Wiley Series 65 Exam Review 2016 + Test Bank: The Uniform Investment Advisor Law Examination (Wiley FINRA)

The go-to guide to acing the Series 65 Exam! Consisting of 130 multiple-choice questions in the areas of ethics and legal guidelines, investment strategies, investment vehicles, and economics and analysis, the Uniform Investment Adviser Law Examination (Series 65) is designed to qualify candidates as investment adviser representatives. An indispensable resource for anyone preparing to take this tough three-hour exam, Wiley Series 65 Exam Review 2016 was created by the experts at The Securities Institute of America, Inc. It arms you with what you need to score high and pass the Series 65 Exam on your first try. Designed to let you build and fine-tune your knowledge of all areas covered in the exam and to guarantee that you're prepared mentally and strategically to take the test. Wiley Series 65 Exam Review 2016 is your ticket to passing the Uniform Investment Adviser Law Examination--with flying colors!;Wiley FINRA Series; Title Page; Copyright; About the Series 65 Exam; Taking the Series 65 Exam; How to Prepare for the Series 65 Exam?; Why Do I Need to Take the Series 65 Exam?; What Score Is Needed to Pass the Exam?; Are There Any Prerequisites for the Series 65 Exam?; How Do I Schedule an Exam?; What Must I Take to the Exam Center?; How Soon Will I Receive the Results of the Exam?; About This Book; About the Test Bank; About The Securities Institute of America; Chapter 1: Equity Securities; What Is a Security?; Equity = Stock; Common Stock; Corporate Time Line; Values of Common Stock. WILEY SERIES 65 EXAM REVIEW 2016 3 CONTENTS 7 ABOUT THE SERIES 65 EXAM 23 ABOUT THIS BOOK 27 ABOUT THE TEST BANK 29 ABOUT THE SECURITIES INSTITUTE OF AMERICA 31 CHAPTER 1 EQUITY SECURITIES 33 What Is a Security? 33 Equity = Stock 34 Common Stock 34 Corporate Time Line 34 AUTHORIZED STOCK 35 ISSUED STOCK 35 OUTSTANDING STOCK 35 TREASURY STOCK 35 Values of Common Stock 36 Book Value 36 Par Value 37 Rights of Common Stockholders 37 Preemptive Rights 37 Characteristics of a Rights Offering 38 Determining the Value of a Right Cum Rights 39 Determining the Value of a Right Ex Rights 39 Voting 40 METHODS OF VOTING 40 Limited Liability 41 Freely Transferable 41 The Transfer Agent 42 The Registrar 42 CUSIP Numbers 43 Inspection of Books and Records 43 Residual Claim to Assets 43 Why Do People Buy Common Stock? 43 Income 43 What Are the Risks of Owning Common Stock? 44 DIVIDENDS MAY BE STOPPED OR REDUCED 44 JUNIOR CLAIM ON CORPORATE ASSETS 44 How Does Someone Become a Stockholder? 45 TRADE DATE 45 SETTLEMENT DATE 45 PAYMENT DATE 45 VIOLATION 46 Preferred Stock 46 Features of All Preferred Stock 46 PAR VALUE 47 PAYMENT OF DIVIDENDS 47 DISTRIBUTION OF ASSETS 47 PERPETUAL 47 NONVOTING 47 INTEREST RATE SENSITIVE 47 Types of Preferred Stock 48 STRAIGHT/NONCUMULATIVE 48 CUMULATIVE PREFERRED 48 PARTICIPATING PREFERRED 48 CONVERTIBLE PREFERRED 49 Callable Preferred 49 Types of Dividends 49 CASH 49 STOCK 50 PROPERTY/PRODUCT 50 Dividend Distribution 50 DECLARATION DATE 51 EX-DIVIDEND DATE 51 RECORD DATE 51 PAYMENT DATE 51 STOCK PRICE AND THE EX-DIVIDEND DATE 52 Taxation of Dividends 52 Selling Dividends 52 Dividend Disbursement Process 53 Warrants 53 How Do People Get Warrants? 