IACCP (QE) Practice Test | 55
Questions | 100% Correct Answers
Which THREE persons or firms may be excluded from having to register under the
Investment Advisers Act of 1940? (Choose three.)
A. Accountants whose advisory services pertain solely to incidental financial
planning.
B. Persons or firms whose advice and reports are related solely to U.S. government
securities.
C. Publishers of generally circulated, bona fide newspapers or financial journals.
D. Domestic banks and bank holding companies. Correct Answer: B. Persons or
firms whose advice and reports are related solely to U.S. government securities.
C. Publishers of generally circulated, bona fide newspapers or financial journals.
D. Domestic banks and bank holding companies.
Which activity is NOT mandated for investment advisers that store required
records electronically?
A. Providing the SEC with prompt access, retrieval, and reproduction.
B. Maintaining copies of all electronically stored records using WORM format.
C. Arranging and indexing records to provide easy access and retrieval.
D. Developing procedures to preserve and maintain records. Correct Answer: B.
Maintaining copies of all electronically stored records using WORM format.
The Investment Advisers Act of 1940 defines the scope of the anti-fraud provisions
as extending to:
A. SEC-registered advisers and foreign advisers with a place of business in the
U.S., whether registered or exempt.
B. SEC-registered advisers and foreign advisers doing business in the U.S.,
whether registered or exempt.
C. SEC-registered investment advisers.
D. All investment advisers, whether registered or exempt. Correct Answer: D. All
investment advisers, whether registered or exempt.
The fiduciary duty imposed on advisers under the Investment Advisers Act of 1940
can BEST be described as:
,A. providing equal disclosure to all clients.
B. imposing an ERISA fiduciary standard.
C. putting the client's interests ahead of the adviser's.
D. acting in a custodial capacity. Correct Answer: C. putting the client's interests
ahead of the adviser's.
Which TWO qualify as a "security" under the Investment Advisers Act of 1940?
(Choose two.)
A. Commodity futures
B. Limited partnership interests
C. Fixed annuities
D. Variable annuities Correct Answer: B. Limited partnership interests
D. Variable annuities
In performing due diligence on a potential solicitor, the investment adviser must
ensure that the solicitor:
A. is not subject to any statutory disqualification.
B. is not acting as a solicitor for an unregistered adviser.
C. has passed the Series 65 exam.
D. is registered in appropriate states. Correct Answer: A. is not subject to any
statutory disqualification.
An SEC-registered investment adviser is NOT required to disclose "material"
disciplinary information in its Form ADV Part 1 after:
A. 5 years
B. 10 years
C. 12 years
D. 15 years Correct Answer: B. 10 years
Which event would be deemed an assignment of an investment advisory contract?
A. An adviser hires a new CEO to replace its current retiring CEO.
B. An adviser is purchased by an unaffiliated adviser.
C. Any public offering of an adviser's stock.
D. An adviser organized as a corporation changes its structure to a partnership.
Correct Answer: B. An adviser is purchased by an unaffiliated adviser
, The Investment Advisers Act of 1940 requires that written investment advisory
agreements must address:
A. proxy voting.
B. assignment of the contract.
C. brokerage arrangements.
D. fees. Correct Answer: B. assignment of the contract.
If an investment adviser becomes ineligible for SEC registration, which document
must be filed to terminate its registration?
A. Form DRP
B. Form ADV-W
C. Form ADV Part 2A
D. Form U5 Correct Answer: B. Form ADV-W
During an examination of XYZ Investment Advisers, the SEC discovers that two
of Adviser's portfolio managers have been engaged in frontrunning client accounts.
Neither Compliance nor Senior Management had any knowledge of the scheme. If
Adviser can show to the SEC's satisfaction that it had developed and enforced
procedures reasonably designed to prevent frontrunning, Adviser will be able to
claim that, despite the violation, Adviser has met its duty to:
A. assist the SEC.
B. maintain required books and records.
C. eliminate internal control deficiencies.
D. supervise. Correct Answer: D. supervise.
SEC-registered advisers that have proxy voting authority for clients must do which
TWO of the following? (Choose two.)
A. Adopt procedures to ensure proxies are voted in the best interest of clients.
B. Disclose to clients information about the firm's proxy policies and procedures
on Form ADV Part 2.
C. Create a proxy voting committee to address conflict situations.
D. Provide information to clients on how their proxies were voted. Correct
Answer: A. Adopt procedures to ensure proxies are voted in the best interest of
clients.
