Series 65 Exam 2025 Questions and
Answers
Under the Uniform Securities Act, which of the following are defined as sales? - ANSWER✔✔-A
sale is a contract or transaction for value. Therefore, when a security is given as a bonus in
connection with the sale of another security, it is also considered a sale. Because an assessable stock
may require a payment made by the recipient, the gift is considered a sale. The gift of a non-
assessable stock is not a sale as it is not a contract for value. An offering of securities is not a
transaction or sale of securities until the offer is accepted.
A broker-dealer is NOT considered an investment adviser if the: - ANSWER✔✔-Excluded from
the definition of investment adviser are financial institutions, publishers, investment adviser
representatives, and certain professionals, including broker-dealers, whose advice is incidental to
their profession and who are not compensated for it.
Under the Investment Advisers Act of 1940, an adviser is required to be registered with the SEC if: -
ANSWER✔✔-Advisers to registered investment companies are required to be SEC-registered.
Under the Advisers Act, as modified by the Dodd-Frank Act, advisers are exempt from SEC
registration if they manage less than $100 million in assets and have no investment company clients.
Persons are excluded from the Advisers Act definition of investment adviser if they are publishers of
FOR STUDY PURPOSES ONLY COPYRIGHT © 2025 ALL RIGHTS RESERVED 1
,news or business/financial publications of general and regular circulation or if their advice relates
solely to U.S. government securities.
According to North American Securities Administrators Association's (NASAA) Statement of Policy
on Dishonest or Unethical Business Practices of Broker-Dealers and Agents, which of the following
practices is NOT unethical? - ANSWER✔✔-The THREE A's: Action, Amount, Asset
An agent of a broker-dealer may exercise discretion in deciding the time or the price at which a sale
takes place during the trading day without express written discretionary authority. Such action is not
unethical because time and price are not considered true discretion. An agent may not exercise
discretion over the number of shares to be sold without prior written discretionary authority. Oral
discretion is only permitted for investment advisers and their representatives, (never broker-dealers
or agents), during the first 10 business days after the initial discretionary transaction in the account.
Reference: 2.11.5 in the License Exam Manual
An investor in the 28% income tax bracket is considering purchasing either an 8% municipal bond
or a 10% corporate bond. Which of the following regarding the bonds is TRUE? - ANSWER✔✔-
Investors are interested in their return after taxes (what they get to keep). The 2 bonds must be
compared on a tax-equivalent basis. For example, the tax-equivalent yield of a municipal bond
equals tax-free yield divided by 100% minus tax rate. The tax equivalent rate in this case is .08 ÷ .72
(100% − 28%) = 11.11%. In other words, a client in the 28% tax bracket would have to invest in a
taxable bond that yields 11.11% to get the same after-tax return that the 8% tax-free bond offers.
FOR STUDY PURPOSES ONLY COPYRIGHT © 2025 ALL RIGHTS RESERVED 2
,Which of the following statements is TRUE about futures and forwards? - ANSWER✔✔-Futures
contracts are traded on exchanges and, therefore, have standardized terms. In forwards, the terms of
each contract are separately negotiated.
Reference: 9.2.1 in the License Exam Manual
George and Martha Washington are both in their mid-70s, very active in their community, and both
work part-time at the local community bank. They would like to contribute a small portion of their
earnings to some form of retirement plan. Which of the following choices would be the most
appropriate for this couple? - ANSWER✔✔-One of the distinguishing characteristics of the Roth
IRA is that contributions may be continued past age 70 ½ as long as the participant has earned
income.
Reference: 20.1.2.1 in the License Exam Manual
An employee is offered a non-qualified stock option with an exercise price of $20 per share. If the
option is exercised when the current market value of the stock is $30, the employee: -
ANSWER✔✔-In the case of NSOs, the difference between the exercise (or strike) price and the
current market value is considered salary to the employee.
