AWMA Module 8 Quiz UPDATED
ACTUAL Questions and CORRECT
Answers
The provision that certain mutual fund policies cannot be changed without shareholder approval
is addressed in the
A) Investment Company Act of 1940.
B) Securities Exchange Act of 1934.
C) Investment Advisers Act of 1940.
D) Securities Act of 1933. - CORRECT ANSWER - A) Investment Company Act of 1940.
The regulation of mutual funds is covered in the Investment Company Act of 1940.
A major responsibility of FINRA is
A) developing rules and regulations for its members.
B) establishing rules for issuing new securities in primary markets.
C) insuring customer accounts in the event of the liquidation of brokerage firms.
D) registering agents of broker-dealers to do business with the public. - CORRECT
ANSWER - A) developing rules and regulations for its members.
FINRA is the largest securities industry self-regulating organization and, therefore, develops
rules and regulations for its members.
Regulatory and industry developments regarding fiduciary advice provided by investment
advisers, and the enactment of Regulation Best Interest will most likely
A)
decrease client expectations of brokers and advisers and fees will stay about the same.
B)
increase client expectations of brokers and advisers and put downward pressure on fees.
,C)
have very little impact on client expectations of brokers and advisers or on any fees being
charged.
D)
increase client expectations and will likely result in higher fees being charged. - CORRECT
ANSWER - B)
increase client expectations of brokers and advisers and put downward pressure on fees.
The bar is being raised since there is increasing public awareness of the differences between
fiduciary and nonfiduciary advice. The enactment of Regulation Best Interest has raised the bar
and increased expectations of broker-dealers. The SEC has also released guidance on the
fiduciary duties that advisers owe to their clients. These developments will increase client
expectations of brokers and advisers and put downward pressure on fees and the sale of certain
products, especially complex high fee products that are now being discouraged.
Which act repealed a prohibition that had been in place preventing financial institutions from
offering a combination of commercial banking, investment banking, and insurance services?
A)
Gramm-Leach-Bliley Act of 1999
B)
USA Patriot Act of 2001
C)
Commodity Futures Modernization Act of 2000
D)
Securities Acts Amendments of 1975 - CORRECT ANSWER - A)
Gramm-Leach-Bliley Act of 1999
The Gramm-Leach-Bliley Act of 1999, also known as the Financial Services Modernization Act,
repealed the part of Glass Steagall that had previously prohibited financial institutions from
consolidating and offering a combination of commercial banking, investment banking, and
insurance services.
, The Employee Retirement Income Security Act (ERISA) was primarily passed because of
concern regarding the integrity and safety of
A)
employer-sponsored retirement plans.
B)
employee wages and benefits.
C)
employee working conditions.
D)
employer-sponsored insurance benefits. - CORRECT ANSWER - A)
employer-sponsored retirement plans.
ERISA was the direct result of concern over the safety and integrity of workers' company
retirement plans.
An investment professional who reads investment journals is complying with the
A)
duty to keep current.
B)
duty to disclose.
C)
duty to diagnose.
D)
duty to consult. - CORRECT ANSWER - A) duty to keep current
Explanation
The duty to keep current requires an investment professional to be up to date with subjects
relating to his or her job.
ACTUAL Questions and CORRECT
Answers
The provision that certain mutual fund policies cannot be changed without shareholder approval
is addressed in the
A) Investment Company Act of 1940.
B) Securities Exchange Act of 1934.
C) Investment Advisers Act of 1940.
D) Securities Act of 1933. - CORRECT ANSWER - A) Investment Company Act of 1940.
The regulation of mutual funds is covered in the Investment Company Act of 1940.
A major responsibility of FINRA is
A) developing rules and regulations for its members.
B) establishing rules for issuing new securities in primary markets.
C) insuring customer accounts in the event of the liquidation of brokerage firms.
D) registering agents of broker-dealers to do business with the public. - CORRECT
ANSWER - A) developing rules and regulations for its members.
FINRA is the largest securities industry self-regulating organization and, therefore, develops
rules and regulations for its members.
Regulatory and industry developments regarding fiduciary advice provided by investment
advisers, and the enactment of Regulation Best Interest will most likely
A)
decrease client expectations of brokers and advisers and fees will stay about the same.
B)
increase client expectations of brokers and advisers and put downward pressure on fees.
,C)
have very little impact on client expectations of brokers and advisers or on any fees being
charged.
D)
increase client expectations and will likely result in higher fees being charged. - CORRECT
ANSWER - B)
increase client expectations of brokers and advisers and put downward pressure on fees.
The bar is being raised since there is increasing public awareness of the differences between
fiduciary and nonfiduciary advice. The enactment of Regulation Best Interest has raised the bar
and increased expectations of broker-dealers. The SEC has also released guidance on the
fiduciary duties that advisers owe to their clients. These developments will increase client
expectations of brokers and advisers and put downward pressure on fees and the sale of certain
products, especially complex high fee products that are now being discouraged.
Which act repealed a prohibition that had been in place preventing financial institutions from
offering a combination of commercial banking, investment banking, and insurance services?
A)
Gramm-Leach-Bliley Act of 1999
B)
USA Patriot Act of 2001
C)
Commodity Futures Modernization Act of 2000
D)
Securities Acts Amendments of 1975 - CORRECT ANSWER - A)
Gramm-Leach-Bliley Act of 1999
The Gramm-Leach-Bliley Act of 1999, also known as the Financial Services Modernization Act,
repealed the part of Glass Steagall that had previously prohibited financial institutions from
consolidating and offering a combination of commercial banking, investment banking, and
insurance services.
, The Employee Retirement Income Security Act (ERISA) was primarily passed because of
concern regarding the integrity and safety of
A)
employer-sponsored retirement plans.
B)
employee wages and benefits.
C)
employee working conditions.
D)
employer-sponsored insurance benefits. - CORRECT ANSWER - A)
employer-sponsored retirement plans.
ERISA was the direct result of concern over the safety and integrity of workers' company
retirement plans.
An investment professional who reads investment journals is complying with the
A)
duty to keep current.
B)
duty to disclose.
C)
duty to diagnose.
D)
duty to consult. - CORRECT ANSWER - A) duty to keep current
Explanation
The duty to keep current requires an investment professional to be up to date with subjects
relating to his or her job.
