Series 66 – Uniform Combined State Law Exam Professional Development & Standards 5

Question 1

Which advertising statement by an investment adviser is misleading and prohibited?

Accepted Answer

A statement implying that registration means the SEC or a state has approved or endorsed the adviser's skills

Answer

Implying that registration signifies government approval or endorsement of the adviser is misleading.

Question 2

A performance fee based on a share of capital gains or appreciation in a client's account is generally prohibited unless:

Accepted Answer

The client is a qualified client and the contract meets conditions

Answer

Performance-based fees are generally permitted only for qualified clients that meet asset or net worth tests.

Question 3

Under Regulation S-P, a financial firm must provide a customer with its initial privacy notice:

Accepted Answer

At the time the customer relationship is established, and annually thereafter

Answer

Customers receive an initial privacy notice when the relationship begins and an annual notice afterward, subject to limited exceptions.

Question 4

A prospective customer refuses to provide any information about income, net worth, or objectives. What is the best course of action for the agent?

Accepted Answer

Document the refusal and limit recommendations to conservative ones consistent with available information

Answer

The agent should document the refusal and make only cautious recommendations, since suitability cannot be fully assessed.

Question 5

A broker-dealer agent exercises discretion limited only to the time and price of an order for a specific security and amount that the customer selected. Written discretionary authority is generally:

Accepted Answer

Not required, but the discretion generally lasts only until the end of the business day

Answer

Time and price discretion alone does not require written authorization, but it expires at the end of the business day on which it was granted.

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 5