Use LEFT and RIGHT arrow keys to navigate between flashcards;
Use UP and DOWN arrow keys to flip the card;
H to show hint;
A reads text to speech;
70 Cards in this Set
- Front
- Back
|
Which of the following choices would be considered an offer or offer to sell under the Uniform Securities Act? -A group of creditors receives stock in a bankrupt company as part of a court-approved reorganization plan -A corporation's current shareholders receive the right to purchase additional shares at a predetermined price -A corporation's current shareholders receive stock instead of a cash dividend -A used car dealer offers a free savings bond with every car |
- A corporation's current shareholders receive the right to purchase additional shares at a predetermined price |
|
|
If it is in the public interest, all of the following actions may be used by the Administrator as grounds for denial of an application for registration as an agent, EXCEPT in the case where the registrant: -Violated federal commodities laws within the past 10 years -Failed to disclose a six-month gap of employment on the U4 -Sold unregistered, non-exempt securities in another state without acknowledgement from investors -Withdrew from registration as an agent in another state |
-Withdrew from registration as an agent in another state |
|
|
The Administrator of State X has reason to believe that a broker-dealer registered in State Y is violating the law in that state. The Administrator of State X will: -Issue a temporary restraining order (TRO) -Issue a cease-and-desist order -Coordinate an investigation with the Administrator of State Y -Suspend the firm's registration |
- Coordinate an investigation with the Administrator of State Y |
|
|
A broker-dealer wishes to withdraw its registration with the Administrator. Under the Uniform Securities Act, which of the following statements is NOT TRUE? -The withdrawal may not take effect if the Administrator is instituting a revocation proceeding -The withdrawal must be in writing -The withdrawal is ordinarily effective 30 days after the broker-dealer gives its intention to withdraw -The withdrawal prevents the broker-dealer from starting over as a new broker-dealer |
- The withdrawal prevents the broker-dealer from starting over as a new broker-dealer |
|
|
A family trust in State A was established 35 years ago. There are now 15 beneficiaries. According to the Uniform Prudent Investor Act, the interests of which beneficiary(ies) are paramount in determining the trust's investment strategy? -Any generational beneficiary as determined by State A's Administrator and applicable securities laws -All beneficiaries regardless of generation -The oldest generational beneficiary -The youngest generational beneficiary |
- All beneficiaries regardless of generation |
|
|
A married couple in their early forties with no children has decided it is time to start thinking about retirement. Which of the following portfolio allocations would you recommend for them? -100% equity securities -25% fixed-income and 75% equity securities -80% fixed-income, 10% equities, and 10% money-market securities -50% fixed-income, 10% equity securities, and 40% in foreign securities |
- 25% fixed-income and 75% equity securities |
|
|
A couple has a 529 College Savings Plan Account for each of their two children, ages 2 and 16. How should these accounts be invested? -The two-year-old's account should be invested primarily in equity securities while the 16-year-old's account should be invested mainly in money-market and fixed-income securities -The two-year-old's account should be invested primarily in equity securities while the 16-year-old's account should be invested mainly in municipal securities -Both accounts should be invested mainly in money-market and fixed-income securities so that the principal is preserved -Both accounts should be invested primarily in equity securities to provide capital appreciation |
- The two-year-old's account should be invested primarily in equity securities while the 16-year-old's account should be invested mainly in money-market and fixed-income securities |
|
|
An investment adviser representative is reviewing the account of two clients, a husband and wife in their 70s who are retired. Their investment profile indicates that they have an annual income of less than $30,000 per year, which consists of a small pension and Social Security benefits. They have investable assets of $225,000. Which of the following investment allocations should the IAR recommend? -30% domestic equities, 30% domestic fixed income, 30% international equities and fixed-income securities, and 10% cash -10% domestic equities, 40% domestic fixed income, 40% international equities and fixed-income securities, and 10% cash -50% domestic equities, 0% fixed-income securities, 0% cash, and 50% international equities -25% domestic equities, 5% international equities, 60% domestic fixed-income securities, and 10% cash |
- 25% domestic equities, 5% international equities, 60% domestic fixed-income securities, and 10% cash |
|
|
