Series 66 Practice Final 5

Under the Uniform Securities Act, an agent must disclose personal knowledge concerning a material public fact about an issuer to a customer in connection with the sale of an issue:
[A]If the investor is not employed by the issuer in such a position as to

[D]All of the above.
Disclosure to clients with regard to a material public fact about an issuer in connection with a sale of securities is always required.

Which of the following would be the best description of a Unit Investment Trust?
[A]A trust which issues redeemable units, has a fixed portfolio, generally of bonds, and is terminated once all of the bonds have reached maturity.
[B]A trust which issues pu

[A]A trust which issues redeemable units, has a fixed portfolio, generally of bonds, and is terminated once all of the bonds have reached maturity.
A Unit Investment Trust is a trust which issues redeemable units, has a fixed portfolio, generally of bonds

Which of the following types of life insurance offers a fixed death benefit, fixed cash value and fixed premium payment?
[A]Term life insurance
[B]Whole life insurance
[C]Universal life insurance
[D]Variable life insurance

[B]Whole life insurance
Whole life insurance offers fixed death benefits, fixed cash values, and fixed premium payments.

An Administrator of a state may deny an application by a broker-dealer for registration, according to the Uniform Securities Act, if the broker-dealer applicant
[A]has no experience in the securities industry.
[B]has been suspended by the London Stock Exc

[B]has been suspended by the London Stock Exchange.
Each standing alone, answers A, C, and D are not sufficient grounds for Administrators to deny applications. However, being suspended by another stock exchange is sufficient grounds for an Administrator

All of the following securities are not subject to the registration provisions of the Uniform Securities Act EXCEPT:
[A]A bank organized under state law issues a security.
[B]A State issues a security.
[C]A federal agency issues a security.
[D]An intrasta

[D]An intrastate security
Federal agencies, states, Canadian provinces, and bank issues are exempt from registration. Since an Intrastate security is NOT included on the Exempt list, it would be required to register.

When limit orders are entered on the floor of the New York Stock Exchange they are handled by which of the following?
[A]Floor-broker
[B]$2 Broker
[C]Designated Marketmaker
[D]Marketmaker

[C]Designated Marketmaker
The person on the floor of the New York Stock Exchange who attempts to maintain a fair and orderly market and handles the limit order book is known as the Designated Marketmaker, formerly called the Specialist. So be prepared to

John is a friend of yours who also happens to be an IAR. The two of you go to a bar for a beer and run into a mutual friend who is there with several people. The mutual friend begins to talk of how John knows his sister-in-law and has produced great retur

[B]John can state that he knows the sister-in-law.
The Model Rules forbid the IA or IAR from disclosing the identity, affairs, or investments of any client unless required to do so by law or with the client's consent. In this situation, John can only stat

When is the borrowing of money from a client allowed under the NASAA Model Rule on Unethical Business Practices of Investment Advisers and Federal Covered Advisers?
[A]It is only allowed if the client is a close relative of the adviser.
[B]It is only allo

[D]When the client is an affiliate of the IA, such action is allowed.
The NASAA Statement of Policy on Investment Advisers (IAs) says that IAs and IARs shall not borrow money or securities from a client unless the client is a broker-dealer, an affiliate o

The USA regulates what investment advisers can say to clients. Which of the following may an IA legally state to a client?
I. The adviser can state that they are registered
II. The adviser can state that the Administrator has verified all information on t

[A]I only
An adviser can only state that they have registered, but it cannot imply qualification or endorsement in any way.

