IACCP (MASTER TERMS) EXAM | QUESTIONS & 100% CORRECT
ANSWERS (VERIFIED) | LATEST UPDATE 2025 | GRADE A+
QUESTION : What does it mean when someone has "Control"? - Correct Answer: Power to
exercise a controlling influence over the management or policies of a company
QUESTION : Investment supervisory services - Correct Answer: Giving of continuous advice
as to the investment of funds on the basis of the individual needs of each client
QUESTION : National securities exchange - Correct Answer: an exchange registered under
section 6 of the Securities Exchange Act of 1934
QUESTION : Person - Correct Answer: Natural person or company
QUESTION : Not Securities - Correct Answer: Commodity Futures, Fixed Annuities
QUESTION : Securities Act of 1933 Securities Exchange Act of 1934 Trust Indenture Act of
1939 - Correct Answer: Acts respectively, heretofore or hereafter amended
QUESTION : What is a Business Development Company? - Correct Answer: A company must
be registered in compliance with Section 54 of the Investment Company Act of 1940 to
qualify as a BDC. A major difference between a BDC and a venture capital fund is that BDCs
allow smaller, non-accredited investors to invest in startup companies.
A BDC is a type of closed-end fund that makes investments in developing companies and
firms that are financially distressed.
1|Page
,QUESTION : What is an underwriter? - Correct Answer: Works closely with the issuing body
to determine the offering price of the securities, buys them from the issuer, and sells them
to investors via the underwriter's distribution network. Underwriters generally receive
underwriting fees from their issuing clients, but they also can earn profits when selling the
underwritten shares to investors.
QUESTION : What is a Foreign Private Advisor? - Correct Answer: No US, fewer than 15
clients in US in private funds, aggregate assets under management US clients in private
funds of less than $25 million. Does not hold self out in the US public as an Investment
Adviser; nor acts as An Investment Adviser to any investment company registered under the
Investment Company Act of 1940
QUESTION : What is a Commodity Pool Operator (CPO)? - Correct Answer: A CPO is an
individual or organization which operates a commodity pool and solicits funds for that
commodity pool.
QUESTION : What is a Commodity Pool? - Correct Answer: An enterprise in which funds
contributed by a number of persons are combined for the purpose of trading futures
contracts, options on futures, retail off-exchange forex contracts or swaps, or to invest in
another commodity pool.
QUESTION : What is a Commodity Trading Advisor (CTA) - Correct Answer: A US financial
regulatory term for an individual or organization who is retained by a fund or individual
client to provide advice and services related to trading in futures contracts, commodity
options and/or swaps. They are responsible for the trading within managed futures
accounts.
2|Page
,QUESTION : What is a Swap - Correct Answer: A derivative contract through which two
parties exchange financial instruments. These instruments can be almost anything, but most
swaps involve cash flows based on a notional principal amount that both parties agree to.
Usually, the principal does not change hands. Each cash flow comprises one leg of the swap.
One cash flow is generally fixed, while the other is variable, that is, based on a a benchmark
interest rate, floating currency exchange rate or index price.
The most common kind of swap is an interest rate swap. Swaps do not trade on exchanges,
and retail investors do not generally engage in swaps. Rather, swaps are over-the-counter
contracts between businesses or financial institutions.
QUESTION : What is a Swap Dealer? - Correct Answer: An individual who acts as the
counterparty in a swap agreement for a fee called a spread. Swap dealers are the market
makers for the swap market. The spread represents the difference between the wholesale
price for trades and the retail price. Because swap arrangements aren't actively traded,
swap dealers allow brokers to standardize swap contracts to some extent.
QUESTION : What is Swap Execution Facility? - Correct Answer: A platform for financial
swap trading that provides pre-trade information (i.e. bid and offer prices) and a mechanism
for executing swap transactions among eligible participants.
QUESTION : Penalties - Correct Answer: 1st Tier - Max Penalty for each act $5,000/natural
person or $50,000 for any other person
2nd Tier $50,000 for each act or omission natural person or $250,000 for any other person
(Fraud, deceit, manipulation or deliberate or reckless disregard)
3rd Tier $100,000 each act natural person or $500,000 for any other person (Fraud, deceit,
manipulation or deliberate or reckless disregard, and if substantial losses or created a
significant risk of substantial losses to other persons)
3|Page
, QUESTION : Violations could result in - Correct Answer: Accounting and disgorgement
Cease and Desist Proceedings
Hearing
Temporary Order
QUESTION : Investment Advisor - Correct Answer: An investment advisor is defined by the
Investment Advisors Act of 1940, as any person or group that makes investment
recommendations or conducts securities analysis in return for a fee, whether through direct
management of client assets or via written publications.
QUESTION : Who are Advisory Affiliates? - Correct Answer: (1) all of your officers, partners,
or directors (or any person performing similar functions);
(2) all persons directly or indirectly controlling or controlled by you; and
(3) all of your current employees (other than employees performing only clerical,
administrative, ...
