Series 65 || with A+ Guaranteed Solutions.
Harold is interested in stable companies with a consistent dividend payment history. Which of
the following best suit Harold's interest? I. High-yield bond fund II. Blue chip fund III. Utility
equities fund IV. GNMA fund
a)I and III
b)I and IV
c)II and III
d)II and IV correct answers c)II and III
A bond is considered to be speculative (a "junk bond") when its Standard and Poor's rating is no
higher than
a)C.
b)B.
c)BB.
d)BBB. correct answers c)BB.
An investor is a successful lawyer and is interested in the technology industry, He is saving for
the down payment on a home that he plans to buy next year. the investor should invest in a
correct answers Tax- Free money market fund.
In this scenario the investment horizon is short, the investor needs the capital safety of a money
market fund. As A "Successful" lawyer, the investor is in a high tax bracket and is better served
in a tax-free money market fund.
An HSA holder who is 65 years old decides to use the money in the account for a nonhealth
expense. Which of the following is true? correct answers There will be a tax
An HSA holder who uses the money for a nonhealthy expenditure pays tax on it, plus a 20%
penalty. After age 65, a withdrawal used for a non-health purpose will be taxed. but not
penalized.
Which of the following is NOT true regarding a cash account?
A) The investor must sign a statement that he or she understands the risks.
B) The account must maintain sufficient funds.
C) The investor must pay in full for all purchases by the settlement date.
D) Brokers may require a large deposit before opening an account. correct answers A) The
investor must sign a statement that he or she understands the risks.
The broker will usually require the investor to sign a statement that they understand and
acknowledges the risks associated with derivative instruments when trying to open an option
account, not a cash account. all the other statements are true.
An investment advisor (IA) purchases stock for its own account from one of its institutional
clients. this transaction is called a/an
,A) Agency cross trade.
B) Institutional cross trade.
C) ECN trade.
D) Principal transaction correct answers D) Principal transaction
in a Principal transaction an IA buys a security from a client or sells a security from its own
inventory to a client. principal transactions require written disclosure to the client and consent
before the transaction is completed. s
Which of the following is false regarding corporate bonds?
A. Capital gains derived from corporate bonds are taxable at the federal level.
B. Corporate bonds generally have higher yields than municipal bonds
C. Corporate bond interest is taxable at the federal level.
D. Corporate bond interest may be tax exempt at the state level. correct answers D. Corporate
bond interest may be tax exempt at the state level.
Corporate bond interest is always taxable at every level: federal, state, and local, if applicable
Which of the following communications would subject an investment advisor representative to
the investment adviser advertising rules?
A. Answering a question as a guest speaker on a panel about industry trends.
B. Meeting witha prospective client and offering the firms securities- related investment advisory
services.
C. Talking with an exisiting customer over the phone about the customer's current portfolio
holdings.
D. Speaking on a radio program about the securities market. correct answers B. Meeting witha
prospective client and offering the firms securities- related investment advisory services.
Offering investment advisory services to prospective clients falls under the definition of
advertising. however, one-on-one communications with existing customers are excluded from
the definition of an advertisement with the caveat that they don't involve new advisory services.
Also excluded are extemporaneous, live, and oral communications, either broadcast or on-on-
one.
The OTC market is the
A. Action market.
B. Listed market.
C. First market.
D. Second market correct answers D. Second market
The physical exchanges are the first market, which is an auction market. The OTC market is the
second market, which is a negotiated market.
Revenues: $1,980,000; Oporating expenses: $500,000 interest expense: $300,000; Management
fees: $100,000 Depreciation: $2,700,000. Cash flows from operations is?
A. Negative.
B. 1,080,000.
, C. 1,380,000.
D. 2,700,000. correct answers B. 1,080,000.
Depreciation is a non-cash expense. $1,980,000 minus $900,000 (oporating expenses, interest
expense and management fees) - $1,080,000 cash flow.
A customer purchased 200 shares of XYZ 2 years ago at $40. The current market price is $50. if
the customer gifts these shares to his daughter today, which statements describe the tax
consequences?
A. The daughter will not have a tax liability if she sells the shares at the current market price.
B. The customer will not have a tax liability if she sells the shares instead of gifting them.
C. The cost basis to the daughter is $50 a share.
D. The daughter will have a tax liability if she sells the shares at the current market price correct
answers D. The daughter will have a tax liability if she sells the shares at the current market
price.
The recipient (Daughter) has the tax liability if she sells any shares following the gift, and the
basis is the donor's original cost basis, or $40 a share, unless the current market price of the
shares at the time of the gift are less than the donor's original cost basis.
Limited partnerships
A. Are business entities that provide investors cash flows, and pass-through profits and losses
B. Expose investors to company liabilities proportional to the percentage of their partnership.
C. Are publicly traded.
D. Usually manage foreign currency valuations. correct answers A. Are business entities that
provide investors cash flows, and pass-through profits and losses
An investor in a limited partnership is for all practical purposes a silent partner in a business,
with liability limited to the investment made. Cash flows, profits and loss flow through to
investors in limited partnerships.
Which of the following is true regarding estate taxes?
A. The estate tax applies to the sum of all assets excluding real estate and royalties
B. Taxes are paid by the recipients.
C. Estates above a specified limit are taxed.
D. Assets are taxed, even if passed to a spouse. correct answers C. Estates above a specified limit
are taxed.
Only estates above a specified limit (currently $5 million) are taxed.
Which of the following is true regarding audits and inspections of records of registered
broker/dealers and investment advisers?
A. Audits may only be conducted with a written notice to the broker/dealer or investment
adviser.
B. Investment advisers cannot be charged for an audit.
C. Reviews can be coordinated with representatives of the SEC and FINRA to avoid duplication
of examinations.
