FINRA Series 66 Practice Test

Answer choices

1. A. The contract's coupon rate will reset, for the described technical objective and its associated operational control requirements, as proposed.
2. B. The investor receives FDIC protection, for the described technical objective and its associated operational control requirements, under the proposed approach.
3. C. The trader may be required to add funds or the position may be liquidated under margin rules
4. D. The position automatically converts into common stock, for the described technical objective and its associated operational control requirements, for the required outcome.

Wrong-answer review

• A. The contract's coupon rate will reset, for the described technical objective and its associated operational control requirements, as proposed.: Incorrect. This option describes a different product characteristic, overstates a feature, or fails to address the specific risk or structure tested in the scenario. Futures use margin and daily marking-to-market; adverse moves can create margin calls and possible liquidation.
• B. The investor receives FDIC protection, for the described technical objective and its associated operational control requirements, under the proposed approach.: Incorrect. This option describes a different product characteristic, overstates a feature, or fails to address the specific risk or structure tested in the scenario. Futures use margin and daily marking-to-market; adverse moves can create margin calls and possible liquidation.
• D. The position automatically converts into common stock, for the described technical objective and its associated operational control requirements, for the required outcome.: Incorrect. This option describes a different product characteristic, overstates a feature, or fails to address the specific risk or structure tested in the scenario. Futures use margin and daily marking-to-market; adverse moves can create margin calls and possible liquidation.

Answer choices

1. A. Evaluate the recommendation in the client’s best interest and fully and fairly disclose the material compensation conflict so it can be appropriately addressed.
2. B. Recommend the higher-paying investment because both products are substantially comparable, under the described iv. laws, regulations, guidelines, and unethical practices (45%) criteria, within the proposed design.
3. C. Avoid discussing compensation because disclosure could confuse the client, under the described iv. laws, regulations, guidelines, and unethical practices (45%) criteria, under the proposed approach.
4. D. Choose whichever investment produces the highest gross return in the prior year, for the required iv. laws, regulations, guidelines, and unethical practices (45%) outcome.

Answer choices

1. A. Dollar-cost averaging, as the primary proposed approach.
2. B. Sector rotation, as the selected response to the described condition.
3. C. Leverage, as described.
4. D. Short selling, for this task.

Answer choices

1. A. The shares can never be publicly traded, for the described technical objective and its associated operational control requirements, within the described context.
2. B. Investors are relying on the sponsor to identify and complete a suitable acquisition within the vehicle's terms, as selected.
3. C. The investment is exempt from all antifraud rules, for the described technical objective and its associated operational control requirements, for review.
4. D. The sponsor guarantees a profitable acquisition, as the selected approach for the stated technical and business outcome.

Answer choices

1. A. Company A is necessarily overvalued, as the proposed i. economic factors and business information (8%) approach.
2. B. Investors are paying more per dollar of earnings for Company A than for the peer, under end-to-end security-and-governance requirements.
3. C. Company A will grow earnings faster, for the described technical objective and its associated operational control requirements.
4. D. The peer has higher earnings per share, for the described technical objective and its associated operational control requirements, as proposed.

Answer choices

1. A. The rule's sophistication and disclosure conditions for non-accredited purchasers
2. B. The offering may use unrestricted general advertising, for the required operational result and control objective.
3. C. The non-accredited purchasers automatically become accredited after purchase, when applied.
4. D. The issuer must register investors on Form BD, within cross-functional operational-accountability boundaries.

Answer choices

1. A. A simple market order, as selected.
2. B. A trust, as the selected response to the described condition.
3. C. A beneficiary risk questionnaire, within this context.
4. D. A stock split, as the selected response to the described condition.

Answer choices

1. A. Project B, because a negative NPV means it earns more than the discount rate, for the specified implementation requirement.
2. B. Both, because NPV ignores the time value of money, for the stated security, delivery, and accountability requirements.
3. C. Project A, because its discounted inflows exceed its discounted outflows, for the affected environment.
4. D. Neither, because current yield is the only valid long-term measure, for the stated i. economic factors and business information (8%) requirement.

Answer choices

1. A. Form U5, for the stated implementation and support requirements.
2. B. Form BDW, as the organization’s selected response.
3. C. Form ADV, for the stated scenario.
4. D. Form D, for this task.

Answer choices

1. A. Review the applicable tax rules and the client's transaction timing rather than guaranteeing the tax result
2. B. Guarantee deductibility because every realized loss is usable, under the described iii. client/customer investment recommendations and strategies (30%) criteria, for consideration.
3. C. Ignore basis because basis matters only for bonds, as the proposed design for the complete governed operational workflow.
4. D. Assume taxes cannot affect investment recommendations, for the required iii. client/customer investment recommendations and strategies (30%) outcome, in context.