Series 65 Practice Exam
Upon reaching he age of 72, required minimum distributions (RMDs) do NOT have to be taken by retired
individuals who are participants of - correct answer ✔✔ROTH IRAs
Individuals who pass the Series 65 Exam will be able to tell prospects that - correct answer ✔✔they
passed a 130-question examination in order to qualify as investment adviser representatives
Fiscal policy, as implemented by Congress and the administration entails - correct answer ✔✔changing
tax rates, running a budget deficit, increasing military spending
Most states have replaced the Uniform Gift to Minors Act (UGMA) with the Uniform Transfers to Minors
Act (UTMA). One of the major advantages of UTMA is - correct answer ✔✔greater flexibility in the
choice of investments
A client with a bearish outlook on a particular stock would be able to benefit from taking which of the
following actions? - correct answer ✔✔Selling the stock short
In order to make a quantitative evaluation using the present value computation, which of the following is
NOT needed? - correct answer ✔✔account value at the beginning of the period
An investor has many tax preference items. Computing the investor's income tax using the regular
method results in a tax burden of $29,900 while computing the alternative minimum tax (AMT) results in
a tax liability of $27,500. Based on this information, the investor's income tax liability for the year is -
correct answer ✔✔$29,900
One of the purposes of filing the annual updating amendment to the Form ADV Part 1A is to - correct
answer ✔✔verify that the investment adviser still qualifies for SEC registration
Which of the following items do NOT fall within Section 28(e) safe harbor? - correct answer ✔✔software
used to simplify the investment adviser's preparation of its tax returns
,Which of the following forms of joint ownership is most associated with ownership of real estate? -
correct answer ✔✔Tenancy by the entirety
An investor would be entitled to a breakpoint on quantity purchases made together with all of the
following accounts except - correct answer ✔✔his brother with whom he regularly shares investment
ideas
An advisory client is interested in learning more about municipal bonds. Which of the following
statements are correct?
I. General obligation bonds are usually, but not always, safer than revenue bonds
II. Interest received on municipal bonds is generally free of both federal and state income taxes
III. Municipal bonds are usually suitable for investors in higher tax brackets
IV. The coupon yield on AAA rated municipal bonds will generally be slightly higher than that of AAA
corporate binds with comparable maturity - correct answer ✔✔I and III
One of your clients has a marginal tax rate of 32%. The 35% tax bracket beings in another $30,000 of
income. Should the client receive a bonus of $50,000, the federal income tax due on that would be -
correct answer ✔✔$16,500
Which of the following risks would most likely be minimized through portfolio diversification? - correct
answer ✔✔credit risk
If a portfolio manager wished to reduce inflation risk, which of the following would be most appropriate
to add to the portfolio? - correct answer ✔✔tangible assets
It would be considered an unethical business practice for a state-registered investment adviser to -
correct answer ✔✔claim that advisory fees are negotiable but maintain a fixed fee schedule
, The Uniform Securities Act provides civil penalties in the event of illegal activities of broker dealers and
their agents. Under the act, a purchaser would not be entitled to claim - correct answer ✔✔the original
consideration paid for the security or the current market value, whichever is greater
One form of commodity investing is the purchase of precious metals. An investor in precious metals
would be least likely to purchase - correct answer ✔✔molybdenum
only precious metals are gold, silver, platinum, and palladium
As specified in the Dodd-Frank Act of 2010, which of the following would NOT qualify for the private
fund exemption? - correct answer ✔✔An investment adviser who limits her advisory clients to insurance
companies
In the over-the-counter market, the person who performs the dealer function that a DMM is responsible
for on an exchange is - correct answer ✔✔the market maker
Under the Uniform Securities Act, all of the following persons with no place of business in the state are
exempt from registration as an investment adviser except - correct answer ✔✔advisers who have
conducted business with no more than sex clients, other than institutions, in the state within the past 12
months
A technical analyst who has been charting the common stock of KISS would most likely sell KISS stock
short when the market price of the stock is - correct answer ✔✔below the support level
When an investor who is reviewing a brokerage account asks what else she could have done with her
money, the investor is asking about which risk? - correct answer ✔✔Opportunity risk
A 46-year old investor wants to have retirement savings worth $1 million at age 70. If the investor can
earn 9%, using the rule of 72, the present value needed today is closest to - correct answer ✔✔$125,000
While reviewing the financial statements of the ABC Corporation, you notice that the company has $5
million in cash on hand and $6 million in inventory. If the current assets total $15 million, the total assets
are $22 million, and the current liabilities are $6 million, the quick asset ratio is - correct answer
