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Series 65: Unit 14 Exam questions with correct answers graded A+
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Series 65: Unit 14 Exam questions with correct answers graded A+
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Series 65: Unit 14 ExamAn agent's client calls on Monday to discuss the current market situation. They discuss how 100 shares of
KAPCO common stock would be an appropriate addition to the client's portfolio. On Thursday, the client
calls and tells the agent to place an order for the KAPCO stock at whatever price the agent feels is best.
The agent waits until Friday, purchasing the stock at a price $2 per share below Thursday's low. In this
case, the agent acted
A. properly because the agent saved the client money.
B. properly because the agent used discretion as to price and time.
C. improperly; the order cannot be placed without prior written authorization allowing discretion.
D. improperly; the order should have been placed on Thursday. - correct answer ✔✔Improperly; the
order should've been placed on Thursday
An investment adviser representative (IAR) concludes a successful meeting with a client by receiving oral
authority to begin exercising discretion in the client's account. The IAR leaves the appropriate paperwork
with the client and urges him to return it in the postage-paid envelope as soon as possible. After
returning to the office, the IAR enters the first discretionary order for this account, a purchase of $10,000
of CANCO common stock. Six days later, CANCO reports that it is going to miss its earnings estimates and
the stock begins to fall. The IAR realizes that the best thing to do for the client is take the loss and get out
before it gets worse, but the client has not yet returned the signed paperwork. In this case,
A. the investment adviser firm should apply to the administrator for an extension of time.
B. the IAR may exercise his discretion as authorized and sell the CANCO.
C. the IAR must wait for the si - correct answer ✔✔The IAR may exercise his discretion as authorized and
sell the CANCO
An agent registered with a broker-dealer personally owns 100 shares of ABCD common stock, thinly
traded over the counter. This agent is in the process of writing an order ticket to liquidate his position in
ABCD when he receives a telephone call from a customer wishing to sell 200 shares of ABCD currently
held in her account. The appropriate action for this agent is to
A. enter an order for 300 shares and then allocate ⅔ of the proceeds to the client and ⅓ to his account.
, B. place the sell order for the customer first and then place his order.
C. complete the sell order for his stock because he was in the process of doing so before the customer's
call.
D. discuss the suitability of the client owning such a large position in a thinly traded stock. - correct
answer ✔✔Place the sell order for his customer first and then place his order
Broker-dealers and their agents can have their licenses suspended or revoked for engaging in business
practices in violation of NASAA's Statement of Policy on Dishonest or Unethical Business Practices of
Broker-Dealers and Agents. Which of the following activities would NASAA consider an unethical or
prohibited practice?
1. Hypothecating a customer's securities in a margin account without written consent from the customer
2. Executing a margin transaction in new customer accounts before receiving written margin agreements
from the customers
3. Charging unreasonable fees for custody and securities transfer services - correct answer
✔✔Hypothecating a customer's securities in a margin account w/o written consent from the customer
and charging unreasonable fees for custody and securities transfer services
Dither, Wigman, and Jones, LLC, is an investment adviser with $2 billion in accounts under management.
In appreciation for the large volume of brokerage transactions directed their way, Alexander Wimpton
and Sons, a member of the NYSE, offers to send Mr. Dither on an all-expenses-paid trip to Zurich to
attend a seminar covering the latest developments in global investing. Under Section 28(e) of the
Securities Exchange Act of 1934,
A. Mr. Dither could attend because attendance at a business-related seminar such as this falls under the
safe harbor provisions of Section 28(e).
B. Mr. Dither could not attend because the safe harbor under Section 28(e) applies only to domestic
events.
C. Mr. Dither could attend but only if he paid the direct costs of the seminar and let Alexander Wimpton
and Sons take care of the transportation costs.
D. Mr. Dither could attend but only if he paid all of the expenses except for those dir - correct answer
✔✔Mr. Dither could attend but only if he paid all of the expenses except for those direct costs of the
seminar
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