Which of the following actions are dishonest and unethical practices if committed by an agent or investment adviser representative? I Telling clients that exchange listing of a security is anticipated, without knowledge of the truth of such a statement II Providing inaccurate market quotations, such as a bond is yielding 10% when it really is yielding 1% III Failing to inform a client of larger-than-ordinary commissions on a transaction IV Compensating an investment adviser on the basis of a share of capital gains -I and II only -I, II, and III only -II, III, and IV only -I, II, III, and IV |
- I, II, III, and IV |
|
|
All of the following choices could be considered excessive trading, EXCEPT: -A portfolio was completely changed on the first and fifteenth of every month -There was aggressive switching among mutual fund families -Turnover was motivated by the commissions an account would generate -There was rampant day trading in a speculator's account |
- There was rampant day trading in a speculator's account |
|
|
An agent is concerned that many customers do not bother to read the prospectus before investing in a mutual fund. Under SEC rules, the agent may take which of the following actions to help his clients become better-educated investors? -The agent may type a large font version of the prospectus for the clients' benefit, provided the large print version has been reviewed and approved by the firm's chief legal counsel -The agent may underline or highlight key content areas within the prospectus, but must remind customers that the points emphasized are of no more or no less importance than the balance of the material contained in the full prospectus -The agent may give clients a summary prospectus -The agent may summarize the prospectus, provided a registered principal approves the resulting abbreviated document and attaches a written notice to all recipients that a full version of the prospectus is available upon request |
- The agent may give clients a summary prospectus |
|
|
Stan is an agent for Rocksolid Brokerage. Stan spends a lot of his free time fishing with his buddy, Oliver. Stan and Oliver notice an ad in a magazine advertising franchises that provide vending machines that sell live bait. Stan has always wanted to start a business to supplement his income from selling securities, so he and Oliver form a corporation to buy a vending machine franchise. Without telling his employer, Stan sells small amounts of stock in his company to friends and neighbors to help get the enterprise started. Which of the following statements is TRUE? -This is an unacceptable practice since the venture is likely to fail and the investors will lose their money -This is an unacceptable practice since these securities transactions are not recorded on the books of Stan's broker-dealer -This is an acceptable practice as long as Stan does not mention his broker-dealer's name in connection with the transactions -This is an acceptable practice because it is a small amount of stock sold to friends and neighbors of Stan and Oliver |
- This is an unacceptable practice since these securities transactions are not recorded on the books of Stan's broker-dealer |
|
|
Under the Uniform Securities Act, which of the following choices is NOT disclosed in an investment advisory contract? -Any other states in which the investment adviser is registered -The manner in which the advisory fee will be computed -A provision disallowing the investment adviser to assign the contract to another party without client consent -A provision prohibiting the investment adviser from being compensated based on a share of capital gains |
- Any other states in which the investment adviser is registered |
|
|
Which of the following statements is NOT TRUE concerning the registration requirements of securities professionals? -Broker-dealers with no place of business in a state and a limited number of noninstitutional clients in a state must register -Broker-dealers with no place of business in a state, who limit their agents to selling exempt securities in a state, need not register -Investment advisers with no place of business in a state and whose only clients are institutional investors in the state need not register -Investment advisers with no place of business in a state and a limited number of noninstitutional clients need not register |
- Broker-dealers with no place of business in a state, who limit their agents to selling exempt securities in a state, need not register |
|
|
An issuer is going to sell a federal covered security in State A. The Administrator of State A may ask the issuer to do all of the following, EXCEPT: -File a Consent to Service of Process -Provide copies of all documents filed with the SEC -Furnish additional information that was not required by the SEC -Pay a registration fee |
- Furnish additional information that was not required by the SEC |
|
|
Which of the following securities is NOT federal covered? -A REIT that is listed on the Nasdaq Capital Market -A real estate limited partnership listed on the Nasdaq Global Market -A fund of funds issued by a registered investment company -A hedge fund, offered under Section 505 of Regulation D |
- A fund of funds issued by a registered investment company |
|
|
Which of the following choices is considered a stock offering under the Uniform Securities Act? -Creditors receive stock as part of a bankruptcy proceeding -Shareholders receive a stock dividend -Shareholders receive the right to purchase additional shares in a subsidiary at a prearranged price -An issuer pledges its securities as collateral for a loan |