53 UNITS 53 ATTACHED TO BONDS 54 SECONDARY MARKET 54 POSSIBLE OUTCOMES OF A WARRANT 54 American Depositary Receipts (ADRs)/American Depositary Shares (ADSs) 54 Currency Risks 55 Functions of the Custodian Bank Issuing ADRs 55 Real Estate Investment Trusts/REITs 55 Direct Participation Programs and Limited Partnerships 56 Limited Partnerships 56 STRUCTURING AND OFFERING LIMITED PARTNERSHIPS 57 TYPES OF LIMITED PARTNERSHIPS 59 Tax Reporting for Direct Participation Programs 60 Limited Partnership Analysis 60 Tax Deductions vs. Tax Credits 60 Other Tax Considerations 61 Dissolving a Partnership 61 Pretest 63 EQUITY SECURITIES 63 CHAPTER 2 CORPORATE AND MUNICIPAL DEBT SECURITIES 67 Corporate Bonds 67 Types of Bond Issuance 68 BEARER BONDS 68 REGISTERED BONDS 68 PRINCIPAL-ONLY REGISTRATION 68 FULLY REGISTERED 68 BOOK ENTRY/JOURNAL ENTRY 69 BOND CERTIFICATE 69 Bond Pricing 69 Par Value 70 Discount 70 Premium 70 Corporate Bond Pricing 70 Bond Yields 71 NOMINAL YIELD 71 CURRENT YIELD 71 YIELD TO MATURITY 72 Yield to Maturity: Premium Bond 72 Yield to Maturity: Discount Bond 73 Calculating the Yield to Maturity 73 Calculating the Yield to Call 74 Realized Compound Yield Returns 74 Yield Spreads 75 The Real Interest Rate 75 Bond Maturities 75 TERM MATURITY 75 SERIAL MATURITY 76 BALLOON MATURITY 76 Series Issue 76 Types of Corporate Bonds 76 SECURED BONDS 76 UNSECURED BONDS 77 Guaranteed Bonds 78 Convertible Bonds 78 Converting Bonds into Common Stock 79 Parity Price 79 Advantages of Issuing Convertible Bonds 80 Disadvantages of Issuing Convertible Bonds 80 Convertible Bonds and Stock Splits 80 The Trust Indenture Act of 1939 81 Bond Indenture 81 Ratings Considerations 81 Exchange Traded Notes (ETNs) 82 Euro and Yankee Bonds 82 Variable Rate Securities 83 Retiring Corporate Bonds 83 REDEMPTION 84 REFUNDING 84 PREREFUNDING 84 CALLING IN BONDS 84 PUTTING BONDS TO THE COMPANY 85 TENDER OFFERS 85 OPEN-MARKET PURCHASES 85 Municipal Bonds 85 Types of Municipal Bonds 86 GENERAL OBLIGATION BOND 86 REVENUE BONDS 87 INDUSTRIAL DEVELOPMENT BONDS/INDUSTRIAL REVENUE BONDS 87 LEASE RENTAL BONDS 88 SPECIAL TAX BONDS 88 SPECIAL ASSESSMENT BONDS 88 DOUBLE-BARRELED BONDS 88 MORAL OBLIGATION BONDS 88 NEW HOUSING AUTHORITY/PUBLIC HOUSING AUTHORITY 89 SHORT-TERM MUNICIPAL FINANCING 89 Taxation of Municipal Bonds 90 Tax-Equivalent Yield 90 Purchasing a Municipal Bond Issued in the State in Which the Investor Resides 91 Triple Tax Free 91 Original Issue Discount (OID) and Secondary Market Discounts 91 Amortization of a Municipal Bond’s Premium 92 Bond Swaps 92 Analyzing Municipal Bonds 92 Analyzing General Obligation Bonds 93 Duration 93 Convexity 94 Bond Portfolio Management 94 Pretest 97 CORPORATE AND MUNICIPAL DEBT SECURITIES 97 CHAPTER 3 GOVERNMENT AND GOVERNMENT AGENCY ISSUES 101 Series EE Bonds 101 Series HH Bonds 102 Treasury Bills, Notes, and Bonds 102 Purchasing Treasury Bills 102 Treasury Notes 103 Treasury Bonds 103 Treasury Bond and Note Pricing 103 Treasury STRIPs 104 Treasury Receipts 104 Treasury Inflation Protected Securities (TIPS) 105 Agency Issues 106 Government National Mortgage Association (GNMA) 106 Federal National Mortgage Association (FNM) 107 Federal Home Loan Mortgage Corporation (FHLMC) 107 Federal Farm Credit System 108 Collateralized Mortgage Obligation (CMO) 108 CMOs and Interest Rates 108 Types of CMOs 109 PRINCIPAL-ONLY CMOs 109 INTEREST-ONLY CMOs 109 PLANNED AMORTIZATION CLASS (PAC) CMO 110 TARGETED AMORTIZATION CLASS (TAC) CMOs 110 PRIVATE-LABEL CMOs 110 Pretest 111 GOVERNMENT AND GOVERNMENT AGENCY ISSUES 111 CHAPTER 4 INVESTMENT COMPANIES 113 Investment Company Philosophy 113 Types of Investment Companies 114 FACE-AMOUNT COMPANY/FACE-AMOUNT CERTIFICATES 114 UNIT INVESTMENT TRUST (UIT) 114 MANAGEMENT INVESTMENT COMPANIES (MUTUAL FUNDS) 115 Open End vs. Closed End 115 Diversified vs. Nondiversified 116 Investment Company Registration 117 Registration Requirements 117 Investment Company Components 119 BOARD OF DIRECTORS 119 BONDING OF KEY EMPLOYEES 120 INVESTMENT ADVISER 120 CUSTODIAN BANK 121 TRANSFER AGENT 121 Mutual Fund Distribution 121 Selling Group Member 121 Distribution of No-Load Mutual Fund Shares 122 Distribution of Mutual Fund Shares 122 Mutual Fund Prospectus 122 Characteristics of Open-End Mutual Fund Shares 123 ADDITIONAL CHARACTERISTICS OF OPEN-END MUTUAL FUNDS 124 Mutual Fund Investment Objectives 124 EQUITY FUNDS 124 EQUITY INCOME FUND 125 SECTOR FUNDS 125 INDEX FUNDS 125 GROWTH AND INCOME (COMBINATION FUND) 125 BALANCED FUNDS 126 ASSET ALLOCATION FUNDS 126 Other Types of Funds 126 Bond Funds 126 CORPORATE BOND FUNDS 126 GOVERNMENT BOND FUNDS 127 MUNICIPAL BOND FUNDS 127 MONEY MARKET FUNDS 127 Alternative Funds 128 Valuing Mutual Fund Shares 128 CHANGES IN THE NAV 129 Sales Charges 130 CLOSED-END FUNDS 130 EXCHANGE-TRADED FUNDS (ETFs) 130 ETFs THAT TRACK ALTERNATIVELY WEIGHTED INDICES 131 FRONT-END LOADS 131 BACK-END LOADS 132 Other Types of Sales Charges 132 Recommending Mutual Funds 132 Calculating a Mutual Fund’s Sales Charge Percentage 133 Finding the Public Offering Price 134 Sales Charge Reductions 134 Breakpoint Schedule 135 Letter of Intent 135 BACKDATING A LETTER OF INTENT 135 Breakpoint Sales 136 Rights of Accumulation 136 Automatic Reinvestment of Distributions 137 Other Mutual Fund Features 137 COMBINATION PRIVILEGES 137 CONVERSION OR EXCHANGE PRIVILEGES 137 30-DAY EMERGENCY WITHDRAWAL 138 Dollar Cost Averaging 138 Mutual Funds Voting Rights 140 Mutual Fund Yields 141 Portfolio Turnover 141 Pretest 143 INVESTMENT COMPANIES 143 CHAPTER 5 VARIABLE ANNUITIES AND RETIREMENT PLANS 147 Annuities 147 FIXED ANNUITY 148 VARIABLE ANNUITY 148 COMBINATION ANNUITY 149 Bonus Annuity 149 Equity-Indexed Annuity 150 Recommending Variable Annuities 151 Annuity Purchase Options 152 SINGLE PAYMENT DEFERRED ANNUITY 152 SINGLE PAYMENT IMMEDIATE ANNUITY 152 PERIODIC PAYMENT DEFERRED ANNUITY 152 Accumulation Units 153 Annuity Units 153 Annuity Payout Options 154 LIFE ONLY/STRAIGHT LIFE 154 LIFE WITH PERIOD CERTAIN 154 JOINT WITH LAST SURVIVOR 154 Factors Affecting the Size of the Annuity Payment 155 The Assumed Interest Rate (AIR) 155 Taxation 156 Types of Withdrawals 156 Annuitizing the Contract 157 Sales Charges 157 Investment Management Fees 157 Variable Annuity vs. Mutual Fund 157 Retirement Plans 158 Individual Plans 158 Individual Retirement Accounts (IRAs) 158 TRADITIONAL IRA 159 ROTH IRA 159 