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Series 66 - Mastery Exam | Questions Solved 100% with Verified Correct Answers Graded A
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Series 66 - Mastery Exam | QuestionsSolved 100% with Verified Correct
Answers Graded A
A 45-year-old client has just received an inheritance and would like to invest $100,000 into a
growth mutual fund offered by your firm. The client intends to use the money to
supplement retirement. You should probably recommend the purchase of
A)
a fixed annuity
B)
Class A shares
C)
Class B shares
D)
Class C shares - ANSWER B
**Class A shares have a front-end load, but a low- or no asset-based sales charge. Class B and C
shares don't have a front-end load, but do have a higher asset-based sales charge. Class C
shares always have a 12b-1 charge.
-Class A: Better for wealthy investors, long time horizon.
-Class B: Better for investors with little cash investments and long time horizon. (At least 5-8
years.)
-Class C: Better for retail investors with a short time horizon. (Usually 1-3 years).
An investment adviser whose primary business is the rendering of investment advice
providing investment supervisory services is entitled to use the term:
A)
investment counsel.
B)
,senior adviser.
C)
pension consultant.
D)
financial planner. - ANSWER A
*Under the Investment Advisers Act of 1940, the term "investment counsel" may only be
used by an investment adviser if the giving of advice is the primary business of the firm.
Mr. Peabody Fawcett and his sister, Ms. Gwenyth Paige-Newberry open a brokerage account at
your firm with an initial deposit of $11 million. The account is opened as tenancy in common
(TIC) with Peabody owning 40% and Gwenyth the balance. Several years later, Peabody is
fatally injured while playing polo. As a result
A)
the account will be frozen until the results of the probate court are released
B)
40% of the value of the account will be transferred to an estate account in his name and 60%
will be transferred into an individual account in her name
C)
the account will be frozen until receiving instructions from the executor of Mr.
Fawcett's account
D)
Mr. Fawcett's share will be transferred to his sister and an individual account will be opened in
her name - ANSWER B
*Page 337 LEM
*Assets pass to tenants estate upon death.
You have a 45-year-old client wishing to save for retirement. The client does not have a great
deal of investment sophistication and inquires about the risks you have exposed him to by
,placing the majority of his portfolio in listed common stocks. You would respond that one
risk he should not concern himself with is
A)
inflation risk
B)
liquidity risk
C)
business risk
D)
systematic risk - ANSWER B
*A portfolio of listed common stocks will have little to no liquidity risk as listed shares are
easily traded. Even though common stock tends to offer protection against inflation, there is
no assurance that the portfolio will keep pace with the rising cost of living.
Which of the following is required to effectuate annual renewal of the registration of
an investment adviser representative affiliated with a federal covered adviser?
A)
Renewal notice to the SEC
B)
Form U-4
C)
Consent to service of process
D)
State licensing fee - ANSWER D
*. State Licensing Fee. All investment adviser representatives are registered with the states, not the
SEC. Renewal requires the payment of the annual renewal registration or licensing fee. The
, consent to service of process is a permanent document submitted with the initial
application for registration.
An investment of $5,000 made 16 years ago is now worth $20,000. Using the Rule of 72,
the approximate compounded annual rate of return is
A)
25%.
B)
4.5%.
C)
9.0%.
D)
18%. - ANSWER C
*shortcut method to determine the # of years it takes for an investment to double.
*Page 190 LEM
Serendipity Asset Planning (SAP) is a covered investment adviser doing business in 48
states. Alicia Adams is an IAR with SAP and splits her time between an office in state X and
state Z. Adams has retail clients as follows:
10 clients in state W
30 clients in state X
65 clients in state Y
4 clients in state Z
Adams would have to register as an IAR in
A)
states X and Y.
B)
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