FINRA Series 66 Exam Practice
Questions And Correct Answers
(Verified Answers) Plus Rationales 2026
Q&A | Instant Download Pdf
1. Which of the following best describes a broker-dealer under the
Uniform Securities Act?
A. A person who gives advice about securities for compensation
B. A person engaged in the business of effecting securities transactions
for others or for their own account
C. A person who issues securities
D. A person who guarantees securities performance
Answer: B
A broker-dealer is defined as any person engaged in the business of
effecting transactions in securities for the account of others or for
their own account.
2. Which of the following is NOT considered a security under the Uniform
Securities Act?
A. Stocks
B. Bonds
C. Insurance policies
D. Investment contracts
Answer: C
Insurance policies are generally excluded from the definition of
securities under the Act.
3. An investment adviser representative must register in a state if they:
A. Have any clients in the state
B. Have a place of business in the state
C. Manage over $100 million
, D. Work for a federal agency
Answer: B
Registration is required if the adviser representative has a place of
business in the state.
4. Which of the following securities is exempt from registration?
A. Corporate bonds
B. Treasury securities
C. Common stock
D. Preferred stock
Answer: B
U.S. Treasury securities are exempt from registration under the
Uniform Securities Act.
5. Which of the following is considered a prohibited practice?
A. Providing disclosures
B. Front running
C. Diversification
D. Asset allocation
Answer: B
Front running is unethical and illegal as it involves trading ahead of
client orders.
6. A person who receives compensation for advice about securities is
considered:
A. Broker-dealer
B. Investment adviser
C. Issuer
D. Agent
Answer: B
An investment adviser provides advice about securities for
compensation.
7. Which of the following transactions is exempt?
A. IPO sale
B. Private placement
C. Secondary market trade
D. Margin trade
Answer: B
, Private placements are exempt transactions under the Uniform
Securities Act.
8. Which document must be provided to clients by an investment
adviser?
A. Prospectus
B. Form ADV Part 2
C. Annual report
D. Trade confirmation
Answer: B
Form ADV Part 2 discloses information about the adviser and must
be provided to clients.
9. Which of the following best defines an agent?
A. A person representing an issuer in securities transactions
B. A person representing a broker-dealer in securities transactions
C. A person issuing securities
D. A person regulating securities
Answer: B
An agent represents a broker-dealer or issuer in effecting
transactions in securities.
10. Custody of client funds requires:
A. No reporting
B. Annual audit
C. Immediate withdrawal
D. SEC approval
Answer: B
Investment advisers with custody must undergo annual surprise
audits.
11. Which of the following is a fiduciary duty?
A. Charging commissions
B. Acting in client’s best interest
C. Trading frequently
D. Avoiding diversification
Answer: B
Fiduciaries must always act in the best interest of their clients.
Questions And Correct Answers
(Verified Answers) Plus Rationales 2026
Q&A | Instant Download Pdf
1. Which of the following best describes a broker-dealer under the
Uniform Securities Act?
A. A person who gives advice about securities for compensation
B. A person engaged in the business of effecting securities transactions
for others or for their own account
C. A person who issues securities
D. A person who guarantees securities performance
Answer: B
A broker-dealer is defined as any person engaged in the business of
effecting transactions in securities for the account of others or for
their own account.
2. Which of the following is NOT considered a security under the Uniform
Securities Act?
A. Stocks
B. Bonds
C. Insurance policies
D. Investment contracts
Answer: C
Insurance policies are generally excluded from the definition of
securities under the Act.
3. An investment adviser representative must register in a state if they:
A. Have any clients in the state
B. Have a place of business in the state
C. Manage over $100 million
, D. Work for a federal agency
Answer: B
Registration is required if the adviser representative has a place of
business in the state.
4. Which of the following securities is exempt from registration?
A. Corporate bonds
B. Treasury securities
C. Common stock
D. Preferred stock
Answer: B
U.S. Treasury securities are exempt from registration under the
Uniform Securities Act.
5. Which of the following is considered a prohibited practice?
A. Providing disclosures
B. Front running
C. Diversification
D. Asset allocation
Answer: B
Front running is unethical and illegal as it involves trading ahead of
client orders.
6. A person who receives compensation for advice about securities is
considered:
A. Broker-dealer
B. Investment adviser
C. Issuer
D. Agent
Answer: B
An investment adviser provides advice about securities for
compensation.
7. Which of the following transactions is exempt?
A. IPO sale
B. Private placement
C. Secondary market trade
D. Margin trade
Answer: B
, Private placements are exempt transactions under the Uniform
Securities Act.
8. Which document must be provided to clients by an investment
adviser?
A. Prospectus
B. Form ADV Part 2
C. Annual report
D. Trade confirmation
Answer: B
Form ADV Part 2 discloses information about the adviser and must
be provided to clients.
9. Which of the following best defines an agent?
A. A person representing an issuer in securities transactions
B. A person representing a broker-dealer in securities transactions
C. A person issuing securities
D. A person regulating securities
Answer: B
An agent represents a broker-dealer or issuer in effecting
transactions in securities.
10. Custody of client funds requires:
A. No reporting
B. Annual audit
C. Immediate withdrawal
D. SEC approval
Answer: B
Investment advisers with custody must undergo annual surprise
audits.
11. Which of the following is a fiduciary duty?
A. Charging commissions
B. Acting in client’s best interest
C. Trading frequently
D. Avoiding diversification
Answer: B
Fiduciaries must always act in the best interest of their clients.
