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| Section | Weight | Objectives |
|---|---|---|
| Seeks Business for the Broker-Dealer from Customers and Potential Customers | 24% | - Topics in communications, marketing, and solicitation activities |
| Opens Accounts After Obtaining and Evaluating Customers’ Financial Profile and Investment Objectives | 16% | - Account opening procedures and financial profile evaluation |
| Obtains and Verifies Customers’ Purchase and Sales Instructions; Processes, Completes and Confirms Transactions | 10% | - Transaction processing and verification |
| Provides Customers with Information About Investments, Makes Recommendations, Transfers Assets and Maintains Appropriate Records | 50% | - Product information, suitability, recordkeeping and transfers |
1. The Securities Exchange Act of 1934:
I. regulates the market for new issues.
II. delineates the registration requirements for investment advisers.
III. regulates secondary market activities.
IV. requires that officers and some other employees of member firms submit their fingerprints to the U.S.
attorney general's office.
A) I and II only
B) II and III only
C) I, II, III, and IV
D) III and IV only
2. Which of the following statements regarding closed-end investment companies is false?
A) Shares of a closed-end company may sell for below the fund's net asset value.
B) Closed-end companies may be either diversified or non-diversified.
C) A closed-end investment company may not issue preferred stock.
D) The closed-end investment company does not pay taxes on the dividend and capital gain income it
earns and distributes to its shareholders.
3. Which of the following is a characteristic of a mutual fund?
A) the fund has a fixed number of shares that can be sold
B) shares are bought and sold through the fund
C) shares may sell below net asset value
D) shares are sold on exchange floors
4. Which of the following securities laws regulates the organizational structure and day-to-day operations of
investment companies?
A) The Securities Act of 1933
B) The Investment Advisers Act of 1940
C) The Investment Company Act of 1940
D) The Securities Exchange Act of 1934
5. Which of the following statements about 1035 exchanges are true?
I. A 1035 exchange refers to the exchange of all of the shares owned in one mutual fund for shares of
another mutual fund in the same family of funds.
II. A 1035 exchange refers to the exchange of one variable annuity contract for another variable annuity
contract without the need to pay tax on any of the income or capital appreciation associated with the
original contract.
III. A 1035 exchange refers to the exchange of a variable annuity contract for a whole life insurance policy
offered by the same company with no tax consequences to the transaction.
A) II only
B) I only
C) I and II only
D) I, II, and III
Solutions:
| Question # 1 Answer: D | Question # 2 Answer: C | Question # 3 Answer: B | Question # 4 Answer: C | Question # 5 Answer: A |
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