IACCP Final Exam Questions With Answers | Latest Update (GRADED)

Which THREE persons or firms may be excluded from having to register under the Investment Advisers Act of 1940? (Choose three.) A. Accountants whose advisory services pertain solely to incidental financial planning. B. Persons or firms whose advice and reports are related solely to U.S. government securities. C. Publishers of generally circulated, bona fide newspapers or financial journals. D. Domestic banks and bank holding companies. - Answer B. Persons or firms whose advice and reports are related solely to U.S. government securities. C. Publishers of generally circulated, bona fide newspapers or financial journals. D. Domestic banks and bank holding companies. Which activity is NOT mandated for investment advisers that store required records electronically? A. Providing the SEC with prompt access, retrieval, and reproduction. B. Maintaining copies of all electronically stored records using WORM format. C. Arranging and indexing records to provide easy access and retrieval. D. Developing procedures to preserve and maintain records. - Answer B. Maintaining copies of all electronically stored records using WORM format. The Investment Advisers Act of 1940 defines the scope of the anti-fraud provisions as extending to: A. SEC-registered advisers and foreign advisers with a place of business in the U.S., whether registered or exempt. B. SEC-registered advisers and foreign advisers doing business in the U.S., whether registered or exempt. C. SEC-registered investment advisers. D. All investment advisers, whether registered or exempt. - Answer D. All investment advisers, whether registered or exempt. The fiduciary duty imposed on advisers under the Investment Advisers Act of 1940 can BEST be described as: A. providing equal disclosure to all clients. B. imposing an ERISA fiduciary standard. C. putting the client's interests ahead of the adviser's. D. acting in a custodial capacity. - Answer C. putting the client's interests ahead of the adviser's. Which TWO qualify as a "security" under the Investment Advisers Act of 1940? (Choose two.) A. Commodity futures B. Limited partnership interests C. Fixed annuities D. Variable annuities - Answer B. Limited partnership interests D. Variable annuities In performing due diligence on a potential solicitor, the investment adviser must ensure that the solicitor: A. is not subject to any statutory disqualification. B. is not acting as a solicitor for an unregistered adviser. C. has passed the Series 65 exam. D. is registered in appropriate states. - Answer A. is not subject to any statutory disqualification. An SEC-registered investment adviser is NOT required to disclose "material" disciplinary information in its Form ADV Part 1 after: A. 5 years B. 10 years C. 12 years D. 15 years - Answer B. 10 years Which event would be deemed an assignment of an investment advisory contract? A. An adviser hires a new CEO to replace its current retiring CEO. B. An adviser is purchased by an unaffiliated adviser. C. Any public offering of an adviser's stock. D. An adviser organized as a corporation changes its structure to a partnership. - Answer B. An adviser is purchased by an unaffiliated adviser The Investment Advisers Act of 1940 requires that written investment advisory agreements must address: A. proxy voting. B. assignment of the contract. C. brokerage arrangements. D. fees. - Answer B. assignment of the contract. If an investment adviser becomes ineligible for SEC registration, which document must be filed to terminate its registration? A. Form DRP B. Form ADV-W C. Form ADV Part 2A D. Form U5 - Answer B. Form ADV-W During an examination of XYZ Investment Advisers, the SEC discovers that two of Adviser's portfolio managers have been engaged in frontrunning client accounts. Neither Compliance nor Senior Management had any knowledge of the scheme. If Adviser can show to the SEC's satisfaction that it had developed and enforced procedures reasonably designed to prevent frontrunning, Adviser will be able to claim that, despite the violation, Adviser has met its duty to: A. assist the SEC. B. maintain required books and records. C. eliminate internal control deficiencies. D. supervise. - Answer D. supervise. SEC-registered advisers that have proxy voting authority for clients must do which TWO of the following? (Choose two.) A. Adopt procedures to ensure proxies are voted in the best interest of clients. B. Disclose to clients information about the firm's proxy policies and procedures on Form ADV Part 2. C. Create a proxy voting committee to address conflict situations. D. Provide information to clients on how their proxies were voted. - Answer A. Adopt procedures to ensure proxies are voted in the best interest of clients. D. Provide information to clients on how their proxies were voted. In which THREE circumstances is an adviser deemed to have custody under the SEC Custody Rule? (Choose three.) A. The investment adviser is mistakenly sent a check payable to the client and returns it to the sender within five business days of receipt. B. The investment adviser deducts advisory fees from the client's account with the client's prior written consent. C. The investment adviser takes possession of a check drawn by the client that is payable to a third party. D. The investment adviser acts as one of three or more trustees in regards to an advisory client's account. - Answer A. The investment adviser is mistakenly sent a check payable to the client and returns it to the sender within five business days of receipt. B. The investment adviser deducts advisory fees from the client's account with the client's prior written consent. D. The investment adviser acts as one of three or more trustees in regards to an advisory client's account. An investment advisory firm is closing its business. What should the firm do with its corporate and organizational documents after termination of the firm entity? A. Retain the documents in an easily accessible place of which the SEC has been notified for five years. B. Retain the documents in an easily accessible place of which the SEC has been notified for three years. C. Dispose of the documents in a prudent manner, ensuring the personal identifying information is destroyed. D. Retain the documents for five years, two of which must be in an easily accessible place. - Answer B. Retain the documents in an easily accessible place of which the SEC has been notified for three years. Under the SEC Custody Rule, an adviser is NOT subject to a surprise annual examination by a qualified accounting firm if the: A. adviser directly debits advisory fees from clients' custodial accounts. B. adviser is granted general power of attorney by advisory clients. C. adviser or certain of adviser's employees serve as trustees to advisory clients. D. adviser provides bill-pay services to advisory clients. - Answer A. adviser directly debits advisory fees from clients' custodial accounts. Which situation would trigger a violation of the SEC Pay-to-Play Rule? A. An individual who has become a covered associate within the last three months makes a $1,000 contribution to an elected official, whom the individual is also soliciting as an advisory client. B. An investment adviser makes a contribution of $50.00 to a government elected official responsible for selecting investment advisers. C. An investment adviser directs its counsel to make a contribution of $50.00 to a government elected official responsible for selecting investment advisers. D. An investment advisory firm pays another registered investment adviser to solicit government clients on its behalf. - Answer A. An individual who has become a covered associate within the last three months makes a $1,000 contribution to an elected official, whom the individual is also soliciting as an advisory client. Each person is defined as an "access person" under the SEC Investment Adviser Codes of Ethics Rule EXCEPT