Test Questions Flashcards
Renewal of of an agents registration must occur before _______ of each year
Dec 31st
A testamentary trust goes into effect when _____
the grantor dies
A ______ is named on a Totten Trust account
beneficiary
Excluded from gross income on an individuals tax return are _______ interest and retirement plan distributions from non-qualified accounts attributable to the ______
muni interest and payments attributable to the cost basis (principal)
Whole life is not _____ (whereas Universal is)
flexible
If an agent moves from one BD to another, the registration of that BD must be transferred ______
promptly (aka immediately)
For a sole proprietorship’s application, they must submit ________ and attest that _____
financial statement and attest that they are true
Weak for EMT states that ________ is essentially useless
technical
The two basic categories of portfolio management “styles” are _____ and ____
active and passive
A mutual fund dealer would be considered a ______
BD
Dividends on preferred are paid only in _____
cash
If you acquire a 5% stake in a company and intend to be active, you file a form 13_, if passive you file a form 13___
active = 13d; passive = 13g
The Federal Intermediate Credit Bank issues _______ at a _____
short term notes at a discount
There is NO “issuer” for fractional interests in ______ and ______ programs
oil&gas and mining
No exemption is offered for agents who offer ______
municipal securities
When securities markets have reach price equilibrium, commission costs are _______
subject to change
A capital needs analysis is used for determining need for ______
a variable form of insurance
If you expect treasuries prices to fall, you would go _____ on futures or forwards contracts
go short
Is there an account statement mailing rule if an IA does NOT take custody of client assets?
NO - quarterly if they do
If an IA is deemed “fee only”, they CANNOT accept ______
12b-1 fees
No exemption is offered to an IA who only gives advice on ______
munis
When the yield curve is inverted, the Fed is pursuing _____ monetary policy
tight
If there is a customer complaint against an agent who has withdrawn their registration, the court retains jurisdiction over that agent for _____
1 year
If you wanted to invest “globally”, would you just invest according to market cap % or using some measure of growth potential?
some measure of growth potential
529 rollovers are permitted once every _____ without a tax penatly
12 months
If you mistakenly receive a check from a customer and return it promptly, are you still required to keep a record?
Yes
If the US is running a trade deficit, then the currency is _____ relative to foreign currencies and exports would become _____ to foreign countries
US dollar will decrease relative to other currencies and exports will be less expensive to foreign countries
Interest income from “non-essential use” munis are subject to the ____
AMT
The MOST appropriate investment in a flat or falling interest rate environment would be _____
US debt
What is the best measure of a company’s solvency?
Quick ratio
If an IAR is terminated, then the ____ notifies the admin; if an agent is notified, then ______ notifies the admin
if IAR, then IA notifies; if agent, then agent AND BD notify
If a fed IAR is terminated, who notifies the admin?
the IAR
Can you invest in mutual funds in a 403(b) plan?
Yes
Which method would be used to calculate the monthly payments for a car loan?
Time value of money
Can the value of a variable annuity fall to zero because of investment performance?
NO - still get minimum insurance coverage
With any life insurance policy, the proceeds would go to a beneficiary without any ______
tax due
If a mutual fund distributed 99% of its income to shareholders, how much would be taxable still?
1%
During a period of inflation, are corporations more like to issue new bonds or not? Would those bonds be callable or not?
They would be less likely to issue bonds and if they did they would be callable
For a married couple selling their house, the first ______ of gain is not taxable
$500,000
A collar is when you buy a put ______ the market price and sell a call ______ the market price
buy a put below the market price and sell a call above the market price
Performance fees must be calculated at a min time interval of _____
1 year
Are 457 plans subject to a 10% early withdrawal penalty?
no
For a discount bond, is the YTC lower or higher than the YTM?
HIGHER
The parties LEAST likely to be a fiduciary to a retirement plan trust are the _____
participants in the plan
For the exam, assume that life expectancy is in the _____
70s
The main risk for a zero coupon bond is ______ risk
inflation
Do corps issue moral obligation bonds?
NO
Are ETNs tax-advantaged as compared to regular structured products?
