HESI A2: Vocabulary & General Knowledge (Quiz 5) Welcome to your Series 66 Practice Exam 3 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. An investor's required rate of return is 6%. If the internal rate of return of the investment offered is 6.32%, then the NPV is A) between 6% and 6.32% B) negative C) positive D) zero None 2. A measurement of investment return that takes the time value of money into consideration is A) risk-adjusted rate of return B) holding period return C) real rate of return D) internal rate of return (IRR) None 3. One way in which internal rate of return (IRR) differs from most return computations is that A) it takes into consideration the rate of inflation B) its application to debt securities is limited C) it takes into consideration the time value of money D) it is always an annualized rate of return None 4. Mr. and Mrs. Rose, advisory clients of yours, request a meeting with you to discuss the options available if they wish to deposit a lump sum to save for college tuition for their child. All of these would be factors to consider EXCEPT A) the Roses’ salaries B) the expected inflation rate C) current college costs D) the age of the child None 5. The difference between present value and net present value represents A) the credit risk premium B) the internal rate of return C) the initial cash outlay D) the discounted cash flow None 6. All the following factors support fundamental analysis while assessing a wide range of qualitative factors except A) the company’s business model. B) the company’s stock price trend. C) the company’s management team’s quality and experience. D) the company’s competitive position. None 7. 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) technical analysis B) credit analysis C) holding period analysis D) fundamental analysis None 8. To a technical analyst, the resistance level signifies the price at which a stock's supply would be expected to A) remain constant. B) decrease substantially. C) increase substantially. D) cause the stock price to ""break out"". None 9. Sortel Industries has preferred stock outstanding that pays annual dividends of $3.75 a share. If an investor wants to earn a rate of return of 8.5%, how much should she be willing to pay for a share of Sortel preferred stock? A) $42.10 B) $31.88 C) $33.89 D) $44.12 None 10. An analytical tool used to project the current value of a common stock using projected future dividends is A) the future value computation B) the dividend payout ratio C) the price-to-earnings ratio D) the dividend discount model None 11. Which of the following analyze corporate financial statements and trends in sales and income? A) Technicians B) Chartists C) Fundamentalists D) Market timers None 12. A support level is the price range at which a technical analyst would expect A) the demand for a stock to increase substantially. B) the supply of a stock to increase substantially. C) the demand for a stock to decrease substantially. D) the supply of a stock to decrease substantially. None 13. An analyst uses the dividend growth model to assist in determining appropriate stocks to recommend. This analyst would consider all of the following factors EXCEPT A) required rate of return B) current dividend C) growth of the dividend D) market capitalization None 14. 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 consider trends towards tablets and smart phones. B) She may review the company’s stock 200-day moving average. C) She may examine the overall state of the economy, the computer industry, and then XYZ Corporation. D) She may calculate the intrinsic value of the stock using one or more of the stock valuation models. None 15. All of the following statements regarding technical analysis are correct except A) technical analysts use terms such as trendline, support, and resistance in analyzing stocks. B) technical analysts rely heavily on financial ratios in their analysis of stocks. C) technical analysts rely on charts to predict the future prices of stocks. D) technical analysts attempt to predict the future movement of stock prices based on past trends. None 16. If a technician believed in the importance of volume, which of the following would indicate bullish sentiment? A) Prices decrease on light volume. B) Prices increase on light volume. C) Prices increase on heavy volume. D) Prices decrease on heavy volume. None 17. A fundamental analyst would be most interested in which of the following? A) The outstanding short interest in the market B) A P/E analysis of the stocks included in the Dow Jones Industrial Average C) A 200-day moving average D) Resistance and support levels None 18. 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 buy. B) rate the stock as a hold. C) purchase additional shares of the stock. D) rate the stock as a sell. None 19. 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) Moving averages B) Support and resistance C) Consolidation D) Trend lines None 20. Which of the following might be used by an analyst to approximate a reasonable price for a common stock? A) Book value per share B) Yield to maturity C) Par value D) The dividend discount model None 21. A technical analyst would be most interested in which of the following? A) Working capital B) 200-day moving averages C) Capitalization ratios D) Price-to-earnings ratios None 22. In the technical analysis of the value of securities, which of the following items is NOT important? A) The breadth of market volume B) The amount of a company's past earnings C) A prevailing market trend in response to shifts in supply and demand D) Resistance and support levels None 23. 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 resistance level. B) a reversal. C) a support level. D) a change in polarity. None 24. When using the dividend discount model, A) future expected dividends are discounted to compute the present value of the stock B) the discount rate is generally lower than the expected rate of return C) best results are obtained from stocks that pay irregular dividends D) the degree of accuracy in forecasting the price of preferred stock is less than that obtained by using the dividend growth model None 25. Which of the following would be of least interest to a chartist? A) The volume of shares traded during the past month B) The short interest C) The advance/decline line D) The relationship between the current market price of an issuer's common stock and most recently reported earnings per share None 26. One respect in which an LLC differs from an S corporation is that A) there is more favorable tax treatment afforded to members of an LLC B) not only income, but losses, if generated, pass through to investors in an LLC C) there is no statutory limit on the number of investors in an LLC D) an LLC can be formed with as little as a single investor None 27. 