Exam 4 Closed Book

Front 1

An Administrator may require filing of sales and advertising literature for _____________.

Back 1

Securities Investments

Front 2

Before soliciting on behalf of an investment adviser, the Investment Adviser Act of 1940 requires solicitors and advisers to have:

Back 2

A written agreement in place.

(a state Administrator may require third-party solicitors to register as an IAR)

Front 3

When an IA directs clients' assets to another adviser it is the responsibility of the original adviser to:

Back 3

Monitor these accounts and ensure the subadviser is acting in the clients best interest.

Front 4

If an IA's net worth is less than the required minimum, it must notify the Administrator by:

Back 4

The close of the next business day.

Front 5

After notifying the Administrator of net worth < required minimum. the IA must file a report of its financial condition by the:

Back 5

Next business day.

(T+2 of discovery of net worth < req. min)

Front 6

Client account statements are sent on a ______________ basis and must include:

Back 6

Quarterly basis.

(1) The amount of funds in the firm's possession

(2) A list of securities held in custody

(3) A record of transactions

(4) All fees charged

Front 7

The Administrator has authority over any offer to buy or sell that is _________, ___________, or ___________ in the Administrators state.

Back 7

Originated, accepted, or directed

Front 8

Anyone who represents a BD in effecting securities transactions is defined as an agent and must register with the state regardless of:

Back 8

Whether compensation is paid or not.

Front 9

Revocable trust, tax and income implications

Back 9

All the income produced by the trust must be included in the grantor's tax returns. However, the trustee would be responsible making certain that the proper tax payments were made.

Front 10

How is income taxed in a irrevocable trust?

Back 10

Income is generally taxed to the trust or the beneficiaries.

Front 11

A broker dealer may use testimonials as long as a they disclose:

Back 11

Whether more than a nominal fee was paid for them.

Front 12

An investment adviser __________ use testimonials in its advertising.

Back 12

MAY NOT

Front 13

Holding period rate of return

Back 13

The return that is earned over the life of an investment and/or loan.

Front 14

A capital needs analysis is used to determine:

Back 14

The amount of insurance a client needs to purchase today in order to fund future financial goals.

Front 15

The Administrator may require BDs to post bonds if:

Back 15

They have custody of or discretionary authority over clients funds or securities.

Front 16

Fees must be ____________.

Back 16

Reasonable

Front 17

Qualified Client tests:

Back 17

(1) Has more than $2.1 million of net worth

(2) Has a minimum of $1 million AUM with an IA

Front 18

Under the Uniform Securities Act, an institutional investor:

Back 18

May be designated as such by rule or order of the Administrator.

Front 19

In order to sell a security in a state, the ____________________ and the ___________ must be registered in that state.

Back 19

Broker-dealer and the agent

Front 20

Bank employees who solicit the sale of securities are considered __________ of broker-dealers

Back 20

Agents

Front 21

Exempt reporting advisers are required to file Form ADV Part 1A with the SEC and must _____________ with the Administrator.

Back 21

Notice File

Front 22

Any material changes of a ERA must be reported _____________.

Back 22

Promptly (usually 30 days)

Front 23

As is the case with other investment advisers, and ERA is required to amend its Form ADV within __________ of its ___________ .

Back 23

90 days of its fiscal year end.

Front 24

The registration of a broker-dealer in a state will automatically constitute the registration of an individual as an agent if this person is:

Back 24

Actively engaged in the business of the firm and is a partner, director, officer, or occupies a similar status.

Front 25

Under the Uniform Securities Act, a private placement offering is one that involves no more than ______ retail investors.

Back 25

10

Front 26

Private Placement Offering is considered an exempt transaction if:

Back 26

(1) The seller believes that all of the retail buyers are purchasing for investment purposes only and,

(2) No commission or other remuneration is being paid for soliciting retail buyers.

Front 27

Employees of self-employed persons with a Keogh plan must be covered by the plan if they have worked for the employer for _______ and are at least 21.

Back 27

One year

Front 28

According to SEC Release IA-1092, a fiduciary must:

Back 28

Disclose all potential conflicts of interest

Front 29

Statue of limitations for civil liabilities under USA

Back 29

Three years from the sale or rendering of advice or within two years of discovery.

Front 30

According to the Investment Advisers Act of 1940, IAs are required to renew their registration within 90 days of _____________.

Back 30

Fiscal year end

(Federal = fiscal)

Front 31

Uniform Securities Act requires registration renewal to be completed at the end of _____________.

Back 31

The Calendar year.

Front 32

IRA decedent inherited by non-spouse has _____ years to have the funds distributed.

Back 32

By the end of the 5th year

Front 33

Investments suitable for an estate account?

Back 33

Most short-term investments

Front 34

The Administrator may require the filing of sales literature and advertising for __________ securities.

Back 34

Nonexempt securities.

(Exempt securities are not subject to the filing requirements under USA)

Front 35

For estate tax purposes, assets are normally valued at:

Back 35

The time of death.

(The date on which the assets are sold is not relevant.)