Which of the following is NOT a shared characteristic between common stock and preferred stock?
[A]The Board of Directors must declare dividends, which are always voluntary.
[B]A reduced tax rate can be achieved on capital gains by holding for one year an
[C]Changes in market value of shares is primarily driven by company performance.
Though the market price of both types of stock can be affected by company performance, the performance of common stock is more heavily driven by company performance, while th
Excluded from the definition of an investment adviser under the Uniform Securities Act is:
[A]An insurance company that, for a fee, provides investment advice to clients
[B]A trust company that, for a fee, provides investment advice to clients
[C]A firm t
[B]A trust company that, for a fee, provides investment advice to clients
The Uniform Securities Act defines an investment adviser as anyone who provides advice related to any security for compensation. Excluded from the definition are banks, savings inst
According to the Securities Exchange Act of 1934, which of the following items would be required on an order ticket for a securities transaction?
I. The account number
II. The designation of the IA, if the order is entered by an IA on behalf of a client
I
[C]I, II, IV
All choices offered would be required on an order ticket except that you would NOT need the price of the security at the time the order is entered. The "designation of the IA" would be a reference to how the IA is functioning and could includ
Steve owns a Sub-Chapter S Corporation and is one of the major shareholders in the corporation. The company has had a good year and has realized capital gains which will be distributed to all shareholders. How will these distributions be reported by the s
[C]Shareholder Capital Gains
When a Sub-Chapter S Corporation has realized capital gains, those gains are distributed to the shareholder as Shareholder Capital Gains. The S-Corporation does not pay taxes, and gains are "passed through" to shareholders.
All of the following statements about mutual fund fees and expenses are TRUE, EXCEPT:
[A]Mutual fund fees and expenses can significantly reduce and even eliminate returns for investors.
[B]No-Load Funds do not charge any sales loads, fees, or expenses.
[C
[B]No-Load Funds do not charge any sales loads, fees, or expenses.
Though a "no-load" fund will not charge a sales load on the front or back end, these funds will often have annual expenses, fees associated with purchasing shares, fees associated with exc
From a historical perspective, investments in real estate would be expected to
[A]move in the same direction as investments in the stock market.
[B]move in the opposite direction to investments in the stock market.
[C]perform entirely independently of the
[B]move in the opposite direction to investments in the stock market.
Historically, real estate prices frequently move in the opposite direction of prices of other financial assets such as stocks and bonds. Though returns vary based on each respective inv
Of the investment strategies listed below, which would be considered to be the simplest strategy?
[A]Tactical
[B]Barbell
[C]Buy and hold
[D]Indexing
[C]Buy and hold
Buy and hold strategy allows investors to pay lower long term taxes and has lower transaction costs and is considered to be the simplest investment strategy.
All of the following are included in the definition of an "agent" under the Uniform Securities Act, EXCEPT:
[A]An individual representing an issuer in effecting transactions in equity securities
[B]An individual who represents a broker-dealer as the broke
[C]An individual who is a partner of a broker-dealer who effects purchases and sales of the broker-dealer's securities to existing employees where no commission is paid
There are specific exclusions which permit commission-free transactions to employees o
According to NASAA regulations, which of the following would be required in order to establish a margin account for a client?
[A]Require the client to sign a Margin Agreement prior to executing any transactions in the account.
[B]Require the client to sig
[B]Require the client to sign a Margin Agreement promptly after the initial transaction in the account.
Under NASAA Statements of Policy, Broker-dealers shall not execute any transaction in a margin account without securing from the customer a properly ex
If a bond has a Coupon Rate of 8% and a Basis of 7%, the bond is trading at a?
[A]Premium
[B]Discount
[C]Parity
[D]Premium above parity price
[A]Premium
Bonds are trading at a premium when the Yield To Maturity, or Basis, is less than the coupon.
An investment adviser charges a fee for an overall financial plan. Which of the following facts must be disclosed to the customer?
I. The adviser will receive a commission on recommended municipal securities transactions.
II. The adviser will receive a co
[D]I, II, III, IV
All choices are correct regarding facts which must disclosed to customers. Investment Advisers are required to disclose compensation received from anywhere.
According to the Uniform Securities Act, which of the following is true regarding proceedings conducted by the administrator:
[A]The Administrator may issue a separate order to revoke an exemption.
[B]An order is issued to revoke an exemption is made retr
[A]The Administrator may issue a separate order to revoke an exemption.
Administrators can issue separate orders to revoke an exemption if it is deemed to be in the public's interest but the Administrator cannot make such revocations retroactive. The burd
Rudy Smith owns 100 shares of ABC stock which he bought for $50. ABC stock has been appreciating in the market, and have increased to $90 per share. However, today the market took a turn, and the stock is only worth $80 per share. Rudy wants to protect hi
[C]Sell Stop Loss
A Sell Stop Loss is used to protect an investor with a long stock position, when the market is going down.
ABC Advisers Inc. is an investment advisory firm that charges clients an annual fee of 1% of assets for their advisory services. ABC is approached by XYZ broker-dealer who offers to pay ABC trailing commissions on all mutual funds purchased through the br
[A]If IA clients receive full disclosure about the asset-based fees as well as the commission-based fees, the arrangement is allowed.
