If the Administrator believes that a violation of the act has occurred or is about to occur, the Uniform
Securities Act grants the office the power to
issue a cease and desist order
seek an injunction against the alleged violation
seek to have a receiver appointed over the violator's assets
seek to have the violator make restitution to investors
A)
I, II, and III
B)
III and IV
C)
I and II
D)
I, II, III, and IV - D
*The Administrator has the power to issue cease and desist orders, apply to courts for temporary or
permanent injunctions or restitution to investors, or have the court appoint receivers over a violator's
assets.
According to standard terminology used in the securities industry, when a person sells securities out of
inventory, that person is acting in the capacity of a (an):
A)
agent.
B)
investor.
C)
principal.
D)
,broker. - C
One of your clients is a widow with three grown children. She wants the assets in her account to go to
her children upon her death—50% to her daughter and 25% to each of her sons. She does not want the
estate to have to deal with probate on these assets. How should her account be set up?
A)
Transfer on death
B)
Tenants in the entirety
C)
Tenants in common
D)
Joint tenants with right of survivorship - A
On a scheduled premium variable life insurance policy, the insured is guaranteed:
A)
nothing.
B)
at least 100% of the stated death benefit.
C)
that premiums may be reduced due to better than projected performance in the separate account.
D)
at least 100% of the stated cash value. - B
*ExplanationA scheduled premium variable life contract is issued with a guaranteed minimum death
benefit. If the individual is concerned about having the minimum guarantee, you should recommend the
scheduled contract.U15LO7
,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 - 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. - 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
-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)
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