QUESTION : What AUM requires SEC Registration? - Correct Answer: Over $100 Million
QUESTION : What is an "Investment Advisor? - Correct Answer: Person/firm compensated
for engaging in business of (directly or indirectly) advising others on securities or the
advisability of investing (or) who issues analysis/reports concerning securities
QUESTION : When is SEC Registration Required? - Correct Answer: 1) definition of "IA" is
met (unless otherwise excepted from definition or exempt/prohibited from registration);
AND $100M in AUM (optional for Mid-Sized Advisers AUM $100-115M Buffer Zone)
4|Page
ANSWERS (VERIFIED) | LATEST UPDATE 2025 | GRADE A+
QUESTION : What does it mean when someone has "Control"? - Correct Answer: Power to
exercise a controlling influence over the management or policies of a company
QUESTION : Investment supervisory services - Correct Answer: Giving of continuous advice
as to the investment of funds on the basis of the individual needs of each client
QUESTION : National securities exchange - Correct Answer: an exchange registered under
section 6 of the Securities Exchange Act of 1934
QUESTION : Person - Correct Answer: Natural person or company
QUESTION : Not Securities - Correct Answer: Commodity Futures, Fixed Annuities
QUESTION : Securities Act of 1933 Securities Exchange Act of 1934 Trust Indenture Act of
1939 - Correct Answer: Acts respectively, heretofore or hereafter amended
QUESTION : What is a Business Development Company? - Correct Answer: A company must
be registered in compliance with Section 54 of the Investment Company Act of 1940 to
qualify as a BDC. A major difference between a BDC and a venture capital fund is that BDCs
allow smaller, non-accredited investors to invest in startup companies.
A BDC is a type of closed-end fund that makes investments in developing companies and
firms that are financially distressed.
1|Page
,QUESTION : What is an underwriter? - Correct Answer: Works closely with the issuing body
to determine the offering price of the securities, buys them from the issuer, and sells them
to investors via the underwriter's distribution network. Underwriters generally receive
underwriting fees from their issuing clients, but they also can earn profits when selling the
underwritten shares to investors.
QUESTION : What is a Foreign Private Advisor? - Correct Answer: No US, fewer than 15
clients in US in private funds, aggregate assets under management US clients in private
funds of less than $25 million. Does not hold self out in the US public as an Investment
Adviser; nor acts as An Investment Adviser to any investment company registered under the
Investment Company Act of 1940
QUESTION : What is a Commodity Pool Operator (CPO)? - Correct Answer: A CPO is an
individual or organization which operates a commodity pool and solicits funds for that
commodity pool.
QUESTION : What is a Commodity Pool? - Correct Answer: An enterprise in which funds
contributed by a number of persons are combined for the purpose of trading futures
contracts, options on futures, retail off-exchange forex contracts or swaps, or to invest in
another commodity pool.
QUESTION : What is a Commodity Trading Advisor (CTA) - Correct Answer: A US financial
regulatory term for an individual or organization who is retained by a fund or individual
client to provide advice and services related to trading in futures contracts, commodity
options and/or swaps. They are responsible for the trading within managed futures
accounts.
2|Page
,QUESTION : What is a Swap - Correct Answer: A derivative contract through which two
parties exchange financial instruments. These instruments can be almost anything, but most
swaps involve cash flows based on a notional principal amount that both parties agree to.
Usually, the principal does not change hands. Each cash flow comprises one leg of the swap.
One cash flow is generally fixed, while the other is variable, that is, based on a a benchmark
interest rate, floating currency exchange rate or index price.
The most common kind of swap is an interest rate swap. Swaps do not trade on exchanges,
and retail investors do not generally engage in swaps. Rather, swaps are over-the-counter
contracts between businesses or financial institutions.
QUESTION : What is a Swap Dealer? - Correct Answer: An individual who acts as the
counterparty in a swap agreement for a fee called a spread. Swap dealers are the market
makers for the swap market. The spread represents the difference between the wholesale
price for trades and the retail price. Because swap arrangements aren't actively traded,
swap dealers allow brokers to standardize swap contracts to some extent.
QUESTION : What is Swap Execution Facility? - Correct Answer: A platform for financial
swap trading that provides pre-trade information (i.e. bid and offer prices) and a mechanism
for executing swap transactions among eligible participants.
QUESTION : Penalties - Correct Answer: 1st Tier - Max Penalty for each act $5,000/natural
person or $50,000 for any other person
2nd Tier $50,000 for each act or omission natural person or $250,000 for any other person
(Fraud, deceit, manipulation or deliberate or reckless disregard)
3rd Tier $100,000 each act natural person or $500,000 for any other person (Fraud, deceit,
manipulation or deliberate or reckless disregard, and if substantial losses or created a
significant risk of substantial losses to other persons)
3|Page
, QUESTION : Violations could result in - Correct Answer: Accounting and disgorgement
Cease and Desist Proceedings
Hearing
Temporary Order
QUESTION : Investment Advisor - Correct Answer: An investment advisor is defined by the
Investment Advisors Act of 1940, as any person or group that makes investment
recommendations or conducts securities analysis in return for a fee, whether through direct
management of client assets or via written publications.
QUESTION : Who are Advisory Affiliates? - Correct Answer: (1) all of your officers, partners,
or directors (or any person performing similar functions);
(2) all persons directly or indirectly controlling or controlled by you; and
(3) all of your current employees (other than employees performing only clerical,
administrative, ...
QUESTION : What AUM requires SEC Registration? - Correct Answer: Over $100 Million
QUESTION : What is an "Investment Advisor? - Correct Answer: Person/firm compensated
for engaging in business of (directly or indirectly) advising others on securities or the
advisability of investing (or) who issues analysis/reports concerning securities
QUESTION : When is SEC Registration Required? - Correct Answer: 1) definition of "IA" is
met (unless otherwise excepted from definition or exempt/prohibited from registration);
AND $100M in AUM (optional for Mid-Sized Advisers AUM $100-115M Buffer Zone)
4|Page
