STC SERIES 66 GREENLIGHT EXAM
QUESTIONS AND CORRECT ANSWERS.
VERIFIED 2025/2026.
Securities that are registered through qualification may only be sold: - ANS Once the
registration is declared effective by the Administrator
Securities that are registered through qualification may be sold once the registration is declared
effective by the Administrator. Note that in choice (c), the use of the term approved is
inappropriate. Securities that are deemed effective for sale by an Administrator may not be
described as having been approved by the Administrator.
The difference between a corporation's current assets and its current liabilities is the: -
ANS Working capital
The amount by which a corporation's current assets exceed its current liabilities is referred to as
working capital.
Assuming an expected rate of return, a specific holding period, and a sum to be invested, an IAR
is able to determine an investment's: - ANS Future value
The future value of an investment is based on the present value of the amount invested, using a
discount rate each year, and doing so over a given period of time. The assumption is that the
annual return is reinvested at the same rate, or is compounded over the given time period,
thereby resulting in a future value that exceeds the present value.
1 @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED.
,Which of the following types of risk is MOST associated with the purchase of a five-year T-bond?
- ANS Interest-rate
Interest-rate risk, which is also referred to as money-rate risk, is essentially the risk that if
interest rates rise, the prices of the debt securities will fall. If an investor needs to liquidate her
debt investment prior to maturity, rising interest rates reduce the value she would receive if she
sold the security in the secondary market. Market risk is primarily associated with common
stock. Since the secondary market for Treasuries is very active, liquidity risk is not a factor.
Although legislative risk (changes in the law) could create diminished value for the instruments,
it is not likely to occur.
Disadvantages of investing in a C Corporation include which of the following choices?
Shareholders are taxed on dividends that they receive.
The corporation is taxed on its income.
Shareholders may not deduct their share of the corporation's losses on their personal tax
returns.
Shareholders are paid last if the corporation liquidates. - ANS I, II, III, and IV
All of the choices are disadvantages of investing in a C Corporation
All the following are characteristics of passive asset allocation strategies, EXCEPT: -
ANS Altering a portfolio in anticipation of an economic event
A passive asset allocation strategy (e.g., buy and hold) is characterized by low transaction costs
and minimal tax consequences. Systematic rebalancing, another passive strategy, alters the
portfolio on a monthly, quarterly, or annual basis to restore an original strategic asset allocation
if market movements have changed it. On the other hand, active (tactical) asset allocation
strategies effect changes to a portfolio's allocation in anticipation of economic events.
A person has established an IA as a sole proprietorship and works as an IAR out of his home
office. To help promote and manage the IA, he has set up a website which contains personal
information about his clients. A few weeks after setting up the website, the IAR discovers that
the website has been hacked and his customers' account information has been stolen. What is
2 @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED.
,the primary regulatory concern? - ANS The IA did not prepare proper cybersecurity policies,
procedures, and measures before launching the website.
Both the SEC and state Administrators require IAs to establish cybersecurity policies in order to
protect their clients. Since the website was hacked, the regulator's primary concern is the
extent of the IA's cybersecurity measures. The regulations don't require websites to be
password protected, despite the fact that many IAs may find them necessary to protect client
information. Also, there's no requirement for an IA to be federally covered before creating a
website. Although websites are considered advertisements and regulators must be notified, it's
unlikely that this is the primary regulatory concern.
A Nasdaq listed company is offering 1,000,000 shares of common stock in State A. The
Administrator in State A may:
Not require registration of the stock in State A.
Require the issuer to perform notice filing.
Require the issuer to pay a fee.
Investigate the underwriter for possible fraud in connection with the offering. - ANS I and IV
only
Securities that are listed on a national exchange (e.g., Nasdaq, NYSE, or AMEX) are referred to as
federal covered securities and, therefore, are not required to be registered at the state level.
Additionally, if the federal covered security is listed on an exchange, the state may not require
the issuer to pay a fee, submit a notice filing, or provide a consent to service of process.
