Series 66 Exam Questions And Accurate
Answers Latest Update
Perhaps the biggest feature of the UPIA is the ability of a trustee to delegate investment
decisions to a qualified third party. Delegation is allowed as long as the fiduciary to
whom the powers are delegated- ANSWER acts with skill and caution.
The UPIA specifically uses the terms, skill and caution, when describing the actions of
the fiduciary. Other aspects of the UPIA address the fact that, instead of looking at
individual securities, the total impact on the entire portfolio is taken into account.
To determine an investor's after-tax return on a corporate bond, all of the following are
needed to be known EXCEPT - ANSWER inflation rate
The after-tax return is calculated by adding the appreciation and income for the total
return and then taking into account the investor's tax rate. The computation of the
inflation-adjusted or real rate of return requires the inflation rate.
Schedule K-1 would be received by an individual with ownership interest in all of the
following except - ANSWER a C corporation.
C corporations pay tax on their earnings; the other business types here flow the income
through to their owners. The owner's share of the income, or loss, is reported to them on
the Schedule K-1. A shareholder in a C corporation that receives dividends will have
that reported on a Form 1099.
As interest rates rise, the opportunity cost of holding cash - ANSWER increases
The opportunity cost of holding cash rises at higher interest rates, and at a higher
interest rate, firms and households will want to hold less cash and more of the
interest-bearing financial assets.
A margin account could be opened for which of the following? - ANSWER Partnership
There is no legal reason why a partnership, or other business structure, cannot open a
margin account. A margin account could never be opened for retirement accounts, for
, Coverdell ESAs, and for UTMA/UGMA accounts.
Which of the following is not a market cap weighted index? - ANSWER Dow Jones
Industrial Average
The Dow Jones Industrial Average is a price weighted index. All the other options
above are market cap weighted indexes.
Which of the following employer-sponsored plans is NOT covered by ERISA? - ANSWER
Deferred compensation
Deferred compensation plans are not covered by ERISA; that is what gives them greater
flexibility than a covered plan.
An order ticket is the document used to place an order to buy a security for the account
of a customer. Which of the following would be found on an order ticket? - ANSWER
Account number, execution price, time of order entry, time of execution or cancellation,
and terms and conditions of the order
Customer name and/or address would never be on an order ticket and that knocks out
three of the choices.
The exchange privilege offered by open-end investment companies allows investors to -
ANSWER exchange shares of one open-end fund for another in the same fund family at a
net asset value basis
The privilege of exchange enables an investor to exchange the value of shares held in
one fund for those of an equal value in the same family.
Most investors have become increasingly interested in other investments in pursuit of
better returns: alternative investments. Alternative investments include structured
products. SSPs that are not exchange traded usually have - ANSWER some kind of
embedded derivatives
SSPs usually include derivatives such as options. There is no insurance, and with the
possible exception of listed products, including an ETN, there would be low or no
liquidity. These products are highly complicated in nature and therefore could not be
suitable for the average conservative investor.
Answers Latest Update
Perhaps the biggest feature of the UPIA is the ability of a trustee to delegate investment
decisions to a qualified third party. Delegation is allowed as long as the fiduciary to
whom the powers are delegated- ANSWER acts with skill and caution.
The UPIA specifically uses the terms, skill and caution, when describing the actions of
the fiduciary. Other aspects of the UPIA address the fact that, instead of looking at
individual securities, the total impact on the entire portfolio is taken into account.
To determine an investor's after-tax return on a corporate bond, all of the following are
needed to be known EXCEPT - ANSWER inflation rate
The after-tax return is calculated by adding the appreciation and income for the total
return and then taking into account the investor's tax rate. The computation of the
inflation-adjusted or real rate of return requires the inflation rate.
Schedule K-1 would be received by an individual with ownership interest in all of the
following except - ANSWER a C corporation.
C corporations pay tax on their earnings; the other business types here flow the income
through to their owners. The owner's share of the income, or loss, is reported to them on
the Schedule K-1. A shareholder in a C corporation that receives dividends will have
that reported on a Form 1099.
As interest rates rise, the opportunity cost of holding cash - ANSWER increases
The opportunity cost of holding cash rises at higher interest rates, and at a higher
interest rate, firms and households will want to hold less cash and more of the
interest-bearing financial assets.
A margin account could be opened for which of the following? - ANSWER Partnership
There is no legal reason why a partnership, or other business structure, cannot open a
margin account. A margin account could never be opened for retirement accounts, for
, Coverdell ESAs, and for UTMA/UGMA accounts.
Which of the following is not a market cap weighted index? - ANSWER Dow Jones
Industrial Average
The Dow Jones Industrial Average is a price weighted index. All the other options
above are market cap weighted indexes.
Which of the following employer-sponsored plans is NOT covered by ERISA? - ANSWER
Deferred compensation
Deferred compensation plans are not covered by ERISA; that is what gives them greater
flexibility than a covered plan.
An order ticket is the document used to place an order to buy a security for the account
of a customer. Which of the following would be found on an order ticket? - ANSWER
Account number, execution price, time of order entry, time of execution or cancellation,
and terms and conditions of the order
Customer name and/or address would never be on an order ticket and that knocks out
three of the choices.
The exchange privilege offered by open-end investment companies allows investors to -
ANSWER exchange shares of one open-end fund for another in the same fund family at a
net asset value basis
The privilege of exchange enables an investor to exchange the value of shares held in
one fund for those of an equal value in the same family.
Most investors have become increasingly interested in other investments in pursuit of
better returns: alternative investments. Alternative investments include structured
products. SSPs that are not exchange traded usually have - ANSWER some kind of
embedded derivatives
SSPs usually include derivatives such as options. There is no insurance, and with the
possible exception of listed products, including an ETN, there would be low or no
liquidity. These products are highly complicated in nature and therefore could not be
suitable for the average conservative investor.