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) the ease in raising substantial amounts of capital. D) unlike the C corporation, which is limited to 100 investors, there is no such limit for an S corporation None 28. Which of the following is NOT a characteristic of a corporation? A) Existence terminates when an owner dies. B) Owners have no personal liability for corporate debts. C) Ownership interests are evidenced by shares of stock. D) It is considered an entity apart from its owners. None 29. 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 sole proprietorship B) a corporation C) a general partnership D) a limited partnership None 30. Samantha Wells, a British citizen temporarily working in the United States, wants to form a business venture with other investors. She is looking for favorable tax treatment of earnings and losses. She also wants to limit the number of investors, but is willing to share control of the enterprise with others to attract them. What business form do you advise to her? A) S Corporation B) General Partnership C) Limited Partnership D) C Corporation None 31. 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) C corporation C) S corporations D) General partnership None 32. Your advisory client is an 86-year-old woman who is presently in the hospital, unable to communicate due to a severe stroke. For the past 6 years, she has followed the practice of making annual gifts of stock to her children and grandchildren on her birthday. Because her 87th is coming up later this month, her oldest son approaches you and asks you to continue the policy. A) You should go to the hospital and see if she can blink her eyes to indicate yes or no. B) With 6 years of prior history, you know this is what she would want you to do so you go ahead as in previous years. C) You may only follow the provisions of her will. D) Without a proper durable power of attorney being produced, you cannot do anything. None 33. 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) a person with durable power of attorney C) the administrator in intestacy D) the spouse of the deceased None 34. 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) impact investing B) asset allocation C) engineered investing D) program-related investing None 35. Which of the following would be used to provide end-of-life instructions once a person becomes incapacitated? A) A living will B) A durable power of attorney C) A living trust D) An incapacitated will None 36. 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 37. An investment constraint that is unique to private foundations is the requirement to A) invest 5% of its assets each year in qualifying investments. B) have an investment policy statement. C) have a board of directors. D) distribute 5% of its assets each year as qualifying distributions. None 38. Because a trust account is managed for the beneficial interest of the beneficiary, the investment adviser representative can A) place the securities in the trust fund in a noncustodial brokerage account B) arrange to have the trust's funds pledged to support a loan for the trustee C) have a check drawn on the account payable to the trustee for expenses D) have funds withdrawn from the account at the direction of the beneficiary None 39. Which of the following would be used to provide end-of-life instructions once a person becomes incapacitated? A) Durable power of attorney B) Living will C) Incapacitated will D) Living trust None 40. 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) the trust because it is a separate legal entity B) Mr. Hawkins as the donor C) Madeleine as the primary beneficiary D) Mrs. Hawkins as the contingent beneficiary None 41. If a customer who has granted a durable power of attorney to her son dies, which of the following statements regarding the power of attorney is TRUE? A) It remains in effect until the son cancels it. B) It is canceled on the death of either principal. C) It remains in effect until the executor of the estate cancels it. D) It remains in effect only if the son is the sole heir to the estate. None 42. 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) follow the beneficiary’s instructions. B) amend the IPS and process the order. C) follow the trust’s IPS and refuse the order. D) contact the grantor of the trust. None 43. The type of trust created by a will that becomes operative at death is A) a testamentary trust B) a revocable trust C) a living trust D) a Q-tip trust None 44. A living will is used to A) avoid the cost and time of probate. B) ensure that the author’s assets are properly distributed after death. C) eliminate, or at least reduce, estate taxes. D) express the author’s end-of-life wishes. None 45. One of the ways in which a simple trust differs from a complex trust is that simple trusts A) may retain income. B) are easier to prepare. C) may make distributions from the corpus of the trust. D) must distribute their distributable net income each year. None 46. 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) investment adviser B) attorney with guardianship over the surviving children C) estate’s executor or administrator C) estate’s executor or administrator None 47. One of your existing clients wishes to open a new account in the name of his spouse and enter orders on her behalf. A) The agent could be liable if the stock declines in value. B) This action is prohibited unless the spouse signs a trading authorization. C) This practice is ordinary and acceptable. D) This action is prohibited unless the customer signs a trading authorization on behalf of his spouse. None 48. Which of the following would likely be stressed in a socially responsible fund? A) Lower than average expenses B) Higher-than-average returns C) Ethical and moral investing D) Avoidance of foreign securities None 49. 