Reference: 4.1.8 in the License Exam Manual
MaryBeth is an agent with QuickTrade Securities, a subsidiary of QuickLoan Bankcorp, a holding
company that also owns QuickIssue Capital Markets, an underwriter specializing in bringing new
issues to market. Under the NASAA Statement of Policy on Dishonest or Unethical Business
Practices of Broker-Dealers and Agents, MaryBeth would be permitted to split commissions
resulting from securities transactions with any of the following individuals EXCEPT -
ANSWER✔✔-Under the NASAA Policy, in order to split commissions, both individuals must be
FOR STUDY PURPOSES ONLY COPYRIGHT © 2025 ALL RIGHTS RESERVED 3
, licensed as agents with either the same broker-dealer, or ones under common control (ownership).
What about sharing with your principal? Why not? In fact, many managers (principals) have
commission overrides as a fundamental part of their compensation package. Remember, as we state
in your License Exam Manual, under the Uniform Securities Act, there is no separate principal
registration as there is with FINRA; all principals are registered as agents (or IARs as the case may
be), just the same as you.
Reference: 2.11.26.4 in the License Exam Manual
Among the differences between C corporations and S corporations is: - ANSWER✔✔-Unlike C
corporations, there is a limit placed on the number of shareholders in an S corp. At the time of this
printing, that maximum is 100, none of whom may be a non-resident alien (C corps have no
residency restrictions). The primary practical difference is the fact that S corporation earnings (and
losses) flow through to the shareholders, whereas C corporation earnings are only received by
shareholders when dividends are paid.
Reference: 14.3.6 in the License Exam Manual
Under the Uniform Securities Act, an investment adviser who has custody of client securities or
funds must do which of the following? - ANSWER✔✔-The adviser must send clients quarterly,
itemized statements listing the funds and securities in the adviser's custody at the end of the period
and all transactions during the period. Unless using a qualified custodian, the adviser must deposit
client funds into one or more bank accounts, not commingled with adviser funds, and notify the
clients in writing of where and in what manner the funds are held. The adviser must also arrange for
an annual, surprise audit by an independent public accountant of client funds and securities. The
FOR STUDY PURPOSES ONLY COPYRIGHT © 2025 ALL RIGHTS RESERVED 4
Answers
Under the Uniform Securities Act, which of the following are defined as sales? - ANSWER✔✔-A
sale is a contract or transaction for value. Therefore, when a security is given as a bonus in
connection with the sale of another security, it is also considered a sale. Because an assessable stock
may require a payment made by the recipient, the gift is considered a sale. The gift of a non-
assessable stock is not a sale as it is not a contract for value. An offering of securities is not a
transaction or sale of securities until the offer is accepted.
A broker-dealer is NOT considered an investment adviser if the: - ANSWER✔✔-Excluded from
the definition of investment adviser are financial institutions, publishers, investment adviser
representatives, and certain professionals, including broker-dealers, whose advice is incidental to
their profession and who are not compensated for it.
Under the Investment Advisers Act of 1940, an adviser is required to be registered with the SEC if: -
ANSWER✔✔-Advisers to registered investment companies are required to be SEC-registered.
Under the Advisers Act, as modified by the Dodd-Frank Act, advisers are exempt from SEC
registration if they manage less than $100 million in assets and have no investment company clients.
Persons are excluded from the Advisers Act definition of investment adviser if they are publishers of
FOR STUDY PURPOSES ONLY COPYRIGHT © 2025 ALL RIGHTS RESERVED 1
,news or business/financial publications of general and regular circulation or if their advice relates
solely to U.S. government securities.
According to North American Securities Administrators Association's (NASAA) Statement of Policy
on Dishonest or Unethical Business Practices of Broker-Dealers and Agents, which of the following
practices is NOT unethical? - ANSWER✔✔-The THREE A's: Action, Amount, Asset
An agent of a broker-dealer may exercise discretion in deciding the time or the price at which a sale
takes place during the trading day without express written discretionary authority. Such action is not
unethical because time and price are not considered true discretion. An agent may not exercise
discretion over the number of shares to be sold without prior written discretionary authority. Oral
discretion is only permitted for investment advisers and their representatives, (never broker-dealers
or agents), during the first 10 business days after the initial discretionary transaction in the account.
