IACCP (MASTER) EXAM QUESTIONS WITH
DETAILED VERIFIED ANSWERS
Assignment
Any direct or indirect transfer or hypothecation of an investment advisory contract by the
assignor
Who is not an Investment Advisor?
A Bank, Lawyer, accountant, engineer, teach whose performance of such services is solely
incidental to the practice of his profession, Broker-dealer (commission only)published of any
bona fide newspaper, magazine, business publication, rating systems (Moodys, etc.)
What does it mean when someone has "Control"?
Power to exercise a controlling influence over the management or policies of a compny
Investment supervisory services
Giving of continuous advice as to the investment of funds on the basis of the individual needs of
each client
National securities exchange
an exchange registered under section 6 of the Securities Exchange Act of 1934
Person
Natural person or company
Not Securities
Commodity Futures, Fixed Annuities
Securities Act of 1933 Securities Exchange Act of 1934 Trust Indenture Act of 1939
Acts respectively, heretofore or hereafter amended
What is a Business Development Company?
,A company must be registered in compliance with Section 54 of the Investment Company Act of
1940 to qualify as a BDC. A major difference between a BDC and a venture capital fund is that
BDCs allow smaller, non-accredited investors to invest in startup companies.
A BDC is a type of closed-end fund that makes investments in developing companies and firms
that are financially distressed.
What is an underwriter?
Works closely with the issuing body to determine the offering price of the securities, buys them
from the issuer, and sells them to investors via the underwriter's distribution network.
Underwriters generally receive underwriting fees from their issuing clients, but they also can
earn profits when selling the underwritten shares to investors.
What is a Foreign Private Advisor?
No US, fewer than 15 clients in US in private funds, aggregate assets under management US
clients in private funds of less than $25 million. Does not hold self out in the US public as an
Investment Adviser; nor acts as An Investment Adviser to any investment company registered
under the Investment Company Act of 1940
What is a Commodity Pool Operator (CPO)?
A CPO is an individual or organization which operates a commodity pool and solicits funds for
that commodity pool.
What is a Commodity Pool?
An enterprise in which funds contributed by a number of persons are combined for the purpose
of trading futures contracts, options on futures, retail off-exchange forex contracts or swaps, or to
invest in another commodity pool.
What is a Commodity Trading Advisor (CTA)
A US financial regulatory term for an individual or organization who is retained by a fund or
individual client to provide advice and services related to trading in futures contracts, commodity
options and/or swaps. They are responsible for the trading within managed futures accounts.
What is a Swap
, A derivative contract through which two parties exchange financial instruments. These
instruments can be almost anything, but most swaps involve cash flows based on a notional
principal amount that both parties agree to. Usually, the principal does not change hands. Each
cash flow comprises one leg of the swap. One cash flow is generally fixed, while the other is
variable, that is, based on a a benchmark interest rate, floating currency exchange rate or index
price.
The most common kind of swap is an interest rate swap. Swaps do not trade on exchanges, and
retail investors do not generally engage in swaps. Rather, swaps are over-the-counter contracts
between businesses or financial institutions.
What is a Swap Dealer?
An individual who acts as the counterparty in a swap agreement for a fee called a spread. Swap
dealers are the market makers for the swap market. The spread represents the difference between
the wholesale price for trades and the retail price. Because swap arrangements aren't actively
traded, swap dealers allow brokers to standardize swap contracts to some extent.
What is Swap Execution Facility?
A platform for financial swap trading that provides pre-trade information (i.e. bid and offer
prices) and a mechanism for executing swap transactions among eligible participants.
Penalties
1st Tier - Max Penalty for each act $5,000/natural person or $50,000 for any other person
2nd Tier $50,000 for each act or omission natural person or $250,000 for any other person
(Fraud, deceit, manipulation or deliberate or reckless disregard)
3rd Tier $100,000 each act natural person or $500,000 for any other person (Fraud, deceit,
manipulation or deliberate or reckless disregard, and if substantial losses or created a significant
risk of substantial losses to other persons)
Violations could result in
Accounting and disgorgement
Cease and Desist Proceedings
DETAILED VERIFIED ANSWERS
Assignment
Any direct or indirect transfer or hypothecation of an investment advisory contract by the
assignor
Who is not an Investment Advisor?
