Question 1

Ms. Scatty is a registered representative with a well-known family of mutual funds. When selling one of the funds, she forgets to give her buyer a prospectus. Which of the following statements is true?

Options :

A : Ms. Scatty can be held civilly liable under the Securities Act of 1933.

B : Ms. Scatty can be held criminally liable under the Securities Act of 1933.

C : Since mutual funds are not covered under the Securities Act of 1933, there is no liability in this instance.

D : Both A and B are true statements.

Answer: A

Question 2

stion No: 159 In 2004, your Uncle Oscar purchased 300 shares of Hasbro, Inc. for $19 a share. Uncle Oscar died earlier year and left his Hasbro stock to you. The stock was selling for $44 on the day he died, but by the time you learned that you were the beneficiary of the stock, the price was $47. What is your cost basis in Hasbro?

Options :

A : $19

B : $44

C : $47

D : $28

Answer: B

Question 3

Dottie is a newly-minted, registered representative and is doing some cold calling to line up appointments with prospects. When doing so, Dottie: I. must not call anyone on her firm’s do-not-call list. II. must not call anyone on the FTC’s national do-not-call-list. III. must not call anyone before 7 a.m. or after 7 p.m., based on the time zone of the person being called. IV. must provide the person called with her name, the name and contact information of her firm, and the purpose of her call.

Options :

A : I and III only

B : I and IV only

C : I, II, and IV only

D : I, II, III, and IV

Answer: C

Question 4

The total of a mutual fund’s front-end load, rear-end load, and 12b-1 fees may not exceed:

Options :

A : 10.0% of the fund’s offer price.

B : 10.0% of the fund’s net asset value.

C : 8.5% of the fund’s offer price.

D : 8.5% of the average annual net assets of the fund.

Answer: C

Question 5

Uncle Scrooge (uncharacteristically) wants to set up a Section 529 college savings plan for his nephew, Louie. If he does so:

Options :

A : he can contribute at most $2,000 a year.

B : his contributions will be tax deductible.

C : any withdrawals that Louie makes to cover tuition, books, and room and board will be free from both federal and state taxes.

D : and Louie decides not to go to college, Uncle Scrooge can name Louie’s brother, Huey, as the beneficiary of the plan without any tax consequences.

Answer: D

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