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) environmental, social, and governance. B) exchange, sensitivity, and growth. C) exchange, sales, and general. D) earnings, systematic, and governmental. None 50. 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) Complex trust B) Charitable lead trust C) Simple trust D) Charitable remainder trust None 51. 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) refer the customer to an attorney that can set up the trust B) tell the customer to contact a tax specialist C) explain to the customer that trusts cannot be traded D) prepare the trust, transfer funds, and begin investing None 52. In a trust account, the person who makes the account management decisions is A) the beneficiary B) the nontrustee custodian C) the investment adviser representative D) the trustee None 53. The distributable net income (DNI) of a simple trust would not include A) interest received on municipal bonds. B) realized capital gains. C) interest received on corporate bonds. D) dividends received. None 54. One of your longtime advisory clients has been critically injured in an automobile accident. The client is in the ICU at the local hospital, unable to communicate. You would be able to accept orders for the account A) from the client’s lawyer B) from the client by getting a squeeze of the hand for a “yes” C) from a person who has a written durable power of attorney over the account D) from the client’s spouse None 55. 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 with a durable power of attorney B) the spouse C) the person named as executor of the estate D) the person appointed as administrator of the estate None 56. Which of the following is required to register in a state under the Uniform Securities Act? A) ABC State Bank, which provides investment advice in its branches throughout the state B) An investment adviser who has no place of business in the state and communicates with only 5 advisory clients in the state for the year C) An investment adviser who has a place of business in the state and whose only clients in the state are insurance companies, banks, and broker-dealers D) A broker-dealer who has no place of business in the state and whose only clients in the state are limited to insurance companies, banks, and broker-dealers None 57. Under the Investment Advisers Act of 1940, which of the following is included in the definition of an investment adviser? A) A professional research analyst who holds himself out to the public as an expert in trading the Euro and other foreign currencies B) A lawyer who advertises to the public that he offers comprehensive legal and investment advice to high-net-worth individuals C) A research service that offers advice on the value of gold D) A bank that advertises to the public that it offers a complete line of trust services None 58. Under the Investment Advisers Act of 1940, which of the following are excluded from the definition of an investment adviser? A) Insurance companies B) Accountants who advise on securities (only) for a fee C) Banks and trust companies D) Attorneys who advise on securities (only) for a fee None 59. 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) as long as the IA does not have an office in Colorado, there are no conditions that would mandate registration there B) 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 C) the Administrator is correct and the firm must register D) this firm would be exempt from registration with the Colorado Administrator because it is doing business in more than one state None 60. 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) Athlete's financial manager B) Aeronautical engineer C) Pension consultant D) Financial planner None 61. Under the Uniform Securities Act, a person who exclusively provides advice on commodities is A) a registered investment adviser representative B) not a registered investment adviser C) an options representative D) a registered insurance agent None 62. 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) St. Amelia's college endowment fund 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) AAA Manufacturing Co., with respect to the quality of investment bankers available for an underwriting of AAA securities D) Amalgamated Bank None 63. Under the Uniform Securities Act, which of the following persons has to register as an investment adviser? A) A broker-dealer who gives investment advice that is incidental to the course of its business and for which no special compensation is received B) An attorney who writes a legal opinion for a municipal bond indenture C) An agent of a broker-dealer who gives investment advice within the course of his duties with the firm for which a fee is charged D) A broker-dealer who gives advice for which he charges a specific fee None 64. 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) is exempt from state registration under the Uniform Securities Act but must be federal registered under the Investment Advisers Act of 1940 C) must be registered both with the SEC and the state D) need not be federal registered under the Investment Advisers Act of 1940 but must register in any state in which it has an office None 65. 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) Sports representative who advises on securities for a fee B) Industrial engineer C) Movie star's business manager who handles the star's investment portfolio D) Pension manager None 66. Which of the following investment advisers, with no place of business in the state, does not qualify for the de minimis exemption? A) An investment adviser who, during the preceding twelve-month period, has had 5 or fewer retail clients. B) An investment adviser who, during the preceding twelve-month period, has had fewer than 6 retail clients. C) An investment adviser who, during the preceding twelve-month period, has had no more than 6 retail clients. D) An investment adviser who, during the preceding twelve-month period, has had no more than 5 retail clients. None 67. 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) 12 months B) 2 years C) 30 days D) 6 months None 68. 