CFP Exam Study with all Correct & 100% Verified Answers
|Actual Complete Exam |Already Graded A+
NASDAQ DUTIES: Advertising regulation/investment companies. (define it) ✔Correct Answer-
Another FINRA task is evaluating members' advertising and communications regarding
securities to ensure that they are fair, accurate, and not misleading. These include
advertisements for mutual funds and variable annuities in newspapers, magazines, electronic
media, and other sales literature such as direct marketing materials.
ARBITRATION ✔Correct Answer-an impartial person or panel hears the issues as presented by
both parties, studies the evidence, and then decides how the issues should be resolved.
Arbitration is final and binding, subject to review by a court only on a very limited basis.
FINRA regulates... ✔Correct Answer-those involved in the sale of securities
SEC regulates... ✔Correct Answer-regulates those who offer investment advice (as well as the
actual offering and sale of securities).
Any planner or broker-dealer who wishes to sell securities must register with... ✔Correct
Answer-FINRA
Who would be required to register with both the SEC (or state depending upon the amount of
AUM) and FINRA? ✔Correct Answer-An adviser receiving commissions from both securities
sales and fees for investment advice
FINRA's registration and licensing requirements also apply to... ✔Correct Answer-registered
representatives of broker-dealers.
The registration process for REGISTERED REPRESENTATIVESS with FINRA involves several steps:
✔Correct Answer-1. Pass the Securities Industry Essentials (SIE) exam. Introduced in 2018, the
SIE exam is an introductory exam that assesses a candidate's knowledge of basic securities
industry concepts, such as types of products and their risks, securities market structures,
regulatory agencies and their functions, and prohibited practices.
2. Associate with a broker or dealer.
3. Register with FINRA through the broker or dealer and complete a background and
information check using Form U-4.
4. Pass the appropriate FINRA Series licensing exams (explained later in this section).
,5. Receive a Central Registration Depository (CRD) number and documentation for the securities
licenses held. This CRD documentation provides important background data when an individual
registers to sell securities in a state other than their state of residence.
6. As a FINRA licensee, complete annual continuing education requirements through her brokers
or dealers. This continuing education is known as the firm element; courses are related to the
profession and securities products. A FINRA licensee must also meet additional continuing
education requirements, known as the regulatory element, at regular intervals. These courses
cover ethics, compliance, and sales practices.
Firm Element ✔Correct Answer-A type of Continuing Education required for REGISTERED
REPRESENTATIVES where courses are related to the profession and securities products.
Regulatory Element Continuing Education ✔Correct Answer-Additional Continuing Education
Requirements whose course cover ETHICS, COMPLIANCE, and SALES PRACTICES.
PROFESSOR'S NOTE: FINRA REGISTRATION ✔Correct Answer-FINRA registration is
nontransferable. A registered person who leaves one member firm to join another firm must
terminate registration at the first firm on Form U-5 and reapply for registration with the new
employing member firm on Form U-4. If a person terminates the registration with one firm, the
individual must register with another firm within two years, or the individual will be required to
requalify for the license.
Licensing exams and the types of securities each license authorizes the individual to sell (SERIES)
include: ✔Correct Answer-SERIES 6: This entitles the holder to sell all open-end investment
companies (mutual funds), variable annuities, variable life insurance, and initially offered (not
secondary) unit investment trusts.
Series 7. This is the broadest license and entitles the holder to sell any security, including
individual stocks and exchange-traded funds.
Series 24. Any person actively engaged in managing a member's securities or investment
banking business (e.g., supervising, soliciting, and conducting business) or in training persons
associated with the member must qualify by examination and register with FINRA as a general
securities principal. A Series 7 or Series 62 qualification is a prerequisite for this license.
Series 63. This is the Uniform Securities Agent State Law Examination. State securities laws
require individuals to pass a qualification exam to sell securities within their states. Almost all
states require individuals to pass the Series 63 exam as a condition of state registration.
Series 65. This entitles the holder to provide investment advice to clients within the holder's
primary state of residence. Note that the CFP Board has entered into a reciprocity agreement
with many state securities departments permitting a waiver of this examination if the individual
is a CFP® certificant.
Series 66. This is the Uniform Combined State Law Examination, which combines the Series 63
license requirements with the Series 65 license requirements. An individual who holds this
license may provide investment advice (and sell securities) to any client in any state. Series 66
,candidates must pass the Series 7 exam before they can qualify to register for their Series 66
exam.
SERIES 6: ✔Correct Answer-his entitles the holder to sell all open-end investment companies
(mutual funds), variable annuities, variable life insurance, and initially offered (not secondary)
unit investment trusts.