D. Provide information to clients on how their proxies were voted.
Questions | 100% Correct Answers
Which THREE persons or firms may be excluded from having to register under the
Investment Advisers Act of 1940? (Choose three.)
A. Accountants whose advisory services pertain solely to incidental financial
planning.
B. Persons or firms whose advice and reports are related solely to U.S. government
securities.
C. Publishers of generally circulated, bona fide newspapers or financial journals.
D. Domestic banks and bank holding companies. Correct Answer: B. Persons or
firms whose advice and reports are related solely to U.S. government securities.
C. Publishers of generally circulated, bona fide newspapers or financial journals.
D. Domestic banks and bank holding companies.
Which activity is NOT mandated for investment advisers that store required
records electronically?
A. Providing the SEC with prompt access, retrieval, and reproduction.
B. Maintaining copies of all electronically stored records using WORM format.
C. Arranging and indexing records to provide easy access and retrieval.
D. Developing procedures to preserve and maintain records. Correct Answer: B.
Maintaining copies of all electronically stored records using WORM format.
The Investment Advisers Act of 1940 defines the scope of the anti-fraud provisions
as extending to:
A. SEC-registered advisers and foreign advisers with a place of business in the
U.S., whether registered or exempt.
B. SEC-registered advisers and foreign advisers doing business in the U.S.,
whether registered or exempt.
C. SEC-registered investment advisers.
D. All investment advisers, whether registered or exempt. Correct Answer: D. All
investment advisers, whether registered or exempt.
The fiduciary duty imposed on advisers under the Investment Advisers Act of 1940
can BEST be described as:
,A. providing equal disclosure to all clients.
B. imposing an ERISA fiduciary standard.
C. putting the client's interests ahead of the adviser's.
D. acting in a custodial capacity. Correct Answer: C. putting the client's interests
ahead of the adviser's.
Which TWO qualify as a "security" under the Investment Advisers Act of 1940?
(Choose two.)
A. Commodity futures
B. Limited partnership interests
C. Fixed annuities
D. Variable annuities Correct Answer: B. Limited partnership interests
D. Variable annuities
In performing due diligence on a potential solicitor, the investment adviser must
ensure that the solicitor:
A. is not subject to any statutory disqualification.
B. is not acting as a solicitor for an unregistered adviser.
C. has passed the Series 65 exam.
D. is registered in appropriate states. Correct Answer: A. is not subject to any
statutory disqualification.
An SEC-registered investment adviser is NOT required to disclose "material"
disciplinary information in its Form ADV Part 1 after:
A. 5 years
B. 10 years
C. 12 years
D. 15 years Correct Answer: B. 10 years
Which event would be deemed an assignment of an investment advisory contract?
A. An adviser hires a new CEO to replace its current retiring CEO.
B. An adviser is purchased by an unaffiliated adviser.
C. Any public offering of an adviser's stock.
D. An adviser organized as a corporation changes its structure to a partnership.
Correct Answer: B. An adviser is purchased by an unaffiliated adviser
, The Investment Advisers Act of 1940 requires that written investment advisory
agreements must address:
A. proxy voting.
B. assignment of the contract.
C. brokerage arrangements.
D. fees. Correct Answer: B. assignment of the contract.
If an investment adviser becomes ineligible for SEC registration, which document
must be filed to terminate its registration?
A. Form DRP
B. Form ADV-W
C. Form ADV Part 2A
D. Form U5 Correct Answer: B. Form ADV-W
During an examination of XYZ Investment Advisers, the SEC discovers that two
of Adviser's portfolio managers have been engaged in frontrunning client accounts.
Neither Compliance nor Senior Management had any knowledge of the scheme. If
Adviser can show to the SEC's satisfaction that it had developed and enforced
procedures reasonably designed to prevent frontrunning, Adviser will be able to
claim that, despite the violation, Adviser has met its duty to:
A. assist the SEC.
B. maintain required books and records.
C. eliminate internal control deficiencies.
D. supervise. Correct Answer: D. supervise.
SEC-registered advisers that have proxy voting authority for clients must do which
TWO of the following? (Choose two.)
A. Adopt procedures to ensure proxies are voted in the best interest of clients.
B. Disclose to clients information about the firm's proxy policies and procedures
on Form ADV Part 2.
C. Create a proxy voting committee to address conflict situations.
D. Provide information to clients on how their proxies were voted. Correct
Answer: A. Adopt procedures to ensure proxies are voted in the best interest of
clients.
D. Provide information to clients on how their proxies were voted.
