Series 66 Exam 100% Correct Answers
Administrator - ANSWER office or agency that has the complete responsibility for
administering the securities laws of the state
Investment Advisor - ANSWER Any person who for compensation advises others
Person - ANSWER Anyone except 1) a minor 2) deceased person 3) mentally
incompetent person
An investment advisor must meet the 3 prong test, what are they - ANSWER 1) gives
advice to others on securities
2) does so as a part of a regular business activity
3) receives compensation for this activity
Non Securities Investments - ANSWER commodities
collectibles (coins or stamps)
precious metals such as gold
real estate
Investment Counsel (2 criteria) - ANSWER 1. An IAs principal business must be giving
investment advice (excludes financial planners)
2. Provide investment supervisory services. Ex: discretionary authority over accounts or
ongoing responsibility to select or make recommendations
Exemptions to the Uniform Securities Act - ANSWER Bank and bank holding company,
savings institution or trust company
-Credit unions not available to exemptions
,Bank Holding Company - ANSWER Invests in and manages other corporations. A bank
holding company is a holding company who's principal asset is a commercial bank. Most
large US Banks are owned by holding companies
L.A.T.E exclusion - ANSWER Any lawyer, accountant, teacher or engineer who's advice
is solely incidental to the practice of his profession is excluded
Broker Dealer - ANSWER Engaged in the business of executing securities transactions
Wrap Free Program - ANSWER A specified fee not based directly upon transactions in a
clients account. A single "wrapped" fee
Ex: investment advisory & brokerage execution. NOT financial planning and
recommendations
Special compensation - ANSWER Compensation to the broker dealer or salesperson in
excess of what they would be paid for providing a brokerage or dealer service alone
Which form of the efficient market hypothesis [EMH] suggests that fundamental analysis
and insider information may produce above-market returns? - ANSWER Weak
KapCo Balance Fund has a NAV of $9.50 and POP of $10. Over the past 12 months it has
paid dividends of $.75 and capital gains of $1.00. What is NavCo's current yield? -
ANSWER 7.5%
$.75/$10= 7.5%
NAV and Capital gains are not included
What type of bonds have the largest exposure to interest rate risk? - ANSWER longest
duration is generally going to have the largest exposure to interest rate risk. The bond
with the lowest coupon will have the longest duration.
,An Administrator may summarily suspend a registration pending final determination of
proceedings under the USA. However the Administrator may NOT enter a final order
without:
1. appropriate prior notice to the registrant
2. opportunity for a hearing
3. findings of fact and conclusions of law
4. prior written acknowledgement of the registrant - ANSWER 1, 2, 3
Which of the following statements (is)are TRUE?
1. An Administrator may suspend a pending registration on a summary basis.
2. An Administrator may not issue a stop order without prior notice and opportunity for a
hearing.
3. An Administrator is authorized to withdraw a registration for the same reasons he
suspended or withdrew a registration. - ANSWER 1 & 2
What happens to all outstanding fixed-income securities when the interest rates
decline? - ANSWER Prices increase
Which one of the following investment strategies is used to pre-determine an
appropriate allocation based on the long-term objectives and risk tolerance of the
client? - ANSWER Strategic asset allocation
Under the Uniform Securities Act, prepaid advisory fees
1. must be disclosed in the advisory contract
2. cannot be greater than 2% of customer's deposited assets
3. exceeding $500 for 6 months or more of service must include the adviser's balance
sheet with the brochure
4. can never be accepted - ANSWER 1 & 3
3 things involved in CAPM to predict a stock's return - ANSWER Expected return on the
market
risk-free rate available in market
, beta coefficient of the stock
How to calculate NAV - ANSWER net assets (assets minus liabilities) divided by the
number of outstanding shares.
An investment adviser representative of a federal covered investment adviser registers
with - ANSWER The administrator
A GRAT has been created by a wealthy individual. She dies during the period in which
the trust is effective. How are the trust assets remaining at that time taxed? - ANSWER
The initial value plus appreciation is subject to estate taxation as part of the grantor's
estate.
Andrew resigns as an agent with Gibraltar Securities. Which of the following is the best
description of how the termination must be reported? - ANSWER Both Andrew and the
firm have to notify the administrator
When a registered agent is terminated from a registered firm, both the agent and the
registered firm must immediately notify the Administrator of the termination.
Plenitude Premier Solutions (PPS) is registered in State C. If PPS wished to have
custody of client funds or securities, - ANSWER prompt notice would be required to be
filed with the State C Administrator on Form ADV.
A U.S. citizen purchases a bond from the government of Sweden. The interest received
is subject to all of the following levels of taxation?