If an analyst is performing a bottom-up analysis of a particular industry, which of the following can be expected?
I. The analyst will be looking at individual firms, then building information in an attempt to analyze the industry as a whole.
II. The anal

[A]I and III
In a bottom-up approach to analysis, an analyst will look at the performance of firms within a particular industry in order to formulate a picture of how that particular industry will perform. The goal is not necessarily to pick individual st

An article is released detailing how Tech Company A has created software that is currently the best on the market. Tech Company A is expected to gain a major portion of market share for this type of software. One of your clients reads the article and buys

[C]This is an example of competitive risk.
This is an example of competitive risk. Competitive risk is the risk that a firm will not remain competitive with other firms in terms of technology, products, or general competition. Here, the tech firm expects

When discussing the Price to Book (P/B) Ratio and Price to Earnings (P/E) Ratio on stocks, which two of the following are typically true when comparing value and growth stocks?
I. Stocks with lower P/B and P/E Ratios are typically value stocks.
II. Stocks

[B]I and IV
A "value" stock is called such because it is considered undervalued in comparison to other companies of similar size in the same industry. Such stocks typically have a low price-to-book ratio, meaning that the overall equity capitalization (al

One of your clients is an elderly gentleman whose wife has recently passed away. A $25,000 life insurance policy has paid out to the client and the client wishes to invest the proceeds. The client is a conservative investor, does not have a need for incom

[D]The IA should recommend CDs issued by a commercial bank.
Taking all of the facts into consideration, the best investment would be the bank-issued certificates of deposit. The client is elderly, conservative, and does not need income. Government bond fu

A large Wall Street investment bank owns and operates a "dark pool". In explaining its popularity to potential institutional customers, it rightly claims as advantages over stock exchanges all of the following EXCEPT:
[A]Large blocks of stock can be trade

[D]Trading large blocks of stock away from the floors of stock exchanges is a new and innovative strategy
Institutions have always crossed large blocks of stock off the exchange floors. The other claimed advantages are legitimate.

Mary is a registered agent with XYZ Brokerage Services. Sue is a licensed insurance agent with ABC Life Insurance Company but is not registered to sell securities. Sue solicits the sale of mutual fund shares with her clients and processes the transaction

[A]She split her commissions
An agent shall not share commissions with any person not also registered as an agent with the same broker-dealer.

You work at a broker-dealer. One of the agents at your broker-dealer gets a phone call from a prospective client who wants the agent to make an offer of sale on a security that the agent cannot offer. The agent tells the prospective client that he cannot

[A]has technically offered to sell the security.
Any solicitation of an offer to buy is considered to be an "offer" under the U.S.A. Because the agent has informed the prospective client that he will accept an offer to buy, the agent has "offered" to sell

A broker-dealer registers in all states where they do business, which constitutes the majority of the US. The firm also is registered with the SEC. Which of the following statements is TRUE according to the Uniform Securities Act?
[A]The broker-dealer mus

[A]The broker-dealer must abide by federal standards when it comes to financial reporting requirements, and would not be subject to additional requirements by any State Administrator.
According to regulations on financial reporting requirements, broker-de

Under the Investment Advisers Act of 1940, which of the following statements are true pertaining to Investment Advisers who have taken custody of the funds of clients?
I. The adviser's clients must receive notification of the manner in which their funds a

[C]I and III only
When an IA has custody of the funds and securities of a client, they are NOT required to be registered as a broker-dealer. They are required to keep the funds and securities of each client in a separate account. However, the funds and se

When considering a possible investment in a Roth IRA, which of the following would NOT be an advantage?
[A]Until the funds are withdrawn during retirement, all contributions and earnings are tax-deferred.
[B]Contributions to the account can continue to be

[A]Until the funds are withdrawn during retirement, all contributions and earnings are tax-deferred.
All choices are advantages except: Until the funds are withdrawn during retirement, all contributions and earnings are tax-deferred. Contributions to a Ro

An individual is attempting to determine if it is necessary to register as an investment adviser due to the nature of some of their activities. The individual only works with accredited or qualified clients. How does this affect registration requirements?

[D]Clients being accredited or qualified would not affect registration requirements or exemptions.
Under the Investment Advisers Act of 1940, specific requirements are given to determine whether registration is necessary. These include specific advice abo

Under NASAA Model Rules on Broker-dealers all of the following statements are true with regard to transactions with clients EXCEPT?
[A]Delivery of a Final Prospectus is required when a client purchases a stock in the secondary market that has been listed

[A]Delivery of a Final Prospectus is required when a client purchases a stock in the secondary market that has been listed on the New York Stock Exchange.
A prospectus must be delivered no later than with the purchase confirmation of a "new" issue, but pr