SIMPLIFIED EMPLOYEE PENSION (SEP) IRA 160 IRA CONTRIBUTIONS 161 IRA ACCOUNTS 161 IRA INVESTMENTS 161 IT IS NOT WISE TO PUT A MUNICIPAL BOND IN AN IRA 162 ROLLOVER VS. TRANSFER 162 DEATH OF AN IRA OWNER 163 EDUCATIONAL IRA/COVERDELL IRA 163 529 PLANS 163 KEOGH PLANS (HR-10) 164 TAX-SHELTERED ANNUITIES (TSAs) AND TAX-DEFERRED ACCOUNTS (TDAs) 165 Corporate Plans 167 NONQUALIFIED CORPORATE RETIREMENT PLANS 167 QUALIFIED PLANS 168 Types of Plans 168 DEFINED BENEFIT PLAN 168 DEFINED CONTRIBUTION PLAN 169 Rolling Over a Pension Plan 170 Employee Stock Options 170 Employee Retirement Income Security Act of 1974 (ERISA) 171 PLAN PARTICIPATION 171 FUNDING 172 VESTING 172 COMMUNICATION 172 BENEFICIARIES 172 Erisa 404C Safe Harbor 172 Life Insurance 173 WHOLE LIFE 173 VARIABLE LIFE 174 UNIVERSAL LIFE 174 VARIABLE UNIVERSAL LIFE/UNIVERSAL VARIABLE LIFE 175 Tax Implications of Life Insurance 175 Pretest 177 VARIABLE ANNUITIES AND RETIREMENT PLANS 177 CHAPTER 6 FUNDAMENTAL AND TECHNICAL ANALYSIS 181 Fundamental Analysis 181 Balance Sheet 182 Capitalization 184 Changes in the Balance Sheet 184 The Income Statement 188 Industry Fundamentals 190 Top-Down and Bottom-Up Analysis 190 Dividend Valuation Models 191 Technical Analysis 191 Market Theories and Indicators 195 Efficient Market Theory 196 Statistical Analysis 197 Market Capitalization 198 MARKET INDEXES 198 Pretest 199 FUNDAMENTAL AND TECHNICAL ANALYSIS 199 CHAPTER 7 ECONOMIC FUNDAMENTALS 201 Gross Domestic Product 201 EXPANSION 202 PEAK 202 CONTRACTION 202 TROUGH 202 Recession 203 Depression 203 Economic Indicators 203 LEADING INDICATORS 204 COINCIDENT INDICATORS 204 LAGGING INDICATORS 204 Schools of Economic Thought 205 CLASSICAL ECONOMICS 205 KEYNESIAN ECONOMICS 205 THE MONETARISTS 205 Economic Policy 206 Tools of the Federal Reserve Board 206 Interest Rates 206 THE DISCOUNT RATE 207 FEDERAL FUNDS RATE 207 BROKER CALL LOAN RATE 207 PRIME RATE 207 Reserve Requirement 208 Changing the Discount Rate 208 Federal Open Market Committee 208 Money Supply 209 M1 209 M2 209 M3 210 Disintermediation 210 Moral Suasion 210 Fiscal Policy 210 CONSUMER PRICE INDEX (CPI) 211 INFLATION/DEFLATION 211 REAL GDP 211 International Monetary Considerations 212 London Interbank Offered Rate / Libor 212 Yield Curve Analysis 213 Pretest 215 ECONOMIC FUNDAMENTALS 215 CHAPTER 8 RECOMMENDATIONS, PROFESSIONAL CONDUCT, AND TAXATION 219 Professional Conduct by Investment Advisers 220 The Uniform Prudent Investors Act of 1994 220 Fair Dealings with Clients 221 CHURNING 221 MANIPULATIVE AND DECEPTIVE DEVISES 222 CUSTOMER COMPLAINTS 222 UNAUTHORIZED TRADING 223 FRAUDULENT ACTS 223 BLANKET RECOMMENDATIONS 223 SELLING DIVIDENDS 224 MISREPRESENTATIONS 224 OMITTING MATERIAL FACTS 225 GUARANTEES 225 Recommending Mutual Funds 225 Periodic Payment Plans 225 Disclosure of Client Information 226 Borrowing and Lending Money 226 Developing the Client Profile 226 Types of Advisory Clients 227 THIRD-PARTY AND FIDUCIARY ACCOUNTS 227 UNIFORM GIFTS TO MINORS ACT (UGMA) 229 RESPONSIBILITIES OF THE CUSTODIAN 229 CONTRIBUTIONS TO AN UGMA ACCOUNT 230 UGMA TAXATION 230 DEATH OF A MINOR OR CUSTODIAN 230 Investment Objectives 232 INCOME 232 GROWTH 233 PRESERVATION OF CAPITAL 233 TAX BENEFITS 233 LIQUIDITY 