Module 5

Question 1

A financial institution that allocates earnings from loan interest and investments to its members in the form of dividends is

A)
a credit union.
 B)
a savings and loan association.
 C)
a brokerage company.
 D)
a thrift institution.

Answer 1

A)

a credit union.

Question 2

A financial planner who wants to sell variable annuities must have which of the following licenses?

1. A FINRA Series 6 or Series 7 license
2. A state variable insurance license

Answer 2

Both

Question 3

Which of the following is the act that extended the regulation of securities to the secondary market or exchanges?

A)
The Investment Advisors Act of 1940
 B)
The Securities Act of 1933
 C)
The Investment Company Act of 1940
 D)
The Securities Act of 1934

Answer 3

D)

The Securities Act of 1934

Question 4

Which of the following is governed by the Securities Exchange Act of 1934?

A)
New issues of securities in the primary market
B)
All of these
C)
Registration of investment companies with the SEC (Securities and Exchange Commission)
D)
The purchase and sale of securities in the secondary market

Answer 4

D)

The purchase and sale of securities in the secondary market

Question 5

The Financial Industry Regulatory Authority (FINRA) Series 66 license combines the license requirements for what other 2 FINRA licenses?

Series 6
Series 7
Series 63
Series 65

Answer 5

Series 63

Series 65

Question 6

Rebecca is a Series 6 licensed registered representative. Assuming she also holds the appropriate state insurance licenses, she can sell which of the following financial products?

1. Individual stocks
2. Exchange-traded funds
3. Variable life insurance policies
4. Open-end investment companies

Answer 6

3. Variable life insurance policies

4. Open-end investment companies

Question 7

Which of the following statements regarding savings and loan associations (S&Ls) is CORRECT?

1. S&Ls are also known as trust companies.
2. One function of S&Ls is to provide home loans.
3. Federally chartered S&Ls are regulated by the Federal Deposit Insurance Corporation (FDIC).
4. Both checking and savings accounts are offered by S&Ls.

Answer 7

2. One function of S&Ls is to provide home loans.

Question 8

Which regulation generally requires delivery of a written disclosure statement detailing the investment adviser’s background and business practices?

A)
McCarran-Ferguson Act of 1945
 B)
Securities Exchange Act of 1934
 C)
Securities Investor Protection Act of 1970
 D)
Investment Advisers Act of 1940

Answer 8

D)

Investment Advisers Act of 1940

Question 9

Which of these types of accounts are covered by Federal Deposit Insurance Corporation (FDIC) insurance?

1. Securities
2. Certificates of deposit
3. Money market mutual funds
4. Money market deposit accounts

Answer 9

2. Certificates of deposit

4. Money market deposit accounts

Question 10

Which of the following are NOT included in the definition of an investment adviser?

1. Banks or bank holding companies
2. Persons whose advice is limited to securities issued and guaranteed by the U.S. government
3. Publishers of bona fide newspapers or financial publications of general and regular circulation
4. Lawyers whose performance of advisory services is solely incidental to the practice of their profession

Answer 10

All of Above

Question 11

The following statements regarding financial institutions are CORRECT except

A)
an insurance company is primarily engaged in the business of furnishing risk protection to businesses and consumers.
B)
a brokerage company is an intermediary that facilitates transactions involving sales of investments or real estate.
C)
a credit union, owned by its members, is a financial institution that accepts deposits and makes loans.
D)
a trust company is also known as a thrift institution.

Answer 11

D)

a trust company is also known as a thrift institution.

Question 12

Brittany wants to deposit or invest $280,000 through a national bank. Which of the following statements is CORRECT?

A)
If the Federal Deposit Insurance Corporation (FDIC) guarantees the funds in a savings account, the excess of the savings deposit over $250,000 is not guaranteed for Brittany’s savings account.
B)
If Brittany deposits $140,000 into each of two savings accounts at the same bank in Brittany’s name only, both accounts are given full FDIC protection.
C)
If Brittany deposits the funds in a savings account, the FDIC guarantees the full amount of her deposit.
D)
If the funds are invested in a mutual fund sold by the bank, the FDIC provides protection up to $250,000.