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 advice to registered investment companies B) when an adviser with numerous clients in the state has not been subject to disciplinary action within any state within the last 10 years C) when an adviser has maintained assets of $100 million or more for 7 out of the last 10 years D) when an adviser only provides investment advice to 401(k) plans with assets of $250,000 or more None 69. 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) Investment adviser representatives B) Broker-dealers receiving special compensation C) Economists whose advice is strictly incidental to their professional activity D) Bank subsidiary offering investment advice None 70. A person is excluded from the definition of investment adviser under the Investment Advisers Act of 1940 if the investment advice and reports are restricted to A) U.S. government securities B) foreign securities C) securities listed on a national stock exchange D) bank and insurance company securities None 71. As defined in the Investment Advisers Act of 1940, all of the following would be considered investment advisers EXCEPT A) a professional plumber with excellent stock market skills who as a hobby and without pay, manages portfolios for 8 of his neighbors B) a tax attorney who manages investment portfolios for 50 clients C) 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 D) a portfolio manager who limits advice to municipal securities exclusively None 72. The sole proprietor of an insurance business that exclusively provides advice on fixed-income annuity contracts A) must register as a broker-dealer with the SEC B) must register as an investment adviser representative under the USA C) must register as an investment adviser under the Investment Advisers Act of 1940 D) need not register under any securities laws None 73. Which of the following persons are included in the definition of investment adviser? A) A financial planner or other person that provides investment advisory services to others for compensation B) A publisher of a bona fide newspaper, news magazine, or business or financial publication of general and regular circulation C) A bank whose deposits are insured by the FDIC D) Any person that the Administrator excludes by rule or order None 74. Which of the following persons must register as an investment adviser under the Uniform Securities Act? A) An accountant who makes no pretense of providing investment advisory services but gives incidental advice to clients as a small part of accounting services provided B) An investment adviser who only serves institutional clients and whose only office is in this state C) An investment adviser whose advice is limited to securities issued or guaranteed by the U.S. government and who has 3 places of business in the state D) An investment adviser representative with no place of business in the state who has dealt with 7 retail clients during the most recent 12 month period None 75. Out-of-state investment advisers with no office in this state are not required to be registered if only advising A) on stocks listed on the NYSE B) insurance companies C) on preferred stock D) on growth issues None 76. If an investment adviser is registered in another state and has no place of business within an Administrator's state, the adviser is exempt from registration under the Uniform Securities Act if A) most of the adviser's customers are municipalities B) the adviser has no more than 5 clients who are residents of the state during the preceding 12 months C) the adviser has no more than 14 customers within the state during the year D) most of the adviser's clients are accredited investors None 77. Under the Investment Advisers Act of 1940, who is not excluded from the definition of investment adviser when their investment advice is solely incidental to the individual's profession? A) Engineers B) Attorneys C) Teachers D) Insurance agents None 78. 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) Attorneys for whom providing investment advice is incidental to the practice of their profession B) Publishers of investment newsletters distributed based on market events. C) Pension consultants D) Sports or entertainment representatives None 79. 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) complex trusts B) 6 or fewer retail clients C) individual accredited investors D) trust companies None 80. Under the Investment Advisers Act of 1940, the exclusion for providing investment advice that is solely incidental to the practice of a profession is NOT available to A) teachers B) real estate agents C) attorneys D) engineers None 81. 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 retired mechanical engineer who charges a reasonable fee for offering investment advice in his areas of expertise to less than 25 clients B) A lawyer with sophisticated investment experience who gratuitously offers his clients advice on the value of securities C) A columnist for a major news magazine who writes on the business and economic functions of banking institutions D) A bank that purchases securities on behalf of its custodial accounts None 82. 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) is headquartered in a state where it conducts most of its business with broker-dealers only C) has no place of business in the state and deals with savings and loan associations only D) has a place of business in the state but has conducted business with 3 individual investors during the preceding 12 consecutive months None 83. 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 CPA who gives high tax bracket clients a chart showing the tax-equivalent yield of municipal bonds B) A publisher of a newsletter that is paid to make reports to be used in the sale of specific securities C) A personal injury attorney who recommends that clients consult with a CFP® for advice on how to deal with the large settlements they receive D) An economist who teaches a course in fundamental analysis at a local community college None 84. 