Finra Jurisdiction

When completing an individual tax return on Form 1040, one of the most important numbers is the adjusted gross income (AGI). Which of the following would NOT be included in AGI? A) Tax-exempt interest received from municipal bonds B) Alimony received from a former spouse C) Qualifying dividends on common stock D) Salary and commissions

USAAdvisers is registered in 10 midwestern states. Regarding financial requirements, USAAdvisers must meet those of A) the SEC B) each state in which it has a place of business C) the state in which its principal office is located D) the state with the most stringent financial requirements

Publicly traded corporations are required to furnish their stockholders with financial information no less frequently than annually. This is usually accomplished by providing an annual report. In lieu of the annual report, this requirement may be met by the furnishing of a: A) Form ADV Part 2. B) Form 10-K. C) Form 8-K. D) Form 10-Q.

An IAR is registered in New York and Vermont. While working in his New York office, he places a call to the cell phone of one of his clients who happens to be on vacation in Ohio. After describing the reasons for a particular stock recommendation, the client asks the agent to call back tomorrow. The agent does so and reaches the client in Indiana. The client decides to purchase 100 shares of the stock. When the client arrives home, he notices that he has already received his stock certificate from the transfer agent located in Illinois. In this case, jurisdiction resides with the Administrator of: I. New York. II. Ohio. III. Indiana. IV. Illinois.A) I and IV. B) II and III. C) I, II and III. D) I, II, III and IV.

According to the Efficient Market Hypothesis, one using fundamental analysis would most likely be of the opinion that he could do better than one following A) charts B) strong-form market efficiency C) semi-strong form market efficiency D) weak-form market efficiency

Although NASAA's rules dealing with customer suitability do not specify unique requirements for seniors, it is generally accepted that agents will give greater consideration to which of the following when making recommendations to their senior clients? I. Age. II. Life stage. III. Retirement savings. IV. Tax status.A) III and IV. B) II and III. C) I and II. D) I and IV.

Frank and Joe Hardy have formed Hardy Investigative Services, (HIS), with each owning 50% of the stock in the company. HIS is organized as an S corporation. Unless receiving an extension, the Form 1120S is due A) April 15 B) January 15 C) 90 days after the end of their fiscal year D) March 15

Under the Investment Advisers Act of 1940, which of the following statements are TRUE? I.Part 2 of Form ADV may be used to satisfy the brochure requirement. II.Advisers who have custody of clients' securities or require prepaid fees in excess of $1,200, 6 months or more in advance are required to provide audited balance sheets to their clients. III.Advisers with $110 million or more in assets under management must be SEC registered and are exempt from state registration. IV.It is misleading and prohibited for an adviser to use RIA or R.I.A. after his name.A) I, II, III and IV. B) II, III and IV. C) III and IV. D) I, III and IV.

Many fixed income investors are looking to avoid loss of principal. Which of the following would likely have the lowest degree of exposure to credit risk? A) A rated general obligation municipal bond. B) Ba rated corporate mortgage bond. C) Baa rated municipal revenue bond. D) Aa rated corporate debenture.

Under the Uniform Securities Act, an adviser who has custody of client securities or funds must: I.submit to a surprise audit of client accounts by an independent accountant each year. II.provide an audited balance sheet to the Administrator each year and include a balance sheet with his disclosure statement (brochure) to all prospective clients. III.send monthly statements to clients on the status of their accounts.A) II and III. B) I and III. C) I, II and III. D) I and II.

When performing a capital needs analysis for a client, factors to be considered would include I.the client's projected earnings II.the projected inflation rate III.projected market volatility IV.the client's ageA) III and IV B) I, II, and IV C) I and II D) I, II, III, and IV

A registered investment adviser hires his friend to act as an adviser solicitor on his behalf. The friend asks if he is required to identify his affiliation with the adviser when contact is made to potential customers. If the adviser says that such disclosure is not required, he is not in violation of provisions of the Investment Advisers Act of 1940, which require disclosure of a relationship between an investment adviser and an investment adviser solicitor, if: A) the friend is an employee of the advisory firm. B) the friend is a client of the adviser's firm. C) There are no exceptions. D) the solicitations are for impersonal advisory services.

To protect the public, the Administrator may: I. deny the registration of an agent with insufficient net capital. II. require an applicant for registration as both a broker/dealer and an investment adviser to limit activities to those of a broker/dealer due to lack of qualifications to render investment advice. III. require an applicant for registration to submit to an oral examination.A) I, II and III. B) I and II. C) I and III. D) II and III.

Under the Uniform Securities Act, the Administrator may require a broker/dealer to post a surety bond of: A) $10,000. B) $50,000. C) An amount not in excess of that set by the SEC. D) $25,000.

KAPCO Securities is a broker/dealer registered with the SEC doing business throughout the Midwest. KAPCO must meet the net capital requirements of: A) the state in which its principal office is located. B) each state in which they do business. C) the SEC even if one or more of the states in which they are registered has a higher net capital standard. D) the state with highest net capital requirements of the states in which it does business.

