Series 66 – Uniform Combined State Law Exam Fiduciary Duties & Suitability Standards 1

Question 1

Under the Uniform Securities Act, investment advisers are held to which standard when dealing with clients?

Accepted Answer

Fiduciary standard

Answer

Suitability standard

Answer

Best efforts standard

Answer

Prudent speculator standard

Question 2

Which of the following best describes the fiduciary duty of loyalty owed by an investment adviser to a client?

Accepted Answer

Placing the client's interests ahead of the adviser's own interests

Answer

Recommending only the highest-yielding investments

Answer

Disclosing only material conflicts of interest

Answer

Ensuring all trades are executed at the lowest commission

Question 3

A broker-dealer registered under the Uniform Securities Act is generally held to which standard when making recommendations to clients?

Accepted Answer

Suitability standard

Answer

Fiduciary standard

Answer

Best interest standard

Answer

Negligence standard

Question 4

Under the fiduciary standard, what must an investment adviser do when a conflict of interest exists?

Accepted Answer

Disclose the conflict and obtain client consent

Answer

Avoid all conflicted transactions entirely

Answer

Refer the client to another adviser

Answer

Seek approval from the state securities administrator

Question 5

Which of the following client factors is LEAST relevant when determining the suitability of an investment recommendation?

Accepted Answer

The adviser's commission rate

Answer

Investment time horizon

Answer

Risk tolerance

Answer

Current income and net worth

Question 6

An investment adviser who executes transactions without the client's authorization in a non-discretionary account is most likely violating which duty?

Accepted Answer

Duty of loyalty

Answer

Duty of care

Answer

Duty of confidentiality

Answer

Duty to disclose

Question 7

What information is an investment adviser required to gather under the 'know your customer' principle before making a recommendation?

Accepted Answer

The client's financial situation, investment objectives, and risk tolerance

Answer

Only the client's current portfolio holdings

Answer

The client's tax returns for the past three years

Answer

The client's employment history and credit score

Series 66 – Uniform Combined State Law Exam Fiduciary Duties & Suitability Standards 1

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