Chapter 7 Practice Questions
1. The primary purpose of the Securities Exchange Act of 1934 was to regulate:
A. Issuers of securities
B. Investment companies
C. Broker-dealers, agents, and the exchanges
D. Investment advisers
2. All of the following would be exempt from registration under the Investment Advisers Act of 1940 except:
A. Broker-dealer charging a fee for investment advice
B. Publisher charging a fee to write a column about investments
C. Lawyer giving investment advice as part of his oversight of a client’s estate
D. Teacher paid for instructing students on the proper way to construct a portfolio
3. Which of the following would not be subject to state registration as an investment adviser?
I. An investment adviser representative
II. An investment adviser with $150 million in client assets under management
III. An investment website that charges a fee and includes an interactive portal where investors enter personal information that generates investment advice
IV. An individual who regularly gives investment advice for a fee but is not employed by an investment advisory firm
A. I and II
B. I and IV
C. II and III
D. III and IV
4. Which of the following would not allow an investment adviser without an office in a state to avoid state registration?
A. The adviser falls under the de minimis rule.
B. The adviser’s only clients are institutional clients.
C. The adviser’s assets under management do not exceed $100 million.
D. The adviser has no more than five non-institutional clients.
5. The NASAA’s recommended capital requirement for an adviser who has discretion but not custody over a client account is:
A. $0
B. $500
C. $10,000
D. $35,000
6. Which of the following are true under the “brochure rule”?
I. The brochure must be delivered 48 hours prior to signing advisory contract.
II. The brochure must be delivered upon request.
III. If the brochure is n