartered under Colorado banking laws. There is a new Administrator in Colorado, and it is his opinion that this IA should be required to register in his state. A careful reading of Section 201 of the Uniform Securities Act would indicate that A) the firm does not have to register because it has no place of business in the state and its only clients are registered financial institutions B) the Administrator is correct and the firm must register C) as long as the IA does not have an office in Colorado, there are no conditions that would mandate registration there D) this firm would be exempt from registration with the Colorado Administrator because it is doing business in more than one state None 100. Under the Uniform Securities Act, all of the following persons may provide investment advice incidental to their normal business without requiring registration as an investment adviser EXCEPT A) an engineer B) a lawyer C) an economist D) a teacher None 101. There are a number of exclusions from the definition of investment adviser. Which of the following would NOT qualify for an exclusion under the Uniform Securities Act? A) An accountant who conducts seminars on the tax benefits of contributing to IRAs, both traditional and Roth B) A lawyer who charges an hourly fee for preparing trust documents for individuals referred to her by an investment adviser C) A teacher at the local high school who receives nominal compensation for giving investment advice to engineers D) A financial planner who conducts seminars for the local PTA, where he presents the benefits of term life insurance None 102. State laws provide for exclusions from the definition of investment adviser. Which of the following persons is specifically excluded under the Uniform Securities Act? A) Broker-dealers receiving special compensation B) Investment adviser representatives C) Bank subsidiary offering investment advice D) Economists whose advice is strictly incidental to their professional activity None 103. Under both state and federal law, there are a number of exclusions from the definition of investment adviser. Which of the following would not qualify for an exclusion? A) A personal injury attorney who recommends that clients consult with a CFP® for advice on how to deal with the large settlements they receive B) A publisher of a newsletter that is paid to make reports to be used in the sale of specific securities C) An economist who teaches a course in fundamental analysis at a local community college D) A CPA who gives high tax bracket clients a chart showing the tax-equivalent yield of municipal bonds None 104. Under the Uniform Securities Act, all of the following may provide investment advice incidental to their normal business without requiring registration as an investment adviser EXCEPT A) an economist B) a teacher C) a lawyer D) an engineer None 105. Which of the following is specifically excluded from the definition of investment adviser under the Investment Advisers Act of 1940, when that person's investment advice is solely incidental to the practice of their profession? A) Financial planner B) Athlete's financial manager C) Aeronautical engineer D) Pension consultant None 106. An investment adviser need not register in a state if it has A) a place of business in the state and only advises employee benefit plans with more than $1 million B) no place of business in the state, does not direct business communications in the state, and advises more than 5 high-net-worth individuals located in the state C) no place of business in the state and only advises 3 insurance companies located in the state D) a place of business in the state and advises fewer than 5 banks None 107. Under the Uniform Securities Act, all of the following are excluded from the definition of an investment adviser EXCEPT A) a federal covered adviser B) an individual providing advice on municipal bonds C) broker-dealers and their agents D) banks None 108. The Investment Advisers Act of 1940 lists several specific exclusions from the definition of investment adviser. Which of the following are included in that listing? A) Publishers of investment newsletters distributed based on market events. B) Pension consultants C) Attorneys for whom providing investment advice is incidental to the practice of their profession D) Sports or entertainment representatives None 109. Which of the following would NOT be considered to be in the business of an investment adviser? A) A person compensated for investment advice, but who provides the advice only to institutions B) A person compensated for investment advice, although this service is not a primary part of the business C) An accountant who provides occasional investment advice but receives no separate fee for the service D) A person who provides investment advice but is compensated only through commissions on the sale of stock None 110. Which of the following is NOT considered to be in the business of investment advising? A) An insurance agent who provides investment advice regularly, but such advice represents a small portion of her business B) A person who prepares reports about securities in general C) 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 D) A financial planner who provides advice on many types of financial instruments, including securities, and receives commissions on the sale of life insurance None 111. ​​​As defined in the Investment Advisers Act of 1940, all of the following would be considered investment advisers EXCEPT A) a portfolio manager who limits advice to municipal securities exclusively B) a civil engineer making investment decisions for $5 million held in escrow while a bridge for which she is the project manager is being constructed C) a professional plumber with excellent stock market skills who as a hobby and without pay, manages portfolios for 8 of his neighbors D) a tax attorney who manages investment portfolios for 50 clients None 112. Which of the following persons is NOT excluded from the definition of investment adviser if their advice given is incidental to the individual's profession? A) Teachers B) Lawyer C) Economist D) Engineers None 113. Both state and federal law contain a number of exclusions from the definition of investment adviser. Which of the following choices is unlikely to qualify for an exclusion? A) A bank that purchases securities on behalf of its custodial accounts B) A retired mechanical engineer who charges a reasonable fee for offering investment advice in his areas of expertise to less than 25 clients C) A columnist for a major news magazine who writes on the business and economic functions of banking institutions D) A lawyer with sophisticated investment experience who gratuitously offers his clients advice on the value of securities None 114. Registration as an investment adviser or investment adviser representative under the Uniform Securities Act is required of A) an officer of a trust company handling investments for trust accounts B) an economics