Wiley FINRA Series 66 Exam Review 2017

About the Series 66 Exam xiii About This Book xvii About the Test Bank xix About the Securities Institute of America xxi Chapter 1 Definition of Terms 1 Security 1 Person 3 Broker Dealer 4 Agent 4 Issuer 5 Nonissuer 5 Investment Adviser 5 Pension Consultants 6 Investment Counsel 6 Form ADV 7 Investment Adviser Registration Database (IARD) 8 Investment Adviser Representative 9 Solicitor 9 Access Person 10 Institutional Investor 10 Accredited Investor 11 Qualified Purchaser 11 Private Investment Company 11 Offer/Offer to Sell/Offer to Buy 11 Sale/Sell 12 Guarantee/Guaranteed 12 Contumacy 12 Federally Covered Exemption 12 Escheatment 13 12B-1 Fees 13 Power of Attorney 14 Option Contracts 14 Call Options 15 Put Options 15 Futures and Forwards 15 Secondary Market Orders 15 Market Orders 16 Buy Limit Orders 16 Sell Limit Orders 16 Stop Orders/Stop Loss Orders 17 Buy Stop Orders 17 Sell Stop Orders 18 Pretest 19 Chapter 2 Securities Industry Rules and Regulations 25 The Securities Act of 1933 25 The Securities Exchange Act of 1934 27 Public Utilities Holding Company Act of 1935 29 Financial Industry Regulatory Authority (FINRA) 29 The Trust Indenture Act of 1939 30 Investment Advisers Act of 1940 30 Investment Company Act of 1940 30 Retail Communications/Communications with the Public 31 FINRA Rule 2210 Communications with the Public 32 Blind Recruiting Ads 34 Generic Advertising 34 Tombstone Ads 35 Testimonials 35 Free Services 36 Misleading Communications 36 Securities Investor Protection Corporation Act of 1970 (SIPC) 37 The Securities Acts Amendments of 1975 38 The Insider Trading and Securities Fraud Enforcement Act of 1988 38 Firewall 39 The Telephone Consumer Protection Act of 1991 39 National Securities Market Improvement Act of 1996 40 The Uniform Securities Act 41 The Patriot Act 41 Regulation S-P 43 Identity Theft 44 Pretest 45 Chapter 3 Economic Fundamentals 49 Gross Domestic Product 49 Recession 51 Depression 51 Economic Indicators 51 Schools of Economic Thought 53 Economic Policy 54 Tools of the Federal Reserve Board 54 Interest Rates 54 Reserve Requirement 55 Changing the Discount Rate 56 Federal Open Market Committee 56 Money Supply 57 Disintermediation 58 Moral Suasion 58 Fiscal Policy 58 International Monetary Considerations 60 London Interbank Offered Rate(LIBOR) 60 Yield Curve Analysis 60 Pretest 63 Chapter 4 Customer Recommendations, Professional Conduct, and Taxation 67 Professional Conduct by Investment Advisers 68 The Uniform Prudent Investors Act of 1994 68 Fair Dealings with Clients 69 Periodic Payment Plans 73 Disclosure of Client Information 74 Borrowing and Lending Money 74 Developing the Client Profile 74 Investment Objectives 77 Risk vs. Reward 79 Alpha 81 Beta 81 Predicting Portfolio Income 88 Fundamental Analysis 90 Capitalization 93 Tax Structure 95 Investment Taxation 95 Calculating Gains and Losses 95 Cost Base of Multiple Purchases 96 Deducting Capital Losses 97 Wash Sales 97 Taxation of Interest Income 98 Inherited and Gifted Securities 98 Donating Securities to Charity 98 Trusts 99 Gift Taxes 99 Estate Taxes 100 Withholding Tax 100 Corporate Dividend Exclusion 100 Alternative Minimum Tax (AMT) 101 Taxes on Foreign Securities 101 Pretest 103 Chapter 5 Variable Annuities, Retirement Plans, AND LIFE INSURANCE 107 Annuities 107 Equity-Indexed Annuities 110 Recommending Variable Annuities 111 Annuity Purchase Options 112 Accumulation Units 112 Annuity Units 113 Annuity Payout Options 113 Factors Affecting the Size of the Annuity Payment 114 The Assumed Interest Rate (AIR) 115 Taxation 115 Sales Charges 116 Variable Annuity vs. Mutual Fund 116 Retirement Plans 116 Individual Plans 117 Individual Retirement Accounts (IRAs) 117 529 Plans 120 Local Government Investment Pools (LGIPs) 121 IRA Contributions 122 IRA Accounts 122 IRA Investments 122 It Is Unwise to Put a Municipal Bond in an IRA 123 Rollover vs. Transfer 123 Keogh Plans (HR-10) 124 Contributions 124 Tax-Sheltered Annuities/Tax-Deferred Account 125 Contributions 126 Tax Treatment of Distributions 127 Corporate Plans 127 Non-Qualified Corporate Retirement Plans 127 Payroll Deductions 127 Deferred Compensation Plans 128 Qualified Plans 128 Types of Plans 128 Rolling Over a Pension Plan 130 Employee Retirement Income Security Act of 1974 (ERISA) 130 ERISA 404C Safe Harbor 132 The Department of Labor Fiduciary Rules 133 Life Insurance 133 Premiums and Death Benefits 135 Assumed Interest Rate 136 Variable Policy Features 137 Sales Charges 138 Life Settlements 139 Tax Implications of Life Insurance 139 Health Savings Accounts 140 Pretest 141 Chapter 6 Registration of Broker Dealers, Investment Advisers, and Agents 145 Registration of Broker Dealers 145 Financial Requirements 146 Agent Registration 147 Hiring New Employees 149 Resignation of a Registered Representative 150 Registering Agents 151 Changes in an Agent s Employment 152 Mergers and Acquisitions of Firms 152 Renewing Registrations 152 Canadian Firms and Agents 152 Investment Adviser State Registration 153 The National Securities Market Improvement Act of 1996 (The Coordination Act) 153 Investment Adviser Representative 154 State Investment Adviser Registration 155 Capital Requirements 155 Exams 156 Advertising and Sales Literature 157 Brochure Delivery 158 The Role of the Investment Adviser 159 Additional Compensation for an Investment Adviser 159 Agency Cross Transactions 159 Disclosures by an Investment Adviser 159 Investment Adviser Contracts 161 Additional Roles of Investment Advisers 162 Private Investment Companies/Hedge Funds 162 Fulcrum Fees 162 Wrap Accounts 163 Soft Dollars 163 Pretest 165 Chapter 7 Securities Registration, Exempt Securities, and Exempt Transactions 171 Exempt Securities 171 Securities Registration 172 Exempt Securities/Federally Covered Exemption 175 Exempt Transactions 176 Pretest 183 Chapter 8 State Securities Administrator: the Uniform Securities Act 189 Actions by the State Securities Administrator 189 Actions Against an Issuer of Securities 191 Rule Changes 192 Investigations 194 Civil and Criminal Penalties 194 Jurisdiction of the State Securities Administrator 195 Administrator s Jurisdiction over Securities Transactions 195 Radio, Television, and Newspaper Distribution 198 Right of Rescission 198 Statute of Limitations 199 Pretest 201 Answer Keys 207 Glossary of Exam Terms 217 Index 283