SERIES 7: ✔Correct Answer-This is the broadest license and entitles the holder to sell any
security, including individual stocks and exchange-traded funds.
SERIES 24: ✔Correct Answer-Any person actively engaged in managing a member's securities
or investment banking business (e.g., supervising, soliciting, and conducting business) or in
training persons associated with the member must qualify by examination and register with
FINRA as a general securities principal. A Series 7 or Series 62 qualification is a prerequisite for
this license.
SERIES 63: ✔Correct Answer-This is the Uniform Securities Agent State Law Examination. State
securities laws require individuals to pass a qualification exam to sell securities within their
states. Almost all states require individuals to pass the Series 63 exam as a condition of state
registration.
SERIES 65: ✔Correct Answer-This entitles the holder to provide investment advice to clients
within the holder's primary state of residence. Note that the CFP Board has entered into a
reciprocity agreement with many state securities departments permitting a waiver of this
examination if the individual is a CFP® certificant.
SERIES 66: ✔Correct Answer-This is the Uniform Combined State Law Examination, which
combines the Series 63 license requirements with the Series 65 license requirements. An
individual who holds this license may provide investment advice (and sell securities) to any
client in any state. Series 66 candidates must pass the Series 7 exam before they can qualify to
register for their Series 66 exam.
PROFESSOR'S NOTE: LICENSES REQUIRED FOR VARIABLE PRODUCTS ✔Correct Answer-A
planner who wishes to sell variable contracts, such as variable life insurance or variable
annuities, must hold a FINRA Series 6 or Series 7 registration (and, in most states, a Series 63 or
Series 66 registration) as well as the particular state's variable insurance license.
What is a BANK and what do they do? ✔Correct Answer-It's an organization chartered by the
federal or a state government to do any of the following: Accept deposits and, depending on
the type of account, pay interest on deposits Make various types of loans Invest customer funds
in securities Honor instruments drawn on accounts Issue cashier's checks Provide safe-deposit
boxes
, National banks are subject to regulation by three independent federal agencies: ✔Correct
Answer-1. Office of the Comptroller of the Currency (OCC). This agency charters, supervises, and
regulates national banks and federal branches of foreign banks located in the United States.
2. Federal Reserve Board. This group makes monetary policy, which is discussed in Module 7 of
this course.
3. Federal Deposit Insurance Corporation (FDIC). The FDIC insures deposits in U.S. banks and
savings and loan associations against bank failures.
Office of the Comptroller of the Currency (OCC) ✔Correct Answer-This agency charters,
supervises, and regulates national banks and federal branches of foreign banks located in the
United States.
FEDERAL RESERVE BOARD ✔Correct Answer-This group makes monetary policy.
FEDERAL DEPOSIT INSURANCE CORPORATION (FDIC) ✔Correct Answer-The FDIC insures
deposits in U.S. banks and savings and loan associations against bank failures.
PROFESSOR'S NOTE: BANKS ✔Correct Answer-State-chartered banks are subject to regulation
by state banking commissions or departments. Additionally, the FDIC supervises state banks
that are not members of the Federal Reserve System.
Federal Deposit Insurance Corporation (FDIC) (EXPANDED NOTES) ✔Correct Answer-All
individuals are entitled to FDIC insurance for a deposit at a U.S. financial institution. Such
insurance protects deposits that are payable in the United States but not overseas. In addition,
only cash and cash-equivalent deposits (e.g., a certificate of deposit) are covered by FDIC
insurance; securities, mutual funds, and other types of investments are not afforded such
protection. Money market mutual funds offered by investment companies (not the same as
money market deposit accounts) are also denied FDIC coverage.
The basic FDIC-insured amount of a depositor is... ✔Correct Answer-$250,000
Deposits maintained in different categories of legal ownership are ___________ insured.
✔Correct Answer-**SEPARATELY
Accordingly, a depositor can have more than $250,000 of FDIC insurance coverage in a single
institution if the funds are owned in different ownership categories. The most common
ownership categories are single (or individual) ownership, joint (or joint tenancy) ownership,
retirement account (e.g., IRA) ownership, and revocable trust ownership (the $250,000 limit is
per beneficiary with this type of ownership).
TEST TIP: FDIC COVERAGE LIMITS PER ACCOUNT ✔Correct Answer-Be aware that deposits
maintained in different categories of legal ownership are separately insured. Therefore, an
individual may have more than the $250,000 FDIC insurance limit in a single institution.