234 SPECULATION 234 Capital Asset Pricing Model (CAPM) 234 Risk vs. Reward 235 CAPITAL RISK 235 MARKET RISK 235 NONSYSTEMATIC RISK 236 LEGISLATIVE RISK 236 TIMING RISK 236 CREDIT RISK 236 REINVESTMENT RISK 236 INTEREST RATE RISK 236 CALL RISK 236 OPPORTUNITY RISK 237 LIQUIDITY RISK 237 Alpha 237 Beta 237 Expected Return 238 Time Value of Money 239 Weighted Returns 241 ADDITIONAL WAYS TO MEASURE RETURNS 242 Modern Portfolio Theory 243 Predicting Portfolio Income 244 PERPETUAL INCOME ACCOUNTS 244 THE RULE OF 72 245 Tax Structure 246 Investment Taxation 246 Calculating Gains and Losses 246 Cost Base of Multiple Purchases 247 FIRST IN, FIRST OUT (FIFO) 247 SHARE IDENTIFICATION 247 AVERAGE COST 248 Deducting Capital Losses 248 Wash Sales 248 Taxation of Interest Income 249 Inherited and Gifted Securities 249 Donating Securities to Charity 249 Trusts 250 Gift Taxes 252 Estate Taxes 252 Withholding Tax 253 Corporate Dividend Exclusion 253 Alternative Minimum Tax (AMT) 253 Taxes on Foreign Securities 253 Pretest 255 CUSTOMER RECOMMENDATIONS, PROFESSIONAL CONDUCT, AND TAXATION 255 CHAPTER 9 SECURITIES INDUSTRY RULES AND REGULATIONS 259 The Securities Act of 1933 259 The Prospectus 260 The Final Prospectus 260 SEC Disclaimer 261 Misrepresentations 261 The Securities Exchange Act of 1934 262 The Securities Exchange Commission (SEC) 262 Extension of Credit 263 Public Utilities Holding Company Act of 1935 263 Financial Industry Regulatory Authority (FINRA) 263 The Trust Indenture Act of 1939 264 Investment Advisers Act of 1940 264 Investment Company Act of 1940 265 FINRA Member Communications with the Public 265 FINRA Rule 2210 Communications with the Public 266 RETAIL COMMUNICATION 266 INSTITUTIONAL COMMUNICATIONS 267 CORRESPONDENCE 268 Corporate Websites 268 Blind Recruiting Ads 269 Generic Advertising 269 Tombstone Ads 270 Testimonials 270 Free Services 271 FREE LUNCH SEMINARS 271 Misleading Communications 272 Securities Investor Protection Corporation Act of 1970 (SIPC) 272 Net Capital Requirement 272 Customer Coverage 273 Fidelity Bond 273 The Securities Acts Amendments of 1975 274 The Insider Trading and Securities Fraud Enforcement Act of 1988 274 Firewall 275 The Telephone Consumer Protection Act of 1991 275 Exemption from the Telephone Consumer Protection Act of 1991 276 National Securities Market Improvement Act of 1996 276 The Uniform Securities Act 277 Currency Transactions 277 The Patriot Act 278 Pretest 281 SECURITIES INDUSTRY RULES AND REGULATIONS 281 CHAPTER 10 TRADING SECURITIES 285 Types of Orders 285 MARKET ORDERS 286 BUY LIMIT ORDERS 286 SELL LIMIT ORDERS 286 STOP ORDERS/STOP LOSS ORDERS 286 BUY STOP ORDERS 287 SELL STOP ORDERS 287 STOP LIMIT ORDERS 288 OTHER TYPES OF ORDERS 288 The Exchanges 289 Priority of Exchange Orders 289 The Role of the Specialist/DMM 289 The Specialist/DMM Acting as a Principal 290 The Specialist/DMM Acting as an Agent 290 Crossing Stock 292 Do Not Reduce (DNR) 293 Adjustments for Stock Splits 293 Stopping Stock 294 Commission House Broker 295 Two-Dollar Broker 295 Registered Traders 295 Super Display Book (SDBK) 295 Short Sales 296 Regulation of Short Sales/Regulation SHO 296 Rule 200 Definitions and Order Marking 296 Rule 203 Security Borrowing and