Federal
State
Local - ANSWER All 3
Since a trust account is managed for the beneficial interest of the beneficiary, the
investment adviser representative who is handling the account may have a check drawn
Administrator - ANSWER office or agency that has the complete responsibility for
administering the securities laws of the state
Investment Advisor - ANSWER Any person who for compensation advises others
Person - ANSWER Anyone except 1) a minor 2) deceased person 3) mentally
incompetent person
An investment advisor must meet the 3 prong test, what are they - ANSWER 1) gives
advice to others on securities
2) does so as a part of a regular business activity
3) receives compensation for this activity
Non Securities Investments - ANSWER commodities
collectibles (coins or stamps)
precious metals such as gold
real estate
Investment Counsel (2 criteria) - ANSWER 1. An IAs principal business must be giving
investment advice (excludes financial planners)
2. Provide investment supervisory services. Ex: discretionary authority over accounts or
ongoing responsibility to select or make recommendations
Exemptions to the Uniform Securities Act - ANSWER Bank and bank holding company,
savings institution or trust company
-Credit unions not available to exemptions
,Bank Holding Company - ANSWER Invests in and manages other corporations. A bank
holding company is a holding company who's principal asset is a commercial bank. Most
large US Banks are owned by holding companies
L.A.T.E exclusion - ANSWER Any lawyer, accountant, teacher or engineer who's advice
is solely incidental to the practice of his profession is excluded
Broker Dealer - ANSWER Engaged in the business of executing securities transactions
Wrap Free Program - ANSWER A specified fee not based directly upon transactions in a
clients account. A single "wrapped" fee
Ex: investment advisory & brokerage execution. NOT financial planning and
recommendations
Special compensation - ANSWER Compensation to the broker dealer or salesperson in
excess of what they would be paid for providing a brokerage or dealer service alone
Which form of the efficient market hypothesis [EMH] suggests that fundamental analysis
and insider information may produce above-market returns? - ANSWER Weak
KapCo Balance Fund has a NAV of $9.50 and POP of $10. Over the past 12 months it has
paid dividends of $.75 and capital gains of $1.00. What is NavCo's current yield? -
ANSWER 7.5%
$.75/$10= 7.5%
NAV and Capital gains are not included
What type of bonds have the largest exposure to interest rate risk? - ANSWER longest
duration is generally going to have the largest exposure to interest rate risk. The bond
with the lowest coupon will have the longest duration.
,An Administrator may summarily suspend a registration pending final determination of
proceedings under the USA. However the Administrator may NOT enter a final order
without:
1. appropriate prior notice to the registrant
2. opportunity for a hearing
3. findings of fact and conclusions of law
4. prior written acknowledgement of the registrant - ANSWER 1, 2, 3
Which of the following statements (is)are TRUE?
1. An Administrator may suspend a pending registration on a summary basis.
2. An Administrator may not issue a stop order without prior notice and opportunity for a
hearing.
3. An Administrator is authorized to withdraw a registration for the same reasons he
suspended or withdrew a registration. - ANSWER 1 & 2
What happens to all outstanding fixed-income securities when the interest rates
decline? - ANSWER Prices increase
Which one of the following investment strategies is used to pre-determine an
appropriate allocation based on the long-term objectives and risk tolerance of the
client? - ANSWER Strategic asset allocation
Under the Uniform Securities Act, prepaid advisory fees
1. must be disclosed in the advisory contract
2. cannot be greater than 2% of customer's deposited assets
3. exceeding $500 for 6 months or more of service must include the adviser's balance
sheet with the brochure
4. can never be accepted - ANSWER 1 & 3
3 things involved in CAPM to predict a stock's return - ANSWER Expected return on the
market
risk-free rate available in market
, beta coefficient of the stock
How to calculate NAV - ANSWER net assets (assets minus liabilities) divided by the
number of outstanding shares.
An investment adviser representative of a federal covered investment adviser registers
with - ANSWER The administrator
A GRAT has been created by a wealthy individual. She dies during the period in which
the trust is effective. How are the trust assets remaining at that time taxed? - ANSWER
The initial value plus appreciation is subject to estate taxation as part of the grantor's
estate.
Andrew resigns as an agent with Gibraltar Securities. Which of the following is the best
description of how the termination must be reported? - ANSWER Both Andrew and the
firm have to notify the administrator
When a registered agent is terminated from a registered firm, both the agent and the
registered firm must immediately notify the Administrator of the termination.
Plenitude Premier Solutions (PPS) is registered in State C. If PPS wished to have
custody of client funds or securities, - ANSWER prompt notice would be required to be
filed with the State C Administrator on Form ADV.
A U.S. citizen purchases a bond from the government of Sweden. The interest received
is subject to all of the following levels of taxation?
Federal
State
Local - ANSWER All 3
Since a trust account is managed for the beneficial interest of the beneficiary, the
investment adviser representative who is handling the account may have a check drawn