- An issuer pledges its securities as collateral for a loan |
|
|
According to the Uniform Securities Act, which of the following entities or individuals must register as a broker-dealer in State A? -The trust department of a bank located in State A -A financial planner located in State A -A broker-dealer located in State B, that occasionally effects transactions for clients vacationing in State A -A company incorporated in State A that processes transactions for other financial institutions |
- A company incorporated in State A that processes transactions for other financial institutions |
|
|
Which of the following choices is NOT a broker-dealer in state B? I-An agent in state A who contacts a client in state B II-A corporation that sells commercial paper every other week in state B III-A broker-dealer registered in state A, where its only office is located, which has only insurance companies as clients in state B IV-A bank trust department that buys and sells securities for its customers I only III only IV only I, II, III, and IV |
- I, II, III, and IV |
|
|
If a bank owns a broker-dealer subsidiary, what would its registration requirements be under the USA? -Since banks are exempt from state securities registration, the subsidiary would also be exempt -If the subsidiary is registered with the SEC, it would be exempt from registering with any particular state -The subsidiary would need to register in any state in which it planned to do business -The subsidiary would register in all states under the provisions of qualification |
- The subsidiary would need to register in any state in which it planned to do business |
|
|
Which of the following choices would be required to register as a broker-dealer in State B? -A broker-dealer with no offices in State B and whose only clients are other financial institutions -A regional broker-dealer with offices in States A, C, D, and E only, and five retail clients who reside in State B -An employee of ACDE Securities, who handles client accounts -A corporation that issues stock to the public |
- A regional broker-dealer with offices in States A, C, D, and E only, and five retail clients who reside in State B |
|
|
A Canadian broker-dealer may continue to effect transactions for its Canadian clients who are in the U.S. temporarily, provided it does which of the following? -Establishes an office in the appropriate state -Limits its business to trading Canadian securities -Registers with the appropriate state -Limits its business to trading exempt securities |
- Registers with the appropriate state |
|
|
Under the Uniform Securities Act, a person effecting transactions in commodities: -Is subject to oversight by the Administrator -Does not meet the definition of an agent -Avoids the definition of an agent only if the person's duties are merely clerical -Is automatically considered an agent if her employer is a broker-dealer |
- Does not meet the definition of an agent |
|
|
An agent's registration is: -Considered an indication that the Administrator considers those securities sold by the agent to be properly registered -Transferrable to another broker-dealer without filing a new Form U4 as long as the agent is sponsored within 30 days -Effective only during the period in which the agent is associated with a properly registered broker-dealer -Effective in all states where the broker-dealer is registered or where the broker-dealer's registration is pending |
- Effective only during the period in which the agent is associated with a properly registered broker-dealer |
|
|
Which of the following communications would be exempt from the sales literature and advertising filing requirements of the Uniform Securities Act? -A brochure on U.S. Treasury securities -A form letter used to prospect for small business retirement plans -An ad espousing the tax advantages of condominium investments -A group e-mail sent to several existing clients explaining the advantages of annuity investing |
- A brochure on U.S. Treasury securities |
|
|
A broker-dealer's registration may be revoked or suspended if the Administrator determines that this action is in the public interest and the: -Broker-dealer violated federal commodities laws within the past 10 years -Broker-dealer's controlling partner has declared personal bankruptcy -Broker-dealer withdrew its registration in another state -Broker-dealer has engaged in ethical business practices |
- Broker-dealer violated federal commodities laws within the past 10 years |
|
|
Monetary disputes between registered persons and their customers are usually settled by: -Arbitration -The SEC -The federal courts -The state courts |
- Arbitration |
|
|
Mr. Brown is a client who must fulfill a $300,000 obligation in two years. He currently has the $300,000 and would like your advice on how to invest these funds temporarily. Which of the following choices should you advise? -U.S. government securities -A Treasury bond fund -AAA municipal bonds -High-quality debentures |
- U.S. government securities |
|
|
According to the Uniform Prudent Investor Act (UPIA), what would be of LEAST concern to an investment adviser? -Tax implications of recommendations and strategies -The possibility of a future increase in the rate of inflation -The length of the adviser's contract and amount of fees collected -Current market conditions |