Delivery Requirements 297 Over the Counter/Nasdaq 298 Market Makers 299 Nasdaq Subscription Levels 299 Nasdaq Quotes 300 Nominal Nasdaq Quotes 301 Nasdaq Execution Systems 301 Nasdaq Market Center Execution System (NMCES) 301 Nasdaq Opening Cross 302 Non-Nasdaq OTCBB 302 Pink OTC 302 Third Market 302 Fourth Market 303 Broker vs. Dealer 303 FINRA 5% Markup Policy 304 Markups/Markdowns When Acting as a Principal 304 Riskless Principal Transactions 305 Proceeds Transactions 306 Arbitrage 306 Pretest 307 TRADING SECURITIES 307 CHAPTER 11 OPTIONS 311 Option Classification 311 CALL OPTIONS 311 PUT OPTIONS 312 Option Classes 312 Option Series 312 Bullish vs. Bearish 312 BULLISH 313 BEARISH 313 Possible Outcomes for an Option 313 EXERCISED 313 SOLD 314 EXPIRE 314 EXERCISE PRICE 314 Characteristics of All Options 314 Managing an Option Position 314 Buying Calls 315 Maximum Gain Long Calls 315 Maximum Loss Long Calls 315 Determining the Breakeven for Long Calls 316 Selling Calls 316 MAXIMUM GAIN SHORT CALLS 316 MAXIMUM LOSS SHORT CALLS 317 DETERMINING THE BREAKEVEN FOR SHORT CALLS 317 Buying Puts 318 MAXIMUM GAIN LONG PUTS 318 MAXIMUM LOSS LONG PUTS 318 DETERMINING THE BREAKEVEN FOR LONG PUTS 318 Selling Puts 319 MAXIMUM GAIN SHORT PUTS 319 MAXIMUM LOSS SHORT PUTS 319 DETERMINING THE BREAKEVEN FOR SHORT PUTS 320 Option Premiums 321 In-the-Money Options 321 At-the-Money Options 321 Out-of-the-Money Options 322 Intrinsic Value and Time Value 322 Using Options as a Hedge 323 Long Stock Long Puts/Married Puts 323 MAXIMUM GAIN LONG STOCK LONG PUTS 323 BREAKEVEN LONG STOCK LONG PUTS 323 MAXIMUM LOSS LONG STOCK LONG PUTS 324 Long Stock Short Calls/Covered Calls 325 BREAKEVEN LONG STOCK SHORT CALLS 325 MAXIMUM GAIN LONG STOCK SHORT CALLS 326 MAXIMUM LOSS LONG STOCK SHORT CALLS 327 DETERMINING THE BREAKEVEN SHORT STOCK LONG CALLS 328 MAXIMUM GAIN SHORT STOCK LONG CALLS 328 MAXIMUM LOSS SHORT STOCK LONG CALL 329 Short Stock Long Calls 327 DETERMINING THE BREAKEVEN SHORT STOCK LONG CALLS 328 MAXIMUM GAIN SHORT STOCK LONG CALLS 328 MAXIMUM LOSS SHORT STOCK LONG CALL 329 Short Stock Short Puts 330 BREAKEVEN SHORT STOCK SHORT PUTS 330 MAXIMUM GAIN SHORT STOCK SHORT PUTS 331 MAXIMUM LOSS SHORT STOCK SHORT PUTS 332 LONG STRADDLES 332 SHORT STRADDLES 332 Futures and Forwards 333 Correlation 333 Pretest 335 OPTIONS 335 CHAPTER 12 DEFINITION OF TERMS 339 Security 339 Person 341 Broker Dealer 342 Agent 343 Issuer 343 Nonissuer 344 Investment Adviser 344 Pension Consultants 344 Investment Counsel 345 Form ADV 345 Investment Adviser Registration Database IARD 346 Investment Adviser Representative 347 Solicitor 347 Access Person 347 Institutional Investor 348 Accredited Investor 348 Qualified Purchaser 349 Private Investment Company 349 Offer/Offer to Sell/Offer to Buy 349 Sale/Sell 349 Guarantee/Guaranteed 350 Contumacy 350 Federally Covered Exemption 350 Power of Attorney 351 Negotiable Certificate of Deposit 351 Pretest 353 DEFINITION OF TERMS 353 CHAPTER 13 REGISTRATION OF BROKER DEALERS, INVESTMENT ADVISERS, AND AGENTS 359 Registration of Broker Dealers and Agents 359 AGENT REGISTRATION 360 REGISTERING BROKER DEALERS 361 FINANCIAL REQUIREMENTS 362 BROKER DEALERS ON THE PREMISES OF OTHER FINANCIAL INSTITUTIONS 