STC SERIES 66 FINAL #1 LATEST
AND 2 EXAM
Which of the following statements is accurate regarding dollar cost
averaging? - ANSWERS-It is a systematic, fixed-dollar method of
investing
Dollar cost averaging is a systematic approach in which an investor
periodically contributes a constant dollar amount over a fixed period.
Buying more shares when prices are low and fewer when prices are high
results in the average cost of the securities purchased being less than the
average of the prices paid (not the other way around). The benefits,
lower cost than the average price, are only obtained when the value of
the asset fluctuates and the investor buys more shares
An Administrator in State Y who receives a complaint regarding an
advertisement that originated in State X will take which of the following
actions? - ANSWERS-Investigate the complaint
The Administrator would first investigate the complaint before taking
any action. (62845)
An investor writes an uncovered RST May 25 put for a premium of 4.
What is the maximum profit that the investor could realize -
ANSWERS-$400
The writer received the $400 premium. If the option expired, he would
have no obligation, recognizing the entire premium as a profit. The
premium represents the most that the writer could profit
END OF
PAGE
1
, STC SERIES 66 FINAL #1 LATEST
AND 2 EXAM
All of the following choices are typical characteristics of a 401(k) plan,
EXCEPT: - ANSWERS-Employers must match employee contributions
In a 401(k) plan, an employee can usually make a pretax contribution to
the plan and reduce taxable income. Employee contributions and growth
in the account are tax-deferred. Employers are not required to match
contributions, but may do so.
What's required to be obtained by an investment adviser when it engages
with a new client? - ANSWERS-Tax ID
Financial institutions must collect certain information when they open
accounts for clients. Typically, a client's name, address, date of birth,
and tax identification number (i.e., Social Security number) must be
obtained. A driver's license can be used to verify the information, but it's
not specifically required since financial institutions are permitted to use
other forms of identification. The employer's address and the date on
which the account is opened are not required to be documented.
All the following descriptions are TRUE of a closed-end management
company, EXCEPT:
Shares are purchased at the current offering price
Shares are redeemable
END OF
PAGE
2
, STC SERIES 66 FINAL #1 LATEST
AND 2 EXAM
Investors can purchase full and fractional shares
The company may issue only common stock
When making a purchase, a customer will pay a markup or a
commission - ANSWERS-II, III, and IV only
Shares of a closed-end fund are not redeemable instruments. The shares
are usually traded in the open market on an exchange. The purchaser
pays either a commission or a markup on both a purchase and a sale. A
closed-end fund may issue common stock, preferred stock, or bonds.
The fund may issue only full shares. Unlike a mutual fund, the closed-
end management company may not issue fractional shares.
If Jane Brown annuitizes her nonqualified variable annuity, how will the
series of payments be taxed? - ANSWERS-Part of each payment is
taxable earnings and part is a tax-free cost basis
A nonqualified annuity has a cost basis consisting of the after-tax dollars
invested, as well as earnings that are tax-deferred. If it is annuitized, the
cost basis is returned in equal amounts in each payment. The rest of each
payment is tax-deferred earnings that become taxable (as income) upon
receipt.
Kevin is an agent of CMP Broker-Dealers which is registered in 10
states. Kevin is currently registered in five states, but only transacts
END OF
PAGE
3
, STC SERIES 66 FINAL #1 LATEST
AND 2 EXAM
business with institutional clients. Due to recent mergers, some of
Kevin's clients will be relocating to North Carolina and CMP now wants
to open a new office there. Kevin will not be moving from his current
office in Missouri, a state in which both Kevin and CMP are registered.
Under the USA: - ANSWERS-Both Kevin and CMP are required to be
registered in North Carolina
This is a tricky question, but the main concept is that a broker-dealer is
not required to register in a state if it has "no place of business in the
state." However, since CMP is opening an office in North Carolina, the
firm is required to be registered in the state regardless of the type of
securities being sold or the types of clients with which it conducts
business. Since the broker-dealer will be registered in North Carolina,
any agents of that broker-dealer who execute client transactions in that
state are also required to be registered, regardless of the types of clients
being represented. Although Kevin may not visit or work out of the
North Carolina office, since his firm has a place of business there and
Kevin will be effecting transactions in the state, he must register
A client purchases an equity-indexed annuity contract that guarantees a
4% return or 80% of the performance of the S&P 500, whichever is
greater. The index declines over the course of the next year. What return
will your client receive? - ANSWERS-4%
An equity-indexed annuity guarantees the contract owner a minimum
interest rate or the performance of a stock index such as the S&P 500
END OF
PAGE
4
AND 2 EXAM
Which of the following statements is accurate regarding dollar cost
averaging? - ANSWERS-It is a systematic, fixed-dollar method of
investing
Dollar cost averaging is a systematic approach in which an investor
periodically contributes a constant dollar amount over a fixed period.
