Test Questions

Question 1

Renewal of of an agents registration must occur before _______ of each year

Answer 1

Dec 31st

Question 2

A testamentary trust goes into effect when _____

Answer 2

the grantor dies

Question 3

A ______ is named on a Totten Trust account

Answer 3

beneficiary

Question 4

Excluded from gross income on an individuals tax return are _______ interest and retirement plan distributions from non-qualified accounts attributable to the ______

Answer 4

muni interest and payments attributable to the cost basis (principal)

Question 5

Whole life is not _____ (whereas Universal is)

Answer 5

flexible

Question 6

If an agent moves from one BD to another, the registration of that BD must be transferred ______

Answer 6

promptly (aka immediately)

Question 7

For a sole proprietorship’s application, they must submit ________ and attest that _____

Answer 7

financial statement and attest that they are true

Question 8

Weak for EMT states that ________ is essentially useless

Answer 8

technical

Question 9

The two basic categories of portfolio management “styles” are _____ and ____

Answer 9

active and passive

Question 10

A mutual fund dealer would be considered a ______

Answer 10

BD

Question 11

Dividends on preferred are paid only in _____

Answer 11

cash

Question 12

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___

Answer 12

active = 13d; passive = 13g

Question 13

The Federal Intermediate Credit Bank issues _______ at a _____

Answer 13

short term notes at a discount

Question 14

There is NO “issuer” for fractional interests in ______ and ______ programs

Answer 14

oil&gas and mining

Question 15

No exemption is offered for agents who offer ______

Answer 15

municipal securities

Question 16

When securities markets have reach price equilibrium, commission costs are _______

Answer 16

subject to change

Question 17

A capital needs analysis is used for determining need for ______

Answer 17

a variable form of insurance

Question 18

If you expect treasuries prices to fall, you would go _____ on futures or forwards contracts

Answer 18

go short

Question 19

Is there an account statement mailing rule if an IA does NOT take custody of client assets?

Answer 19

NO - quarterly if they do

Question 20

If an IA is deemed “fee only”, they CANNOT accept ______

Answer 20

12b-1 fees

Question 21

No exemption is offered to an IA who only gives advice on ______

Answer 21

munis

Question 22

When the yield curve is inverted, the Fed is pursuing _____ monetary policy

Answer 22

tight

Question 23

If there is a customer complaint against an agent who has withdrawn their registration, the court retains jurisdiction over that agent for _____

Answer 23

1 year

Question 24

If you wanted to invest “globally”, would you just invest according to market cap % or using some measure of growth potential?

Answer 24

some measure of growth potential

Question 25

529 rollovers are permitted once every _____ without a tax penatly

Answer 25

12 months

Question 26

If you mistakenly receive a check from a customer and return it promptly, are you still required to keep a record?

Answer 26

Yes

Question 27

If the US is running a trade deficit, then the currency is _____ relative to foreign currencies and exports would become _____ to foreign countries

Answer 27

US dollar will decrease relative to other currencies and exports will be less expensive to foreign countries

Question 28

Interest income from "non-essential use" munis are subject to the ____

Answer 28

AMT

Question 29

The MOST appropriate investment in a flat or falling interest rate environment would be _____

Answer 29

US debt

Question 30

What is the best measure of a company's solvency?

Answer 30

Quick ratio

Question 31

If an IAR is terminated, then the ____ notifies the admin; if an agent is notified, then ______ notifies the admin

Answer 31

if IAR, then IA notifies; if agent, then agent AND BD notify

Question 32

If a fed IAR is terminated, who notifies the admin?

Answer 32

the IAR

Question 33

Can you invest in mutual funds in a 403(b) plan?

Answer 33

Yes

Question 34

Which method would be used to calculate the monthly payments for a car loan?

Answer 34

Time value of money

Question 35

Can the value of a variable annuity fall to zero because of investment performance?

Answer 35

NO - still get minimum insurance coverage

Question 36

With any life insurance policy, the proceeds would go to a beneficiary without any ______

Answer 36

tax due

Question 37

If a mutual fund distributed 99% of its income to shareholders, how much would be taxable still?

Answer 37

1%

Question 38

During a period of inflation, are corporations more like to issue new bonds or not? Would those bonds be callable or not?

Answer 38

They would be less likely to issue bonds and if they did they would be callable

Question 39

For a married couple selling their house, the first ______ of gain is not taxable

Answer 39

$500,000

Question 40

A collar is when you buy a put ______ the market price and sell a call ______ the market price

Answer 40

buy a put below the market price and sell a call above the market price

Question 41

Performance fees must be calculated at a min time interval of _____

Answer 41

1 year

Question 42

Are 457 plans subject to a 10% early withdrawal penalty?

Answer 42

no

Question 43

For a discount bond, is the YTC lower or higher than the YTM?

