Module 1

Question 1

What are NOT Securities?

Answer 1

• Insurance Contract
• Endowment Policies with Fixed Benefits
• Keogh & IRA
• Written confirmation of trades
• Commodity Future Contracts
• Drilling Leases

Question 2

If a Broker/Dealer is out of state and has not place of business in a state, who can they transact with and not have to register as a broker/dealer in that state?

Answer 2

• Issuers
• Other broker/dealer
• Banks, Savings and Loan associations
• Trust Company
• Institutional Investors (Insurance companies, pension or profit-sharing trusts, or other institutional accounts)

Question 3

What is the De Minimis Exemption for IA or IAR?

Answer 3

5 or less residents of the a state within 12-month period

Question 4

Who are Federal Covered Advisers?

Answer 4

• Investment advisers that have $30 million or more in AUM ($110 million)
• Investment advisers that advise registered investment companies
• Investment advisers that provide services in 30 or more states (15 or more)
• Any adviser that manages a pension plan of $50 million or more ($200 million or more)
• Any adviser to a nationally recognized statistical ratings organization, such as Morningstar or Value Line

Question 5

What are NOT considered an offer or sale?

Answer 5

• Loans
• Stock dividends
• Securities acquired through a merger, consolidation or reorganization

Question 6

What are Derivatives?

Answer 6

• Options
• Future contracts
• Forward contracts
• CMOs
• SWAPS

***REITs and UITs are NOT DERIVATIVES

Question 7

What are Securities?

Answer 7

• Stocks - including voting trusts and treasury stocks
• Bonds - including debenture, collateral and equipment trust certificates, REITs and CMOs
• Certificate of Interest in Profit-sharing agreements
• Participation Interest in oil, gas, mining, lease, real estate limited partnership, including those with rental pool
• Preorganization Certificates or Subscription Agreements
• Certificate of Deposits
• Multilevel Distributorship
• Notes and Commercial Paper
• Fractionalized Home Mortgages
• Options, Warrants and Rights
• Variable Annuity Contracts
• Whisky Warehouse Receipts
• Commodity Options

Question 8

Who created the Uniform Securities Act?

Answer 8

North American Securities Administrators Association (NASAA)