SERIES 66 FINAL #1 COMPLETE
QUESTIONS AND ANSWERS LATEST
UPDATE 2025/2026
Under the Investment Advisers Act of 1940, an investment adviser's registration is
renewed:
A: monthly
B: quarterly
C: semi-annually
D: annually - CORRECT ANSWER - D
If an investment adviser has generated a 20% return for investors annually over the
last 10 years, he is permitted to say which of the following to clients?
A: "You will not lose money, as you can see from my investment performance in
prior years"
B: "I can guarantee you at least a 10% investment return per year, since this is only
½ as good as my prior performance"
C: "As you can see, in prior years, I have been successful at making money for my
clients"
D: "My performance in prior years shows you what investment return can be
expected in the future" - CORRECT ANSWER - C
An IAR is visiting with a client that is well-known for its research on stocks. The
IAR notices a memo on the client's desk that states that DEFF stock is going to be
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,included on the firm's recommended list and that this information has not been
published yet. The IAR:
A: cannot do anything with this information
B: can trade personally based on this information but cannot use it to trade for
clients
C: can trade for clients based on this information but cannot use it to trade
personally
D: can trade both personally and for clients using this information - CORRECT
ANSWER - A
What type of option can only be exercised at expiration?
A: American Style
B: European Style
C: Eastern Style
D: Western Style - CORRECT ANSWER - B
Which statement is TRUE about taxation of capital gains?
A: Short term capital gains are taxed at higher rates than long term capital gains
B: Short term capital gains are taxed at lower rates than long term capital gains
C: Short term capital gains are taxed at the same rate as long term capital gains
D: Short term capital gains are taxed at ordinary income rates; long term capital
gains are tax deferred - CORRECT ANSWER - A
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,An agent of a broker-dealer recommends a security to a customer. The customer
buys 1,000 shares, paying the firm a commission. The stock reaches a new market
high in two weeks. Under the Uniform Securities Act, which statement is TRUE?
A: The firm can charge the customer a separate amount for investment advice
B: The firm can increase the commission charged to the customer based on the
excellent performance of the investment
C: The agent can accept a large gift from the client for the advice
D: The only compensation that can be accepted by the broker-dealer is the original
commission charged - CORRECT ANSWER - D
A registered agent effects a trade for a customer "privately" in a transaction that is
not recorded on the books of the agent's broker-dealer. Which statement is TRUE?
A: This transaction is allowed as long as the agent told the customer that the trade
was being done privately
B: This transaction is allowed if no commission was taken on the trade
C: This transaction is allowed without restriction
D: This transaction is a prohibited business practice - CORRECT ANSWER - D
If 26 week T-bills are yielding 5%; while preferred stocks are yielding 11%, the
equity risk premium is:
A: 0%
B: 5%
C: 6%
D: 11% - CORRECT ANSWER - C
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, Which of the following is a "non-issuer" transaction?
A: The sale of a new issue of bonds by a corporation
B: The trade of 100 shares of stock on an exchange floor
C: The sale of mutual fund shares to a customer
D: The sale of Treasury Bills by the U.S. Government - CORRECT ANSWER - B
An investment adviser that makes investment decisions by first selecting specific
investments that are likely to outperform the market based on new product
introductions, growth in existing product lines etc. prior to taking into account
overall economic conditions, is using a(n):
A: bottom up approach to investing
B: top down approach to investing
C: dynamic selection approach to investing
D: efficient market approach to investing - CORRECT ANSWER - A
NASAA administers the:
A: Uniform Securities Act
B: Securities Act of 1933
C: Investment Advisers Act of 1940
D: Investment Company Act of 1940 - CORRECT ANSWER - A
All of the following are defined as "institutional buyers" under the Uniform
Securities Act EXCEPT:
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QUESTIONS AND ANSWERS LATEST
UPDATE 2025/2026
Under the Investment Advisers Act of 1940, an investment adviser's registration is
renewed:
A: monthly
B: quarterly
C: semi-annually
D: annually - CORRECT ANSWER - D
If an investment adviser has generated a 20% return for investors annually over the
last 10 years, he is permitted to say which of the following to clients?
A: "You will not lose money, as you can see from my investment performance in
prior years"
B: "I can guarantee you at least a 10% investment return per year, since this is only
½ as good as my prior performance"
C: "As you can see, in prior years, I have been successful at making money for my
clients"
D: "My performance in prior years shows you what investment return can be
expected in the future" - CORRECT ANSWER - C
An IAR is visiting with a client that is well-known for its research on stocks. The
IAR notices a memo on the client's desk that states that DEFF stock is going to be
1|Page
,included on the firm's recommended list and that this information has not been
published yet. The IAR:
A: cannot do anything with this information
B: can trade personally based on this information but cannot use it to trade for
clients
C: can trade for clients based on this information but cannot use it to trade
personally
D: can trade both personally and for clients using this information - CORRECT
ANSWER - A
What type of option can only be exercised at expiration?
A: American Style
B: European Style
C: Eastern Style
D: Western Style - CORRECT ANSWER - B
Which statement is TRUE about taxation of capital gains?
A: Short term capital gains are taxed at higher rates than long term capital gains
B: Short term capital gains are taxed at lower rates than long term capital gains
C: Short term capital gains are taxed at the same rate as long term capital gains
D: Short term capital gains are taxed at ordinary income rates; long term capital
gains are tax deferred - CORRECT ANSWER - A
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,An agent of a broker-dealer recommends a security to a customer. The customer
buys 1,000 shares, paying the firm a commission. The stock reaches a new market
high in two weeks. Under the Uniform Securities Act, which statement is TRUE?
A: The firm can charge the customer a separate amount for investment advice
B: The firm can increase the commission charged to the customer based on the
excellent performance of the investment
C: The agent can accept a large gift from the client for the advice
D: The only compensation that can be accepted by the broker-dealer is the original
commission charged - CORRECT ANSWER - D
A registered agent effects a trade for a customer "privately" in a transaction that is
not recorded on the books of the agent's broker-dealer. Which statement is TRUE?
A: This transaction is allowed as long as the agent told the customer that the trade
was being done privately
B: This transaction is allowed if no commission was taken on the trade
C: This transaction is allowed without restriction
D: This transaction is a prohibited business practice - CORRECT ANSWER - D
If 26 week T-bills are yielding 5%; while preferred stocks are yielding 11%, the
equity risk premium is:
A: 0%
B: 5%
C: 6%
D: 11% - CORRECT ANSWER - C
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, Which of the following is a "non-issuer" transaction?
A: The sale of a new issue of bonds by a corporation
B: The trade of 100 shares of stock on an exchange floor
C: The sale of mutual fund shares to a customer
D: The sale of Treasury Bills by the U.S. Government - CORRECT ANSWER - B
An investment adviser that makes investment decisions by first selecting specific
investments that are likely to outperform the market based on new product
introductions, growth in existing product lines etc. prior to taking into account
overall economic conditions, is using a(n):
A: bottom up approach to investing
B: top down approach to investing
C: dynamic selection approach to investing
D: efficient market approach to investing - CORRECT ANSWER - A
NASAA administers the:
A: Uniform Securities Act
B: Securities Act of 1933
C: Investment Advisers Act of 1940
D: Investment Company Act of 1940 - CORRECT ANSWER - A
All of the following are defined as "institutional buyers" under the Uniform
Securities Act EXCEPT:
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