However, the state Administrator may investigate any broker-dealer (including the underwriter)
that participates in the offering for fraud or deceit and file an enforcement action if it is
warranted.
According to the Uniform Securities Act, which of the following activities by an agent of a
broker-dealer is unethical? - ANS Executing orders to sell securities in a client's individual and
joint account based on instructions from the client's spouse.
Unless the client's spouse has been given specific authorization, executing these orders is
unethical. An agent may exercise discretion over the price and/or time of execution, based on
verbal authorization from the client. Agents are allowed to accept unsolicited orders to buy and
3 @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED.
, sell securities. Agents are not required to send all clients a preliminary prospectus, but they are
required to send a final prospectus to clients who purchase non-exempt securities.
If an agent of a broker-dealer is granted a durable power of attorney over a client's account, all
of the following statements are TRUE, EXCEPT - ANS The client must be an institution
A durable power of attorney provides the agent with the power to manage the grantor's
financial affairs even if the grantor becomes incapacitated. With this authority (which must be
in written form), the agent of the broker-dealer may make financial decisions on behalf of the
grantor (discretion). A standard power of attorney is terminated if the grantor becomes
incapacitated. (17178)
The factors that assist in determining a client's risk tolerance include:
Income
Age
Personality
Net worth - ANS I, II, III, IV
A person's risk tolerance is based on income, age, personality type, net worth, as well as any
other relevant details. For instance, family considerations may also influence a person's risk
tolerance.
Which TWO of the following statements are TRUE regarding an investment adviser that
maintains custody of its clients' assets?
The securities must be deposited with a qualified custodian.
The securities must be held in a vault that is maintained by the firm.
A notice must be sent to the clients to indicate the secure location or custodian of the
securities.
Annual statements must be sent to each client of the investment adviser. - ANS I and III
According to Rule 206(4)-2 of the Investment Advisers Act of 1940, it is a deceptive trade
practice to maintain custody (safekeeping) of client funds and securities unless they are held by
a qualified custodian. When the IA opens an account with a qualified custodian, the client must
4 @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED.
QUESTIONS AND CORRECT ANSWERS.
VERIFIED 2025/2026.
Securities that are registered through qualification may only be sold: - ANS Once the
registration is declared effective by the Administrator
Securities that are registered through qualification may be sold once the registration is declared
effective by the Administrator. Note that in choice (c), the use of the term approved is
inappropriate. Securities that are deemed effective for sale by an Administrator may not be
described as having been approved by the Administrator.
The difference between a corporation's current assets and its current liabilities is the: -
ANS Working capital
The amount by which a corporation's current assets exceed its current liabilities is referred to as
working capital.
Assuming an expected rate of return, a specific holding period, and a sum to be invested, an IAR
is able to determine an investment's: - ANS Future value
The future value of an investment is based on the present value of the amount invested, using a
discount rate each year, and doing so over a given period of time. The assumption is that the
annual return is reinvested at the same rate, or is compounded over the given time period,
thereby resulting in a future value that exceeds the present value.
1 @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED.
,Which of the following types of risk is MOST associated with the purchase of a five-year T-bond?
- ANS Interest-rate
Interest-rate risk, which is also referred to as money-rate risk, is essentially the risk that if
interest rates rise, the prices of the debt securities will fall. If an investor needs to liquidate her
debt investment prior to maturity, rising interest rates reduce the value she would receive if she
sold the security in the secondary market. Market risk is primarily associated with common
stock. Since the secondary market for Treasuries is very active, liquidity risk is not a factor.
Although legislative risk (changes in the law) could create diminished value for the instruments,
it is not likely to occur.
Disadvantages of investing in a C Corporation include which of the following choices?
Shareholders are taxed on dividends that they receive.
The corporation is taxed on its income.
Shareholders may not deduct their share of the corporation's losses on their personal tax
returns.
