Series 65 – Uniform Investment Adviser Law Exam Laws, Regulations, and Ethics

Question 1

Under the Investment Advisers Act of 1940, who is generally required to register with the SEC?

Accepted Answer

Investment advisers with $110 million or more in assets under management

Answer

All investment advisers regardless of AUM

Answer

Investment advisers with fewer than 15 clients

Answer

Only advisers who charge performance-based fees

Question 2

What constitutes 'churning' in an investment account?

Accepted Answer

Excessive trading in a client's account to generate commissions for the adviser, regardless of the client's interest

Answer

Rotating between different asset classes quarterly

Answer

Rebalancing a portfolio more than twice per year

Answer

Investing in highly liquid instruments to take advantage of short-term price changes

Question 3

What is insider trading?

Accepted Answer

Trading securities based on material, non-public information in violation of a duty

Answer

Trading securities based on publicly available information

Answer

Buying shares in a company where you are employed

Answer

Selling shares before a public earnings announcement

Question 4

Which document must investment advisers provide to clients under the Investment Advisers Act?

Accepted Answer

Form ADV Part 2 (the brochure)

Answer

Form 10-K

Answer

Form S-1

Answer

Schedule 13D

Question 5

What is a 'conflict of interest' in the context of investment advisory relationships?

Accepted Answer

A situation where the adviser's personal or financial interests could improperly influence advice given to the client

Answer

A disagreement between the adviser and client about investment strategy

Answer

A legal dispute between two competing advisers

Answer

The risk that client goals conflict with market conditions

Question 6

What is the Uniform Securities Act designed to do?

Accepted Answer

Provide a model framework for state securities regulation, including registration of securities, advisers, and broker-dealers

Answer

Standardize brokerage commission rates nationally

Answer

Replace all federal securities laws

Answer

Establish a uniform fee schedule for investment advisers