Series 65 – Uniform Investment Adviser
Law Exam Practice Test Questions And
Correct Answers (Verified Answers) Plus
Rationales 2026 Q&A | Instant
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(Covers: Economics, Investment Vehicles, Client Recommendations, and
Laws, Regulations & Ethics)
1. Which of the following best describes the purpose of the Uniform
Securities Act (USA)?
A. To regulate only federal securities transactions
B. To protect investment advisers from liability
C. To protect investors through state-level regulation of securities and
professionals
D. To enforce federal tax rules on securities transactions
,Rationale: The USA provides a framework for states to regulate securities to
protect investors from fraud and ensure ethical practices.
2. An investment adviser representative (IAR) must register in which of the
following?
A. Only the state where the firm is located
B. Only at the federal level
C. In each state where the representative has a place of business or clients
D. Nowhere if they work for a federally covered adviser
Rationale: IARs must register in every state where they maintain a place of
business or have more than a de minimis number of clients.
3. Which of the following securities is exempt from registration under the
Uniform Securities Act?
A. Corporate bond issued by a private company
B. Common stock listed on NASDAQ
C. U.S. Treasury bond
D. Municipal revenue bond issued in another state
Rationale: U.S. government securities are exempt because they are backed
by the full faith and credit of the U.S. government.
,4. Under the Investment Advisers Act of 1940, who is considered an
investment adviser?
A. A person who sells fixed annuities
B. A person who provides investment advice for compensation as part of a
regular business
C. A person who publishes a general newsletter about economic trends
D. A person who executes client trades only
Rationale: An adviser gives advice about securities for compensation as part
of a business; this defines an IA under the Act.
5. Which of the following is NOT a security under the USA?
A. Variable annuity
B. Fixed annuity
C. Investment contract
D. Stock option
Rationale: Fixed annuities are insurance products without investment risk
and are not considered securities.
6. A broker-dealer has discretionary authority over client accounts. This
means the firm can:
A. Withdraw funds from the account without notice
B. Change the client’s investment objectives
C. Decide which securities to buy or sell and the timing without prior
, approval
D. Receive performance-based compensation
Rationale: Discretionary authority allows choice of security, quantity, and
timing but not withdrawal of funds or changes to objectives.
7. An investment adviser must maintain client records for how many years?
A. 3 years
B. 5 years
C. 7 years
D. 10 years
Rationale: The Advisers Act requires most records to be kept for 5 years,
with the first 2 years easily accessible.
8. Which of the following is a leading economic indicator?
A. Stock market prices
B. Unemployment rate
C. Corporate profits
D. Duration of unemployment
Rationale: Stock prices typically move ahead of economic trends and are
considered leading indicators.
Law Exam Practice Test Questions And
Correct Answers (Verified Answers) Plus
Rationales 2026 Q&A | Instant
Download Pdf
(Covers: Economics, Investment Vehicles, Client Recommendations, and
Laws, Regulations & Ethics)
1. Which of the following best describes the purpose of the Uniform
Securities Act (USA)?
A. To regulate only federal securities transactions
B. To protect investment advisers from liability
C. To protect investors through state-level regulation of securities and
professionals
D. To enforce federal tax rules on securities transactions
,Rationale: The USA provides a framework for states to regulate securities to
protect investors from fraud and ensure ethical practices.
2. An investment adviser representative (IAR) must register in which of the
following?
A. Only the state where the firm is located
B. Only at the federal level
C. In each state where the representative has a place of business or clients
D. Nowhere if they work for a federally covered adviser
Rationale: IARs must register in every state where they maintain a place of
business or have more than a de minimis number of clients.
3. Which of the following securities is exempt from registration under the
Uniform Securities Act?
A. Corporate bond issued by a private company
B. Common stock listed on NASDAQ
C. U.S. Treasury bond
D. Municipal revenue bond issued in another state
Rationale: U.S. government securities are exempt because they are backed
by the full faith and credit of the U.S. government.
,4. Under the Investment Advisers Act of 1940, who is considered an
investment adviser?
A. A person who sells fixed annuities
B. A person who provides investment advice for compensation as part of a
regular business
C. A person who publishes a general newsletter about economic trends
D. A person who executes client trades only
Rationale: An adviser gives advice about securities for compensation as part
of a business; this defines an IA under the Act.
5. Which of the following is NOT a security under the USA?
A. Variable annuity
B. Fixed annuity
C. Investment contract
D. Stock option
Rationale: Fixed annuities are insurance products without investment risk
and are not considered securities.
6. A broker-dealer has discretionary authority over client accounts. This
means the firm can:
A. Withdraw funds from the account without notice
B. Change the client’s investment objectives
C. Decide which securities to buy or sell and the timing without prior
, approval
D. Receive performance-based compensation
Rationale: Discretionary authority allows choice of security, quantity, and
timing but not withdrawal of funds or changes to objectives.
7. An investment adviser must maintain client records for how many years?
A. 3 years
B. 5 years
C. 7 years
D. 10 years
Rationale: The Advisers Act requires most records to be kept for 5 years,
with the first 2 years easily accessible.
8. Which of the following is a leading economic indicator?
A. Stock market prices
B. Unemployment rate
C. Corporate profits
D. Duration of unemployment
Rationale: Stock prices typically move ahead of economic trends and are
considered leading indicators.
