Series 65 Exam ACTUAL Exam Questions
and CORRECT Answers
According to the Uniform Securities Act, a state-registered investment adviser may have custody
of a customer's funds and securities if
A)
it has received the permission of the Administrator.
B)
it has received permission from the state banking authorities.
C)
it does not share in the capital gains and losses of the account.
D)
the Administrator has been notified of the custody arrangement. - CORRECT ANSWER -
A)
it has received the permission of the Administrator.
As long as retaining custody of funds is not prohibited, an investment adviser may have custody
of a customer's account after providing notice to the Administrator. Performance-based
compensation is not related to the custody rules.
LO 14.e
When referring to a federal covered investment adviser, all of the following are supervised
persons except
A)
the receptionist who works for the investment adviser and analyzes client financial profiles.
B)
the chief securities analyst.
C)
an individual contracted to promote the firm to potential advisory clients.
D)
,an investment adviser representative. - CORRECT ANSWER - C)
an individual contracted to promote the firm to potential advisory clients.
All individuals working for an investment adviser who provide investment advice or
management are considered supervised persons. Whether analyzing securities or customer
profiles, one would be a supervised employee. Contracted promoters are not employees of the
adviser; therefore, under the Investment Advisers Act of 1940, the adviser is only required to
make a bona fide effort to determine that the promoter complies with the federal law. Please be
careful because this is not so under the USA. That act considers promoters (solicitors) to be
supervised persons, whether employed by the adviser or not, and requires IAR registration.
LO 9.h
If an agent receives a written customer complaint from his stepmother regarding the handling of
her account, under the current regulations, the agent
A)
must refer the complaint to the manager, who must retain the document on file for the time
period specified under current regulations.
B)
does not have to refer the complaint to his manager because the correspondence is considered a
private communication.
C)
must refer the complaint to the manager, who does not have to retain the document because
family disputes are confidential and need not be disclosed to a third party.
D)
does not have to refer the complaint because the stepmother has provided written documentation.
- CORRECT ANSWER - A)
must refer the complaint to the manager, who must retain the document on file for the time
period specified under current regulations.
An agent must refer all written complaints to his manager; that the complaint is from a family
member is irrelevant. The manager must retain the complaint on file in a readily accessible place
for the time period specified under current federal securities law.
LO 14.i
,Which of the following is likely to be characterized by no management fees and a portfolio
consisting of municipal or corporate bonds?
A)
Closed-end investment company
B)
Unit investment trust
C)
Open-end investment company
D)
Face-amount certificate company - CORRECT ANSWER - B)
Unit investment trust
Only management companies, (open- and closed-end) have management fees.
LO 3.f
William and Kat, a married couple, are advisory clients of yours. Each is employed and covered
by a qualified plan. Which of the following statements are correct?
I. Employees covered by a qualified plan are not eligible to open Roth IRAs.
II. Employees covered by a qualified plan are eligible to open Roth IRAs.
III. Distributions from a qualified plan may be rolled over into a Roth IRA.
IV. Distributions from a qualified plan may not be rolled over into a Roth IRA.
A)
I and III
B)
II and III
C)
I and IV
D)
, II and IV - CORRECT ANSWER - B)
II and III
Eligibility for opening a Roth IRA is not affected by participation in a qualified plan. Unlike a
traditional IRA, where participation in a plan by the taxpayer or spouse may limit the
deductibility of the contributions, the limit on eligibility for opening a Roth IRA is based on
exceeding a specified adjusted gross income (AGI). Regardless of the AGI, distributions from a
qualified plan, such as a 401(k), may be rolled over into a Roth IRA. With regards to the Roth
IRA, although not part of this question, it is important to note that the portion of the distribution
from the qualified plan representing pre-tax contributions will be subject ordinary income tax.
Then, assuming the qualifications are met, distributions from the Roth IRA will be tax-free.
LO 18.a
Defalcator Investment Planning (DIP) has $175 million in AUM and has offices in States A, K,
and R. DIP would be required to provide a balance sheet as part of its brochure if it charged fees
of
A)
$1,200 for the next six months of advisory service.
B)
$600 for the next six months of advisory service.
C)
$1,500 for the next three months of advisory service.
D)
$1,500 for the next year's advisory service. - CORRECT ANSWER - D)
$1,500 for the next year's advisory service.
Federal covered investment advisers, who charge substantial prepayment of advisory fees, must
include a balance sheet with their brochure. The definition of a substantial prepayment is more
than $1,200, six or more months in advance. The correct choice is the only one meeting both
requirements. Remember, it isn't $1,200 or more, it is more than $1,200 and it must be for at
least six months of service to count. Please notice that with $175 million in AUM, DIP must be
SEC registered; the location of its offices is irrelevant to the question.
