Series 65 terms and definitions UPDATED
ACTUAL Exam Questions and CORRECT
Answers
Exclusions from broker dealer definition - CORRECT ANSWER - 1. Agents 2. Issuers
3.Banks, savings institutions or trust companies. 4. A firm with no place if business in a state if
the only clients in state are financial institutions. 5. A firm with no place of business in state if
customer is in that state temporarily.
Definition of Investment Adviser under USA - CORRECT ANSWER - Any person who
for compensation engages in the business of advising others about securities directly or
indirectly. Remember: ABC: advising,business, compensation
Advantages of S Corporation - CORRECT ANSWER - limited liability
unlimited life
ease of formation
Pass through taxation
no double taxation
Life Annuity with Period Certain - CORRECT ANSWER - An annuity payout option that
guarantees the annuitant a monthly check for a certain period and thereafter until the annuitant's
death. If the annuitant dies before the period expires, the payments go to the annuitant's named
beneficiary for a pre-determined period
Investment Advisers Act of 1940- Rule keeping for electronic format - CORRECT
ANSWER - Can be in electronic format if:
1.they can be read 2. Copies can be made. 3. A duplicate copy is stored in a separate location.
Once a broker-dealer or investment advisory firm is registered, what are the record keeping
requirements under the USA? - CORRECT ANSWER - Under the USA, every registered
BD or IA shall make and keep records as the Administrator prescribes by rule or order, except as
provided by federal law. Records should be preserved for 5 years under Federal Law.
, Dividend Discount Method - CORRECT ANSWER - The dividend discount method is a
way to determine the price at which a stock should be selling by calculating the present value or
discounted value of projected future dividend payments.
discount rate - CORRECT ANSWER - The discount rate is the rate charged to member
banks which borrow from Fed.
Reserve to take care of temporary reserve needs.
Breakpoint - CORRECT ANSWER - A quantity at which investor receives a reduced
Sales Charge due to amount invested.
FinCEN - CORRECT ANSWER - Financial Crimes Enforcement Network, the entity that
a SAR would be reported to. Works to combat money laundering.
What hedges a long stock position - CORRECT ANSWER - Long puts
What is the general industry standard for the advisory fee on assets under management? -
CORRECT ANSWER - A general industry standard is 2% of assets under management
measured annually and 20% of annual profits when dealing with allowable, performance based
fees.
Single or Life Annuity - CORRECT ANSWER - Annuitant receives regular income
payments until they die. No beneficiaries
Under the NASAA, what is the minimum net worth requirement for an IA who has custody over
client funds? - CORRECT ANSWER - 35,000
Long Term Capital Gains Tax Rate - CORRECT ANSWER - 1. The long term holding
period is 12 months plus one day or longer.
ACTUAL Exam Questions and CORRECT
Answers
Exclusions from broker dealer definition - CORRECT ANSWER - 1. Agents 2. Issuers
3.Banks, savings institutions or trust companies. 4. A firm with no place if business in a state if
the only clients in state are financial institutions. 5. A firm with no place of business in state if
customer is in that state temporarily.
Definition of Investment Adviser under USA - CORRECT ANSWER - Any person who
for compensation engages in the business of advising others about securities directly or
indirectly. Remember: ABC: advising,business, compensation
Advantages of S Corporation - CORRECT ANSWER - limited liability
unlimited life
ease of formation
Pass through taxation
no double taxation
Life Annuity with Period Certain - CORRECT ANSWER - An annuity payout option that
guarantees the annuitant a monthly check for a certain period and thereafter until the annuitant's
death. If the annuitant dies before the period expires, the payments go to the annuitant's named
beneficiary for a pre-determined period
Investment Advisers Act of 1940- Rule keeping for electronic format - CORRECT
ANSWER - Can be in electronic format if:
1.they can be read 2. Copies can be made. 3. A duplicate copy is stored in a separate location.
Once a broker-dealer or investment advisory firm is registered, what are the record keeping
requirements under the USA? - CORRECT ANSWER - Under the USA, every registered
BD or IA shall make and keep records as the Administrator prescribes by rule or order, except as
provided by federal law. Records should be preserved for 5 years under Federal Law.
, Dividend Discount Method - CORRECT ANSWER - The dividend discount method is a
way to determine the price at which a stock should be selling by calculating the present value or
discounted value of projected future dividend payments.
discount rate - CORRECT ANSWER - The discount rate is the rate charged to member
banks which borrow from Fed.
Reserve to take care of temporary reserve needs.
Breakpoint - CORRECT ANSWER - A quantity at which investor receives a reduced
Sales Charge due to amount invested.
FinCEN - CORRECT ANSWER - Financial Crimes Enforcement Network, the entity that
a SAR would be reported to. Works to combat money laundering.
What hedges a long stock position - CORRECT ANSWER - Long puts
What is the general industry standard for the advisory fee on assets under management? -
CORRECT ANSWER - A general industry standard is 2% of assets under management
measured annually and 20% of annual profits when dealing with allowable, performance based
fees.
Single or Life Annuity - CORRECT ANSWER - Annuitant receives regular income
payments until they die. No beneficiaries
Under the NASAA, what is the minimum net worth requirement for an IA who has custody over
client funds? - CORRECT ANSWER - 35,000
Long Term Capital Gains Tax Rate - CORRECT ANSWER - 1. The long term holding
period is 12 months plus one day or longer.
