Things I Don't Know

Question 1

True or false: Disclosure of the relationship between an investment advisor and a solicitor is always required.

Answer 1

False. Not required when service involves impersonal advisory services only.

Question 2

True or false: There is a redemption fee with a money market mutual fund.

Answer 2

False

Question 3

Requirements for a preorganization subscription to be an exempt transaction:

Answer 3

1 - No payment may be made by any subscriber
2 - No commission may be paid to anyone for soliciting potential subscribers
3 - There may be no more than ten subscribers

Question 4

True or false: A preorganization certificate may be advertised.

Answer 4

True

Question 5

The average portfolio maturity of a money market mutual fund cannot exceed ___ days

Answer 5

60

Question 6

SEC requires that money market funds’ investments be limited to securities that are rated in the top __ ratings categories

Answer 6

2

Question 7

True or false: Sale of treasury bills to an individual client is an exempt transaction

Answer 7

False. Exempt security but not exempt transaction

Question 8

Final approval of annual operating budget for US is given by

Answer 8

Congress

Question 9

True or false: Control over a Qualified Tuition Plan/ Section 529 passes to the student once withdrawals commence

Answer 9

False

Question 10

Publicly traded corps may furnish a Form ___ instead of an annual report

Answer 10

10-K

Question 11

True or false: Anyone who represents an issuer in effecting transactions between the underwriter and issuer is excluded from the definition of an agent under the USA

Answer 11

True

Question 12

Which account does a donor have the most control over? UTMA, Section 529, Coverdell ESA, UGMA

Answer 12

Section 529 - can take money back, keeps control once student starts withdrawing, etc

Question 13

Defined as a sale: gift of assessable or nonassessable stock

Answer 13

Gift of assessable stock

Question 14

The SEC may suspend all trading on a specific exchange for up to __ days

Answer 14

90

Question 15

The SEC may summarily suspend trading on a particular nonexempt security for up to __ days

Answer 15

10

Question 16

True or false: The SEC may suspend trading on exempt securities

Answer 16

False

Question 17

Specialized funds have this stated objective

Answer 17

Capital appreciation

Question 18

Definition of pension consultant

Answer 18

Person who provides investment advice to administrators of employee benefit plans

Question 19

True or false: an investment advisory contract’s term may not exceed 1 year

Answer 19

False

Question 20

Two securities Administrator has power to revoke exemption for:

Answer 20

Non-profits and employee benefit plans

Question 21

True or false: Administrator can revoke any transaction exemption

Answer 21

False. Can revoke all but federal covered security transactions

Question 22

An investment advisor makes advice his ___ activity

Answer 22

Regular

Question 23

True or false: Coverdells may only be used by persons who fall within certain income limits

Answer 23

True

Question 24

If money is not used in a 529 plan, it reverts to the __

Answer 24

Donor

Question 25

If money is not used in a Coverdell plan, it reverts to the __

Answer 25

Beneficiary

Question 26

A private placement can be offered to no more than __ noninstitutional investors

Answer 26

10

Question 27

True or false: Local companies that issue common stock sold only within the state are not required to register with the Administrator

Answer 27

False

Question 28

True or false: Convertible bonds are more sensitive to the price of the underlying stock than they are to interest rates

Answer 28

True

Question 29

True or false: Equity index annuities offer unlimited gain

Answer 29

False

Question 30

True or false: Equity index annuities offer a minimum return

Answer 30

True

Question 31

True or false: Equity index annuities are considered securities

Answer 31

False

Question 32

True or false: Benefits of a nonqualified deferred compensation arrangement are guaranteed

Answer 32

False

Question 33

True or false: If the transaction in which the security is sold is exempt, this would exempt the security from registration

Answer 33

True

Question 34

What must be given to client participating in wrap fee program?

Answer 34

Appendix 1 of Form ADV Part 2A

Question 35

True or false: Adviser who issues research reports on corporate securities would not be considered an adviser

Answer 35

False

Question 36

Loan consent agreement permits a firm to

Answer 36

Loan out a customer's margin securities

Question 37

Expense ratio =

Answer 37

Expenses / Average Annual Net Assets

Question 38

True or false: Municipal bonds are a prohibited investment in an IRA

Answer 38

False. Inappropriate but not prohibited

Question 39

When interest rates fall, prepayments of mortgages ___

Answer 39

Increase

Question 40

IA may receive compensation based on share of capital gains if:

Answer 40

The client has $1M in AUM or has net worth of $2.1M

Question 41

True or false: Investment advisors are excluded from the definition of broker dealer

Answer 41

False

Question 42

True or false: Agents, issuers, and banks are excluded from the definition of broker dealer

Answer 42

True

Question 43

When an investment adviser wants to increase its fees, it must

Answer 43

1 - disclose promptly only to those customers who will be affected by the change through a new brochure 2 - disclose in the summary of material changes in the annual updating amendment to the SEC No need to tell unaffected customers or Administrator

Question 44

True or false: ETFs have a limited number of outstanding shares

Answer 44

False

Question 45

True or false: Closed end investment companies are traded on registered stock exchanges

Answer 45

True

Question 46

True or false: ETFs rarely stray far from NAV

Answer 46

True

Question 47

Eurodollar bonds are denominated in ___

Answer 47

USD

Question 48

Eurodollar bonds are issued within or outside of the US?

Answer 48

Outside

Question 49

European option

Answer 49

Can only be exercised on expiration date

Question 50

Regulation D (private placement) must file Form D

Answer 50

No later than 15 days after the first sale

Question 51

True or false: If divorced prior to 2019, alimony is considered eligible income for an IRA

Answer 51

True

Question 52

True or false: Investment firms must appoint a chief compliance officer?

Answer 52

True

Question 53

Education IRA =

Answer 53

Coverdell ESA

Question 54

REITs must distribute ___% of net investment income and must invest ___% of assets in real estate related activities

Answer 54

90% and 75%

Question 55

USA criminal penalty fine

Answer 55

$5000