1|Page
SERIES 66: PRACTICE EXAMS 1 & 2
QUESTIONS WITH COMPLETE ANSWERS.
1. Which of the following statements about contributions to 403(b) plans are
TRUE?
I Employees may contribute by salary reduction
II An employee may transfer funds from a savings account to make up for prior years
III An employee may contribute up to $19,000 by means of salary reduction for 2019
IV The employer decides the amount of the contribution to be made on behalf of
the employees: I & III
2. Couple with 2 adult children have established a revocable trust to remove
assets from their taxable estate. After doing so, they find that they are $100,000 over
the estate tax exclusion that qualifies for the maximum unified tax credit of
$4,371,600 in 2019. In order to reduce the size of their taxable estate by
$100,000, they can donate:: 50K to one charity & 50K to another (any charitable
contributions reduce the size of the taxable estate)
3. When looking at the Price/Book Value of a corporation, the numerator on the
equation is based on (market/accounting) value and the denominator is based
on the (market/accounting): Market, accounting (market price/common
stockholder's equity)
4. A business form that gives a "flow-through" tax benefit and limited liability to
owners is a(n):: S Corporation (general partnerships have UNLIMITED liability)
5. For bonds trading at a discount, rank the yield measures from lowest to
highest:
- YTM
- YTC
- Current
- Nominal: Nominal, Current, YTM, YTC
6. Insurance company that sells an EIA could use what methods to credit the
change in investment value?: Annual reset, point-to-point, and high water mark
7. A customer who buys a 10 year zero coupon bond with the intention of hold- ing it
,2|Page
to maturity would be MOST concerned with what type of risk?: Inflation risk
8. A 75 year-old man (can/cannot) make contributions & (must/is not required) to
take distributions from a Roth IRA: Can & is not required
9. Which of the following statements are TRUE regarding customer consent for
certain actions taken by an investment adviser?
I If the investment adviser and its accounts are acquired by another investment
advisory firm, consent of the adviser's existing customers is required
II If the investment adviser and its accounts are acquired by another in-
vestment advisory firm, consent of the adviser's existing customers is not required
III If the investment adviser were to acquire another advisory firm, consent of the
adviser's existing customers is required
IV If the investment adviser were to acquire another advisory firm, consent of the
adviser's existing customers is not required: I & IV (the clients accounts that will be
impacted)
10. The seller of a futures contract has the obligation to x a specific commodity at a
certain price and grade at a specific date and location through an y futures exchange:
Sell & organized
11. An RIA plans on offering options strategies as part of his services. For this
new strategy, he will charge .6% of assets monthly. This information is added to
the RIA's disclosure statement and the RIA tells all of his clients of the fees orally
in seminars. Each of his clients signs an agreement regarding the options
strategies and fees. Is this action permitted?: Yes - clients got full disclosure &
agreed in writing
12. When an investment adviser is acts as a trustee where the client is the
beneficiary of the trust - is the IA deemed to have custody of client funds?: - YES
(also full POA & inadvertent receipts of customer funds or checks that are not
returned within 3 business days)
13. Which of the following is EXCLUDED from Adjusted Gross Income on a tax
return?
A) Salary & commission income
B) Social Security payments received
C) Muni bond interest income
D) Muni bond cap gains: C (not federally taxable)
SERIES 66: PRACTICE EXAMS 1 & 2
QUESTIONS WITH COMPLETE ANSWERS.
1. Which of the following statements about contributions to 403(b) plans are
TRUE?
I Employees may contribute by salary reduction
II An employee may transfer funds from a savings account to make up for prior years
III An employee may contribute up to $19,000 by means of salary reduction for 2019
IV The employer decides the amount of the contribution to be made on behalf of
the employees: I & III
2. Couple with 2 adult children have established a revocable trust to remove
assets from their taxable estate. After doing so, they find that they are $100,000 over
the estate tax exclusion that qualifies for the maximum unified tax credit of
$4,371,600 in 2019. In order to reduce the size of their taxable estate by
$100,000, they can donate:: 50K to one charity & 50K to another (any charitable
contributions reduce the size of the taxable estate)
3. When looking at the Price/Book Value of a corporation, the numerator on the
equation is based on (market/accounting) value and the denominator is based
on the (market/accounting): Market, accounting (market price/common
stockholder's equity)
4. A business form that gives a "flow-through" tax benefit and limited liability to
owners is a(n):: S Corporation (general partnerships have UNLIMITED liability)
5. For bonds trading at a discount, rank the yield measures from lowest to
highest:
- YTM
- YTC
- Current
- Nominal: Nominal, Current, YTM, YTC
6. Insurance company that sells an EIA could use what methods to credit the
change in investment value?: Annual reset, point-to-point, and high water mark
7. A customer who buys a 10 year zero coupon bond with the intention of hold- ing it
,2|Page
to maturity would be MOST concerned with what type of risk?: Inflation risk
8. A 75 year-old man (can/cannot) make contributions & (must/is not required) to
take distributions from a Roth IRA: Can & is not required
9. Which of the following statements are TRUE regarding customer consent for
certain actions taken by an investment adviser?
I If the investment adviser and its accounts are acquired by another investment
advisory firm, consent of the adviser's existing customers is required
II If the investment adviser and its accounts are acquired by another in-
vestment advisory firm, consent of the adviser's existing customers is not required
III If the investment adviser were to acquire another advisory firm, consent of the
adviser's existing customers is required
IV If the investment adviser were to acquire another advisory firm, consent of the
adviser's existing customers is not required: I & IV (the clients accounts that will be
impacted)
10. The seller of a futures contract has the obligation to x a specific commodity at a
certain price and grade at a specific date and location through an y futures exchange:
Sell & organized
11. An RIA plans on offering options strategies as part of his services. For this
new strategy, he will charge .6% of assets monthly. This information is added to
the RIA's disclosure statement and the RIA tells all of his clients of the fees orally
in seminars. Each of his clients signs an agreement regarding the options
strategies and fees. Is this action permitted?: Yes - clients got full disclosure &
agreed in writing
12. When an investment adviser is acts as a trustee where the client is the
beneficiary of the trust - is the IA deemed to have custody of client funds?: - YES
(also full POA & inadvertent receipts of customer funds or checks that are not
returned within 3 business days)
13. Which of the following is EXCLUDED from Adjusted Gross Income on a tax
return?
A) Salary & commission income
B) Social Security payments received
C) Muni bond interest income
D) Muni bond cap gains: C (not federally taxable)
