Green light 1 Questions & 100% Correct Answers- Latest Test | Graded A+ | Passed
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Course
Green light
Institution
Green Light
An investment adviser representative advises a client in a low income tax bracket to
purchase municipal securities. Which of the following statements best describes this
action?
a. The advice by the representative is unethical
b. Advice concerning tax-free securities is excluded from the pr...
Green light 1 Questions & 100% Correct
Answers- Latest Test | Graded A+ | Passed
An investment adviser representative advises a client in a low income tax bracket to
purchase municipal securities. Which of the following statements best describes this
action?
a. The advice by the representative is unethical
b. Advice concerning tax-free securities is excluded from the provisions of the Investment
Advisers Act of 1940
c. The action constitutes fraud
d. The Administrator has no jurisdiction over municipal securities unless the securities are
out-of-state bonds
✓ -:- a. The advice by the representative is unethical
The action taken by the representative is unethical rather than fraudulent. Municipal
securities provide federally exempt interest income. This is advantageous to individuals in
higher tax brackets. Recommending the security to an individual in a lower tax bracket is
not suitable. There is no indication that an intent to deceive the client was employed;
therefore, an assertion of fraud is inappropriate.
Any appreciation or depreciation in real estate that the client owns would be included on
the client's balance sheet, not his personal income statement. Choices (a), (c), and (d) are all
sources of income that should be included on the client's income statement.
According to the Uniform Securities Act, which of the following entities or persons must
register as a broker-dealer in State A?
a. The trust department of a bank located in State A
b. A broker-dealer located in State B, that conducts transactions for customers vacationing
in State A
c. A person located in State A, who is in the business of providing advice relating to
securities
d. A person located in State A who effects securities transactions for her own account or the
account of others
4|Page | Grade A+| 2024/2025
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