FSA EXAM QUESTIONS WITH CORRECT DETAILED ANSWERS (ALREADY GRADED A+)
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Course
FSA
Institution
FSA
FSA EXAM QUESTIONS WITH CORRECT DETAILED ANSWERS (ALREADY GRADED A+)
After reviewing a large customer's account, an investment adviser determines that there is a conflict of interest between the adviser and the customer. Which action should be taken by the adviser?
A. The adviser should refra...
FSA EXAM QUESTIONS WITH CORRECT
DETAILED ANSWERS (ALREADY
GRADED A+)
After reviewing a large customer's account, an investment adviser determines that there
is a conflict of interest between the adviser and the customer. Which action should be
taken by the adviser?
A. The adviser should refrain from giving the customer investment advice until the State
Administrator has been notified of the conflict
B. The adviser should notify the customer about the conflict in writing and let the
customer decide what action to take, if any
C. The adviser should terminate the relationship with the customer
D. The adviser is under no obligation to take any action since it has a fiduciary
relationship with the customer - Answer-B
The basic rule on conflicts of interest is that they must be disclosed to the customer in
writing. Then it is up to the customer to determine what course of action to take, if any,
because of the existence of the conflict.
Which of the following falls under the jurisdiction of the Administrator of the State of
New Jersey?
A. The purchase of call options by a customer living in New Jersey via a Nebraska-
based broker-dealer's Internet web site
B. The sale of certificates of deposit by an Internet bank located in South Dakota to
customers residing in the State of New Jersey
C. The delivery of securities by DTCC located in New York to customers located in the
State of New Jersey
D. The redemption of mutual fund shares with the paying agent located in
Massachusetts by customers located in the State of New Jersey - Answer-A
An offer of securities made through any medium (such as the Internet), if received by a
customer of a State, is subject to that State Administrator's jurisdiction. Since this
customer is living in New Jersey, and accessed the Nebraska-based broker-dealer's
website, the New Jersey (and Nebraska) Administrator(s) have jurisdiction. Offers of
certificates of deposit by banks are not securities and hence do not fall under the
Administrator's jurisdiction. The delivery of securities by a depository such as DTCC
(Depository Trust and Clearing Corporation) is not subject to the Administrator's
jurisdiction - it is the sale of securities that is subject to the Administrator's jurisdiction.
Similarly, the redemption of mutual funds is not a sale of securities and the
Administrator does not have jurisdiction.
, Which of the following is NOT defined as a "broker-dealer" under the Uniform Securities
Act?
A. An agent of a broker-dealer who effects securities transactions
B. A person who effects securities transactions for its own account
C. A person who effects securities transactions for the account(s) of others
D. An agent of a broker-dealer who effects securities transactions that are not recorded
on the books of the broker-dealer - Answer-A
Which person is EXCLUDED from the definition of a broker-dealer under the Uniform
Securities Act?
A. A person with no place of business in the State who solely effects exempt
transactions for customers that reside in the State
B. A person with no place of business in the State who solely effects transactions in
federal covered securities in the State
C. A person with no place of business in the State that effects underwriting transactions
with other broker-dealers in the State
D. A person with no place of business in the State who only effects securities
transactions with accredited investors in the State - Answer-C
All of the following persons are excluded from the definition of a broker-dealer or are
exempt from registration as a broker-dealer under the Uniform Securities Act, EXCEPT
a firm:
A. with an office in the State that effects trades exclusively with other broker-dealers
B. with no office in the State that effects trades exclusively with trust companies and
other financial institutions
C. with no office in a State with a broker-dealer "de minimis" exemption that has a few
clients in the State in the preceding 12 months
D. with an office in that State that is a trust company that deals with the public -
Answer-A
All of the following are EXCLUDED from the definition of a broker-dealer under the
Uniform Securities Act EXCEPT a firm with no place of business in the State that:
A. has a few clients in the State with a de minimis exemption
B. deals exclusively with issuers of securities
C. deals exclusively with other broker-dealers
D. deals exclusively with insurance companies - Answer-A
The "de minimis" exemption for broker-dealers is only offered in a minority of States,
and typically applies to out-of-state broker-dealers who only have 3 or fewer clients in
that State. Thus. Choice A qualifies for the exemption and does not have to register
because it is exempt from registration (as opposed to being excluded from the definition
and therefore not being required to register). Thus, Choice A is defined as a broker-
dealer, but it is one that is exempt from registration in that State.
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