✔✔1.5:1
Upon reaching he age of 72, required minimum distributions (RMDs) do NOT have to be taken by retired
individuals who are participants of - correct answer ✔✔ROTH IRAs
Individuals who pass the Series 65 Exam will be able to tell prospects that - correct answer ✔✔they
passed a 130-question examination in order to qualify as investment adviser representatives
Fiscal policy, as implemented by Congress and the administration entails - correct answer ✔✔changing
tax rates, running a budget deficit, increasing military spending
Most states have replaced the Uniform Gift to Minors Act (UGMA) with the Uniform Transfers to Minors
Act (UTMA). One of the major advantages of UTMA is - correct answer ✔✔greater flexibility in the
choice of investments
A client with a bearish outlook on a particular stock would be able to benefit from taking which of the
following actions? - correct answer ✔✔Selling the stock short
In order to make a quantitative evaluation using the present value computation, which of the following is
NOT needed? - correct answer ✔✔account value at the beginning of the period
An investor has many tax preference items. Computing the investor's income tax using the regular
method results in a tax burden of $29,900 while computing the alternative minimum tax (AMT) results in
a tax liability of $27,500. Based on this information, the investor's income tax liability for the year is -
correct answer ✔✔$29,900
One of the purposes of filing the annual updating amendment to the Form ADV Part 1A is to - correct
answer ✔✔verify that the investment adviser still qualifies for SEC registration
Which of the following items do NOT fall within Section 28(e) safe harbor? - correct answer ✔✔software
used to simplify the investment adviser's preparation of its tax returns
,Which of the following forms of joint ownership is most associated with ownership of real estate? -
correct answer ✔✔Tenancy by the entirety
An investor would be entitled to a breakpoint on quantity purchases made together with all of the
following accounts except - correct answer ✔✔his brother with whom he regularly shares investment
ideas
An advisory client is interested in learning more about municipal bonds. Which of the following
statements are correct?
I. General obligation bonds are usually, but not always, safer than revenue bonds
II. Interest received on municipal bonds is generally free of both federal and state income taxes
III. Municipal bonds are usually suitable for investors in higher tax brackets
IV. The coupon yield on AAA rated municipal bonds will generally be slightly higher than that of AAA
corporate binds with comparable maturity - correct answer ✔✔I and III
One of your clients has a marginal tax rate of 32%. The 35% tax bracket beings in another $30,000 of
income. Should the client receive a bonus of $50,000, the federal income tax due on that would be -
correct answer ✔✔$16,500
Which of the following risks would most likely be minimized through portfolio diversification? - correct
answer ✔✔credit risk
If a portfolio manager wished to reduce inflation risk, which of the following would be most appropriate
to add to the portfolio? - correct answer ✔✔tangible assets
It would be considered an unethical business practice for a state-registered investment adviser to -
correct answer ✔✔claim that advisory fees are negotiable but maintain a fixed fee schedule
, The Uniform Securities Act provides civil penalties in the event of illegal activities of broker dealers and
their agents. Under the act, a purchaser would not be entitled to claim - correct answer ✔✔the original
consideration paid for the security or the current market value, whichever is greater
One form of commodity investing is the purchase of precious metals. An investor in precious metals
would be least likely to purchase - correct answer ✔✔molybdenum
only precious metals are gold, silver, platinum, and palladium
As specified in the Dodd-Frank Act of 2010, which of the following would NOT qualify for the private
fund exemption? - correct answer ✔✔An investment adviser who limits her advisory clients to insurance
companies
In the over-the-counter market, the person who performs the dealer function that a DMM is responsible
for on an exchange is - correct answer ✔✔the market maker
Under the Uniform Securities Act, all of the following persons with no place of business in the state are
exempt from registration as an investment adviser except - correct answer ✔✔advisers who have
conducted business with no more than sex clients, other than institutions, in the state within the past 12
months
A technical analyst who has been charting the common stock of KISS would most likely sell KISS stock
short when the market price of the stock is - correct answer ✔✔below the support level
When an investor who is reviewing a brokerage account asks what else she could have done with her
money, the investor is asking about which risk? - correct answer ✔✔Opportunity risk
A 46-year old investor wants to have retirement savings worth $1 million at age 70. If the investor can
earn 9%, using the rule of 72, the present value needed today is closest to - correct answer ✔✔$125,000
While reviewing the financial statements of the ABC Corporation, you notice that the company has $5
million in cash on hand and $6 million in inventory. If the current assets total $15 million, the total assets
are $22 million, and the current liabilities are $6 million, the quick asset ratio is - correct answer
✔✔1.5:1