Answer 43

HIGHER

Question 44

The parties LEAST likely to be a fiduciary to a retirement plan trust are the _____

Answer 44

participants in the plan

Question 45

For the exam, assume that life expectancy is in the _____

Answer 45

70s

Question 46

The main risk for a zero coupon bond is ______ risk

Answer 46

inflation

Question 47

Do corps issue moral obligation bonds?

Answer 47

NO

Question 48

Are ETNs tax-advantaged as compared to regular structured products?

Answer 48

Yes, because dividends are not disbursed and are taxed at capital gains rates

Question 49

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?

Answer 49

YES

Question 50

Does only a portion of the population pay for a special assessment bond?

Answer 50

YES - only those receiving the benefit

Question 51

Whole life and universal life "cash values" are generally invested in _____

Answer 51

fixed income

Question 52

Two fees (an advisory and a per trade commissions) are permitted if the agent/IA is acting in _____

Answer 52

a double capacity

Question 53

If tax rates rise, what happens to the price of munis?

Answer 53

They RISE - because now they are more attractive investments

Question 54

Can the admin require filing of muni advertising?

Answer 54

NO - it is exempt

Question 55

Post registration requirements are only applicable to ____ and ____

Answer 55

IAs and BDs, not their agents

Question 56

Is the exchange where the trade was executed required to be on the order confirm?

Answer 56

NO

Question 57

Is an adviser who gives advice solely about munis required to register? Are they required to file ads?

Answer 57

YES required to register, NO not required to file ads

Question 58

Does a stock BEST describe an ETF vs a mutual fund?

Answer 58

YES

Question 59

Does having POA or discretionary power over a customers account count as "taking custody"?

Answer 59

NO - only if you can withdraw funds

Question 60

If a fund is rebalanced monthly but passively managed, this would be termed ______/_______

Answer 60

active/passive (rebalancing comes first)

Question 61

Can a mutual fund sell bonds or preferred stock? Can they pledge the securities in their portfolio for a loan?

Answer 61

NO, they cannot sell bonds or preferred stock. YES they can pledge securities for a loan

Question 62

Is the firm or the individual considered the Registered Investment Adviser?

Answer 62

The FIRM

Question 63

A capital need is the amount of money needed to _____

Answer 63

buy something in the future

Question 64

Excluded from gross adjusted income for a customer is ______ bond interest

Answer 64

municipal

Question 65

Are social security payments included in adjusted gross income for a client?

Answer 65

YES

Question 66

For an IA who is an individual, are that person's home, automobile, etc. included in computation of net capital?

Answer 66

NO

Question 67

To qualify for a private placement under the USA, do all purchasers have to reside in the state?

Answer 67

NO

Question 68

Are teachers excluded from the definition of an IA?

Answer 68

Yes

Question 69

Are actuaries excluded from the definition of an IA?

Answer 69

NO

Question 70

A foreign security held in a foreign branch of a US bank is a _____

Answer 70

ADR

Question 71

The risk that a portfolio's return will underperform the benchmark return is called the:

Answer 71

tracking error

Question 72

Is depreciation expense listed on a customer's income statement?

Answer 72

NO

Question 73

Suits alleging criminal violations under the USA must be brought within _____ of the occurrence of the violation

Answer 73

5 years

Question 74

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?

Answer 74

State B ONLY

Question 75

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

Answer 75

an INSIDER

Question 76

Is an IA required to disclose to a customer that they can select a BD to execute transactions?

Answer 76

YES

Question 77

The Administrator can deny an exemption to:

Answer 77

non-profit issues

Question 78

Does the NYSE trade futures contracts?

Answer 78

NO

Question 79

The longest initial maturity of a T-Bill is _____ weeks

Answer 79

52

Question 80

Delivery of a brochure is not required for impersonal advice given for less than _____ annually or advice given to _____

Answer 80

less than $500, or advice given to investment companies

Question 81

Jumbo CDs (negotiable CDs) trade at par ______

Answer 81

plus accrued interest

Question 82

Under NASAA, when must a customer receive the prospectus by?

Answer 82

No later than confirmation date

Question 83

Does the investment policy statement include performance projections and strategies used for selecting investments?

Answer 83

YES

Question 84

An IA must only disclose if they have impaired financial condition to customers if they have _____ or ____

Answer 84

taken custody of client assets or have received more than $1,200 in prepaid fees

Question 85

Do utility companies typically issue mortgage bonds?

Answer 85

YES

Question 86

The NASDAQ Composite index is composed of primarily ______

Answer 86

high tech growth stocks

Question 87

Can you require a customer to talk on the phone and listen to a sales pitch prior to accepting a "free" offer?

Answer 87

YES, this is acceptable (but filling out a questionnaire is not)

Question 88

All IRA assets _____ included in the gross estate

Answer 88

ARE - and the benes don't have a ta liability if the estate pays the tax due

Question 89

_____ employee contributions are NOT permitted in a defined contribution plan

Answer 89

Mandatory - both employee and employer contributions are voluntary

Question 90

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?

Answer 90

HOW LONG THE MUTUAL FUND HAS OWNED THE STOCK