- The length of the adviser's contract and amount of fees collected |
|
|
A client has a $5,000,000 account with an objective of income only. Under the Uniform Securities Act, an agent who has discretionary authorization for the account could: -Not buy a speculative stock without the client's approval -Speculate with 5% of the client's assets -Speculate with any amount that could be reasonably justified -Not purchase equities in the account |
- Not buy a speculative stock without the client's approval |
|
|
A no-load mutual fund has no: I -12b-1 fees II -Front-end III -sales charges IV -Contingent deferred sales charges I only I and II only II and III only I, II, and III |
- II and III only |
|
|
Which of the following statements is NOT TRUE? -Agent refers to a person who represents an issuer in an exempt transaction -If an agent recommends a security to a client, this security must be suitable for the client in relation to the client's investment objectives -If an agent receives insider information, the appropriate action would be to report the news to a supervisor and ask the supervisor for advice -An agent may not promise a client that any investment will always result in a profit |
- Agent refers to a person who represents an issuer in an exempt transaction |
|
|
An agent takes the prospectus for a new issue and creates a marketing piece that includes all the positive facts from the prospectus but none of the risk factors. According to NASAA's Statement of Policy on Dishonest or Unethical Business Practices of Broker-Dealers and Agents, the agent may give this marketing piece to a client: -Only if the prospectus is included -Only if it is approved by a principal and filed with an Administrator -Only if the issue is exempt -This type of communication may never be provided to a client |
- This type of communication may never be provided to a client |
|
|
Which TWO of the following choices describe an unethical business practice? I An agent tells clients that the broker-dealer will rebate their commissions if an IPO does not increase by 10% during its first month of trading II An agent tells clients to purchase shares in a company based on the research report the broker-dealer just issued III An agent who has insider information about a stock executes a client's unsolicited order for that stock IV An agent highlights the important parts of a prospectus at the client's request I and IV II and III III and IV I and II |
- I and IV |
|
|
Which of the following persons would NOT be considered an investment adviser representative under the Uniform Securities Act? -A person who makes recommendations about municipal securities at an investment advisory firm -A person who solicits advisory services and private offerings for accredited investors -An accountant who offers a separate service for securities advice based on his clients' tax situation -A person who assists clients and enters orders for securities transactions |
- A person who assists clients and enters orders for securities transactions |
|
|
Micro Manager Partners is an investment advisory firm. Micro is creating a new standard contract for its advisory clients. Which of the following clauses should NOT appear in the contract? -The Adviser [Micro] will provide the following services to the Client: management of the Client's portfolio on a discretionary basis, quarterly written summaries of account activity, and quarterly personal review of the Client's assets under management of the Adviser -The Client agrees to pay a quarterly fee to the Adviser consisting of (i) .25% times the value of the portfolio at the end of each quarter, plus (ii) 2% of any increase in the value of the portfolio compared to the end of the previous quarter. Part (ii) of the fee will not be assessed if the portfolio declines in value -The Adviser may not assign this contract to another party without the prior written consent of the Client -If any partner leaves the business of the Adviser, or if the Adviser adds any partner, the Adviser will notify the Client within a reasonable period, but not more than ten business days after any such change |
- The Client agrees to pay a quarterly fee to the Adviser consisting of (i) .25% times the value of the portfolio at the end of each quarter, plus (ii) 2% of any increase in the value of the portfolio compared to the end of the previous quarter. Part (ii) of the fee will not be assessed if the portfolio declines in value |
|
|
Paul is an investment adviser representative for Bruce Asset Management, a federal covered investment adviser. Although Paul's office is located in State A, he conducts business with clients from State A, State B, and State C. Which of the following choicesreflect(s) the state registration requirements in this situation? I Bruce Asset Management must be registered in State A II Paul must be registered in State A III Paul must be registered in State B and State C. IV Bruce Asset Management must be registered in State B and State C I and IV only II only I, II, and III only I, II, III, and IV |
- II only |
|
|
