STC SERIES 66 CHAPTER 10 TEST EXAM
WITH CORRECT QUESTIONS AND
ANSWERS 2025
You have been approached by Steven to provide investment advice. Steven was recently named
as executor of his uncle's estate and wants your assistance managing the investment portfolio
pending disposition. Which of the following statements is TRUE? - CORRECT-ANSWERSYou
may accept the assignment
You may accept the assignment. The executor is free to obtain any necessary outside advice in
the exercise of his fiduciary duty. Permission of the court or heirs is not required. Regarding
your advice, remember that the estate will be short-lived and, therefore, your focus should be
mainly on safeguarding the assets for the benefit of the heirs. Long-term investments or
speculative investments would generally not be suitable.
,An IAR is assisting an executor with an account in which the prior owner has died. Who has
authority to take action in the account? - CORRECT-ANSWERSThe fiduciary of the estate
When a person dies with a will, she has named an executor who will act as a fiduciary for the
estate. If a person dies without a will, a court will appoint an administrator to act as a fiduciary
for the estate. Notice that the question mentions the term "executor," which makes fiduciary
the best response. Durable powers of attorney don't remain in effect after a person dies.
A married couple received $50,000 of cash as a wedding gift and intend to use the money as a
down payment on a new home. They anticipate closing on the new home within six months.
Which of the following investments is the MOST suitable? - CORRECT-ANSWERSA money-
market mutual fund
Since a money-market mutual fund is a very conservative and liquid investment, it's the best
choices for this couple. A stock portfolio and ETF that's based on an index will expose the
couple to market risk and are therefore unsuitable due to their short time horizon and capital
, preservation need. A bank-insured CD is conservative, but it's not liquid. With the CD, the
couple would be required to redeem it early and be subject to a penalty. The type of CD that's
liquid is a negotiable (marketable) CD since it can be bought and/or sold in the secondary
market. However, negotiable CDs have a minimum denomination of $100,000, but often trade
in $1 million denominations.
What are the advantages of a limited liability company (LLC) compared to an S Corporation? -
CORRECT-ANSWERSA simpler managerial structure
Owners of S Corporations and limited liability companies have limited liability. Both entities also
have a flow-through tax structure. Income, capital gains, and capital losses are passed directly
on to the investors and reported on their personal income tax returns. Neither entity pays
federal corporate taxes on income earned. The advantage of a limited liability company is that
its managerial structure is much simpler. There is no need for a board of directors or annual
WITH CORRECT QUESTIONS AND
ANSWERS 2025
You have been approached by Steven to provide investment advice. Steven was recently named
as executor of his uncle's estate and wants your assistance managing the investment portfolio
pending disposition. Which of the following statements is TRUE? - CORRECT-ANSWERSYou
may accept the assignment
You may accept the assignment. The executor is free to obtain any necessary outside advice in
the exercise of his fiduciary duty. Permission of the court or heirs is not required. Regarding
your advice, remember that the estate will be short-lived and, therefore, your focus should be
mainly on safeguarding the assets for the benefit of the heirs. Long-term investments or
speculative investments would generally not be suitable.
,An IAR is assisting an executor with an account in which the prior owner has died. Who has
authority to take action in the account? - CORRECT-ANSWERSThe fiduciary of the estate
When a person dies with a will, she has named an executor who will act as a fiduciary for the
estate. If a person dies without a will, a court will appoint an administrator to act as a fiduciary
for the estate. Notice that the question mentions the term "executor," which makes fiduciary
the best response. Durable powers of attorney don't remain in effect after a person dies.
A married couple received $50,000 of cash as a wedding gift and intend to use the money as a
down payment on a new home. They anticipate closing on the new home within six months.
Which of the following investments is the MOST suitable? - CORRECT-ANSWERSA money-
market mutual fund
Since a money-market mutual fund is a very conservative and liquid investment, it's the best
choices for this couple. A stock portfolio and ETF that's based on an index will expose the
couple to market risk and are therefore unsuitable due to their short time horizon and capital
, preservation need. A bank-insured CD is conservative, but it's not liquid. With the CD, the
couple would be required to redeem it early and be subject to a penalty. The type of CD that's
liquid is a negotiable (marketable) CD since it can be bought and/or sold in the secondary
market. However, negotiable CDs have a minimum denomination of $100,000, but often trade
in $1 million denominations.
What are the advantages of a limited liability company (LLC) compared to an S Corporation? -
CORRECT-ANSWERSA simpler managerial structure
Owners of S Corporations and limited liability companies have limited liability. Both entities also
have a flow-through tax structure. Income, capital gains, and capital losses are passed directly
on to the investors and reported on their personal income tax returns. Neither entity pays
federal corporate taxes on income earned. The advantage of a limited liability company is that
its managerial structure is much simpler. There is no need for a board of directors or annual