362 REGISTERING AGENTS 363 Changes in an Agent’s Employment 364 Mergers and Acquisitions of Firms 364 Renewing Registrations 364 Canadian Firms and Agents 364 Investment Adviser Registration 365 NATIONAL SECURITIES MARKETS IMPROVEMENT ACT OF 1996/COORDINATION ACT 366 INVESTMENT ADVISER REPRESENTATIVE 367 INVESTMENT ADVISER REGISTRATION 367 CAPITAL REQUIREMENTS 368 EXAMS 368 Advertising and Sales Literature 369 Brochure Delivery 370 The Role of the Investment Adviser 371 Additional Compensation for an Investment Adviser 371 Agency Cross Transactions 372 Disclosures by an Investment Adviser 372 Investment Adviser Contracts 375 Additional Roles of Investment Advisers 375 Private Investment Companies/Hedge Funds 376 Fulcrum Fees 376 Wrap Accounts 376 Soft Dollars 376 Pretest 379 REGISTRATION OF BROKER DEALERS, INVESTMENT ADVISERS, AND AGENTS 379 CHAPTER 14 SECURITIES REGISTRATION, EXEMPT SECURITIES, AND EXEMPT TRANSACTIONS 385 Exempt Securities 385 Securities Registration 386 REGISTRATION OF IPOs THROUGH COORDINATION 386 REGISTRATION THROUGH NOTICE FILING 387 REGISTRATION OF NONESTABLISHED ISSUERS/REGISTRATION THROUGH QUALIFICATION 387 Exempt Securities/Federally Covered Exemption 389 Exempt Transactions 390 Private Placements/Regulation D Offerings 390 RULE 144 391 RULE 147 Intrastate Offering 392 Transactions with Financial Institutions 392 Transactions with Fiduciaries 393 Transactions with Underwriters 393 Unsolicited Orders 393 Transactions in Mortgage-Backed Securities 393 Pledges 394 Offers to Existing Securities Holders 394 Preorganization Certificates 394 Isolated Nonissuer Transactions 394 Nonissuer Transactions 395 Pretest 397 SECURITIES REGISTRATION, EXEMPT SECURITIES, AND EXEMPT TRANSACTIONS 397 CHAPTER 15 STATE SECURITIES ADMINISTRATOR: THE UNIFORM SECURITIES ACT 401 North America Securities Administrators Association 401 Actions by the State Securities Administrator 402 Cancelation of a Registration 403 Withdrawal of a Registration 403 Actions Against an Issuer of Securities 403 Rule Changes 404 Administrative Orders 404 Interpretive Opinions 405 Administrative Records 405 Investigations 406 Civil and Criminal Penalties 406 Jurisdiction of the State Securities Administrator 407 Administrator’s Jurisdiction over Securities Transactions 408 Radio, Television, and Newspaper Distribution 410 Right of Rescission 410 Statute of Limitations 411 Pretest 413 STATE SECURITIES ADMINISTRATOR: THE UNIFORM SECURITIES ACT 413 ANSWER KEYS 419 GLOSSARY OF EXAM TERMS 433 INDEX 499 ADVERT 511 ACCESS CODE 512 EULA 513 Wiley FINRA Series Title Page Copyright About the Series 65 Exam Taking the Series 65 Exam How to Prepare for the Series 65 Exam? Why Do I Need to Take the Series 65 Exam? What Score Is Needed to Pass the Exam? Are There Any Prerequisites for the Series 65 Exam? How Do I Schedule an Exam? What Must I Take to the Exam Center? How Soon Will I Receive the Results of the Exam? About This Book About the Test Bank About The Securities Institute of America Chapter 1: Equity Securities What Is a Security? Equity = Stock Common Stock Corporate Time Line Values of Common Stock. Book ValuePar Value Rights of Common Stockholders Preemptive Rights Characteristics of a Rights Offering Determining