A hedge fund is being sold to investors as a private placement under Regulation D. An agent believes that this fund would be an excellent investment opportunity for several of his clients. The agent may discuss the fund with which of the following clients? -A newly retired man, whose annual income last year was $200,000 -A middle-aged couple who are both physicians with a joint annual income of $400,000 -A young, aggressive investor with a net worth of $500,000 and an annual income of $150,000 -A couple that just won the lottery, whose annual income this year was $500,000 and whose net worth is $550,000 |
- A middle-aged couple who are both physicians with a joint annual income of $400,000 |
|
|
Which of the following persons is NOT excluded from the definition of a broker-dealer under the Uniform Securities Act? -A bank -An agent -An investment adviser -An issuer |
- An agent |
|
|
An investment adviser is registered in State A and State B. A broker-dealer is registered only in State A. The client of the investment adviser is a resident of State B. The investment adviser asks the broker-dealer to purchase a nonexempt security, which is registered in State B, for the advisory client. The broker-dealer: -Should refuse the order because the broker-dealer is not registered in the state in which the client resides -May accept the order as long as this practice does not occur with any regularity -May accept the order only if the client places the order -May accept the order if the broker-dealer has no place of business in State B |
- May accept the order if the broker-dealer has no place of business in State B |
|
|
An agent is employed by a broker-dealer. Both the agent and the broker-dealer are registered in State X. The agent wants to begin soliciting high net worth retail clients in State Y, where she already has many institutional customers. The CEO of the broker-dealer, who is also the firm's chief compliance officer, approves the agent's activities. The agent may start soliciting retail clients in State Y: -Immediately, since she is exempt from registration there as long as the broker-dealer is not registered in State Y -Who are qualified purchasers only -Only after she is registered in State Y -As soon as possible, since the firm has approved her activities |
- Only after she is registered in State Y |
|
|
Which TWO of the following actions would fall under the jurisdiction of a state securities Administrator? I The purchase of options through the Internet by a state resident II The sale of long-term certificates of deposit by a bank III The delivery of securities to a customer who is a resident of a particular state IV The offer of securities by an out-of-state broker-dealer to a resident of the state I and II I and III I and IV III and IV |
- I and IV |
|
|
The LEAST suitable investment for Mrs. McCarthy, a 70-year-old investor, would be a: -Treasury note -Utility stock mutual fund -Fixed annuity -Zero-coupon bond |
- Zero-coupon bond |
|
|
A securities agent and an investment adviser have offices next door to each other. The adviser directs brokerage business to the agent for execution and, in return, the agent rebates the adviser 10% of the commissions generated by these transactions. According to NASAA Model Rules, this practice is: -Acceptable, provided the agent is also registered as an investment adviser representative -Acceptable, provided it is disclosed on the adviser's Form ADV -A violation of the Uniform Securities Act -Unethical according to NASAA |
- Acceptable, provided it is disclosed on the adviser's Form ADV |
|
|
An investor has been saving for her two children's college education using mutual funds in a taxable account. Her investment profile indicates that she is in a high tax bracket. The oldest child will be starting college in the fall. The younger one will be beginning college in three years. Which of the following allocations would you recommend for the investor's assets? -50% in stock funds, 50% in bond funds -30% in an S&P 500 Index fund, 60% in municipal and corporate bond funds, and 10% in a money-market fund -25% in municipal bond funds, 25% in an S&P 500 Index fund, and 50% in money-market funds -80% in long-term bond funds and 20% in money-market funds |
- 25% in municipal bond funds, 25% in an S&P 500 Index fund, and 50% in money-market funds |
|
|
A customer executes a power of attorney granting her agent discretionary authority over her account. The agent, however, executes more transactions in the account than the client anticipated, generating a large number of commissions. Many of the transactions were outside the investor's objectives. Under the NASAA Statement of Policy on Dishonest or Unethical Business Practices by Broker-Dealers and Agents, the agent has: I -Abused discretion II -Made unsuitable recommendations III -Churned the account IV -Failed to disclose a material conflict of interest I only II and III only I and III only II and IV only |
- I and III only |
|
|
In order for an investment adviser to maintain custody of funds and securities: -The firm must have a three-year track record of no violations -The investment adviser must notify the Administrator and there must be no rule against custody -The Administrator must give permission to the investment adviser -At least $100,000 in Treasury bills must be posted as security |
- The investment adviser must notify the Administrator and there must be no rule against custody |
