HESI A2: Vocabulary & General Knowledge (Quiz 4) 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! 1. 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 None 2. 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. None 3. 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 None 4. 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 None 5. 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 None 6. 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 None 7. 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 None 8. 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. None 9. 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. None 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 None 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 None 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 None 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 None 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. None 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 None 16. Which of the following has the least exposure to inflation risk? A) Common stock B) Fixed annuity C) Preferred stock D) Cash None 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. None 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 None 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 None 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 None 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 None 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. None 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 None 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 None 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 None 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. None 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 None 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 None 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 None 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 None 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 None 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 None 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 None 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 None 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 None 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 None 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 None 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 None 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 None 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 None 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 None 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) None 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 None 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) None 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 None 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 None 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 None 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 None 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 None 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 None 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 None 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 None 53. An S corporation is characterized by A) limited lifetime B) more than 100 shareholders C) unlimited personal liability D) flow-through tax treatment None 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 None 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 None 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. None 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 None 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. None 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 None 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 None 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 None 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. None 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 None 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 None 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 None 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 None 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. None 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 None 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 None 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 None 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 None 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. None 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. None 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 None 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 None 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 None 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 None 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 None 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 None 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. None 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. None 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 None 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 None 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 None 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. None 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 None 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 None 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 None 89. Which of the following must register as an investment adviser under the Investment Advisers Act of 1940? A) A person who provides advice to insurance companies on their portfolios B) A person who provides advice to people who are investing in antique furniture C) A person who provides advice to people who are investing in coin collections D) A person who provides advice to people who are investing in mutual funds registered under the Investment Company Act of 1940 None 90. Registration as an investment adviser or investment adviser representative under the Uniform Securities Act is required of A) 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 B) 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 C) an agent of a broker-dealer who recommends model portfolios to clients in exchange for them executing their trades through him D) an officer of a trust company handling investments for trust accounts None 91. Under the Investment Advisers Act of 1940, which of the following is considered an investment adviser? A) The trust officer of a commercial bank who manages investment accounts for clients B) A person who publishes a regular newsletter of advice on U.S. Treasury bonds and other U.S. government securities C) A lawyer who specializes in consulting on investing in securities D) A syndicated columnist who gives weekly reports and recommendations on investments None 92. 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) The investment advisory activities have grown to represent 30% of their business. C) They advertise that they are available to provide investment advice. D) The advice is incidental to the practice of their profession. None 93. The USA provides either an exclusion from the definition or an exemption from registration as an investment adviser for certain persons. Which of the following would be required to register? A) A bank trust officer with less than $250 million in assets under management B) A CFP® who provides a full range of financial planning to clients on a fee-only basis C) A teacher who teaches a course in the local high school on consumer economics D) An engineer employed by an oil company selling limited partnership interests to public investors who provides estimates of recoverable reserves None 94. 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 95. Under the Uniform Securities Act, a person who is in the business of providing advice on trading futures contracts in addition to advising clients on securities issued or guaranteed by the U.S. government is A) not required to be a registered investment adviser in the state B) required to be a registered agent in the state C) required to be a registered investment adviser representative in the state D) required to be a registered investment adviser in the state None 96. 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) No, because he falls under the de minimis exemption having relatively few clients. C) No, because he is a CPA. D) Yes, because he could receive commission income from investment clients. None 97. Under the Uniform Securities Act, all of the following are excluded from the definition of an investment adviser EXCEPT A) banks B) an individual providing advice on municipal bonds C) broker-dealers and their agents D) a federal covered adviser None 98. Which of the following is responsible for the administration of the USA in a state? A) State judiciary system B) The Administrator C) Executive department D) Securities and Exchange Commission None 99. The Uniform Securities Act's definition of investment adviser would include A) A person who, on a regular basis for compensation, offers specific investment advice to clients as to the value of securities B) An investment adviser representative of an advisory firm who makes securities recommendations on a regular basis for compensation C) A temporary employee hired to assist in administrative responsibilities of an advisory firm D) Any person who is a federal covered investment adviser None 100. 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 1 out of 100 Time is Up! Time's upTime is Up!