A Bank, Lawyer, accountant, engineer, teach whose performance of such services is solely
incidental to the practice of his profession, Broker-dealer (commission only)published of any
bona fide newspaper, magazine, business publication, rating systems (Moodys, etc.)
What does it mean when someone has "Control"?
Power to exercise a controlling influence over the management or policies of a compny
Investment supervisory services
Giving of continuous advice as to the investment of funds on the basis of the individual needs of
each client
National securities exchange
an exchange registered under section 6 of the Securities Exchange Act of 1934
Person
Natural person or company
Not Securities
Commodity Futures, Fixed Annuities
Securities Act of 1933 Securities Exchange Act of 1934 Trust Indenture Act of 1939
Acts respectively, heretofore or hereafter amended
What is a Business Development Company?
,A company must be registered in compliance with Section 54 of the Investment Company Act of
1940 to qualify as a BDC. A major difference between a BDC and a venture capital fund is that
BDCs allow smaller, non-accredited investors to invest in startup companies.
A BDC is a type of closed-end fund that makes investments in developing companies and firms
that are financially distressed.
What is an underwriter?
Works closely with the issuing body to determine the offering price of the securities, buys them
from the issuer, and sells them to investors via the underwriter's distribution network.
Underwriters generally receive underwriting fees from their issuing clients, but they also can
earn profits when selling the underwritten shares to investors.
What is a Foreign Private Advisor?
No US, fewer than 15 clients in US in private funds, aggregate assets under management US
clients in private funds of less than $25 million. Does not hold self out in the US public as an
Investment Adviser; nor acts as An Investment Adviser to any investment company registered
under the Investment Company Act of 1940
What is a Commodity Pool Operator (CPO)?
A CPO is an individual or organization which operates a commodity pool and solicits funds for
that commodity pool.
What is a Commodity Pool?
An enterprise in which funds contributed by a number of persons are combined for the purpose
of trading futures contracts, options on futures, retail off-exchange forex contracts or swaps, or to
invest in another commodity pool.
What is a Commodity Trading Advisor (CTA)
A US financial regulatory term for an individual or organization who is retained by a fund or
individual client to provide advice and services related to trading in futures contracts, commodity
options and/or swaps. They are responsible for the trading within managed futures accounts.
What is a Swap
, A derivative contract through which two parties exchange financial instruments. These
instruments can be almost anything, but most swaps involve cash flows based on a notional
principal amount that both parties agree to. Usually, the principal does not change hands. Each
cash flow comprises one leg of the swap. One cash flow is generally fixed, while the other is
variable, that is, based on a a benchmark interest rate, floating currency exchange rate or index
price.
The most common kind of swap is an interest rate swap. Swaps do not trade on exchanges, and
retail investors do not generally engage in swaps. Rather, swaps are over-the-counter contracts
between businesses or financial institutions.
What is a Swap Dealer?
An individual who acts as the counterparty in a swap agreement for a fee called a spread. Swap
dealers are the market makers for the swap market. The spread represents the difference between
the wholesale price for trades and the retail price. Because swap arrangements aren't actively
traded, swap dealers allow brokers to standardize swap contracts to some extent.
What is Swap Execution Facility?
A platform for financial swap trading that provides pre-trade information (i.e. bid and offer
prices) and a mechanism for executing swap transactions among eligible participants.
Penalties
1st Tier - Max Penalty for each act $5,000/natural person or $50,000 for any other person
2nd Tier $50,000 for each act or omission natural person or $250,000 for any other person
(Fraud, deceit, manipulation or deliberate or reckless disregard)
3rd Tier $100,000 each act natural person or $500,000 for any other person (Fraud, deceit,
manipulation or deliberate or reckless disregard, and if substantial losses or created a significant
risk of substantial losses to other persons)
Violations could result in
Accounting and disgorgement
Cease and Desist Proceedings
