Missed Qs Flashcards
Which of the following is considered a sale of securities under the USA?
I. Redemption of mutual fund shares worth $10,000
II. Dividends of common stock for which no consideration was given for the dividends
III. With the approval of the board of directors, an exchange of common stock for the stock in another company under a merger
IV. Disposition of stock for which cash consideration is received
I. Redemption of mutual fund shares worth $10,000
IV. Disposition of stock for which cash consideration is received
Which of the following are required to execute orders in a customer’s discretionary account?
I. The customer must authorize each transaction in writing.
II. Trades must be in accordance with the account holder’s investment objectives.
III. The rules relating to best execution are the same as for a nondiscretionary account.
IV. Discretionary orders must take place before nondiscretionary orders.
II. Trades must be in accordance with the account holder’s investment objectives.
III. The rules relating to best execution are the same as for a nondiscretionary account.
Which of the following securities are not subject to state registration under the Uniform Securities Act?
I. Equipment trust certificates issued by a railroad subject to federal regulation
II. Preferred stock of a bank holding company listed on the New York Stock Exchange
III. Subordinated convertible debentures issued by the Dominion Electric Company of Canada, a public utility regulated by the Canadian federal government
IV. Shares of a savings and loan association authorized to do business in the state
I, II, III, IV
Securities exempt under the USA include bank issues, savings and loan issues, and common carriers or public utilities regulated by the U.S. or Canadian federal government. Securities issued by bank holding companies that trade on SEC-regulated exchanges are federal covered securities and are not subject to state registration.
Which of the following is not a security?
A An interest in a real estate condominium sold with a rental pool
B A variable annuity
C A $1 million whole life insurance policy
D A promissory note with a six-month maturity
C a $1 million whole life insurance policy
In conducting investigations, the Administrator may do which of these?
I. Require a person to file a statement in writing and under oath.
II. Publish information of any violation over the vigorous objections of a violator.
III. Conduct investigations both inside the state and in other states to determine whether violations of the USA have occurred in his state.
IV. Conduct investigations outside the state to determine whether violations of the USA have occurred in that other state.
I, II, and III
The Administrator may require written statements under oath, publicize violations, and investigate anywhere necessary to determine whether or not a violation of the act took place in his state. However, he is not authorized to conduct investigations in other states to determine whether a violation of the USA occurred in those states.
A federal covered investment adviser employs the services of a third-party promoter to solicit business for the firm. The Investment Advisers Act of 1940 would require the solicitor to deliver a copy of
A the investment adviser’s Form ADV, Part 1.
B the promoter’s agreement when above the de minimis compensation limit.
C the solicitor’s brochure
D the solicitor’s script
B the promoter’s agreement when above the de minimis compensation limit
Third-party solicitors (promoters) must provide a copy of the written agreement between the promoter and the investment adviser (IA) when the compensation exceeds $1,000 during the preceding 12 months (de minimis). There is no requirement for a promoter’s brochure
An investment adviser would be most likely to be the contra-party to a trade when acting as a _________
a principal
The term contra-party means the other side of the trade. There are always two parties (the principals) to any transaction: the buyer and the seller.
There are three primary expenses involved with brokerage accounts that are not included in the fee disclosure template. Those are
- commissions
- markups and markdowns
- advisory fees for those firms that are also registered as investment advisers
It would not be considered a prohibited or unethical business practice for a federal covered investment adviser to
A pay a nominal fee, based on account size, to certain professionals as a way of thanking them for client referrals
B charge a performance-based fee to an individual who meets the SEC’s accredited investor standard detailed in Rule 501 of Regulation D
C pay a nominal fixed fee to unrelated third parties as a way of thanking them for endorsements
D use an endorsement from a bona fide client with the proper caveat that this individual’s results may not be typical, and it is possible they may not be reproduced in the future.
C pay a nominal fixed fee to unrelated third parties as a way of thanking them for endorsements.
Under the Investment Advisers Act of 1940, a registered investment adviser may
A imply SEC approval or sponsorship because of registration
B use the statement “registered with the SEC” in advertisements
C use the initials RIA after its name on a business card
D imply SEC approval or sponsorship because of passing an exam
B use the statement “registered with the SEC” in advertisements
An individual who has passed the NASAA examination for registration as an investment adviser representative may begin soliciting advisory clients
A when informed by the Administrator that the representative’s registration is effective
B within 48 hours
C when informed by the investment adviser that the representative’s registration is effective
D immediately
C when informed by the investment adviser that the representative’s registration is effective
Certain documents belonging to a federal covered investment adviser must be kept for a period of time after the enterprise closes. Those documents are
A sent to the Administrator for safekeeping
B sent to the SEC for safekeeping
C required to be shredded
D the responsibility of the investment adviser
D the responsibility of the investment adviser
Whether the firm is a state-registered or federal covered investment adviser (IA), if there have been material changes, a copy of the IA’s brochure or a summary of the changes must be sent to all clients no later than ___ days after the close of the IA’s fiscal year
120 days
According to the Uniform Securities Act, which of the following would be considered exempt transactions?
I. The sale of an unlisted corporate bond by an executor of an estate
II. The gift of 100 shares of a NYSE-listed stock from a father to his minor child
III. Preorganization certificates subscribed to by 14 institutional investors during a 12-month period for which no payment has been made
IV. An unsolicited order from an individual client to purchase a nonexempt, unregistered security
I and IV
I. The sale of an unlisted corporate bond by an executor of an estate and IV. An unsolicited order from an individual client to purchase a nonexempt, unregistered security
One of the likely consequences of a rating downgrade on a bond is
a reduction in the market price of the bond
One business succession issue that applies to virtually all investment advisers is
A departure of a partner holding a majority interest
B loss of the designated regulatory contact person
C death of the sole proprietor
D permanent disability of a member of the board of directors
B loss of the designated regulatory contact person
Among the differences between an investment in a limited partnership offering and in a corporation is that
A limited partners take a more active role in the management of the enterprise than do stockholders of a corporation
B only corporations are organized to run a business
C only corporations issue securities
D limited partnership offerings do not pay dividends; corporations do
D limited partnership offerings do not pay dividends; corporations do