Yes, because dividends are not disbursed and are taxed at capital gains rates
In order for an agent’s internet communications to NOT be considered an offer to sell, does the BD have to review and the agent have to comply with a scope of authority given?
YES
Does only a portion of the population pay for a special assessment bond?
YES - only those receiving the benefit
Whole life and universal life “cash values” are generally invested in _____
fixed income
Two fees (an advisory and a per trade commissions) are permitted if the agent/IA is acting in _____
a double capacity
If tax rates rise, what happens to the price of munis?
They RISE - because now they are more attractive investments
Can the admin require filing of muni advertising?
NO - it is exempt
Post registration requirements are only applicable to ____ and ____
IAs and BDs, not their agents
Is the exchange where the trade was executed required to be on the order confirm?
NO
Is an adviser who gives advice solely about munis required to register? Are they required to file ads?
YES required to register, NO not required to file ads
Does a stock BEST describe an ETF vs a mutual fund?
YES
Does having POA or discretionary power over a customers account count as “taking custody”?
NO - only if you can withdraw funds
If a fund is rebalanced monthly but passively managed, this would be termed ______/_______
active/passive (rebalancing comes first)
Can a mutual fund sell bonds or preferred stock? Can they pledge the securities in their portfolio for a loan?
NO, they cannot sell bonds or preferred stock. YES they can pledge securities for a loan
Is the firm or the individual considered the Registered Investment Adviser?
The FIRM
A capital need is the amount of money needed to _____
buy something in the future
Excluded from gross adjusted income for a customer is ______ bond interest
municipal
Are social security payments included in adjusted gross income for a client?
YES
For an IA who is an individual, are that person’s home, automobile, etc. included in computation of net capital?
NO
To qualify for a private placement under the USA, do all purchasers have to reside in the state?
NO
Are teachers excluded from the definition of an IA?
Yes
Are actuaries excluded from the definition of an IA?
NO
A foreign security held in a foreign branch of a US bank is a _____
ADR
The risk that a portfolio’s return will underperform the benchmark return is called the:
tracking error
Is depreciation expense listed on a customer’s income statement?
NO
Suits alleging criminal violations under the USA must be brought within _____ of the occurrence of the violation
5 years
If both an IA and his client are on vacation in State B, and an offer to sell securities is made and accepted while on vacation, which state has jurisdiction?
State B ONLY
If you hold more than 10% of an outstanding issue you are considered an _____ and cannot sell the stock short, must report trading activities to the SEC, and must forfeit profits if trading prior to holding the securities for 6 months
an INSIDER
Is an IA required to disclose to a customer that they can select a BD to execute transactions?
YES
The Administrator can deny an exemption to:
non-profit issues
Does the NYSE trade futures contracts?
NO
The longest initial maturity of a T-Bill is _____ weeks
52
Delivery of a brochure is not required for impersonal advice given for less than _____ annually or advice given to _____
less than $500, or advice given to investment companies
Jumbo CDs (negotiable CDs) trade at par ______
plus accrued interest
Under NASAA, when must a customer receive the prospectus by?
No later than confirmation date
Does the investment policy statement include performance projections and strategies used for selecting investments?
YES
An IA must only disclose if they have impaired financial condition to customers if they have _____ or ____
taken custody of client assets or have received more than $1,200 in prepaid fees
Do utility companies typically issue mortgage bonds?
YES
The NASDAQ Composite index is composed of primarily ______
high tech growth stocks
Can you require a customer to talk on the phone and listen to a sales pitch prior to accepting a “free” offer?
YES, this is acceptable (but filling out a questionnaire is not)
All IRA assets _____ included in the gross estate
ARE - and the benes don’t have a ta liability if the estate pays the tax due
_____ employee contributions are NOT permitted in a defined contribution plan
Mandatory - both employee and employer contributions are voluntary
Is the holding period of capital gains distributions from mutual funds based on how long you’ve owned the mutual fund or how long the mutual fund has owned the stock?
HOW LONG THE MUTUAL FUND HAS OWNED THE STOCK