professor at a local community college who gives lectures in the evenings to public groups about portfolio analysis for which he charges a nominal fee C) an agent of a broker-dealer who recommends model portfolios to clients in exchange for them executing their trades through him D) a tax attorney who, as an incidental part of his tax practice, recommends that his high-tax-bracket clients investigate the use of municipal bonds in their portfolios None 115. An investment adviser registered in State A who has no office in State B is exempt from registration in that state if, during any 12-month period, the adviser limits its retail clients in State B to no more than A) 5 B) 10 C) 35 D) 20 None 116. Under which of the following circumstances may attorneys and accountants claim an exclusion from the definition of investment adviser under the Investment Advisers Act of 1940? A) They charge a separate fee for the provision of investment advice from that received for their professional services. B) They advertise that they are available to provide investment advice. C) The investment advisory activities have grown to represent 30% of their business. D) The advice is incidental to the practice of their profession. None 117. Out-of-state investment advisers with no office in this state are not required to be registered if only advising A) on preferred stock B) on growth issues C) on stocks listed on the NYSE D) insurance companies None 118. Under the Investment Advisers Act of 1940, which of the following are excluded from the definition of an investment adviser? A) Banks and trust companies B) Insurance companies C) Accountants who advise on securities (only) for a fee D) Attorneys who advise on securities (only) for a fee None 119. Which of the following is responsible for the administration of the USA in a state? A) Executive department B) State judiciary system C) The Administrator D) Securities and Exchange Commission None 120. A person who renders investment advice solely with respect to securities issued by the U.S. government A) is excluded from the definition of investment adviser under federal law and is, therefore, exempt from state registration requirements B) must be registered both with the SEC and the state C) need not be federal registered under the Investment Advisers Act of 1940 but must register in any state in which it has an office D) is exempt from state registration under the Uniform Securities Act but must be federal registered under the Investment Advisers Act of 1940 None 121. Which of the following must register as an investment adviser under the Investment Advisers Act of 1940? A) A person who provides advice to people who are investing in coin collections B) A person who provides advice to insurance companies on their portfolios C) A person who provides advice to people who are investing in antique furniture D) A person who provides advice to people who are investing in mutual funds registered under the Investment Company Act of 1940 None 122. A discussion referring to blue-sky laws would include all of the following EXCEPT A) forms requiring issuers selling securities in the state to comply with state securities laws B) the Securities Act of 1933 and Securities Exchange Act of 1934 C) a state securities law that grants state securities Administrators the power to deny or revoke a broker-dealer's or an agent's registration within its state D) state laws that are designed to protect the public against fraud in securities sales within a state None 123. Under the Uniform Securities Act, who must register as an investment adviser? A) A financial planner with no place of business in a state and who advises only trust companies B) A registered broker-dealer who receives compensation for providing investment advice C) A bank that provides investment advice D) An accountant who provides advice solely incidental to the business None 124. Under the provisions of the Uniform Securities Act, it is NOT necessary for an investment adviser to register when it A) has a place of business in the state but deals exclusively with federal covered advisers B) has a place of business in the state but has conducted business with 3 individual investors during the preceding 12 consecutive months C) is headquartered in a state where it conducts most of its business with broker-dealers only D) has no place of business in the state and deals with savings and loan associations only None 125. The sole proprietor of an insurance business that exclusively provides advice on fixed-income annuity contracts A) need not register under any securities laws B) must register as an investment adviser under the Investment Advisers Act of 1940 C) must register as an investment adviser representative under the USA D) must register as a broker-dealer with the SEC None 126. An investment adviser with no place of business in the state is exempt from registration with the state when making recommendations to all of the following EXCEPT A) AAA Manufacturing Co., with respect to the quality of investment bankers available for an underwriting of AAA securities B) when the recommendations are made exclusively to individual residents of the state who are accredited investors regarding new issues of exempt securities not registered in that state C) St. Amelia's college endowment fund D) Amalgamated Bank None 127. Which of the following is specifically excluded from the definition of an investment adviser providing the investment advice is solely incidental to the business in which the person is engaged? A) Pension manager B) Movie star's business manager who handles the star's investment portfolio C) Industrial engineer D) Sports representative who advises on securities for a fee None 128. Under the Investment Advisers Act of 1940, which of the following is considered an investment adviser? A) A person who publishes a regular newsletter of advice on U.S. Treasury bonds and other U.S. government securities B) The trust officer of a commercial bank who manages investment accounts for clients C) A syndicated columnist who gives weekly reports and recommendations on investments D) A lawyer who specializes in consulting on investing in securities None 129. Under the Uniform Securities Act, a state-registered investment adviser whose only office was in State N would NOT have to register in State O if its only clients were A) trust companies B) individual accredited investors C) complex trusts D) 6 or fewer retail clients None 130. Martin holds both the CPA and the CFP designations. Within the previous year, if he has provided portfolio advice to approximately 40 clients, is Martin required to register as an investment adviser? A) Yes, because he provides investment advice on a more than incidental basis. B) Yes, because he could receive commission income from investment clients. C) No, because he falls under the de minimis exemption having relatively few clients. D) No, because he is a CPA. None 1 out of 130 Time is Up! Time's upTime is Up!