Buying more shares when prices are low and fewer when prices are high
results in the average cost of the securities purchased being less than the
average of the prices paid (not the other way around). The benefits,
lower cost than the average price, are only obtained when the value of
the asset fluctuates and the investor buys more shares
An Administrator in State Y who receives a complaint regarding an
advertisement that originated in State X will take which of the following
actions? - ANSWERS-Investigate the complaint
The Administrator would first investigate the complaint before taking
any action. (62845)
An investor writes an uncovered RST May 25 put for a premium of 4.
What is the maximum profit that the investor could realize -
ANSWERS-$400
The writer received the $400 premium. If the option expired, he would
have no obligation, recognizing the entire premium as a profit. The
premium represents the most that the writer could profit
END OF
PAGE
1
, STC SERIES 66 FINAL #1 LATEST
AND 2 EXAM
All of the following choices are typical characteristics of a 401(k) plan,
EXCEPT: - ANSWERS-Employers must match employee contributions
In a 401(k) plan, an employee can usually make a pretax contribution to
the plan and reduce taxable income. Employee contributions and growth
in the account are tax-deferred. Employers are not required to match
contributions, but may do so.
What's required to be obtained by an investment adviser when it engages
with a new client? - ANSWERS-Tax ID
Financial institutions must collect certain information when they open
accounts for clients. Typically, a client's name, address, date of birth,
and tax identification number (i.e., Social Security number) must be
obtained. A driver's license can be used to verify the information, but it's
not specifically required since financial institutions are permitted to use
other forms of identification. The employer's address and the date on
which the account is opened are not required to be documented.
All the following descriptions are TRUE of a closed-end management
company, EXCEPT:
Shares are purchased at the current offering price
Shares are redeemable
END OF
PAGE
2
, STC SERIES 66 FINAL #1 LATEST
AND 2 EXAM
Investors can purchase full and fractional shares
The company may issue only common stock
When making a purchase, a customer will pay a markup or a
commission - ANSWERS-II, III, and IV only
Shares of a closed-end fund are not redeemable instruments. The shares
are usually traded in the open market on an exchange. The purchaser
pays either a commission or a markup on both a purchase and a sale. A
closed-end fund may issue common stock, preferred stock, or bonds.
The fund may issue only full shares. Unlike a mutual fund, the closed-
end management company may not issue fractional shares.
If Jane Brown annuitizes her nonqualified variable annuity, how will the
series of payments be taxed? - ANSWERS-Part of each payment is
taxable earnings and part is a tax-free cost basis
A nonqualified annuity has a cost basis consisting of the after-tax dollars
invested, as well as earnings that are tax-deferred. If it is annuitized, the
cost basis is returned in equal amounts in each payment. The rest of each
payment is tax-deferred earnings that become taxable (as income) upon
receipt.
Kevin is an agent of CMP Broker-Dealers which is registered in 10
states. Kevin is currently registered in five states, but only transacts
END OF
PAGE
3
, STC SERIES 66 FINAL #1 LATEST
AND 2 EXAM
business with institutional clients. Due to recent mergers, some of
Kevin's clients will be relocating to North Carolina and CMP now wants
to open a new office there. Kevin will not be moving from his current
office in Missouri, a state in which both Kevin and CMP are registered.
Under the USA: - ANSWERS-Both Kevin and CMP are required to be
registered in North Carolina
This is a tricky question, but the main concept is that a broker-dealer is
not required to register in a state if it has "no place of business in the
state." However, since CMP is opening an office in North Carolina, the
firm is required to be registered in the state regardless of the type of
securities being sold or the types of clients with which it conducts
business. Since the broker-dealer will be registered in North Carolina,
any agents of that broker-dealer who execute client transactions in that
state are also required to be registered, regardless of the types of clients
being represented. Although Kevin may not visit or work out of the
North Carolina office, since his firm has a place of business there and
Kevin will be effecting transactions in the state, he must register
A client purchases an equity-indexed annuity contract that guarantees a
4% return or 80% of the performance of the S&P 500, whichever is
greater. The index declines over the course of the next year. What return
will your client receive? - ANSWERS-4%
An equity-indexed annuity guarantees the contract owner a minimum
interest rate or the performance of a stock index such as the S&P 500
END OF
PAGE
4