Answer 12

A)
If the Federal Deposit Insurance Corporation (FDIC) guarantees the funds in a savings account, the excess of the savings deposit over $250,000 is not guaranteed for Brittany’s savings account.

Question 13

Doug has the following amounts on deposit at the same bank.

Account Ownership Balance
Savings account Doug $200,000
Traditional IRA Doug $300,000
Certificate of Deposit Joint with spouse $400,000

How much Federal Deposit Insurance Corporation (FDIC) insurance coverage does Doug have for his accounts at the bank?

Answer 13

$650,000

Question 14

What legislation has as one of its primary purposes to provide investors with the full and fair disclosure of material information regarding initial public offerings (IPOs)?

A)
Securities Act of 1933
 B)
The Securities Investor Protection Corporation Act of 1970
 C)
The Maloney Act of 1938
 D)
Securities Exchange Act of 1934

Answer 14

A)

Securities Act of 1933

Question 15

Mason has decided to pursue a career selling financial products. He currently holds a Series 7 license and a state variable insurance license. In addition to the Series 63 registration required by his state, what other license(s) must he obtain to sell both variable life insurance and mutual funds?

A)
Mason has the appropriate licenses to sell variable life insurance and mutual funds.
B)
Mason must obtain a FINRA Series 65 license.
C)
Mason must obtain a FINRA Series 6 license.
D)
Mason must obtain a FINRA Series 24 license.

Answer 15

A)

Mason has the appropriate licenses to sell variable life insurance and mutual funds.

Question 16

Which of the following are exempt from registration under the Investment Advisers Act of 1940?

Foreign private advisers
Charitable organizations and plans
Commodity trading advisers
Private fund advisers

Answer 16

All of Above

Question 17

Which of the following statements regarding the National Credit Union Share Insurance Fund (NCUSIF) are CORRECT?

1. The NCUSIF is an agency of the federal government.
2. The NCUSIF is backed by the full faith and credit of the state governments.
3. Up to $500,000 of a member’s account balances are insured by the NCUSIF.
4. The fund is administered by the National Credit Union Administration (NCUA).

Answer 17

1. The NCUSIF is an agency of the federal government.

4. The fund is administered by the National Credit Union Administration (NCUA).

Question 18

Martina has the following amounts on deposit in the same bank.

Account Ownership Balance
Traditional IRA Martina $275,000
Savings account Martina $100,000
Certificate of deposit Joint with spouse $300,000

How much Federal Deposit Insurance Corporation (FDIC) insurance coverage does Martina currently have for her accounts?

Answer 18

$500,000

Question 19

National banks are subject to regulation by which of the following independent federal agencies?

1. Federal Reserve Board
2. Securities and Exchange Commission (SEC)
3. Federal Deposit Insurance Corporation (FDIC)
4. Office of the Comptroller of the Currency (OCC)

Answer 19

1. Federal Reserve Board
2. Federal Deposit Insurance Corporation (FDIC)
3. Office of the Comptroller of the Currency (OCC)

Question 20

Which of the following are applicable Financial Industry Regulatory Authority (FINRA) examinations for registered investment advisers (RIAs) that plan to sell securities?

Series 65: Uniform Registered Investment Advisor Examination.
Series 7: General Securities Registered Representative.
Series 66: Uniform Combined State Law Examination.
Series 63: Uniform Securities Agent State Law Exam.

Answer 20

All of Above

Question 21

Which of the following statements regarding registration requirements to become an investment adviser is CORRECT?

