Series 66 – Uniform Combined State Law Exam Professional Development & Standards 3

Question 1

An investment adviser must deliver its Form ADV Part 2A brochure to a new client:

Accepted Answer

Before or at the time the advisory contract is entered into

Answer

The brochure must be delivered before or at the time of entering the advisory contract so the client can review it first.

Question 2

An investment adviser representative's fiduciary duty to clients consists primarily of:

Accepted Answer

A duty of care and a duty of loyalty

Answer

Fiduciary duty requires acting in the client's best interest, with care in advice and loyalty by avoiding or disclosing conflicts.

Question 3

An adviser wants to sell a security from its own inventory to an advisory client. Which is required?

Accepted Answer

Written disclosure of the capacity and client consent before the transaction is completed

Answer

Principal transactions require disclosure in writing of the adviser's role and the client's consent before completion of the trade.

Question 4

An adviser's affiliated broker-dealer acts as broker for both the advisory client and the other party in a trade. This is an agency cross transaction, which requires:

Accepted Answer

Written client consent after full disclosure, plus confirmations and annual statements of such trades

Answer

Agency cross transactions require prior written consent, disclosure at confirmation, and at least annual summaries to the client.

Question 5

The Section 28(e) safe harbor protects an adviser that pays more than the lowest commission for brokerage if the adviser determines in good faith that:

Accepted Answer

The commission is reasonable relative to the brokerage and research services received

Answer

The safe harbor covers research and brokerage services that benefit client accounts when the commission is reasonable in relation to the value received.

Series 66 – Uniform Combined State Law Exam Practice Test

Series 66 – Uniform Combined State Law Exam Practice Test

Series 66 – Uniform Combined State Law Exam Professional Development & Standards 3