As long as arrangements where fees and commissions are fully disclosed to clients prior to both being charged, these arra
Suzanne is an IA who handles Bobby's account. Bobby is heavily invested in bonds and regularly reviews and calculates the current yield on his bonds. Which of the following would be of greatest concern to Suzanne in relation to Bobby's view of the bonds?
[C]Bobby isn't getting an accurate idea of the yield to maturity of the bonds.
Current yield is a great snapshot of a bond considering the bond's nominal yield (coupon rate) divided by the bond's current market price. It is a valid tool in analyzing bonds
When may an investment adviser (IA), share in profits and losses of a client's account?
[A]Only when the state Administrator permits it by rule or order.
[B]Only when the IA and client have agreed in a written contract
[C]Only when the IA is deducting adv
[B]Only when the IA and client have agreed in a written contract
When an investment adviser shares in profits and losses in a clients account it must be agreed to in a written contract between the IA and client. The IA does not need the administrators per
The definition of an issuer found in the Uniform Securities Act includes all of the following EXCEPT:
[A]A business entity that is involved in the sale of oil and natural gas certificates of interest.
[B]A county that sells bonds to finance a new fairgrou
[A]A business entity that is involved in the sale of oil and natural gas certificates of interest.
In the Uniform Securities Act, any entity that is involved in the sale of certificates of interest or participation in oil, gas, or mining titles or leases
Of the following individuals who are employed by a federal-covered adviser, which individual would be required to register as an IAR in a state?
[A]A person who manages 20 pension plans and 2 individuals as clients
[B]A person advising 5 mutual funds and
[B]A person advising 5 mutual funds and managing individual retirement accounts for 8 relatives
If an IA or IAR has more than 5 clients in a state, the IAR must register in that state. Institutional investors and officers of the IA are disregarded when co
Generally, if stock prices are rising and such moves are above the moving averages for that stock's price over the past measured period it would be a signal to a technical analyst to do which of the following?
[A]Buy the stock
[B]Sell the stock
[C]Hold th
[A]Buy the stock
Although there are many components to Moving Averages, generally if stock prices are increasing and are exceeding that stocks moving averages of past measured periods (60 days, 90 days, 200 days), it would be a signal to "buy" the stock f
To enter into an investment advisory contract with a client permitting performance based fees, the IA must disclose all of the following EXCEPT:
[A]the period of time that will be used to measure investment performance
[B]the nature of the benchmark index
[D]that the IA may not be compensated for both realized capital gains and unrealized capital appreciation in the same portfolio
NASAA regulations do not expressly prohibit compensation based on realized capital gains AND unrealized capital appreciation in
Which of the following are features of a call or put option contract which has a "European-Style" exercise?
I. This type of option can be exercised at any time up to and including at expiration.
II. This type of option can only be exercised at expiration.
[C]II and III
European-style options, calls and puts, can only be exercised at expiration. Because they cannot be exercised at other times prior to expiration, the primary use of European-style options is hedging.American-style options, calls and puts, ca
According to the Uniform Securities Act, of the following answers, which does not constitute a sale?
[A]A company agrees to give a person 500 shares of a security for no upfront fee, but reserves the right to require the investor to pay $5 per share at a
[C]A bank takes a pledge for 500 shares of stock as collateral for a loan.
In all of the transactions listed above, aside from C, there has been a change in hands of the securities in question. The agreement to pay an assessment at a later date is a sale,
After starting her own business several years ago, Susan's business has become very successful and Susan has assets that she never thought she would have. She has been thinking about getting an Investment Adviser to help her out since she is busy with her
[D]I, III, & IV only
All choices listed except II would be included on a personal balance sheet. II is incorrect because although you would include Common Stock, it would be listed at its current market value at the point in time that the balance sheet is
State Administrators have certain authority regarding the establishment of requirements related to net capital and registration of broker-dealers. Which best describes this authority?
[A]Administrators must establish minimum capital requirements that are
[C]Administrators can only enforce the minimum net capital requirements of the SEC.
Remember that Federal law always preempts state law and that states can never require more than what is required at the Federal level (SEC). The Administrator has discreti
Which of the following are characteristics of a Money Purchase Plan?
[A]Employer contributions are mandatory.
[B]Employee contributions are mandatory.
[C]Employers are obligated to contribute when it is profitable only.
[D]Employees must contribute regard
[A]Employer contributions are mandatory.
A Money Purchase Plan is a Defined Contribution pension plan which requires an employer to make contributions regardless of how well or how poorly the company is performing. Employees are not required to contribute
In the bankruptcy process, real estate is sold for a value higher than the amount owed on the mortgage for that real estate. How are the proceeds that exceed the mortgage used?
[A]The proceeds that exceed the mortgage balance are then directed toward the
[D]The proceeds that exceed the mortgage balance are used to pay all other claims and creditors.
This question is directed toward Chapter 7 bankruptcies, though that is not specified in the question. In a Chapter 7 bankruptcy, the proceeds of a sale of re