NASAA Series 66 Uniform Combined State Law Examination practice questions
208 free questions with answers and explanations.
- 201.An Investment Adviser Representative (IAR) has been approached by a client who expresses interest in purchasing a security that the IAR knows is highly illiquid and unsuitable for the client's stated financial goals and risk tolerance. The client insists on making the purchase despite the IAR's initial warnings. What is the IAR's most appropriate course of action under the Uniform Securities Act?Laws, Regulations, and Guidelines, including Prohibition on Unethical Business Practices
- 202.A client approaches their Investment Adviser Representative (IAR) with a request to invest all of their liquid assets into a single, highly speculative biotechnology stock, based on a tip from a friend. The IAR, understanding the client's moderate risk tolerance and long-term financial goals, advises against this concentration and recommends a diversified portfolio. The client insists on the speculative investment. What is the IAR's most appropriate action?Laws, Regulations, and Guidelines, including Prohibition on Unethical Business Practices
- 203.An investment adviser (IA) registered in State A has 30 clients. 25 of these clients reside in State A, and the remaining 5 clients reside in State B. The IA has no office in State B and does not advertise there. Under the Uniform Securities Act, must this IA register in State B?Laws, Regulations, and Guidelines, including Prohibition on Unethical Business Practices
- 204.A client, Mr. Henderson, informs his investment adviser representative (IAR) that he plans to make a significant cash deposit into his investment account, which he received from the sale of an antique car to an anonymous buyer for an unusually high price. Mr. Henderson seems evasive when asked for details about the transaction. What is the IAR's primary obligation in this situation?Laws, Regulations, and Guidelines, including Prohibition on Unethical Business Practices
- 205.A broker-dealer firm is preparing to offer a new proprietary mutual fund to its clients. The firm's marketing materials prominently feature hypothetical performance data for the fund, projecting annual returns of 15% based on a back-tested strategy. The materials do not clearly disclose that the performance is hypothetical, nor do they include any warnings about the limitations of such data. This practice is most likely a violation of which ethical standard?Laws, Regulations, and Guidelines, including Prohibition on Unethical Business Practices
- 206.A client approaches their Investment Adviser Representative (IAR) with a request to invest a significant portion of their portfolio in a single, highly speculative penny stock. The IAR conducts due diligence and determines that the investment is clearly unsuitable for the client's financial situation, risk tolerance, and investment objectives. What is the IAR's most appropriate course of action?Laws, Regulations, and Guidelines, including Prohibition on Unethical Business Practices
- 207.A federal covered investment adviser (FCIA) with its principal office in State A frequently conducts business with clients residing in State B. The FCIA has no physical office in State B, but it provides investment advice to 10 retail clients in State B. Under the Uniform Securities Act (USA), what is the FCIA's obligation regarding State B?Laws, Regulations, and Guidelines, including Prohibition on Unethical Business Practices
- 208.A client, Mr. Henderson, informs his investment adviser representative (IAR) that he plans to withdraw a large sum of cash from his investment account to purchase a luxury item from an unknown offshore vendor, insisting on privacy and becoming evasive when questioned about the vendor's legitimacy. The IAR observes several 'red flags' indicative of potential money laundering. What is the IAR's primary obligation in this situation?Laws, Regulations, and Guidelines, including Prohibition on Unethical Business Practices