EXAMPLE Sherri has the following assets, some of which are on deposit at a bank: Assets
Ownership
|Actual Complete Exam |Already Graded A+
NASDAQ DUTIES: Advertising regulation/investment companies. (define it) ✔Correct Answer-
Another FINRA task is evaluating members' advertising and communications regarding
securities to ensure that they are fair, accurate, and not misleading. These include
advertisements for mutual funds and variable annuities in newspapers, magazines, electronic
media, and other sales literature such as direct marketing materials.
ARBITRATION ✔Correct Answer-an impartial person or panel hears the issues as presented by
both parties, studies the evidence, and then decides how the issues should be resolved.
Arbitration is final and binding, subject to review by a court only on a very limited basis.
FINRA regulates... ✔Correct Answer-those involved in the sale of securities
SEC regulates... ✔Correct Answer-regulates those who offer investment advice (as well as the
actual offering and sale of securities).
Any planner or broker-dealer who wishes to sell securities must register with... ✔Correct
Answer-FINRA
Who would be required to register with both the SEC (or state depending upon the amount of
AUM) and FINRA? ✔Correct Answer-An adviser receiving commissions from both securities
sales and fees for investment advice
FINRA's registration and licensing requirements also apply to... ✔Correct Answer-registered
representatives of broker-dealers.
The registration process for REGISTERED REPRESENTATIVESS with FINRA involves several steps:
✔Correct Answer-1. Pass the Securities Industry Essentials (SIE) exam. Introduced in 2018, the
SIE exam is an introductory exam that assesses a candidate's knowledge of basic securities
industry concepts, such as types of products and their risks, securities market structures,
regulatory agencies and their functions, and prohibited practices.
2. Associate with a broker or dealer.
3. Register with FINRA through the broker or dealer and complete a background and
information check using Form U-4.
4. Pass the appropriate FINRA Series licensing exams (explained later in this section).
,5. Receive a Central Registration Depository (CRD) number and documentation for the securities
licenses held. This CRD documentation provides important background data when an individual
registers to sell securities in a state other than their state of residence.
6. As a FINRA licensee, complete annual continuing education requirements through her brokers
or dealers. This continuing education is known as the firm element; courses are related to the
profession and securities products. A FINRA licensee must also meet additional continuing
education requirements, known as the regulatory element, at regular intervals. These courses
cover ethics, compliance, and sales practices.
Firm Element ✔Correct Answer-A type of Continuing Education required for REGISTERED
REPRESENTATIVES where courses are related to the profession and securities products.
Regulatory Element Continuing Education ✔Correct Answer-Additional Continuing Education
Requirements whose course cover ETHICS, COMPLIANCE, and SALES PRACTICES.
PROFESSOR'S NOTE: FINRA REGISTRATION ✔Correct Answer-FINRA registration is
nontransferable. A registered person who leaves one member firm to join another firm must
terminate registration at the first firm on Form U-5 and reapply for registration with the new
employing member firm on Form U-4. If a person terminates the registration with one firm, the
individual must register with another firm within two years, or the individual will be required to
requalify for the license.
Licensing exams and the types of securities each license authorizes the individual to sell (SERIES)
include: ✔Correct Answer-SERIES 6: This entitles the holder to sell all open-end investment
companies (mutual funds), variable annuities, variable life insurance, and initially offered (not
secondary) unit investment trusts.
Series 7. This is the broadest license and entitles the holder to sell any security, including
individual stocks and exchange-traded funds.
Series 24. Any person actively engaged in managing a member's securities or investment
banking business (e.g., supervising, soliciting, and conducting business) or in training persons
associated with the member must qualify by examination and register with FINRA as a general
securities principal. A Series 7 or Series 62 qualification is a prerequisite for this license.
Series 63. This is the Uniform Securities Agent State Law Examination. State securities laws
require individuals to pass a qualification exam to sell securities within their states. Almost all
states require individuals to pass the Series 63 exam as a condition of state registration.
Series 65. This entitles the holder to provide investment advice to clients within the holder's
primary state of residence. Note that the CFP Board has entered into a reciprocity agreement
with many state securities departments permitting a waiver of this examination if the individual
is a CFP® certificant.
Series 66. This is the Uniform Combined State Law Examination, which combines the Series 63
license requirements with the Series 65 license requirements. An individual who holds this
license may provide investment advice (and sell securities) to any client in any state. Series 66
,candidates must pass the Series 7 exam before they can qualify to register for their Series 66
exam.
SERIES 6: ✔Correct Answer-his entitles the holder to sell all open-end investment companies
(mutual funds), variable annuities, variable life insurance, and initially offered (not secondary)
unit investment trusts.
