Series 65: Dean Tinney Kaplan Practice
Test/Notes
A registered broker-dealer would not be able to open an account for
A. A deceased individual
B. The American Cancer Society
C. The sovereign government of Poland
D. A convicted felon - correct answer ✔✔A deceased individual
Gaston is a police officer and wishes to contribute to a retirement plan sponsored by the city. Gaston
wants the flexibility of being able to have unfettered penalty-free access to his funds before reaching age
59 1/2. This can only be accomplished if Gaston contributes to
A. 401(k) plan
B. 403(b) plan
C. SEP IRA
D. 457 plan - correct answer ✔✔457 plan
A married couple has lived in the same home for 40 years and now, w/ the children all gone, they've
decided to sell and move to a retirement village. They purchased the home for $80k and have accepted a
contract for $800k. The tax consequences of this sale is
A. $0 capital gain
B. $720k capital gain
C. $470k capital gain
D. $220k capital gain - correct answer ✔✔$220k
,A married couple has lived in the same home for 40 years and now, w/ the children all gone, they've
decided to sell and move to a retirement village. They purchased the home for $80k and have accepted a
contract for $800k. The tax consequences of this sale is $220k capital gain
How do you calculate this? - correct answer ✔✔First $250k is included - married couple = $500k
excluded plus the $80k
In order to compute the real rate of return for a security, it would be necessary to know all of the
following except
A. The annual dividend
B. The CPI
C. The beta of the security
D. The purchase price - correct answer ✔✔The beta of the security
Under the Uniform Securities Act, which of the following is an agent?
A. An individual who is in the business of providing investment advice on behalf of his employer
B. A clerical person who files trade confirmations for the firm
C. A broker-dealer that charges a commission as a regular part of its business
D. An individual who effects securities transactions for commissions - correct answer ✔✔An individual
who effects securities transactions for commissions
Which of the following statements about diversification through asset class allocation are true?
1. Diversification involves investing a portfolio in at least 20 different securities of the same asset class
2. Diversification is a way to reduce unsystematic risk in a portfolio
3. Diversification is a defensive investment strategy - correct answer ✔✔Diversification is a way to
reduce unsystematic risk in a portfolio and diversification is a defensive investment strategy
,The Administrator has just notified Rockland Securities that its application to operate as a broker-dealer
in this state is now effective. Which of the following parties would be considered registered?
1. The firm
2. Its officers functioning as agents
3. Its directors functioning as agents
4. Its agents - correct answer ✔✔The firm, its officers functioning as agents, and its directors functioning
as agents
Which of the following is responsible for administration of the Bank Secrecy Act?
A. The Financial Crimes Enforcement Network
B. Securities and Exchange Commission
C. Security Services
D. Department of Health and Human Services - correct answer ✔✔The Financial Crimes Enforcement
Network
Which of the following bond diversification strategies involves purchasing only short-term and long-term
bonds?
A. Immunization
B. Bullet strategy
C. Laddering strategy
D. Barbell strategy - correct answer ✔✔Barbell strategy
A 74-year-old widower has been your client since his early 50s. He is a well-informed investor and has
always seemed capable of understanding most investment concepts you have presented. At least twice a
year, the 2 of you meet to evaluate his current financial situation and objectives. In your last meeting, it
seemed to you that he was distracted and somewhat forgetful. It would be appropriate for you to do all
of the following except
A. Take detailed notes on future conversations and meetings w/ him
, B. Inform your supervisor of your concerns about his memory loss
C. Ask him to invite a friend or family member to accompany him to appointments w/ you
D. Wait to see if there are further causes for concern about his capabilities - correct answer ✔✔Wait to
see if there are further causes for concern about his capabilities
The National Securities Market Improvement Act of 1996 (NSMIA) affects federal and state laws in that
A. Federal securities laws preempt state laws
B. The Uniform Securities Act supersedes the Investment Advisers Act of 1940
C. Federal laws and state laws remain the same
D. State law preempts federal law - correct answer ✔✔Federal securities laws preempt state laws
The Administrator thinks they're ___ and the SEC is ___ - correct answer ✔✔God
An investor is analyzing the impact of the specific type of risk affecting bonds b/c the fixed cash
payments that they deliver may become less valuable. What risk is this?