13.f
and CORRECT Answers
According to the Uniform Securities Act, a state-registered investment adviser may have custody
of a customer's funds and securities if
A)
it has received the permission of the Administrator.
B)
it has received permission from the state banking authorities.
C)
it does not share in the capital gains and losses of the account.
D)
the Administrator has been notified of the custody arrangement. - CORRECT ANSWER -
A)
it has received the permission of the Administrator.
As long as retaining custody of funds is not prohibited, an investment adviser may have custody
of a customer's account after providing notice to the Administrator. Performance-based
compensation is not related to the custody rules.
LO 14.e
When referring to a federal covered investment adviser, all of the following are supervised
persons except
A)
the receptionist who works for the investment adviser and analyzes client financial profiles.
B)
the chief securities analyst.
C)
an individual contracted to promote the firm to potential advisory clients.
D)
,an investment adviser representative. - CORRECT ANSWER - C)
an individual contracted to promote the firm to potential advisory clients.
All individuals working for an investment adviser who provide investment advice or
management are considered supervised persons. Whether analyzing securities or customer
profiles, one would be a supervised employee. Contracted promoters are not employees of the
adviser; therefore, under the Investment Advisers Act of 1940, the adviser is only required to
make a bona fide effort to determine that the promoter complies with the federal law. Please be
careful because this is not so under the USA. That act considers promoters (solicitors) to be
supervised persons, whether employed by the adviser or not, and requires IAR registration.
LO 9.h
If an agent receives a written customer complaint from his stepmother regarding the handling of
her account, under the current regulations, the agent
A)
must refer the complaint to the manager, who must retain the document on file for the time
period specified under current regulations.
B)
does not have to refer the complaint to his manager because the correspondence is considered a
private communication.
C)
must refer the complaint to the manager, who does not have to retain the document because
family disputes are confidential and need not be disclosed to a third party.
D)
does not have to refer the complaint because the stepmother has provided written documentation.
- CORRECT ANSWER - A)
must refer the complaint to the manager, who must retain the document on file for the time
period specified under current regulations.
An agent must refer all written complaints to his manager; that the complaint is from a family
member is irrelevant. The manager must retain the complaint on file in a readily accessible place
for the time period specified under current federal securities law.
LO 14.i
,Which of the following is likely to be characterized by no management fees and a portfolio
consisting of municipal or corporate bonds?
A)
Closed-end investment company
B)
Unit investment trust
C)
Open-end investment company
D)
Face-amount certificate company - CORRECT ANSWER - B)
Unit investment trust
Only management companies, (open- and closed-end) have management fees.
LO 3.f
William and Kat, a married couple, are advisory clients of yours. Each is employed and covered
by a qualified plan. Which of the following statements are correct?
I. Employees covered by a qualified plan are not eligible to open Roth IRAs.
II. Employees covered by a qualified plan are eligible to open Roth IRAs.
III. Distributions from a qualified plan may be rolled over into a Roth IRA.
IV. Distributions from a qualified plan may not be rolled over into a Roth IRA.
A)
I and III
B)
II and III
C)
I and IV
D)
, II and IV - CORRECT ANSWER - B)
II and III
Eligibility for opening a Roth IRA is not affected by participation in a qualified plan. Unlike a
traditional IRA, where participation in a plan by the taxpayer or spouse may limit the
deductibility of the contributions, the limit on eligibility for opening a Roth IRA is based on
exceeding a specified adjusted gross income (AGI). Regardless of the AGI, distributions from a
qualified plan, such as a 401(k), may be rolled over into a Roth IRA. With regards to the Roth
IRA, although not part of this question, it is important to note that the portion of the distribution
from the qualified plan representing pre-tax contributions will be subject ordinary income tax.
Then, assuming the qualifications are met, distributions from the Roth IRA will be tax-free.
LO 18.a
Defalcator Investment Planning (DIP) has $175 million in AUM and has offices in States A, K,
and R. DIP would be required to provide a balance sheet as part of its brochure if it charged fees
of
A)
$1,200 for the next six months of advisory service.
B)
$600 for the next six months of advisory service.
C)
$1,500 for the next three months of advisory service.
D)
$1,500 for the next year's advisory service. - CORRECT ANSWER - D)
$1,500 for the next year's advisory service.
Federal covered investment advisers, who charge substantial prepayment of advisory fees, must
include a balance sheet with their brochure. The definition of a substantial prepayment is more
than $1,200, six or more months in advance. The correct choice is the only one meeting both
requirements. Remember, it isn't $1,200 or more, it is more than $1,200 and it must be for at
least six months of service to count. Please notice that with $175 million in AUM, DIP must be
SEC registered; the location of its offices is irrelevant to the question.
13.f