1. An investment adviser is any person who, for compensation, engages in the business of advising others as to the valuation of securities, either directly or through publications or writing.
2. An investment adviser is any person who, for compensation, advises others in purchasing or selling securities.
3. An investment adviser, who is registered with the Securities and Exchange Commission (SEC), must be competent.
4. An individual who wants to be an investment adviser must be sponsored by a broker/dealer before registration.

Answer 21

1. An investment adviser is any person who, for compensation, engages in the business of advising others as to the valuation of securities, either directly or through publications or writing.
2. An investment adviser is any person who, for compensation, advises others in purchasing or selling securities.

Question 22

Which of the following acts established the Securities and Exchange Commission (SEC)?

A)
The Securities Exchange Act of 1934
 B)
The Investment Company Act of 1940
 C)
The Securities Investor Protection Act of 1970
 D)
The Securities Act of 1933

Answer 22

A)

The Securities Exchange Act of 1934

Question 23

Which of the following statements concerning the responsibilities of Securities and Exchange Commission (SEC) registered investment advisers is CORRECT?

1. It is unlawful for any person registered as an investment adviser to use the initials RIA after her name unless the person also carries the CFP® certification.
2. A registered investment adviser who ceases to practice as an investment adviser must file Form ADV-W as soon as possible.

Answer 23

2. A registered investment adviser who ceases to practice as an investment adviser must file Form ADV-W as soon as possible.

Question 24

Olivia is a Financial Industry Regulatory Authority (FINRA) Series 6 licensed registered representative. Assuming she also holds the appropriate state insurance licenses, which of the following products can she sell?

1. Individual stocks
2. Variable annuities
3. Exchange-traded funds (ETFs)
4. Open-end investment companies

Answer 24

2. Variable annuities

4. Open-end investment companies

Question 25

Which of the following statements regarding the Securities Act of 1933 are CORRECT? 1. The Act requires the registration of new issues of securities. 2. The Act identifies securities that are exempt from the registration requirements. 3. The Securities and Exchange Commission (SEC) was established by this act. 4. The Act provides applicable procedures for issuing an initial public offering (IPO) of securities.

Answer 25

1. The Act requires the registration of new issues of securities. 2. The Act identifies securities that are exempt from the registration requirements. 4. The Act provides applicable procedures for issuing an initial public offering (IPO) of securities.

Question 26

Cornerstone Company, owned by a bank, specializes in managing estates. The company is ``` A) a trust company. B) an investment bank. C) a brokerage company. D) a thrift institution. ```

Answer 26

A) | a trust company.

Question 27

Which of these statements regarding credit unions are CORRECT? 1. Loans are typically offered at reduced interest rates. 2. Earnings from loan interest and investments are paid to members in the form of shares. 3. Deposits in a credit union are insured up to $100,000 per qualifying account by the National Credit Union Share Insurance Fund (NCUSIF). 4. Each credit union member may use a vote to elect the board of directors.

Answer 27

1. Loans are typically offered at reduced interest rates. | 4. Each credit union member may use a vote to elect the board of directors

Question 28

What federal legislation authorized the Securities and Exchange Commission (SEC) to regulate open-end investment companies and mutual funds? ``` A) The Investment Company Act of 1940 B) The Securities Act of 1933 C) The Securities Exchange Act of 1934 D) The McCarran Ferguson Act of 1945 ```

Answer 28

A) | The Investment Company Act of 1940

Question 29

Who of the following must register as an investment adviser with the Securities and Exchange Commission (SEC)? 1. Jessica, an attorney, who advertises that she also gives investment advice 2. Katherine, a Certified Public Accountant, who primarily provides investment advice and security analysis 3. Grant, a CFP® professional, who receives compensation for publishing reports upon request by investors 4. Jim, an attorney, who solely advises his clients regarding venture capital opportunities

Answer 29

1. Jessica, an attorney, who advertises that she also gives investment advice 2. Katherine, a Certified Public Accountant, who primarily provides investment advice and security analysis 3. Grant, a CFP® professional, who receives compensation for publishing reports upon request by investors