The Complete Series 65 Drill:
Exam-Quality Questions Across All
4 Sections with Detailed Answers
and Rationales
Section 1: Laws, Regulations, and Guidelines (Questions 1-30)
Question 1
An investment adviser is defined as a person who:
A. Gives advice on insurance products only
B. Provides advice about securities for compensation
C. Sells real estate for commissions
D. Works for a bank in a clerical role
Answer: B
Rationale: An investment adviser is defined as anyone
who provides advice about securities for compensation. Insurance products and real estate are
not securities, and bank employees in clerical roles are not acting as investment advisers .
,---
Question 2
Which of the following is NOT considered "compensation" under the Investment Advisers Act?
A. Advisory fees
B. Commissions
C. Salary
D. Personal gifts from family
Answer: D
Rationale: Personal gifts from family are not connected
to providing investment advice and are therefore not considered compensation under the Act.
Advisory fees, commissions, and salary all constitute compensation for advisory services .
---
Question 3
A person who manages client portfolios on a discretionary basis is acting as a:
A. Broker-dealer
B. Custodian
C. Investment adviser
D. Transfer agent
Answer: C
, Rationale: Discretionary portfolio management is an
advisory function. Investment advisers may be granted discretionary authority to make
investment decisions on behalf of clients without obtaining specific prior approval for each
transaction .
---
Question 4
Which of the following must register with the state rather than the SEC?
A. Advisers with more than $110 million AUM
B. Federal covered advisers
C. Advisers with less than $100 million AUM
D. Investment companies
Answer: C
Rationale: Advisers with assets under management
(AUM) under $100 million typically register at the state level. Federal covered advisers manage
$100 million or more and register with the SEC .
---
Question 5
Which of the following is exempt from the definition of investment adviser?
A. Bank
B. Broker-dealer
C. Insurance agent
, D. Financial planner
Answer: A
Rationale: Banks are specifically excluded from the
definition of investment adviser under both federal and state securities laws. Broker-dealers,
insurance agents, and financial planners may be subject to investment adviser registration
requirements depending on their activities .
---
Question 6
Form ADV is used to:
A. Advertise advisory services
B. Register as an investment adviser
C. Execute client trades
D. File tax returns
Answer: B
Rationale: Form ADV is the uniform registration
document used by investment advisers to register with state securities administrators or the
SEC. Part 1 contains business information, and Part 2 is the narrative brochure provided to
clients .
---
Question 7
Exam-Quality Questions Across All
4 Sections with Detailed Answers
and Rationales
Section 1: Laws, Regulations, and Guidelines (Questions 1-30)
Question 1
An investment adviser is defined as a person who:
A. Gives advice on insurance products only
B. Provides advice about securities for compensation
C. Sells real estate for commissions
D. Works for a bank in a clerical role
Answer: B
Rationale: An investment adviser is defined as anyone
who provides advice about securities for compensation. Insurance products and real estate are
not securities, and bank employees in clerical roles are not acting as investment advisers .
,---
Question 2
Which of the following is NOT considered "compensation" under the Investment Advisers Act?
A. Advisory fees
B. Commissions
C. Salary
D. Personal gifts from family
Answer: D
Rationale: Personal gifts from family are not connected
to providing investment advice and are therefore not considered compensation under the Act.
Advisory fees, commissions, and salary all constitute compensation for advisory services .
---
Question 3
A person who manages client portfolios on a discretionary basis is acting as a:
A. Broker-dealer
B. Custodian
C. Investment adviser
D. Transfer agent
Answer: C
, Rationale: Discretionary portfolio management is an
advisory function. Investment advisers may be granted discretionary authority to make
investment decisions on behalf of clients without obtaining specific prior approval for each
transaction .
---
Question 4
Which of the following must register with the state rather than the SEC?
A. Advisers with more than $110 million AUM
B. Federal covered advisers
C. Advisers with less than $100 million AUM
D. Investment companies
Answer: C
Rationale: Advisers with assets under management
(AUM) under $100 million typically register at the state level. Federal covered advisers manage
$100 million or more and register with the SEC .
---
Question 5
Which of the following is exempt from the definition of investment adviser?
A. Bank
B. Broker-dealer
C. Insurance agent
, D. Financial planner
Answer: A
Rationale: Banks are specifically excluded from the
definition of investment adviser under both federal and state securities laws. Broker-dealers,
insurance agents, and financial planners may be subject to investment adviser registration
requirements depending on their activities .
---
Question 6
Form ADV is used to:
A. Advertise advisory services
B. Register as an investment adviser
C. Execute client trades
D. File tax returns
Answer: B
Rationale: Form ADV is the uniform registration
document used by investment advisers to register with state securities administrators or the
SEC. Part 1 contains business information, and Part 2 is the narrative brochure provided to
clients .
---
Question 7
