Practice Exam #2
1. An investment adviser is an entity that:
A. Provides trading services for a fee
B. Provides investment advice for a fee
C. Assists customers with transactions and receives a commission for doing so
D. Assists customers with transactions and receives a fee for doing so
2. Which of the following would be considered providing investment advice?
A. Publishing a newsletter that discusses the gas and oil industries
B. Publishing a newsletter that gives money-saving tips for families
C. Publishing a newsletter that includes recommendations based on an individual’s investment situation
D. Publishing a newsletter in which investments are mentioned on an incidental basis
3. Each of the following is exempt from state registration as an investment adviser except:
A. Federal covered advisers
B. Advisers with no office and only institutional investor clients in the state
C. Out-of-state advisers with fewer than 25 clients in the state
D. Anyone exempted by amendments to the law
4. Investment adviser representatives:
A. Must meet net capital requirements
B. Should never receive a commission for any services they provide to clients
C. Are not subject to licensing examinations
D. Must be re-registered every year
5. Which of the following represent the NASAA’s suggested net capital requirements for different investment advisers, depending on the nature of their businesses?
I. $50,000
II. $35,000
III. $10,000
IV. A positive net worth
A. I and II
B. I and III
C. I, II, and III
D. II, III, and IV
6. Employees of a federally registered investment adviser never need to register in a state if:
A. They have fewer than 10 clients in the state.
B. They do not have an office in the state and do not provide investment advice for compensation.
C. They only publish investment-based newsletters.
D. They only advise investors on bond securities.
7. An investment adviser r