PASS THE SERIES 65 TEST 100% VALID
ANSWERS [GUARANTEED A+]
3 Pronged Approach - Test used by SEC to determine if an entity meets the definition of
an investment adviser. Does the Person provide investment advice-relating to securities and
based on the clients situation? Does the person receive compensation as a result of providing
investment advice? Is the person in the business of providing investment advice?
8-K - SEC report required by the Securities Exchange Act of 1934 of public companies
announcing unusual material events. A report of unscheduled material events or corporate
changes at a company that could be of importance to the shareholders or the Securities and
Exchange Commission. Examples of events reported on an 8-K include acquisition, bankruptcy,
resignation of directors, loss of major customers or a change in the fiscal year. Also known as
Form 8k.
10-K - SEC report required by the Securities Exchange act of 1934 annually of public
companies.
©caleb 2024/2025. Published 2025
,10-Q - SEC report required by the Securities Exchange act of 1934 quarterly of public
companies.
12b-1 - Fee deducted from a mutual fun's assets to cover distribution costs e.g. selling,
mailing, printing, advertising. An operating expense, unlike the sale charge that is deducted
from the investor's check.
72-t - An Internal Revenue Service (IRS) rule that allows for penalty-free withdrawals
from an IRA account. The rule requires that, in order for the IRA owner to take penalty-free
early withdrawals, he or she must take at least five "substantially equal periodic payments"
(SEPPs). The amount depends on the IRA owner's life expectancy calculated with various IRS-
approved methods. Allows you to take advantage of your retirement savings before the age of
59.5, when there is otherwise a 10% penalty on early withdrawal. The withdrawals, however,
are still taxed at your income rate. The drawback to taking advantage of Rule 72(t) is that you
may deplete your retirement accounts well before the end of your life expectancy. By taking out
your funds early you are putting yourself in jeopardy in the future
©caleb 2024/2025. Published 2025
,75-5-10 Rule - Diversification formula for a fund advertising itself as diversified. 75% of
the portfolio must have no more than 5% of assets invested in any one security and no more
than 10% of the company's outstanding shares may be owned.
200-Day Moving Average - Average closing price over the previous 200 days for a stock or
an index.
401(k) Plan - Qualified defined contribution plan offering employer-matched
contributions.
403(b) - Qualified plan for tax-exempt, non-profit organizations
404(c) - Safe-harbor provisions allowing employers to pass off risk to participants of
defined contribution plans.
457 Plan - Tax-advantaged retirement accounts for state and municipal government
employees. AKA Section 457 Plan
©caleb 2024/2025. Published 2025
, 529 Plans - Education savings plans offering tax-free distributions at the federal level for
qualified education expenses.
1035 Contract Excange - Section 1035 Exchange refers to the replacement of an annuity
or life insurance policy for a new one without incurring any tax consequence for the exchange.
The IRS allows holders of these types of contracts to do this in order to replace outdated
contracts with new contracts with improved benefits, lower fees and different investment
options. The following exchanges of insurance contracts are considered tax-free by the IRS:
replacing one annuity contract for another annuity contract with identical annuitant replacing
one life insurance policy for another life insurance policy, endowment policy or annuity contract
replacing one endowment policy for an identical endowment policy or an annuity contract Any
other variation from those acceptable exchanges listed above (annuity contract for life
insurance) will not be considered a tax-free exchange. The IRS has provided strict guidelines that
the owner, insured and annuitant must be the same on the new contract as listed on the old in
order to qualify for the tax-free treatment. The contract must also exchange directly between
the insurance companies to retain the tax-free status. The IRS has ruled in several previous
cases that if an owner cashes out of a current contract and immediately applies the proceeds to
a new contract it will not be treated as a tax-free event or Section 1035 Exchange.
1040 - Tax form used by individuals and sole proprietors.
©caleb 2024/2025. Published 2025
ANSWERS [GUARANTEED A+]
3 Pronged Approach - Test used by SEC to determine if an entity meets the definition of
an investment adviser. Does the Person provide investment advice-relating to securities and
based on the clients situation? Does the person receive compensation as a result of providing
investment advice? Is the person in the business of providing investment advice?
8-K - SEC report required by the Securities Exchange Act of 1934 of public companies
announcing unusual material events. A report of unscheduled material events or corporate
changes at a company that could be of importance to the shareholders or the Securities and
Exchange Commission. Examples of events reported on an 8-K include acquisition, bankruptcy,
resignation of directors, loss of major customers or a change in the fiscal year. Also known as
Form 8k.
10-K - SEC report required by the Securities Exchange act of 1934 annually of public
companies.
©caleb 2024/2025. Published 2025
,10-Q - SEC report required by the Securities Exchange act of 1934 quarterly of public
companies.
12b-1 - Fee deducted from a mutual fun's assets to cover distribution costs e.g. selling,
mailing, printing, advertising. An operating expense, unlike the sale charge that is deducted
from the investor's check.
72-t - An Internal Revenue Service (IRS) rule that allows for penalty-free withdrawals
from an IRA account. The rule requires that, in order for the IRA owner to take penalty-free
early withdrawals, he or she must take at least five "substantially equal periodic payments"
(SEPPs). The amount depends on the IRA owner's life expectancy calculated with various IRS-
approved methods. Allows you to take advantage of your retirement savings before the age of
59.5, when there is otherwise a 10% penalty on early withdrawal. The withdrawals, however,
are still taxed at your income rate. The drawback to taking advantage of Rule 72(t) is that you
may deplete your retirement accounts well before the end of your life expectancy. By taking out
your funds early you are putting yourself in jeopardy in the future
©caleb 2024/2025. Published 2025
,75-5-10 Rule - Diversification formula for a fund advertising itself as diversified. 75% of
the portfolio must have no more than 5% of assets invested in any one security and no more
than 10% of the company's outstanding shares may be owned.
200-Day Moving Average - Average closing price over the previous 200 days for a stock or
an index.
401(k) Plan - Qualified defined contribution plan offering employer-matched
contributions.
403(b) - Qualified plan for tax-exempt, non-profit organizations
404(c) - Safe-harbor provisions allowing employers to pass off risk to participants of
defined contribution plans.
457 Plan - Tax-advantaged retirement accounts for state and municipal government
employees. AKA Section 457 Plan
©caleb 2024/2025. Published 2025
, 529 Plans - Education savings plans offering tax-free distributions at the federal level for
qualified education expenses.
1035 Contract Excange - Section 1035 Exchange refers to the replacement of an annuity
or life insurance policy for a new one without incurring any tax consequence for the exchange.
The IRS allows holders of these types of contracts to do this in order to replace outdated
contracts with new contracts with improved benefits, lower fees and different investment
options. The following exchanges of insurance contracts are considered tax-free by the IRS:
replacing one annuity contract for another annuity contract with identical annuitant replacing
one life insurance policy for another life insurance policy, endowment policy or annuity contract
replacing one endowment policy for an identical endowment policy or an annuity contract Any
other variation from those acceptable exchanges listed above (annuity contract for life
insurance) will not be considered a tax-free exchange. The IRS has provided strict guidelines that
the owner, insured and annuitant must be the same on the new contract as listed on the old in
order to qualify for the tax-free treatment. The contract must also exchange directly between
the insurance companies to retain the tax-free status. The IRS has ruled in several previous
cases that if an owner cashes out of a current contract and immediately applies the proceeds to
a new contract it will not be treated as a tax-free event or Section 1035 Exchange.
1040 - Tax form used by individuals and sole proprietors.
©caleb 2024/2025. Published 2025