Shareholders are paid last if the corporation liquidates. - ANS I, II, III, and IV
All of the choices are disadvantages of investing in a C Corporation
All the following are characteristics of passive asset allocation strategies, EXCEPT: -
ANS Altering a portfolio in anticipation of an economic event
A passive asset allocation strategy (e.g., buy and hold) is characterized by low transaction costs
and minimal tax consequences. Systematic rebalancing, another passive strategy, alters the
portfolio on a monthly, quarterly, or annual basis to restore an original strategic asset allocation
if market movements have changed it. On the other hand, active (tactical) asset allocation
strategies effect changes to a portfolio's allocation in anticipation of economic events.
A person has established an IA as a sole proprietorship and works as an IAR out of his home
office. To help promote and manage the IA, he has set up a website which contains personal
information about his clients. A few weeks after setting up the website, the IAR discovers that
the website has been hacked and his customers' account information has been stolen. What is
2 @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED.
,the primary regulatory concern? - ANS The IA did not prepare proper cybersecurity policies,
procedures, and measures before launching the website.
Both the SEC and state Administrators require IAs to establish cybersecurity policies in order to
protect their clients. Since the website was hacked, the regulator's primary concern is the
extent of the IA's cybersecurity measures. The regulations don't require websites to be
password protected, despite the fact that many IAs may find them necessary to protect client
information. Also, there's no requirement for an IA to be federally covered before creating a
website. Although websites are considered advertisements and regulators must be notified, it's
unlikely that this is the primary regulatory concern.
A Nasdaq listed company is offering 1,000,000 shares of common stock in State A. The
Administrator in State A may:
Not require registration of the stock in State A.
Require the issuer to perform notice filing.
Require the issuer to pay a fee.
Investigate the underwriter for possible fraud in connection with the offering. - ANS I and IV
only
Securities that are listed on a national exchange (e.g., Nasdaq, NYSE, or AMEX) are referred to as
federal covered securities and, therefore, are not required to be registered at the state level.
Additionally, if the federal covered security is listed on an exchange, the state may not require
the issuer to pay a fee, submit a notice filing, or provide a consent to service of process.
However, the state Administrator may investigate any broker-dealer (including the underwriter)
that participates in the offering for fraud or deceit and file an enforcement action if it is
warranted.
According to the Uniform Securities Act, which of the following activities by an agent of a
broker-dealer is unethical? - ANS Executing orders to sell securities in a client's individual and
joint account based on instructions from the client's spouse.
Unless the client's spouse has been given specific authorization, executing these orders is
unethical. An agent may exercise discretion over the price and/or time of execution, based on
verbal authorization from the client. Agents are allowed to accept unsolicited orders to buy and
3 @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED.
, sell securities. Agents are not required to send all clients a preliminary prospectus, but they are
required to send a final prospectus to clients who purchase non-exempt securities.
If an agent of a broker-dealer is granted a durable power of attorney over a client's account, all
of the following statements are TRUE, EXCEPT - ANS The client must be an institution
A durable power of attorney provides the agent with the power to manage the grantor's
financial affairs even if the grantor becomes incapacitated. With this authority (which must be
in written form), the agent of the broker-dealer may make financial decisions on behalf of the
grantor (discretion). A standard power of attorney is terminated if the grantor becomes
incapacitated. (17178)
The factors that assist in determining a client's risk tolerance include:
Income
Age
Personality
Net worth - ANS I, II, III, IV
A person's risk tolerance is based on income, age, personality type, net worth, as well as any
other relevant details. For instance, family considerations may also influence a person's risk
tolerance.
Which TWO of the following statements are TRUE regarding an investment adviser that
maintains custody of its clients' assets?
The securities must be deposited with a qualified custodian.
The securities must be held in a vault that is maintained by the firm.
A notice must be sent to the clients to indicate the secure location or custodian of the
securities.
Annual statements must be sent to each client of the investment adviser. - ANS I and III
According to Rule 206(4)-2 of the Investment Advisers Act of 1940, it is a deceptive trade
practice to maintain custody (safekeeping) of client funds and securities unless they are held by
a qualified custodian. When the IA opens an account with a qualified custodian, the client must
4 @COPYRIGHT 2025/2026 ALLRIGHTS RESERVED.