SERIES 7: ✔Correct Answer-This is the broadest license and entitles the holder to sell any
security, including individual stocks and exchange-traded funds.
SERIES 24: ✔Correct Answer-Any person actively engaged in managing a member's securities
or investment banking business (e.g., supervising, soliciting, and conducting business) or in
training persons associated with the member must qualify by examination and register with
FINRA as a general securities principal. A Series 7 or Series 62 qualification is a prerequisite for
this license.
SERIES 63: ✔Correct Answer-This is the Uniform Securities Agent State Law Examination. State
securities laws require individuals to pass a qualification exam to sell securities within their
states. Almost all states require individuals to pass the Series 63 exam as a condition of state
registration.
SERIES 65: ✔Correct Answer-This entitles the holder to provide investment advice to clients
within the holder's primary state of residence. Note that the CFP Board has entered into a
reciprocity agreement with many state securities departments permitting a waiver of this
examination if the individual is a CFP® certificant.
SERIES 66: ✔Correct Answer-This is the Uniform Combined State Law Examination, which
combines the Series 63 license requirements with the Series 65 license requirements. An
individual who holds this license may provide investment advice (and sell securities) to any
client in any state. Series 66 candidates must pass the Series 7 exam before they can qualify to
register for their Series 66 exam.
PROFESSOR'S NOTE: LICENSES REQUIRED FOR VARIABLE PRODUCTS ✔Correct Answer-A
planner who wishes to sell variable contracts, such as variable life insurance or variable
annuities, must hold a FINRA Series 6 or Series 7 registration (and, in most states, a Series 63 or
Series 66 registration) as well as the particular state's variable insurance license.
What is a BANK and what do they do? ✔Correct Answer-It's an organization chartered by the
federal or a state government to do any of the following: Accept deposits and, depending on
the type of account, pay interest on deposits Make various types of loans Invest customer funds
in securities Honor instruments drawn on accounts Issue cashier's checks Provide safe-deposit
boxes
, National banks are subject to regulation by three independent federal agencies: ✔Correct
Answer-1. Office of the Comptroller of the Currency (OCC). This agency charters, supervises, and
regulates national banks and federal branches of foreign banks located in the United States.
2. Federal Reserve Board. This group makes monetary policy, which is discussed in Module 7 of
this course.
3. Federal Deposit Insurance Corporation (FDIC). The FDIC insures deposits in U.S. banks and
savings and loan associations against bank failures.
Office of the Comptroller of the Currency (OCC) ✔Correct Answer-This agency charters,
supervises, and regulates national banks and federal branches of foreign banks located in the
United States.
FEDERAL RESERVE BOARD ✔Correct Answer-This group makes monetary policy.
FEDERAL DEPOSIT INSURANCE CORPORATION (FDIC) ✔Correct Answer-The FDIC insures
deposits in U.S. banks and savings and loan associations against bank failures.
PROFESSOR'S NOTE: BANKS ✔Correct Answer-State-chartered banks are subject to regulation
by state banking commissions or departments. Additionally, the FDIC supervises state banks
that are not members of the Federal Reserve System.
Federal Deposit Insurance Corporation (FDIC) (EXPANDED NOTES) ✔Correct Answer-All
individuals are entitled to FDIC insurance for a deposit at a U.S. financial institution. Such
insurance protects deposits that are payable in the United States but not overseas. In addition,
only cash and cash-equivalent deposits (e.g., a certificate of deposit) are covered by FDIC
insurance; securities, mutual funds, and other types of investments are not afforded such
protection. Money market mutual funds offered by investment companies (not the same as
money market deposit accounts) are also denied FDIC coverage.
The basic FDIC-insured amount of a depositor is... ✔Correct Answer-$250,000
Deposits maintained in different categories of legal ownership are ___________ insured.
✔Correct Answer-**SEPARATELY
Accordingly, a depositor can have more than $250,000 of FDIC insurance coverage in a single
institution if the funds are owned in different ownership categories. The most common
ownership categories are single (or individual) ownership, joint (or joint tenancy) ownership,
retirement account (e.g., IRA) ownership, and revocable trust ownership (the $250,000 limit is
per beneficiary with this type of ownership).
TEST TIP: FDIC COVERAGE LIMITS PER ACCOUNT ✔Correct Answer-Be aware that deposits
maintained in different categories of legal ownership are separately insured. Therefore, an
individual may have more than the $250,000 FDIC insurance limit in a single institution.
EXAMPLE Sherri has the following assets, some of which are on deposit at a bank: Assets
Ownership
