In which of the following instances is it permissible for an investment adviser to borrow money from a
client?

• A.It is never permissible for an investment adviser to borrow money from a client.
• B.The investment adviser may borrow money from a client if the client is a bank.
• C.The investment adviser may borrow money from a client if the client is a close friend of the majority
  owner of the investment advisory firm.
• D.The investment adviser may borrow money in either of the scenarios described in B or C.

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The current yield on a bond fund refers to

• A.the percentage increase in the fund's net asset value.
• B.the return that the fund earned because of the capital appreciation of the securities in the fund.
• C.the total return that the fund has earned over the most recent 12-month period.
• D.the return that the fund earned based only on the interest income it received

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Which of the following entities must sign a "consent to service of process," thereby allowing the
Administrator to receive legal documents that are meant to be served to the entity in place of that entity?
I. agents
II. investment advisers
III. investment adviser representatives
IV. broker-dealers

• A.I and IV only
• B.II and III only
• C.II and IV only
• D.I, II, III, and IV

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Which of the following is not one of the criteria for a security to be eligible for registration by notification?

• A.The issuer must have preferred stockholders as well as common stockholders.
• B.The issuer must have a net worth of $4 million, or its net income before tax for at least two of the
• C.The issuer must never have defaulted on any bond or long-term lease obligation.
• D.If the security to be issued is an equity interest in the firm, its offer price has to be at least $5 a

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Layered Corporation wants to issue a bond that will have warrants attached. Each warrant gives the
holder the right to buy 5 shares of Layered's common stock at a price stipulated on the warrant. In this
instance, Layered must file to register which of the following securities with the state?
I. the bonds
II. the warrants
III. the common stock

• A.I only
• B.I and III only
• C.I and II only
• D.I, II, and III

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