A 55-year-old customer in the 18% tax bracket wants to maximize current return with a moderate degree of risk. He has just inherited $25,000 and seeks a bond investment. A suitable bond would have which of the following features? A) Little or no call protection. B) Relatively high rating. C) Tax-exempt status. D) Rating below Ba but above D.

All of the following are exempt transactions EXCEPT: A) unsolicited, nonissuer transactions. B) commercial paper with a maturity of no longer than 270 days. C) the sale of securities to a closed-end investment company. D) isolated, nonissuer transactions.

What is the term used to describe a person on the floor of a stock exchange who stands ready to buy or sell shares of specified stocks? A) Floor broker. B) Specialist. C) Market maker. D) Arbitrageur.

Willful violations under the Investment Advisers Act of 1940 may result in which of the following punishment(s)? I. $10,000 fine. II. A prison term of up to 10 years. III. Being barred from association with any investment adviser.A) I, II and III. B) I and III. C) I only. D) II and III.

Which of the following are exempt transactions under the Uniform Securities Act? I.XYZ Company signs an agreement to sell 1 million shares of its stock to ABC broker/dealer, who will then act as an underwriter in marketing the shares to the public. II.A non-issuer sale of securities listed on the Nasdaq Stock Market to several individual clients of the agent. III.Mr. Jones sells 100 shares of an unregistered security he owns to his next--door neighbor for $1,000. IV.A customer calls a registered agent and asks to buy 1,000 shares of SPHG, a company the representative is not familiar with, and the representative fills the order.A) II and IV. B) I and III. C) I and II. D) I, III and IV.

In which of the following funds would a buy-and-hold style most likely be used by the manager? A) Market timing fund. B) Information technology fund. C) Equity index fund. D) Options income fund.

All of the following statements are true regarding investment advisory contracts under NASAA's Model Rule on Unethical Business Practices of Investment Advisers, Investment Adviser Representatives, and Federal Covered Advisers EXCEPT: A) the contract must be written in 10-point type or larger. B) the contract must describe the discretionary powers the client is granting to the adviser. C) the contract may be for an initial period of more than 1 year. D) the contract must describe the services the adviser will provide to the client.

Which of the following is (are) NOT exempt from registration as an investment adviser representative in the state in which they conduct business? I. A certified financial planner who prepares financial plans and whose only compensation is commissions. II. An insurance agent who prepares comprehensive financial plans and receives commissions on any insurance products purchased by his clients. III. A broker/dealer with extensive business in the state. IV. A mutual fund company with offices and clients in the state.A) I, II, III and IV. B) I only. C) I and II. D) III and IV.

Which of the following are characteristics of commercial paper? I.Backed by money market deposits. II.Negotiated maturities and yields. III.Issued by insurance companies. IV.Not registered with the SEC.A) I and II. B) III and IV. C) II and IV. D) I and III.

To register a sole proprietorship as an investment adviser in a state, the application for initial registration (Form ADV) must be filed with the appropriate party. This application must include: I.a consent to service of process. II.the appropriate fees. III.any information to be furnished or disseminated to any client or prospective client. IV.a copy of the articles of incorporation for the business.A) I, II, III and IV. B) II and III. C) I and IV. D) I, II and III.

A customer with liquid net worth of $25,000 tells an agent that she has $1,000 to invest. Explaining how diversification can reduce risk, the agent recommends that the customer purchase eight different over-the-counter stocks, each trading at approximately $1 per share. With regard to the above situation: I. the recommendation is suitable for the customer because the agent recommends a diversified stock portfolio. II. high-risk penny stocks are not suitable recommendations for this low net worth customer. III. the agent may be exhibiting a pattern of excessive commissions (churning) in his customer's account. IV. once the customer agrees to the agent's recommendation, it is no longer considered an unsolicited transaction.A) I and IV. B) II only. C) III and IV. D) II and III.

Damon Raymond is an agent with ABC Investment Planning, a registered broker/dealer and investment adviser. Under what circumstances would Damon not have to obtain client consent when ABC Investment Planning is acting in a principal capacity? A) Never B) Only if the client terminates the advisory relationship C) When the trade that is made is unrelated to the advisory relationship D) When the client has given ABC blanket permission to engage in this type of transaction

Which of the following statements regarding the Investment Advisers Act of 1940 and the adviser's brochure are CORRECT? A) Annual delivery of a summary of material changes relieves the adviser of the obligation to deliver a brochure. B) Advisers must deliver the brochure to clients for whom they offer impersonal advisory service only when the annual charge does not reach $500. C) Each client must receive the brochure no later than the entering into the advisory contract. D) Each client must receive the brochure no later than 48 hours after entering into the advisory contract.

An agent of a broker/dealer has a client who lost her job but will be starting a new job in three weeks. The client is in need of $900 for the three week gap. Under what circumstances may the agent arrange a loan for the client? A) If the loan is repaid within 30 days B) If the client is agent's niece C) If the loan is less than $1,000 D) If the client has $5,000 in her brokerage account

When are estate taxes due? A) Nine months after death. B) Six months after death. C) Nine months after valuation. D) Six months after valuation.

Registration statements for securities under the Uniform Securities Act are effective for: A) one year from the date of issue. B) one year from the effective date. C) one year from the previous December 31. D) a period of time determined by the Administrator for each issue.