Series 66 Exam Questions And 100% Correct
Answers Latest Update
Which of the following would NOT be an unethical business practice of a broker -dealer?
- ANSWER Effecting a transaction in a security for a customer for the purpose of acting
as agent for both buyer and seller.
Jerry is a successful divorce attorney in your community. He tells you that due to a favor
you have done for him relating to one of his cases, he would like to send brokerage
business to your firm. However, he wants you to send him duplicate confirmations and
statements on all clients he sends to you. What would you do? - ANSWER You may not
send duplicate statements unless you obtain written consent from each client
What do theta and gamma measure? - ANSWER The volatility of the intrinsic value and
time value of an option's premium.
If a portfolio manger is focused on keeping a clients assigned asset allocation properly
balanced over a long period of time, she is using a: - ANSWER Strategic asset allocation
strategy
If an agent recommends a leveraged ETF to a client, it should be made clear that: -
ANSWER It will not reflect appropriate tracking of the underlying index over extended
periods because of the portfolio's daily rebalancing
Because the underlying portfolio of an ETF gets reset at the end of each day, the price
moves reflect only a percentage value for one single day. This means that a leveraged
ETF does not track the performance of the underlying index over longer periods very
well. Remember, buying a leveraged ETF on margin increases leveraging; it doesn't
decrease it. Because of this daily resetting feature, leveraged ETFs are not considered
suitable long-term investments.
Under the Securities Exchange Act of 1934, which of the following is NOT required to
appear on the confirmation for a bond trade? ANSWER Disclosure of the bond's rating
, Although a bond's rating does not have to be shown on a confirmation, if a bond is
unrated, that fact does have to be disclosed. A bond's price and its yield-to-maturity at
the time of trade does have to be disclosed on a confirmation.
From modern portfolio theory (MPT), the expected return of an investment is the: -
ANSWER Possible returns on the investment weighted by the likelihood that return will
occur
A portfolio has an alpha of 0%, a beta of 1.0, and an actual return of 12%. What would the
alpha of the portfolio be if the beta was 0.9 and the actual return was 10.6%? - ANSWER
-0.20%
12% x.9 = 10.8 % expected return. 10.8% - 10.6% =. 20 %
semi-strong form efficiency - ANSWER All public information, including historical data,
is reflected in securities prices
Net Present Value (NPV)-ANSWER the sum of the present values of expected future
cash flows from an investment, minus the cost of that investment
Negative = bad
Positive = good
0=expected return
If a portfolio manager has a diversified portfolio of large-cap stocks, it would use index
options to reduce which of the following risks?-ANSWER systematic risk
Which of the following statements is TRUE about the annual renewal of an investment
advisor? - ANSWER Form ADV is filed with the SEC within 90 days of a federal covered
advisers fiscal year end, or within 90 days of the calendar year end.
Dollar Weighted Return/ money weighted return - ANSWER the internal rate of return on
an investment
A broker-dealer is registered in state A and is wholly owned by a publicly traded bank
Answers Latest Update
Which of the following would NOT be an unethical business practice of a broker -dealer?
- ANSWER Effecting a transaction in a security for a customer for the purpose of acting
as agent for both buyer and seller.
Jerry is a successful divorce attorney in your community. He tells you that due to a favor
you have done for him relating to one of his cases, he would like to send brokerage
business to your firm. However, he wants you to send him duplicate confirmations and
statements on all clients he sends to you. What would you do? - ANSWER You may not
send duplicate statements unless you obtain written consent from each client
What do theta and gamma measure? - ANSWER The volatility of the intrinsic value and
time value of an option's premium.
If a portfolio manger is focused on keeping a clients assigned asset allocation properly
balanced over a long period of time, she is using a: - ANSWER Strategic asset allocation
strategy
If an agent recommends a leveraged ETF to a client, it should be made clear that: -
ANSWER It will not reflect appropriate tracking of the underlying index over extended
periods because of the portfolio's daily rebalancing
Because the underlying portfolio of an ETF gets reset at the end of each day, the price
moves reflect only a percentage value for one single day. This means that a leveraged
ETF does not track the performance of the underlying index over longer periods very
well. Remember, buying a leveraged ETF on margin increases leveraging; it doesn't
decrease it. Because of this daily resetting feature, leveraged ETFs are not considered
suitable long-term investments.
Under the Securities Exchange Act of 1934, which of the following is NOT required to
appear on the confirmation for a bond trade? ANSWER Disclosure of the bond's rating
, Although a bond's rating does not have to be shown on a confirmation, if a bond is
unrated, that fact does have to be disclosed. A bond's price and its yield-to-maturity at
the time of trade does have to be disclosed on a confirmation.
From modern portfolio theory (MPT), the expected return of an investment is the: -
ANSWER Possible returns on the investment weighted by the likelihood that return will
occur
A portfolio has an alpha of 0%, a beta of 1.0, and an actual return of 12%. What would the
alpha of the portfolio be if the beta was 0.9 and the actual return was 10.6%? - ANSWER
-0.20%
12% x.9 = 10.8 % expected return. 10.8% - 10.6% =. 20 %
semi-strong form efficiency - ANSWER All public information, including historical data,
is reflected in securities prices
Net Present Value (NPV)-ANSWER the sum of the present values of expected future
cash flows from an investment, minus the cost of that investment
Negative = bad
Positive = good
0=expected return
If a portfolio manager has a diversified portfolio of large-cap stocks, it would use index
options to reduce which of the following risks?-ANSWER systematic risk
Which of the following statements is TRUE about the annual renewal of an investment
advisor? - ANSWER Form ADV is filed with the SEC within 90 days of a federal covered
advisers fiscal year end, or within 90 days of the calendar year end.
Dollar Weighted Return/ money weighted return - ANSWER the internal rate of return on
an investment
A broker-dealer is registered in state A and is wholly owned by a publicly traded bank