|
|
Which of the following investors are considered accredited under Regulation D of the Securities Act of 1933? I A portfolio manager at a mutual fund company II Banks III Any senior officer of a publicly traded company IV Individuals with a net worth of $1 million or more I and II only II and IV only III only I, III, and IV only |
- II and IV only |
|
|
A newly hired employee is applying for registration as an agent in State Z. What information does the agent need to disclose on his application for registration (Form U4)? I -Any alias that the agent has used II -A real estate partnership that the agent controlled that declared bankruptcy five years ago III -The agent has an unsatisfied judgment against him as the result of an auto accident IV -The fact that the agent's house is in foreclosure I and II only II and III only I, II, and III only I, II, III, and IV |
- I, II, and III only |
|
|
A broker-dealer must keep all the following records, EXCEPT: -Original copies of all incoming client correspondence -Form ADV for any investment adviser for which the broker-dealer provides safekeeping services -Signed copies of all discretionary account agreements executed by clients -Copies of all order tickets |
- Form ADV for any investment adviser for which the broker-dealer provides safekeeping services |
|
|
Sue Whitman is a high-ranking official in the Comptroller's Office of Zanzibar Securities. Her title is Executive Vice President. Under the Uniform Securities Act, Mrs. Whitman is: -An agent since all officers of a securities firm are considered agents -Not considered an agent since she is not involved in sales or trading -Considered an agent but would not need to pass a qualifying exam -Not considered an agent but could accept unsolicited orders |
- Not considered an agent since she is not involved in sales or trading |
|
|
Which of the following statements is TRUE regarding the bond that is required to be posted under the Uniform Securities Act as a condition for registration? -It protects clients against losses -It protects against brokerage firm fraud -It is used to cover the costs of possible legal actions -Property can be accepted in lieu of a bond |
- It is used to cover the costs of possible legal actions |
|
|
A broker-dealer is registered in State A. Which TWO of the following statements are TRUE regarding the examination of that broker-dealer's records by the Administrator of State A? I -The Administrator may examine the broker-dealer's records even if they are located in State B II -If the records are located in State B, the Administrator ofState A must obtain the consent of the Administrator of State B to examine the records III -The Administrator may examine the broker-dealer's records under any circumstances IV -The Administrator may examine the broker-dealer's records with good reason I and III I and IV II and III II and IV |
- I and IV |
|
|
Under the Uniform Securities Act, a state Administrator may NOT deny, suspend, or revoke any registration, or bar or censure a person if the applicant was: -Convicted of a felony within the past 10 years -Convicted of a misdemeanor eight years ago -Prohibited by a court from engaging in the securities business -Subject to a suspension order of a stock exchange |
- Convicted of a misdemeanor eight years ago |
|
|
Under the Uniform Securities Act, a person's registration may be revoked or denied for which of the following reasons? I -The person was convicted of a non-securities-related misdemeanor three years ago II -The person was convicted of a drug-related felony seven years ago III -There is mounting evidence that the individual is involved in a securities-related fraud IV -The person was convicted of a securities-related misdemeanor six years ago I and IV only II and IV only II and III only I, II, and IV only |
- II and IV only |
|
|
Under the Uniform Securities Act, the statute of limitations for criminal violations of the Act is: One year Three years Five years There is no time limit for criminal violations |
Five years |
|
|
Which TWO of the following reasons would allow the Administrator to deny an agent's registration? I -The applicant has been convicted of a misdemeanor within the past 10 years II -The applicant neglected to disclose a bankruptcy filing six years prior III -The applicant has a history of losing arbitration cases with public customers in the previous two years IV -The applicant failed to disclose he was formerly employed at another broker-dealer in the last four years I and III I and IV II and III II and IV |
- II and IV |
|
|
IA Incorporated is an investment adviser. BD Securities is a brokerage firm with offices down the hall. IA Incorporated and BD Securities have an agreement under which IA directs brokerage transactions to BD and receives a 15% rebate on the commissions that BD charges. This arrangement is: -A conflict of interest and an unethical business practice -Acceptable, provided BD is also registered as an investment adviser -Acceptable, provided IA discloses the arrangement to its clients in writing -Acceptable, provided the arrangement is in writing and filed with the Administrator |
- Acceptable, provided IA discloses the arrangement to its clients in writing |
|
|