the Value of a Right Cum Rights Determining the Value of a Right Ex Rights Voting Limited Liability Freely Transferable The Transfer Agent The Registrar CUSIP Numbers Inspection of Books and Records Residual Claim to Assets Why Do People Buy Common Stock? Income What Are the Risks of Owning Common Stock? How Does Someone Become a Stockholder? Preferred Stock Features of All Preferred Stock Types of Preferred Stock Callable Preferred Types of Dividends. Dividend DistributionTaxation of Dividends Selling Dividends Dividend Disbursement Process Warrants How Do People Get Warrants? American DepositAry Receipts (ADRs)/American DepositAry Shares (ADSs) Currency Risks Functions of the Custodian Bank Issuing ADRs Real Estate Investment Trusts/REITs Direct Participation Programs and Limited Partnerships Limited Partnerships Tax Reporting for Direct Participation Programs Limited Partnership Analysis Tax Deductions vs. Tax Credits Other Tax Considerations Dissolving a Partnership Pretest. Chapter 2: Corporate and Municipal Debt SecuritiesCorporate Bonds Types of Bond Issuance Bond Pricing Par Value Discount Premium Corporate Bond Pricing Bond Yields Yield to Maturity: Premium Bond Yield to Maturity: Discount Bond Calculating the Yield to Maturity Calculating the Yield to Call Realized Compound Yield Returns Yield Spreads The Real Interest Rate Bond Maturities Series Issue Types of Corporate Bonds Guaranteed Bonds Convertible Bonds Converting Bonds into Common Stock Parity Price Advantages of Issuing Convertible Bonds. Disadvantages of Issuing Convertible BondsConvertible Bonds and Stock Splits The Trust Indenture Act of 1939 Bond Indenture Ratings Considerations Exchange Traded Notes (ETNs) Euro and Yankee Bonds Variable Rate Securities Retiring Corporate Bonds Municipal Bonds Types of Municipal Bonds Taxation of Municipal Bonds Tax-Equivalent Yield Purchasing a Municipal Bond Issued in the State in Which the Investor Resides Triple Tax Free Original Issue Discount (OID) and Secondary Market Discounts Amortization of a Municipal Bond's Premium Bond Swaps Analyzing Municipal Bonds. The go-to guide to acing the Series 65 Exam! Consisting of 130 multiple-choice questions in the areas of ethics and legal guidelines, investment strategies, investment vehicles, and economics and analysis, the Uniform Investment Adviser Law Examination (Series 65) is designed to qualify candidates as investment adviser representatives. An indispensable resource for anyone preparing to take this tough three-hour exam, Wiley Series 65 Exam Review 2016 was created by the experts at The Securities Institute of America, Inc. It arms you with what you need to score high and pass the Series 65 Exam on your first try. Designed to let you build and fine-tune your knowledge of all areas covered in the exam and to guarantee that you're prepared mentally and strategically to take the test, it features: Dozens of examples Assorted practice questions for each subject area covered in the exam Priceless test-taking tips and strategies Helpful hints on how to study for the test, manage stress, and stay focused Wiley Series 65 Exam Review 2016 is your ticket to passing the Uniform Investment Adviser Law Examination—with flying colors!