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) An accountant who provides advice solely incidental to the business C) A bank that provides investment advice D) A registered broker-dealer who receives compensation for providing investment advice None 85. Which of the following parties is most likely to be considered an investment adviser under the Investment Advisers Act of 1940? A) The trust department of Citibank, which handles billions of dollars in trust assets B) Dow Jones, Inc., publisher of The Wall Street Journal C) A CPA who manages investment accounts for 50 clients and charges hourly fees for the service D) An expert in fixed-income securities whose only clients are individuals and whose only recommendations deal with securities issued or guaranteed by the U.S. Treasury None 86. 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) Teacher B) Economist C) Engineer D) Lawyer None 87. A broker-dealer is NOT considered an investment adviser if A) the firm is registered under the Investment Advisers Act of 1940 B) the investment advisory services are incidental to the broker-dealer's business and no special compensation is received C) the firm's investment advice is limited to 10 or fewer people D) the firm has less than 15 advisory accounts totaling less than $1 million None 88. Which of the following would have to register as an investment adviser under the Uniform Securities Act? A) A trust company B) An accountant who advises clients about investments as an incidental part of services C) A retired aeronautical engineer who charges a nominal fee for holding seminars on opportunities in aerospace stocks D) An economics professor who occasionally gives a lecture to business groups about the stock market None 89. Alpha-Beta Advisers (ABA) has its principal office in State X. ABA limits its clientele to insurance companies that are authorized to do business in State X. Which of the following best describes the registration requirements for ABA? A) SEC only B) Both the SEC and State X C) State X only D) Neither the SEC nor State X None 90. Under the Uniform Securities Act, an investment adviser would be exempt from registration in a state in which he has no place of business if he A) had no more than 15 clients in that state within the past 12 months B) had no more than 10 clients in that state within the past 12 months C) had no more than 5 clients in that state within the past 12 months D) is registered as a broker-dealer None 91. An investment adviser need not register in a state if it has A) no place of business in the state and only advises 3 insurance companies located in the state B) a place of business in the state and only advises employee benefit plans with more than $1 million C) a place of business in the state and advises fewer than 5 banks D) 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 None 92. 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 financial planner who conducts seminars for the local PTA, where he presents the benefits of term life insurance C) A lawyer who charges an hourly fee for preparing trust documents for individuals referred to her by an investment adviser D) A teacher at the local high school who receives nominal compensation for giving investment advice to engineers None 93. A discussion referring to blue-sky laws would include all of the following EXCEPT A) 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 B) state laws that are designed to protect the public against fraud in securities sales within a state C) the Securities Act of 1933 and Securities Exchange Act of 1934 D) forms requiring issuers selling securities in the state to comply with state securities laws None 94. 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) a teacher B) a lawyer C) an economist D) an engineer None 95. 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 have conducted business with no more than 6 individual clients in the state within the last 12 months B) advisers who deal exclusively with savings banks located in the state C) advisers who deal exclusively with federal covered investment advisers located in the state D) advisers who deal exclusively with investment companies registered under the Investment Company Act of 1940 None 96. 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 economist B) an engineer C) a teacher D) a lawyer None 97. Searching Out New Growth (SONG) is a venture capital fund. As such, all of the following statements are true EXCEPT A) SONG’s investment adviser is exempt from registration B) SONG must have less than $150 million in assets in the fund C) SONG is not registered under the Investment Company Act of 1940 D) SONG only issues securities which are, except in extraordinary circumstances, non-redeemable None 98. Who of the following is not exempt from registration as an investment adviser under the Investment Advisers Act of 1940? A) An adviser whose only office is in State G who deals only with State G residents, none of whom is a private fund, and does not deal in securities listed on any national securities exchange B) An adviser whose clientele consists solely of insurance companies C) An adviser to seven private funds with total assets under management in the U.S. of $125 million D) An adviser, with total AUM of $125 million, specializing in stocks listed on the New York Stock Exchange, whose only place of business is in State F and whose only clients are 110 State F resident individuals None 99. In which of the following cases is the exemption from registration with the SEC not based on the value of assets under management? A) An investment adviser with assets under management of less than $25 million B) An investment adviser that acts as an adviser solely to private funds and has assets under management in the United States of less than $150 million C) An investment adviser that acts as an adviser solely to one or more venture capital funds D) An investment adviser that acts as an adviser solely to one or more national banks None 100. The Investment Advisers Act of 1940 would consider each of the following investment advisers to be exempt from registration EXCEPT A) an adviser whose only clients are insurance companies B) an adviser whose only clients are banks C) an adviser who maintains an office in only one state, advises only residents of that state (none of whom is a private fund), and gives advice relating solely to securities not traded on any national exchange D) an adviser whose only clients are venture capital funds None 1 out of 100 Time is Up! Time's upTime is Up!
