Chapter 2: Uniform Securities Act – Registration
This term describes securities required to be registered in each state unless exempt.
What are non-covered securities?
This term describes intentionally misleading a client to induce a transaction.
What is fraud?
This act regulates public disclosure by issuers.
What is the Securities Act of 1933?
This client factor considers expected investment duration.
What is time horizon?
This ratio measures a company’s ability to meet short-term obligations.
What is the current ratio?
Which individual must register in every state in which they have a place of business?
A. Federal covered adviser
B. Investment adviser representative
C. Issuer of exempt securities
D. Clerical employee
What is B. Investment adviser representative?
This power allows the Administrator to issue rules and interpretations.
What is rulemaking authority?
Which act requires ongoing reporting by publicly traded companies?
A. Securities Act of 1933
B. Securities Exchange Act of 1934
C. Investment Advisers Act
D. Uniform Securities Act
What is B. Securities Exchange Act of 1934?
This suitability factor addresses cash flow requirements.
What is liquidity need?
Which ratio EXCLUDES inventory from current assets?
A. Current ratio
B. Debt ratio
C. Quick ratio
D. Cash flow ratio
What is C. Quick ratio?
This registration method is used when securities are offered in only one state.
What is qualification?
Which activity would MOST likely be considered churning?
A. Buying municipal bonds
B. Excessive trading for commissions
C. Rebalancing annually
D. Buying dividend stocks
What is B. Excessive trading for commissions?
This form is filed annually by registered investment advisers.
What is Form ADV?
Which client would MOST likely have a speculative objective?
A. Retiree
B. Pension fund
C. Young investor with high income
D. Insurance company
What is C. Young investor with high income?
This valuation ratio compares price to earnings.
What is the P/E ratio?
Which registration method coordinates state and federal review simultaneously?
A. Qualification
B. Notice filing
C. Coordination
D. Registration by exemption
What is C. Coordination?
This type of order temporarily halts a suspected violation.
What is a cease-and-desist order?
Which act regulates investment advisers’ fiduciary obligations?
A. ’33 Act
B. ’34 Act
C. IA Act of 1940
D. Investment Company Act
What is C. Investment Advisers Act of 1940?
This client characteristic reflects emotional tolerance for volatility.
What is risk tolerance?
Growth stocks typically have which characteristic?
A. Low P/E ratios
B. High dividend yields
C. High P/E ratios
D. Low price-to-book ratios
What is C. High P/E ratios?
This document gives detailed information about the issuer and securities being offered.
What is a prospectus?
This liability applies even when fraud was unintentional
What is civil liability?
This act regulates closed-end and open-end investment companies.
What is the Investment Company Act of 1940?
This objective seeks appreciation over income.
What is growth?
The portfolio MOST suitable for a pension fund seeking income would include:
A. Government securities, time deposits, and naked option writing
B. Government securities, corporate bonds, and fully covered option writing
C. Government securities, corporate bonds, and naked option writing
D. Government securities, municipal bonds, and fully covered option writing
What is B. Government securities, corporate bonds, and fully covered option writing?
Which of the following is NOT an exempt security?
A. U.S. Treasury bond
B. Municipal bond
C. Corporate bond
D. Canadian government security
What is C. Corporate bond?
Under the USA, which must be proven to establish fraud?
A. Intent only
B. Negligence only
C. Material misstatement or omission
D. Registration failure
What is C. Material misstatement or omission?
Which adviser would register with the state, not the SEC?
A. $200M AUM adviser
B. $150M AUM adviser
C. $80M AUM adviser
D. Federal covered adviser
What is C. $80M AUM adviser?
Which client would typically require the MOST disclosure?
A. Bank
B. Insurance company
C. Retail investor
D. Pension fund
What is C. Retail investor?
An income statement does which of the following?
A. Covers financial activity over a period of time
B. Shows financial position at a specific point in time
C. Lists assets and liabilities of a company
D. Quantifies the value of property, plant, and equipment
What is A. Covers financial activity over a period of time?
This occurs when an agent conducts securities business before registration becomes effective.
What is illegal registration activity?
This Administrator action may result in fines or penalties.
What is an administrative sanction?
This law created rules against insider trading.
What is the Securities Exchange Act of 1934?
This factor evaluates marginal tax impact on returns.
What is tax status?
A major difference between the current ratio and the quick ratio is that the quick ratio does NOT include:
A. Current liabilities
B. Current assets
C. Inventory
D. Marketable securities
What is C. Inventory?
Which party is NOT required to register under the Uniform Securities Act?
A. Broker-dealer
B. Investment adviser
C. Issuer selling its own securities
D. Investment adviser representative
What is C. Issuer selling its own securities?
Which practice is considered unethical even if disclosed?
A. Reasonable commissions
B. Suitability analysis
C. Excessive trading
D. Conflict disclosure
What is C. Excessive trading?
Which document discloses conflicts and compensation?
A. Prospectus
B. Form U4
C. Form ADV
D. Registration statement
What is C. Form ADV?
Which objective fits a retiree relying on portfolio income?
A. Growth
B. Speculation
C. Income
D. Aggressive growth
What is C. Income?
Which factor would be IRRELEVANT in determining whether a common stock is classified as a value stock?
A. The current ratio of the common stock
B. The stock’s current P/E ratio
C. The price of the stock versus company sales
D. The stock’s price-to-book value
What is A. The current ratio of the common stock?
This filing notifies a state of a federal covered adviser’s presence.
What is a notice filing?
This standard requires honest and fair treatment of clients.
What is fiduciary responsibility?
This federal act created registration exemptions for private offerings.
What is the Securities Act of 1933?
This occurs when recommendations exceed a client’s financial capacity.
What is unsuitability?
Which ratio measures leverage?
A. Current ratio
B. Debt-to-equity ratio
C. P/E ratio
D. Price-to-book ratio
What is B. Debt-to-equity ratio?
Which statement about registration effectiveness is TRUE?
A. Registration is effective immediately upon filing
B. Registration implies state approval
C. Registration becomes effective after Administrator review
D. Registration removes antifraud liability
What is C. Registration becomes effective after Administrator review?
Which party may be held liable for materially aiding a violation?
A. Only issuers
B. Only agents
C. Any person materially assisting
D. Only broker-dealers
What is C. Any person materially assisting?
Which act primarily protects investors through disclosure?
A. USA
B. ’33 Act
C. IA Act
D. Investment Company Act
What is B. Securities Act of 1933?
Which factor is MOST relevant when recommending municipal bonds?
A. Liquidity
B. Tax bracket
C. Time horizon
D. Risk tolerance
What is B. Tax bracket?
This metric measures volatility of returns.
What is standard deviation?