Reference: 2.11.5 in the License Exam Manual
An investor in the 28% income tax bracket is considering purchasing either an 8% municipal bond
or a 10% corporate bond. Which of the following regarding the bonds is TRUE? - ANSWER✔✔-
Investors are interested in their return after taxes (what they get to keep). The 2 bonds must be
compared on a tax-equivalent basis. For example, the tax-equivalent yield of a municipal bond
equals tax-free yield divided by 100% minus tax rate. The tax equivalent rate in this case is .08 ÷ .72
(100% − 28%) = 11.11%. In other words, a client in the 28% tax bracket would have to invest in a
taxable bond that yields 11.11% to get the same after-tax return that the 8% tax-free bond offers.
FOR STUDY PURPOSES ONLY COPYRIGHT © 2025 ALL RIGHTS RESERVED 2
,Which of the following statements is TRUE about futures and forwards? - ANSWER✔✔-Futures
contracts are traded on exchanges and, therefore, have standardized terms. In forwards, the terms of
each contract are separately negotiated.
Reference: 9.2.1 in the License Exam Manual
George and Martha Washington are both in their mid-70s, very active in their community, and both
work part-time at the local community bank. They would like to contribute a small portion of their
earnings to some form of retirement plan. Which of the following choices would be the most
appropriate for this couple? - ANSWER✔✔-One of the distinguishing characteristics of the Roth
IRA is that contributions may be continued past age 70 ½ as long as the participant has earned
income.
Reference: 20.1.2.1 in the License Exam Manual
An employee is offered a non-qualified stock option with an exercise price of $20 per share. If the
option is exercised when the current market value of the stock is $30, the employee: -
ANSWER✔✔-In the case of NSOs, the difference between the exercise (or strike) price and the
current market value is considered salary to the employee.
Reference: 4.1.8 in the License Exam Manual
MaryBeth is an agent with QuickTrade Securities, a subsidiary of QuickLoan Bankcorp, a holding
company that also owns QuickIssue Capital Markets, an underwriter specializing in bringing new
issues to market. Under the NASAA Statement of Policy on Dishonest or Unethical Business
Practices of Broker-Dealers and Agents, MaryBeth would be permitted to split commissions
resulting from securities transactions with any of the following individuals EXCEPT -
ANSWER✔✔-Under the NASAA Policy, in order to split commissions, both individuals must be
FOR STUDY PURPOSES ONLY COPYRIGHT © 2025 ALL RIGHTS RESERVED 3
, licensed as agents with either the same broker-dealer, or ones under common control (ownership).
What about sharing with your principal? Why not? In fact, many managers (principals) have
commission overrides as a fundamental part of their compensation package. Remember, as we state
in your License Exam Manual, under the Uniform Securities Act, there is no separate principal
registration as there is with FINRA; all principals are registered as agents (or IARs as the case may
be), just the same as you.
Reference: 2.11.26.4 in the License Exam Manual
Among the differences between C corporations and S corporations is: - ANSWER✔✔-Unlike C
corporations, there is a limit placed on the number of shareholders in an S corp. At the time of this
printing, that maximum is 100, none of whom may be a non-resident alien (C corps have no
residency restrictions). The primary practical difference is the fact that S corporation earnings (and
losses) flow through to the shareholders, whereas C corporation earnings are only received by
shareholders when dividends are paid.
Reference: 14.3.6 in the License Exam Manual
Under the Uniform Securities Act, an investment adviser who has custody of client securities or
funds must do which of the following? - ANSWER✔✔-The adviser must send clients quarterly,
itemized statements listing the funds and securities in the adviser's custody at the end of the period
and all transactions during the period. Unless using a qualified custodian, the adviser must deposit
client funds into one or more bank accounts, not commingled with adviser funds, and notify the
clients in writing of where and in what manner the funds are held. The adviser must also arrange for
an annual, surprise audit by an independent public accountant of client funds and securities. The
FOR STUDY PURPOSES ONLY COPYRIGHT © 2025 ALL RIGHTS RESERVED 4