A. Systematic risk
B. Interest rate risk
C. Inflation risk
D. Credit risk - correct answer ✔✔Inflation risk
What beats inflation over the long-term? - correct answer ✔✔Common stock
What keeps pace w/ inflation? - correct answer ✔✔TIPS
Being a limited partner in a direct participation program is analogous to being
A. An agent of a broker-dealer
Test/Notes
A registered broker-dealer would not be able to open an account for
A. A deceased individual
B. The American Cancer Society
C. The sovereign government of Poland
D. A convicted felon - correct answer ✔✔A deceased individual
Gaston is a police officer and wishes to contribute to a retirement plan sponsored by the city. Gaston
wants the flexibility of being able to have unfettered penalty-free access to his funds before reaching age
59 1/2. This can only be accomplished if Gaston contributes to
A. 401(k) plan
B. 403(b) plan
C. SEP IRA
D. 457 plan - correct answer ✔✔457 plan
A married couple has lived in the same home for 40 years and now, w/ the children all gone, they've
decided to sell and move to a retirement village. They purchased the home for $80k and have accepted a
contract for $800k. The tax consequences of this sale is
A. $0 capital gain
B. $720k capital gain
C. $470k capital gain
D. $220k capital gain - correct answer ✔✔$220k
,A married couple has lived in the same home for 40 years and now, w/ the children all gone, they've
decided to sell and move to a retirement village. They purchased the home for $80k and have accepted a
contract for $800k. The tax consequences of this sale is $220k capital gain
How do you calculate this? - correct answer ✔✔First $250k is included - married couple = $500k
excluded plus the $80k
In order to compute the real rate of return for a security, it would be necessary to know all of the
following except
A. The annual dividend
B. The CPI
C. The beta of the security
D. The purchase price - correct answer ✔✔The beta of the security
Under the Uniform Securities Act, which of the following is an agent?
A. An individual who is in the business of providing investment advice on behalf of his employer
B. A clerical person who files trade confirmations for the firm
C. A broker-dealer that charges a commission as a regular part of its business
D. An individual who effects securities transactions for commissions - correct answer ✔✔An individual
who effects securities transactions for commissions
Which of the following statements about diversification through asset class allocation are true?
1. Diversification involves investing a portfolio in at least 20 different securities of the same asset class
2. Diversification is a way to reduce unsystematic risk in a portfolio
3. Diversification is a defensive investment strategy - correct answer ✔✔Diversification is a way to
reduce unsystematic risk in a portfolio and diversification is a defensive investment strategy
,The Administrator has just notified Rockland Securities that its application to operate as a broker-dealer
in this state is now effective. Which of the following parties would be considered registered?
1. The firm
2. Its officers functioning as agents
3. Its directors functioning as agents
4. Its agents - correct answer ✔✔The firm, its officers functioning as agents, and its directors functioning
as agents
Which of the following is responsible for administration of the Bank Secrecy Act?
A. The Financial Crimes Enforcement Network
B. Securities and Exchange Commission
C. Security Services
D. Department of Health and Human Services - correct answer ✔✔The Financial Crimes Enforcement
Network
Which of the following bond diversification strategies involves purchasing only short-term and long-term
bonds?
A. Immunization
B. Bullet strategy
C. Laddering strategy
D. Barbell strategy - correct answer ✔✔Barbell strategy
A 74-year-old widower has been your client since his early 50s. He is a well-informed investor and has
always seemed capable of understanding most investment concepts you have presented. At least twice a
year, the 2 of you meet to evaluate his current financial situation and objectives. In your last meeting, it
seemed to you that he was distracted and somewhat forgetful. It would be appropriate for you to do all
of the following except
A. Take detailed notes on future conversations and meetings w/ him
, B. Inform your supervisor of your concerns about his memory loss
C. Ask him to invite a friend or family member to accompany him to appointments w/ you
D. Wait to see if there are further causes for concern about his capabilities - correct answer ✔✔Wait to
see if there are further causes for concern about his capabilities
The National Securities Market Improvement Act of 1996 (NSMIA) affects federal and state laws in that
A. Federal securities laws preempt state laws
B. The Uniform Securities Act supersedes the Investment Advisers Act of 1940
C. Federal laws and state laws remain the same
D. State law preempts federal law - correct answer ✔✔Federal securities laws preempt state laws
The Administrator thinks they're ___ and the SEC is ___ - correct answer ✔✔God
An investor is analyzing the impact of the specific type of risk affecting bonds b/c the fixed cash
payments that they deliver may become less valuable. What risk is this?
A. Systematic risk
B. Interest rate risk
C. Inflation risk
D. Credit risk - correct answer ✔✔Inflation risk
What beats inflation over the long-term? - correct answer ✔✔Common stock
What keeps pace w/ inflation? - correct answer ✔✔TIPS
Being a limited partner in a direct participation program is analogous to being
A. An agent of a broker-dealer
