Series 65 final exam
An options strategy that would be most useful for an investor with a long position in a stock who is
concerned that a proposed management change will negatively impact the stock's price would be to
A)
buy a put on that stock.
B)
sell a call on that stock.
C)
buy a call on that stock.
D)
sell a put on that stock. - correct answer ✔✔a
(This investor is looking to hedge his risk of loss. The best way to hedge a long position is to buy a put
option.)
One of your new clients has only been working for 3 years but is already interested in retirement
planning. In order to be fully eligible for Social Security, the client must
A)
be at least age 62.
B)
have minimum credited earnings of at least $20,000 per year.
C)
have a minimum of 40 covered quarters of employment.
D)
have at least 40 years of employment. - correct answer ✔✔c
A feature of which of the following business entities is limited liability but no flow-through of earnings or
losses?
,A)
Corporation
B)
LLC
C)
Limited partnership
D)
Sole proprietorship - correct answer ✔✔a
Interest rates are declining. An analyst would be most likely to state that the business cycle is in which
stage?
A)
Trough
B)
Contraction
C)
Peak
D)
Expansion - correct answer ✔✔B
As part of its suitability determination, an IA firm requires that all potential nonbusiness clients complete
a family balance sheet. Items that would be included are
I. gold jewelry
II. loan secured by the family automobile
III. the amount paid thus far this year for Botox injections
IV. the balance owed to the dentist for new crowns
A)
I, II, III and IV
B)
,I and IV
C)
II and III
D)
I, II and IV - correct answer ✔✔D
The capital asset pricing model (CAPM) is an investment theory that serves as a model for
A)
pricing securities based on their unsystematic risk
B)
measuring the correlation between a security and the overall market
C)
pricing securities based on their total risk
D)
pricing securities based on their systematic risk - correct answer ✔✔D
All of the following are potential benefits of high frequency trading (HFT) except
A)
greater trading opportunities for the small investor.
B)
arbitrage opportunities increase market efficiency.
C)
lower costs for institutional purchasers.
D)
increased liquidity, especially in very active stocks. - correct answer ✔✔A
Under the Investment Advisers Act of 1940, as amended by the Marketing Rule for Investment Advisers,
advertising done by investment advisers prohibits which of these?
I. The use of testimonials
, II. Reference only to specific past recommendations
III. Untrue statements
A)
III only
B)
I only
C)
II and III
D)
I and III - correct answer ✔✔C
Which of the following investments would not be considered exchange-traded derivatives?
A)
Forwards
B)
Warrants
C)
Futures
D)
Options - correct answer ✔✔A
Who safeguards the securities held in a mutual fund's portfolio?
A)
The custodian
B)
The trustee
C)
The corporation
D)
An options strategy that would be most useful for an investor with a long position in a stock who is
concerned that a proposed management change will negatively impact the stock's price would be to
A)
buy a put on that stock.
B)
sell a call on that stock.
C)
buy a call on that stock.
D)
sell a put on that stock. - correct answer ✔✔a
(This investor is looking to hedge his risk of loss. The best way to hedge a long position is to buy a put
option.)
One of your new clients has only been working for 3 years but is already interested in retirement
planning. In order to be fully eligible for Social Security, the client must
A)
be at least age 62.
B)
have minimum credited earnings of at least $20,000 per year.
C)
have a minimum of 40 covered quarters of employment.
D)
have at least 40 years of employment. - correct answer ✔✔c
A feature of which of the following business entities is limited liability but no flow-through of earnings or
losses?
,A)
Corporation
B)
LLC
C)
Limited partnership
D)
Sole proprietorship - correct answer ✔✔a
Interest rates are declining. An analyst would be most likely to state that the business cycle is in which
stage?
A)
Trough
B)
Contraction
C)
Peak
D)
Expansion - correct answer ✔✔B
As part of its suitability determination, an IA firm requires that all potential nonbusiness clients complete
a family balance sheet. Items that would be included are
I. gold jewelry
II. loan secured by the family automobile
III. the amount paid thus far this year for Botox injections
IV. the balance owed to the dentist for new crowns
A)
I, II, III and IV
B)
,I and IV
C)
II and III
D)
I, II and IV - correct answer ✔✔D
The capital asset pricing model (CAPM) is an investment theory that serves as a model for
A)
pricing securities based on their unsystematic risk
B)
measuring the correlation between a security and the overall market
C)
pricing securities based on their total risk
D)
pricing securities based on their systematic risk - correct answer ✔✔D
All of the following are potential benefits of high frequency trading (HFT) except
A)
greater trading opportunities for the small investor.
B)
arbitrage opportunities increase market efficiency.
C)
lower costs for institutional purchasers.
D)
increased liquidity, especially in very active stocks. - correct answer ✔✔A
Under the Investment Advisers Act of 1940, as amended by the Marketing Rule for Investment Advisers,
advertising done by investment advisers prohibits which of these?
I. The use of testimonials
, II. Reference only to specific past recommendations
III. Untrue statements
A)
III only
B)
I only
C)
II and III
D)
I and III - correct answer ✔✔C
Which of the following investments would not be considered exchange-traded derivatives?
A)
Forwards
B)
Warrants
C)
Futures
D)
Options - correct answer ✔✔A
Who safeguards the securities held in a mutual fund's portfolio?
A)
The custodian
B)
The trustee
C)
The corporation
D)