Under the Uniform Securities Act, which TWO of the following practices are prohibited? I -Accepting orders from a client's brother with written, third-party authorization II -Recommending securities without regard for the client's financial resources III -Quoting a price that is marked up from the current offering price IV -Crediting a portion of mutual fund's sales load back to a client's account I and III I and IV II and III II and IV |
- II and IV |
|
|
Which of the following transactions would NOT be considered an unethical business practice by a broker-dealer? -Effecting a transaction in a security that does not involve any beneficial change of ownership -Effecting a transaction in a security while acting as an agent for both buyer and seller -Effecting a transaction in a security on behalf of clients for the purpose of increasing the trading volume of that security -Effecting a transaction in a security with other broker-dealers for the purpose of increasing or decreasing the price |
- Effecting a transaction in a security while acting as an agent for both buyer and seller |
|
|
An agent's recommendations have made a client a lot of money over the last two years. The client is so pleased that he tells the agent that she can keep 5% of any gains in his account from now on. Which of the following statements is TRUE? -This is acceptable as long as the broker-dealer and the client agree in writing -This is acceptable if the broker-dealer is also registered as an investment adviser -This is not acceptable unless the agent is also registered as an IAR -This is not acceptable since it is considered to be sharing in the client's profits |
- This is not acceptable since it is considered to be sharing in the client's profits |
|
|
An investment adviser's compensation could be based on: -A share of capital gains -Any agreement that the client and investment adviser mutually sign -A percentage of capital appreciation of the net assets in the client's account -A percentage of the value of the fund averaged over a prescribed period |
- A percentage of the value of the fund averaged over a prescribed period |
|
|
According to the Uniform Securities Act, if an advisory firm concentrates its advice on New York Stock Exchange securities, the firm: -Can seek an exemption from registration as an adviser -Will be subject to the rules of the New York Stock Exchange -Is not engaging in a violative practice -Can only receive commissions as compensation |
- Is not engaging in a violative practice |
|
|
The Uniform Securities Act requires that an investment adviser deliver a written disclosure document to an advisory client or prospective advisory client. In which TWO of the following situations is the adviser NOT required to send this document to clients? I -The firm advises only investment companies but does not send its brochure to them II -The firm sends a newsletter to subscription clients who pay an annual fee of $120 III -The firm has no office in the state IV -The firm advises only institutional investors I and II II and III I and IV II and IV |
I and II |
|
|
Under the Uniform Securities Act, which of the following issuers must file a registration statement with the state Administrator? I -Corporations with stock listed on the Toronto Stock Exchange II -Federal Savings and Loan Associations III -Federal credit unions IV -For-profit corporations I and IV only II and III only I, II, and III only IV only |
IV only |
|
|
Advertising and sales-related materials would need to be filed with the Administrator in which of the following circumstances? -The materials relate to transactions with institutional investors -The securities were issued by a common carrier -The securities are listed on a foreign exchange -The materials relate to federal covered securities |
- The securities are listed on a foreign exchange |
|
|
An order ticket must include all of the following information, EXCEPT: -The account for which the order was entered -The price and time at which it was executed -The time of entry -Authorization of a registered principal |
- Authorization of a registered principal |
|
|
An agent holding limited discretionary authority over a customer's account may: -Buy or sell securities in the account without consulting the customer -Withdraw money from the account -Receive a fee for using his discretion in trading the account -Borrow assets from the customer's account |
- Buy or sell securities in the account without consulting the customer |
|
|
According to the Uniform Securities Act, an employee who is not registered as an agent may do which of the following? -Clear transactions -Accept unsolicited orders on behalf of an agent -Participate in an exempt transaction with a registered agent -Participate in the distribution of an exempt security |
- Clear transactions |
|
|
An agent, who is registered in State A, receives a call from a prospective client in State B. The client wants to place an order to buy some stock, but the agent is not registered in State B. The prospective client's mother, however, lives in State A. The agent should: -Use the mother's address on the client's account -Tell the client to have his mother place the order on his behalf -Obtain a written representation from the client that the order was unsolicited -Refuse the order |
- Refuse the order |
