A-2-Z Associates advertises itself as a full service brokerage firm that will buy and sell securities for its
clients, as well as provide investment advice to them. Its brochure provides a variety of plans to which a
client can subscribe. The basic plan is the cheapest and allows the client a maximum number of trades
per month for a specified fee. Another, slightly more expensive, plan provides the client with the same
maximum number of trades per month, but the client also receives a personalized quarterly review of his
portfolio along with advice for restructuring his portfolio based on such factors as current market
conditions and specific industry or company information. The most expensive plan is one in which the
client is assigned to an individual portfolio manager, who will take total responsibility for the asset
allocation of the client's portfolio and will provide the client with monthly reports. Based on the services
A-2-Z provides, it must register with the state as:

• A.a broker-dealer.
• B.an investment adviser.
• C.both a broker-dealer and an investment adviser.
• D.an investment adviser representative.

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An agent working for a broker-dealer mistakenly sends an investment adviser some bonds that the
adviser purchased on behalf of his client instead of directing the bonds to the financial institution that is
serving as the qualified custodian of the client's funds. If the investment adviser wants to avoid being
considered custodian of this client's account, what must the adviser do?

• A.Record what securities were sent, when he received them, and when he forwarded them--which
• B.Record what securities were sent, when he received them, and when he forwarded them--which must
  be within three business days-to his client.
• C.Record what securities were sent, when he received them, and when he forwarded them--which must
  be within twenty-four hours-to his client.
• D.Record what securities were sent, when he received them, and when he forwarded them--which must
  be within twenty-four hours-to the qualified custodian of the client's funds.

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Erin is a registered agent who works for SecureMoney Brokers-dealers. One of her clients, Mrs. McTurk,
is a recently-widowed woman who relies on Erin for advice about her investment portfolio. Mrs. McTurk
reminds Erin of her own grandmother, and she is happy to provide guidance within the sphere of her own
knowledge. Based on these facts, which of the following statements is true?

• A.SecureMoney Broker-dealers must register as an investment adviser since one of its employees is
  providing investment advice.
• B.Erin must register as an investment adviser since she is providing investment advice.
• C.SecureMoney Broker-dealers must register as an investment adviser since one of its employees is
  providing investment advice, and Erin must register as an investment adviser representative as the firm's
  employee.
• D.Neither SecureMoney Broker-dealers nor Erin must register as an investment adviser based on the
  facts provided.

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Finn Nance has recently passed his CFP exam and is now a certified financial planner. He has new
business cards printed that have the words "Certified Financial Planner" printed under his picture. In doing
so,

• A.Finn has not violated any laws or engaged in any prohibited practices.
• B.Finn has violated a securities law. The Uniform Securities Act prohibits anyone from using the word
  "certified" on any advertisement for services.
• C.Finn has possibly violated a state securities regulation. The Administrator in many states prohibits the
  use of the word "certified" on any advertisement for services.
• D.Finn is not in violation of any laws as long as he has notified the state Administrator of his new
  designation and his new logo.

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Which of the following statements best explains the difference between an agent and a broker-dealer?

• A.An agent is an individual who represents a broker-dealer or an issuer and buys and sells securities he
  does not own in return for a commission on the transactions he executes. A broker-dealer may also buy
  and sell securities for his own portfolio, in which case the broker-dealer enjoys any price appreciation on
  those securities.
• B.A broker-dealer must be licensed in the state in which he conducts business, but there are no separate
  licensing requirements for agents.
• C.Agents are engaged exclusively in the purchase and sale of stocks whereas broker-dealers also buy
  and sell bonds and option contracts.
• D.Agents conduct their business exclusively in the secondary market, while broker-dealers also operate
  in the primary market.

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