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Question 1 of 10
1. Question
A rule prohibiting investment advisers from maintaining custody of their client’s funds is issued by which of the following?
Correct
Investment advisers may only maintain possession or control of their client’s assets under specific circumstances. Such possession or control is referred to as maintaining custody of the assets. Investment advisers may not maintain custody of their client’s funds if the Administrator has issued a rule prohibiting such custody.
Incorrect
Investment advisers may only maintain possession or control of their client’s assets under specific circumstances. Such possession or control is referred to as maintaining custody of the assets. Investment advisers may not maintain custody of their client’s funds if the Administrator has issued a rule prohibiting such custody.
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Question 2 of 10
2. Question
Performance-based fees are only charged to which category of clients?
Correct
Performance based fess are only charges to high net-worth clients.
Incorrect
Performance based fess are only charges to high net-worth clients.
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Question 3 of 10
3. Question
What is the minimum frequency at which investment advisers must provide regular statements to custodial clients?
Correct
Investment advisers that maintain custody of their clients’ assets are required to provide regular statements to their custodial clients that outline the value of the account, account transactions, and the location of all of the clients’ assets. At a minimum, investment advisers must provide these statements to custodial clients on quarterly basis.
Incorrect
Investment advisers that maintain custody of their clients’ assets are required to provide regular statements to their custodial clients that outline the value of the account, account transactions, and the location of all of the clients’ assets. At a minimum, investment advisers must provide these statements to custodial clients on quarterly basis.
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Question 4 of 10
4. Question
How many main types of municipal bonds are there?
Correct
There are three main types of municipal bonds, categorized according to the way that the bond repayments can be financed:
General obligation bonds, revenue bonds, and double barrelled bonds.Incorrect
There are three main types of municipal bonds, categorized according to the way that the bond repayments can be financed:
General obligation bonds, revenue bonds, and double barrelled bonds. -
Question 5 of 10
5. Question
General obligation bonds are also known as:
Correct
General obligation (GO) bonds are the first type. These are issued to pay for improvements that benefit a community, but don’t produce income. They are also known as “full faith and credit issues,” because they are repaid from tax revenue raised by the issuing government entity.
Incorrect
General obligation (GO) bonds are the first type. These are issued to pay for improvements that benefit a community, but don’t produce income. They are also known as “full faith and credit issues,” because they are repaid from tax revenue raised by the issuing government entity.
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Question 6 of 10
6. Question
Market manipulation refers to which of the following?
I. Manipulation of labour market by creating false amount for salary scale
II. Manipulation of financial markets by creating false prices for securities
III. Manipulation of financial markets by creating new market location for securities
IV. Manipulation of financial markets by inflating prices for securitiesCorrect
Market manipulation refers to the manipulation of financial markets by creating false or inflated prices for securities.
Incorrect
Market manipulation refers to the manipulation of financial markets by creating false or inflated prices for securities.
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Question 7 of 10
7. Question
Regarding sharing profits and losses in a client’s account, which of the following statement is false?
I. Advisors share in the profits alone in proportion to the advisors’ share of the investment made
II. Advisors share in the losses alone in proportion to the advisors’ share of the investment made
III. Advisors share in the profits and losses in proportion to the advisors’ share of the investment made
IV. Advisors have no share in the client’s accountCorrect
Advisors may share in the profits and losses in a client’s account so long as those profits and losses are proportional to the advisors’ share of the investment made.
Incorrect
Advisors may share in the profits and losses in a client’s account so long as those profits and losses are proportional to the advisors’ share of the investment made.
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Question 8 of 10
8. Question
Trading authorization can be obtained through which of the following ways?
I. Through a limited trade authorization document
II. Through an unlimited trade authorization document
III. Through a power of attorney document
IV. Through a power of police order documentCorrect
Trading authorization is usually obtained in one of the two ways; through a limited trade authorization document or through a power of attorney document.
Incorrect
Trading authorization is usually obtained in one of the two ways; through a limited trade authorization document or through a power of attorney document.
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Question 9 of 10
9. Question
Under what condition is loaning money to a client an acceptable or ethical practice?
I. If the investment advisor is in the business of loaning money
II. If the investment advisor is a philanthropist
III. If the client is a business affiliate of the advisor
IV. If the investment advisor is an in-law to the clientCorrect
Loaning money to a client is not an acceptable or ethical practice unless the investment advisor is in the business of loaning money or the client to whom the money is being loaned is a business affiliate of the advisor.
Incorrect
Loaning money to a client is not an acceptable or ethical practice unless the investment advisor is in the business of loaning money or the client to whom the money is being loaned is a business affiliate of the advisor.
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Question 10 of 10
10. Question
Investment advisers can implement the best practices concerning cybersecurity. This includes the following, except:
I. Identifying, and alleviating identity theft
II. Adopting policies, procedures, and training pertaining to bank popularity
III. Enacting confidentiality agreements with third-party service provider
IV. Storing electronic data such that they can be easily rewritten or erasedCorrect
Investment advisers ought to implement best practices concerning cybersecurity, which can include but is not limited to the following; preventing, identifying, and alleviating identity theft; storing electronic data such that they cannot be rewritten or erased; adopting policies, procedures, and training pertaining to cybersecurity; utilizing encrypted or secure servers, emails, and other media as necessary or feasible; installing antivirus software; enacting confidentiality agreements with third-party service providers.
Incorrect
Investment advisers ought to implement best practices concerning cybersecurity, which can include but is not limited to the following; preventing, identifying, and alleviating identity theft; storing electronic data such that they cannot be rewritten or erased; adopting policies, procedures, and training pertaining to cybersecurity; utilizing encrypted or secure servers, emails, and other media as necessary or feasible; installing antivirus software; enacting confidentiality agreements with third-party service providers.