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Question 1 of 10
1. Question
Under which of the following conditions does charging commission to a client’s account become an acceptable practice?
Correct
Charging commission to a client’s account to is an acceptable practice if the amount of commission is disclosed to the investor before the commission is charged.
Incorrect
Charging commission to a client’s account to is an acceptable practice if the amount of commission is disclosed to the investor before the commission is charged.
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Question 2 of 10
2. Question
Which one of the following are not performance-based fees?
Correct
Performance-based fees are investment advisory fees that are calculated based on the advisor collecting a share of the capital appreciation that occurs in the advised party’s account. Fees charged based upon the total amount of assets managed are not performance based fees.
Incorrect
Performance-based fees are investment advisory fees that are calculated based on the advisor collecting a share of the capital appreciation that occurs in the advised party’s account. Fees charged based upon the total amount of assets managed are not performance based fees.
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Question 3 of 10
3. Question
Which of the following best describes the level of client confidentiality that must be maintained?
Correct
The level of client confidentiality that must be maintained can best be described as absolute.
Incorrect
The level of client confidentiality that must be maintained can best be described as absolute.
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Question 4 of 10
4. Question
Securities dealers are obligated to report activity that could be tied to which of the following?
Correct
Securities dealers are obligated to report activity that could be tied to money laundering.
Incorrect
Securities dealers are obligated to report activity that could be tied to money laundering.
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Question 5 of 10
5. Question
Which of the acts mandates that all financial institutions keep client information secure?
Correct
The Graham-Leach Bliley Act is the congressional act that mandates that all financial institutions keep client information secure.
Incorrect
The Graham-Leach Bliley Act is the congressional act that mandates that all financial institutions keep client information secure.
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Question 6 of 10
6. Question
To maintain ethical practices in charging of commissions to a client’s account, the advisor should do which of the following?
Correct
To maintain ethical practices, the advisor should clearly disclose to both parties that he or she will be receiving commissions from both parties.
Incorrect
To maintain ethical practices, the advisor should clearly disclose to both parties that he or she will be receiving commissions from both parties.
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Question 7 of 10
7. Question
A limited power of attorney limits the authority of which of the following?
Correct
A limited power of attorney limits the authority the advisor has. This limit of powers is outlined in the power of attorney document.
Incorrect
A limited power of attorney limits the authority the advisor has. This limit of powers is outlined in the power of attorney document.
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Question 8 of 10
8. Question
Why do younger investors require more conservative strategy than other investors of similar demographics?
Correct
A younger investor may not be able to accept large swings in his or her portfolio, thereby requiring a more conservative strategy than other investors of similar demographics.
Incorrect
A younger investor may not be able to accept large swings in his or her portfolio, thereby requiring a more conservative strategy than other investors of similar demographics.
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Question 9 of 10
9. Question
Which one of the statements is true when the advisor acts in the role of a broker in an agency-cross transaction?
Correct
When the advisor acts in the role of a broker in an agency-cross transaction, he or she will collect commissions from both parties in the transaction.
Incorrect
When the advisor acts in the role of a broker in an agency-cross transaction, he or she will collect commissions from both parties in the transaction.
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Question 10 of 10
10. Question
When an advisor accepts discretion over a client’s, he or she has authority over the three A’s. This includes which of the following?
Correct
Having discretion over a client’s funds gives the advisor authority to decide which security to trade, whether to buy or sell that security, and the amount of that security. These conditions are commonly referred to as the three A’s. Respective to the sentence above, the three A’s are asset, action, and amount.
Incorrect
Having discretion over a client’s funds gives the advisor authority to decide which security to trade, whether to buy or sell that security, and the amount of that security. These conditions are commonly referred to as the three A’s. Respective to the sentence above, the three A’s are asset, action, and amount.