Series 66 Review

How many years do you need to work in order for Social Security benefits to hit?

10

If a discount or premium is mentioned, the term being discussed is _____

NAV

If a dealer is buying or selling securities, think …

markup/markdown

For an FCA, if there is a material change, the document must be amended …

immediately

For a state-registered IAR, if there is a material change, the document must be amended …

within 30 days

Cash dividend tax rate for lower tax bracket

15%

Cash dividend tax rate for lower tax bracket

20%

LLC/LLP traits:

limited liability; flow-through taxation

GP traits:

flow-through taxation; no limited liability

S corp

flow-through taxation; limited liability; max 100 shareholders

C corp (most exchange-traded companies are these)

unique tax identification number; limited liability; unlimited number of investors;

Communication directed to a specific audience, rather than the general public

sales literature

an insurance policy against theft/embezzlement; NOT a security

surety bond

Commission charged on the transaction must be disclosed to the customer on the _________ of the transaction.

confirmation

BD withholds the IPO issue from the public with the intention of taking a “free ride” on the upward movement of the stock

free riding and withholding

An RIA can only borrow money from a client if the client is a …

BD; bank; IA affiliate

Registration by Filing(Notification)

seasoned issuer; simplest method

Registration by Coordination

issuer registers with SEC and state at the same time

Registration by Qualification

most complicated; can be used for any security; usually for an IPO where there isn’t federal SEC registration

Where does an RIA have to retain records?

only in state where it has its main place of business

When can an IA take custody of client funds?

surety bond has been taken out

Criminal penalty for violation of USA

$5k per violation; 3 years of prison per violation

IA political campaign contribution limit

$350 per election IA can vote in

IA custody is considered if ____ or more of prepaid advisory fees are collected within the upcoming ___ months or less

$500; 6

When an administrator suspends a party’s license, the license can ask for a hearing and it must be held within …

15 days of written request

A registered investment advisor must maintain its articles of incorporation until …

3 years after termination

type of trust that distributes all its income to beneficiaries in the year its earned

simple trust

type of trust that doesn’t always distribute all earned income to beneficiaries; undistributed earnings will be donated to charity or taxable to the trust

complex trust

type of trust that can be changed at any time prior to the death of the person who owns the assets; AVOIDS PROBATE

revocable(inter vivos) trust

trust that is set up after trustor dies; arranged according to a will; trustee carries out will’s instructions; GOES THROUGH PROBATE

testamentary trust

Components of the numerator of a mutual fund expense ratio:

other expenses; 12b-1 fees; management fee

breakpoints means buy ____(A,B, or C) shares

A

inserting a third party between a broker-dealer and the best available price in the market resulting in a higher price to the customer

interpositioning

When do registrations need to be renewed by?

December 31 of each year

3 things IRAs can hold

US minted gold coins and bullion; partnership units; REITs

3 things IRAs can’t hold

collectibles; art; life insurance

qualified dividends are taxed at

capital gains rates

Who are qualified dividends made by:

U.S. corporations; foreign corporations with U.S. ties

Forward contracts are traded:

OTC

deposits or withdrawals >$10,000 require a CTR, which is the

Department of Treasury

tenants by entirety

married couples; each party owns 100% of the property

qualified clients requirements:

$1.4 million AUM; net worth of $2.7 million excluding primary residence

1-5% match of investor’s premium by annuity company

bonus annuity

Mortgages (are/are not) securities

are not

any communications(besides a one-on-one conversation) to current clients that offers new investment advisory services regarding securities

advertisement

an unenforceable clause in an advisory agreement that limits an investment adviser’s liability for the advisor’s gross negligence or willful malfeasance

hedge clause

does term life insurance have cash value (yes/no)

no

An SEC registration application as an investment adviser must be granted, or a proceeding must be initiated denying registration within:

45 days

What entity holds an IAR license?

state administrator

donates assets into the trust

grantor

Who can use testimonials?

FCAs and their reps

Variable Universal Life Insurance

flexible premium payment, investment options, and death benefits

If an IA accepts $1,200 or more of prepaid fees, the IA must promptly file an audited ____________ with the SEC

balance sheet

NASAA recordkeeping rules only apply to:

state-registered advisers

guaranteed renewable term insurance is __________(permanent/not permanent)

not permanent

No margin extended in a ______ account.

cash

The party responsible for filing the estate tax form is:

the executor

transfers of customer accounts require approval by:

the customer

If the beneficiary of an UTMA account passes away prior to reaching the age of majority, assets pass to:

the beneficiary’s estate

simplest type of account

individual account

state-registered IAs automatically register:

all officers

3 stipulations of IA contracts

in writing; no performance-based fees; customer approval needed to assign to another IA

offers include:

sales calls; gifts of assessable stock; warrants

When any information on a U4 changes, amend Form U4 within:

30 days

When events necessitate a statutory disqualification, amend Form U4 within:

10 days

Under the IA Act of 1940, required records must be retained for:

5 years

ADV Part 2 Brochure Supplement

IAR’s educational background, business experiences, other business activities, and disciplinary history

IARs _____(do/do not) have to meet net capital requirements to apply to be registered

do not

muni bonds are almost always exempt from _______ taxes

federal

when a dealer provides a firm quote and then changes their quote

backing away

What is the maximum amount a non-working spouse can claim of Social Security benefits?

50%

If a non-working spouse claims a percentage of the total Social Security payment, does that reduce the amount received by the working spouses?

no

The administrator must be notified _________ in writing using Form ADV of when the adviser takes custody of the securities.

promptly

What are the two times Form CRS must be given to an IA client?

beginning of relationship; on request

A bond’s YTM is most closely associated with its:

IRR

Dose a JTWROS go through probate?

no

Which type of insurance is typically offered as an employee benefit?

term life

Rules about AML activities in the US are derived from the:

Bank Secrecy Act of 1970

Do A or B shares have lower 12b-1 fees?

A shares

What time horizon do bonus annuities have?

long

How long does an administrator have jurisdiction over someone that has left the industry?

1 year

Investments to fund a fixed annuity contract are held by the ________ in the _______ account.

issuer; general

Best option to minimize estate taxes upon death:

irrevocable trust

USA anti-fraud provisions only apply to:

securities

What type of life insurance policy has fixed premiums, guaranteed cash value, and a guaranteed death benefit?

whole life

Maximum criminal penalty for a firm:

$25 million fine

Maximum civil penalty for a firm:

$1 million or treble damage, whichever is greater

Maximum criminal penalty for an individual:

$5 million and 20 years in prison

Maximum civil penalty for an individual:

treble damages

Institutional clients have assets of at least: $

1,000,000

To give advice to an employee benefit plan in a state where an IA is not registered, the plan must have at least ________ in assets

$1,000,000

Performance fees are allowed for:

qualified clients and advisory firm insiders/employees

Investment companies are:

federal covered

Privacy notice must be given at ________ and _________, unless there’s been no changes to the policy.

account opening; annually thereafter

The Administrator _____(does/does not) approve an adviser’s fee schedule.

does not

Form ADV ______(would/would not) need to be updated if an IAR changes the fee schedule

would

State-registered IAs and IARs _______(can/cannot) use testimonials

cannot

FCAs _____(can/cannot) use testimonials.

can

Investment Advisers Act of 1940 —>

SEC

Uniform Securities Act —>

state