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 are exceptions to the definition of an investment adviser subject to state registration?
- I. An investment adviser representative
- II. An investment adviser with $110 million in client assets under management
- III. The publisher of a general interest business magazine
- IV. A bank or savings institution
- A. II only
- B. II and III
- C. I, II, and III
- D. I, II, III, and IV
- 4. All of the following would allow someone with no office in the state, but who otherwise is clearly defined as an investment adviser, to avoid state registration except:
- A. The adviser falls under the de minimis rule.
- B. The adviser’s only clients are institutional clients.
- C. The advisor’s assets under management do not exceed $100 million.
- D. The adviser has no more than five non-institutional clients.
- 5. The net 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 d