Chapter 8 Practice Questions

1. 1. The primary purpose of the Securities Exchange Act of 1934 was to regulate:
2. A. Issuers of securities
3. B. Investment companies
4. C. Broker-dealers, agents, and the exchanges
5. D. Investment advisers
6. 2. All of the following would be exempt from registration under the Investment Advisers Act of 1940 except:
7. A. Broker-dealer charging a fee for investment advice
8. B. Publisher charging a fee to write a column about investments
9. C. Lawyer giving investment advice as part of his oversight of a client’s estate
10. D. Teacher paid for instructing students on the proper way to construct a portfolio
11. 3. Which of the following are exceptions to the definition of an investment adviser subject to state registration?
12. I. An investment adviser representative
13. II. An investment adviser with $150 million in client assets under management
14. III. The publisher of a general interest business magazine
15. IV. A bank or savings institution
16. A. II only
17. B. II and III
18. C. I, II, and III
19. D. I, II, III, and IV
20. 4. All of the following would allow someone with no office in the state, but who otherwise is clearly defined as an investment adviser, to avoid state registration except:
21. A. The adviser falls under the de minimis rule.
22. B. The adviser’s only clients are institutional clients.
23. C. Their assets under management do not exceed $100 million.
24. D. The adviser has no more than five non-institutional clients.
25. 5. The net capital requirement for an adviser who has discretion, but not custody, over a client account is:
26. A. $0
27. B. $500
28. C. $10,000
29. D. $35,000
30. 6. Which of the following are true under the brochure rule?
31. I. The brochure must be delivered 48 hours prior to signing advisory contract.
32. II. The brochure must be delivered upon request.
33. III. If the brochur