SERIES 66 FINAL EXAM QUESTIONS AND
ANSWERS GRADED A+ 100% VERIFIED.
All of the following provisions would be found in an advisory contract EXCEPT
the requirement for customer approval if the contract is to be assigned to someone
else
an exculpatory clause holding the adviser harmless for gross negligence or rule
violations
notification to customers if there is a change in the composition of the advisory
partnership - CORRECT ANSWER - an exculpatory clause holding the adviser
harmless for gross negligence or rule violations
Investment advisory contracts must be in writing under the Investment Advisers
Act of 1940; must detail the advisory fee; must provide for customer approval if
the account is assigned to another investment adviser; and must provide for notice
to the customer if there is a change in the composition of the advisory partnership
(for those advisers that are partnerships). An "exculpatory" clause is legal language
that the adviser cannot be held liable for negligence or rule violations, and such a
"hedge" clause is not legally enforceable and is prohibited
A 40-year old man wishes to remove funds from his IRA to buy his child an
automobile for commuting to work after school. The customer has:
regular income tax liability only on the amount withdrawn
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,10% penalty tax only on the amount withdrawn
both regular income tax liability and 10% penalty tax on the amount withdrawn -
CORRECT ANSWER - both regular income tax liability and 10% penalty tax on
the amount withdrawn
Premature distributions from an IRA (before age 59 ½), unless for reason of: death
or disability; or the payment of qualifying higher education expenses (such as
tuition); or the payment of the first $10,000 of first time home purchase expenses;
incur normal income tax plus a 10% penalty tax on the amount withdrawn. The
purchase of a car for a child for commuting to work after school is not a qualifying
higher education expense
Under the NASAA Statement of Policy on Dishonest and Unethical Business
Practices, all of the following are considered manipulative and prohibited practices
EXCEPT
Arbitrage
churning
wash trades
painting the tape - CORRECT ANSWER - Arbitrage
A registered investment adviser has a close friend that recently passed away from
lung cancer. When the adviser is screening stock groups using a proprietary
computer model as part of his portfolio allocation decision-making, he identifies
that tobacco stocks appear to be undervalued and are likely to outperform the
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,market in the coming months. The adviser decides not to invest in these stocks.
This is an example of
strategic / tactical investing
ethical / socially responsible investing
fundamental investment analysis - CORRECT ANSWER - ethical / socially
responsible investing
A customer wishes to maximize liquidity and minimize interest rate risk. The
BEST recommendation is
bonds with short term maturities
bonds with long term maturities
callable bonds - CORRECT ANSWER - bonds with short term maturities
Which of the following actions is a violation of the Uniform Securities Act?
Failing to charge a mark-up to a customer in a principal transaction
Improperly using inside information
Failing to state every fact to a customer - CORRECT ANSWER - Improperly
using inside information
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, An exchange traded debt security is a
ETF
ETN
ADR
CMO - CORRECT ANSWER - ETN
An agent may be denied registration for which of the following reasons?
I The agent was convicted of embezzling customer funds 5 years ago
II The agent is not qualified due to lack of experience
III The agent has omitted material facts in his or her registration application
IV The agent is financially insolvent - CORRECT ANSWER - 1-3-4
An agent may be denied registration if he has been convicted of a misdemeanor
involving securities or monies, or any felony, within the past 10 years; if he has
omitted material facts in his registration application; or if he is financially
insolvent, defined as not being able to pay bills as they come due. Registration
cannot be denied solely on the basis of lack of experience. In addition to lack of
experience, the agent must be unqualified due to lack of training or knowledge
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ANSWERS GRADED A+ 100% VERIFIED.
All of the following provisions would be found in an advisory contract EXCEPT
the requirement for customer approval if the contract is to be assigned to someone
else
an exculpatory clause holding the adviser harmless for gross negligence or rule
violations
notification to customers if there is a change in the composition of the advisory
partnership - CORRECT ANSWER - an exculpatory clause holding the adviser
harmless for gross negligence or rule violations
Investment advisory contracts must be in writing under the Investment Advisers
Act of 1940; must detail the advisory fee; must provide for customer approval if
the account is assigned to another investment adviser; and must provide for notice
to the customer if there is a change in the composition of the advisory partnership
(for those advisers that are partnerships). An "exculpatory" clause is legal language
that the adviser cannot be held liable for negligence or rule violations, and such a
"hedge" clause is not legally enforceable and is prohibited
A 40-year old man wishes to remove funds from his IRA to buy his child an
automobile for commuting to work after school. The customer has:
regular income tax liability only on the amount withdrawn
1|Page
,10% penalty tax only on the amount withdrawn
both regular income tax liability and 10% penalty tax on the amount withdrawn -
CORRECT ANSWER - both regular income tax liability and 10% penalty tax on
the amount withdrawn
Premature distributions from an IRA (before age 59 ½), unless for reason of: death
or disability; or the payment of qualifying higher education expenses (such as
tuition); or the payment of the first $10,000 of first time home purchase expenses;
incur normal income tax plus a 10% penalty tax on the amount withdrawn. The
purchase of a car for a child for commuting to work after school is not a qualifying
higher education expense
Under the NASAA Statement of Policy on Dishonest and Unethical Business
Practices, all of the following are considered manipulative and prohibited practices
EXCEPT
Arbitrage
churning
wash trades
painting the tape - CORRECT ANSWER - Arbitrage
A registered investment adviser has a close friend that recently passed away from
lung cancer. When the adviser is screening stock groups using a proprietary
computer model as part of his portfolio allocation decision-making, he identifies
that tobacco stocks appear to be undervalued and are likely to outperform the
2|Page
,market in the coming months. The adviser decides not to invest in these stocks.
This is an example of
strategic / tactical investing
ethical / socially responsible investing
fundamental investment analysis - CORRECT ANSWER - ethical / socially
responsible investing
A customer wishes to maximize liquidity and minimize interest rate risk. The
BEST recommendation is
bonds with short term maturities
bonds with long term maturities
callable bonds - CORRECT ANSWER - bonds with short term maturities
Which of the following actions is a violation of the Uniform Securities Act?
Failing to charge a mark-up to a customer in a principal transaction
Improperly using inside information
Failing to state every fact to a customer - CORRECT ANSWER - Improperly
using inside information
3|Page
, An exchange traded debt security is a
ETF
ETN
ADR
CMO - CORRECT ANSWER - ETN
An agent may be denied registration for which of the following reasons?
I The agent was convicted of embezzling customer funds 5 years ago
II The agent is not qualified due to lack of experience
III The agent has omitted material facts in his or her registration application
IV The agent is financially insolvent - CORRECT ANSWER - 1-3-4
An agent may be denied registration if he has been convicted of a misdemeanor
involving securities or monies, or any felony, within the past 10 years; if he has
omitted material facts in his registration application; or if he is financially
insolvent, defined as not being able to pay bills as they come due. Registration
cannot be denied solely on the basis of lack of experience. In addition to lack of
experience, the agent must be unqualified due to lack of training or knowledge
4|Page
