Series 65 Midterm Exam 2025
Questions and Answers
ABC Securities is a broker-dealer registered with the SEC and domiciled in State M.
ABC Securities is not be defined as a broker-dealer in State N under the Uniform
Securities Act if it has no offices in State N and if which of the following are true?
I Its only clients are insurance companies.
II It has contact with fewer than six State N residents in any 12-month period.
III Its only solicitation of State N residents is through radio advertisements originating
in State M but received in State N.
IV It occasionally engages in firm commitment underwriting with issuers based in State
N. - ANSWER✔✔-I & IV
A broker-dealer with no office in the state is not defined as a broker-dealer in that state
if its only business is with institutions, other broker-dealers, and issuers when engaged
in underwriting their securities. There is no de minimis exemption. Any solicitation of
,individuals into the state, whether in person or by radio, television, or any publication,
requires registration in the state.
If a client who seeks diversification through real estate is concerned about illiquidity
associated with investing in real estate, which of the following investments is most
suitable?
A)
Real estate investment trust
B)
Interest in a real estate limited partnership
C)
Privately placed investment
D)
Direct investment in a shopping center renting retail space to a broad variety of stores -
ANSWER✔✔-A
Real estate investment trusts (REITs) are best suited to the client because they are
market-traded securities that provide an investor with a liquid market in which to
invest in real estate.
,One of your clients who is interested in a hedge fund notes that the fund invests in
blank-check companies. He seems uncertain what blank-check companies are, so you
explain that they are sometimes known as special purpose acquisition companies
(SPACs) and are unique in that
A)
they are synonymous with blind-pool companies that sell shares to investors without
telling them what the specific use of the funds raised will be or what industry or sector
might be targeted.
B)
they carry unique risks because in a blank-check company, shareholders have no vote
on any business opportunity targeted for investment.
C)
they have no business operations but instead raise money for the sole purpose of
seeking out a business to engage in.
D)
they carry high risk because the funds will always be invested in the best available
opportunity even though it isn't immediately identified. - ANSWER✔✔-C
, Blank-check companies, sometimes known as special purpose acquisition companies
(SPACs), are unique in that they have no business operations. Instead, they raise money
for the sole purpose of seeking out a business to engage in. Once businesses are
targeted, proposals will be presented to shareholders who can vote to approve or not.
While a blank-check company doesn't indicate what industry or sectors might be
targeted, blind-pool companies generally do.
Under the SEC's marketing rule for investment advisers,
A)
testimonials are given by clients while endorsements are given by promoters.
B)
testimonials are given by promoters while endorsements are given by clients.
C)
an investment adviser may compensate a bad actor for an endorsement as long as the
person's status and compensation are disclosed.
D)
a written agreement must be in effect between the adviser and any promoter when
compensation exceeds $100. - ANSWER✔✔-A
Questions and Answers
ABC Securities is a broker-dealer registered with the SEC and domiciled in State M.
ABC Securities is not be defined as a broker-dealer in State N under the Uniform
Securities Act if it has no offices in State N and if which of the following are true?
I Its only clients are insurance companies.
II It has contact with fewer than six State N residents in any 12-month period.
III Its only solicitation of State N residents is through radio advertisements originating
in State M but received in State N.
IV It occasionally engages in firm commitment underwriting with issuers based in State
N. - ANSWER✔✔-I & IV
A broker-dealer with no office in the state is not defined as a broker-dealer in that state
if its only business is with institutions, other broker-dealers, and issuers when engaged
in underwriting their securities. There is no de minimis exemption. Any solicitation of
,individuals into the state, whether in person or by radio, television, or any publication,
requires registration in the state.
If a client who seeks diversification through real estate is concerned about illiquidity
associated with investing in real estate, which of the following investments is most
suitable?
A)
Real estate investment trust
B)
Interest in a real estate limited partnership
C)
Privately placed investment
D)
Direct investment in a shopping center renting retail space to a broad variety of stores -
ANSWER✔✔-A
Real estate investment trusts (REITs) are best suited to the client because they are
market-traded securities that provide an investor with a liquid market in which to
invest in real estate.
,One of your clients who is interested in a hedge fund notes that the fund invests in
blank-check companies. He seems uncertain what blank-check companies are, so you
explain that they are sometimes known as special purpose acquisition companies
(SPACs) and are unique in that
A)
they are synonymous with blind-pool companies that sell shares to investors without
telling them what the specific use of the funds raised will be or what industry or sector
might be targeted.
B)
they carry unique risks because in a blank-check company, shareholders have no vote
on any business opportunity targeted for investment.
C)
they have no business operations but instead raise money for the sole purpose of
seeking out a business to engage in.
D)
they carry high risk because the funds will always be invested in the best available
opportunity even though it isn't immediately identified. - ANSWER✔✔-C
, Blank-check companies, sometimes known as special purpose acquisition companies
(SPACs), are unique in that they have no business operations. Instead, they raise money
for the sole purpose of seeking out a business to engage in. Once businesses are
targeted, proposals will be presented to shareholders who can vote to approve or not.
While a blank-check company doesn't indicate what industry or sectors might be
targeted, blind-pool companies generally do.
Under the SEC's marketing rule for investment advisers,
A)
testimonials are given by clients while endorsements are given by promoters.
B)
testimonials are given by promoters while endorsements are given by clients.
C)
an investment adviser may compensate a bad actor for an endorsement as long as the
person's status and compensation are disclosed.
D)
a written agreement must be in effect between the adviser and any promoter when
compensation exceeds $100. - ANSWER✔✔-A
