Series 65: Simulated Exam 6 || with 100% Correct Answers.
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Series 65: Simulated
Institution
Series 65: Simulated
In a DPP, a general partner is all of the following except
A. a key executive who makes day-to-day business decisions.
B. one who buys and sells the program's property.
C. one who appoints the property manager.
D. one who has limited liability. correct answers One who has limited liability
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Series 65: Simulated Exam 6 || with 100% Correct Answers.
In a DPP, a general partner is all of the following except
A. a key executive who makes day-to-day business decisions.
B. one who buys and sells the program's property.
C. one who appoints the property manager.
D. one who has limited liability. correct answers One who has limited liability
A general partner of a limited partnership is a key executive of the program who purchases and
sells the property and/or appoints someone to manage the property. The general partner does not
have limited liability. By not allowing the general partner to have limited liability, the program is
able to rule out limited liability as a corporate characteristic.
Which of the following statements regarding standard deviation is true?
A. Standard deviation is expressed in dollars.
B. Two investments with the same expected return will not necessarily have the same level of
risk and standard deviation.
C. The smaller the deviation from the average performance, the riskier the investment becomes.
D. Standard deviation quantifies expected return. correct answers Two investments with the
same expected return will not necessarily have the same level of risk and standard deviation
Two investments can have the same expected return but have significantly different deviations.
The investment with the larger standard deviation is the riskier of the 2 and will be more volatile
even if the expected returns are the same. Standard deviation measures the deviation percentage
from the average of the expected or historical returns of an investment. The larger the standard
deviation, the riskier the investment. Standard deviation is not expressed in dollars, it is
expressed in percentages.
Which of the following would be considered a security under the provisions of the Uniform
Securities Act?
A. An endowment contract issued by a life insurance company licensed to do business in the
state
B. A fixed annuity contract issued by a life insurance company not authorized to do business in
the state
C. A certificate of interest in a real estate limited partnership offering
D. Gold bullion correct answers A certificate of interest in a real estate limited partnership
offering
It is always best to remember what is not a security than try to remember all of the things that
are. All insurance contracts, other than variable ones, are not securities. Commodities, including
precious metals, are not securities.
,Which of the following actions would not result in the denial or revocation of the registration of
a security?
A. The registration statement was found to be both incomplete and misleading.
B. The provisions of the Uniform Securities Act were violated by persons filing the registration
statement.
C. The registrant's underwriters earned underwriting fees that were considered reasonable by the
Administrator.
D. The registrant engaged in illegal business operations. correct answers The registrant's
underwriters earned underwriting fees that were considered reasonable by the Administrator
Underwriters may, and often do, earn lucrative underwriting fees; only fees considered excessive
and unreasonable are prohibited. A registration statement that is incomplete or a misleading
registration will result in denial of the registration. Illegal acts by the registrant (the issuer) or
those filing the registration statement will lead to denial (if found before the registration is
effective) or revocation (if discovered afterwards).
Caroline considers her investment skills to be much greater than they actually are. She takes
credit for many decisions that have positive results but blames the economy when her
investments do poorly. Caroline's behavior is an example of
A. regret aversion.
B. confirmation bias.
C. anchoring.
D. overconfidence. correct answers Overconfidence
Caroline's behavior is an example of overconfidence. Confirmation bias is paying attention to
information that supports a preconceived opinion and poorly made decision, while disregarding
accurate, unsupportive information. Anchoring is making irrational decisions based on
information that should have no influence on the decision at hand. Regret aversion is when the
investor prepares herself in such a way as to avoid distress over an adverse outcome.
According to the Investment Advisers Act of 1940, the SEC must either grant investment adviser
registration or begin proceedings to determine whether registration should be denied within how
many days of filing?
A. 45
B. 90
C. 60
D. 30 correct answers 45
The SEC is required by the Investment Advisers Act of 1940 to either grant an adviser
registration or begin proceedings to determine whether the registration should be denied within
45 days of application.
,The goal of modern portfolio theory (MPT) is to construct the most efficient portfolio. An
efficient portfolio is one that offers
A. the least risk for a given amount of return
B. the highest correlation coefficient
C. the lowest Sharpe ratio
D. the most return for the most risk correct answers The least risk for a given amount of return
Under MPT, an efficient portfolio is one that manages risk to provide the optimum return. That
is, for any given amount of return, the portfolio achieves that return with the lowest possible risk.
Conversely, it can be stated that you receive the highest possible return with the lowest possible
risk. Analysts using MPT are seeking a high Sharpe ratio.
When it comes to advertising by investment advisers and their representatives, which of the
following would most likely be acceptable to the SEC?
A. A paid testimonial from a nonaffiliated third party
B. Showing past performance over the most recent 12 months of a group of securities selected
from all of the adviser's recommendations
C. A like from a client on an investment adviser representative's Facebook post that announced
the birth of her most recent child
D. Offering prospective clients a free 3-month trial to the investment adviser's special investment
formula that ensures success correct answers A like from a client on an investment adviser
representative's Facebook post that announced the birth of her most recent child
Although the SEC Model Rule for Investment Advisers has specific requirements for
testimonials, it has been determined that a Facebook like for a non-business-related matter (such
as the birth of a child, a wedding anniversary, or vacation photos) is not considered a testimonial.
The rule is tricky in that it states that testimonials come from clients and third parties give
endorsements. When showing past performance, an investment adviser cannot cherry-pick the
ones it wishes to show—all recommendations of similar types of securities (all common stock or
all bonds) must be shown. No securities professional can ever ensure investment success; that
would be considered a performance guarantee.
Debts that will come due more than one year after the date on the balance sheet are known as
A. accounts payable.
B. current liabilities.
C. fixed (or long-term) liabilities.
D. deferred charges. correct answers Fixed (or long-term) liabilities
Debts that will come due more than one year after the date on the balance sheet are known as
fixed (or long-term) liabilities. Current liabilities are debts that may come due within one year
from the date on the balance sheet.
, A customer's limit order to buy 500 shares of QRS at 60 is executed and the agent reports the
trade execution to the customer. One hour later, the customer notices that QRS is down 2 points
and informs the agent that he no longer wants the stock and is not planning to pay for it. The
agent should tell the customer that
A. he may sell the stock at the purchase price in the open market
B. the firm will repurchase the securities from the customer for the price paid
C. he owns the stock and must submit payment
D. he personally will repurchase the securities from the customer for the price paid correct
answers He owns the stock and must submit payment
The customer has entered into a contract to purchase a security as soon as the order is executed.
The customer owns the stock and must submit payment.
To comply with ERISA Section 404(c), a 401(k) plan must satisfy all the following requirements
except
A. plan participants must have the ability to transfer assets among investment options at least
quarterly.
B. plan participants must have access to at least 3 core diversified investment options.
C. sufficient information must be provided to plan participants about investment alternatives
available under the plan to permit informed decision making.
D. plan participants must be provided with the services of a Certified Financial Planner at least
annually to assist them with investment decision making. correct answers Plan participants must
be provided with the services of a Certified Financial Planner at least annually to assist them
with investment decision making
Section 404(c) relieves a plan fiduciary from liabilities associated with losses stemming from
employee investment choices. To qualify for this protection, the plan must provide at least 3 core
diversified investment options, participants must have the ability to transfer assets among
investment options at least quarterly, and sufficient information must be provided to participants
to allow for informed decision making.
The long party to a put option contract has
A. the right to buy the underlying asset.
B. the obligation to buy the underlying asset.
C. the obligation to sell the underlying asset.
D. the right to sell the underlying asset. correct answers The right to sell the underlying asset
Being long a put option means owning the option. Owners have rights, while sellers have
obligations. A put option gives the owner the right to sell the underlying asset at the exercise
price. The seller of the put option is obliged to take delivery and pay the exercise price if the
buyer exercises the option.
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