Series 82 Example Questions
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What is the equivalent taxable yield of a 6.5% municipal bond if the investor's tax bracket is 25%?
A ) 8.67%
B ) 4.88%
C ) 18.5%
D ) 6.5%
Answer: The Best Answer is A
Feedback: To find the equivalent taxable yield of a municipal bond, take the coupon yield of the municipal bond divided by (100 minus the investor's tax bracket.) In this example, .065 / (1.00-.25) = .0867 = 8.67%.
Which of the following types of accounts are subject to less strict suitability requirements?
A ) Institutional accounts
B ) Corporate accounts
C ) Accredited investor accounts
D ) Fiduciary accounts
Answer: The Best Answer is A
Feedback: Prior to recommending any transaction to a retail customer, a dealer must exert “best efforts” to obtain information concerning the customer’s financial status, tax status, investment objectives, and any other information pertinent to making suitable recommendations on the customer’s behalf. This is generally referred to as suitability information, meaning the information that is necessary to be able to recommend suitable transactions to a particular client.
Firms are not held to such strict suitability rules for institutional accounts, which are accounts belonging to institutional customers. If a dealer believes that an institutional customer is capable of independently evaluating risk and the customer regularly makes independent investment decisions, the dealer’s suitability requirements are fulfilled.
According to Regulation D, which of the following are NOT considered "accredited investors?"
A ) An individual with a net worth of $1,500,000, not counting his or her home
B ) A married couple with an annual joint earned income of $250,000 for two years
C ) An individual with an annual earned income of $250,000 for each of the last two years
D ) All are considered
Answer: The Correct Answer is B
Feedback: Accredited investors are individuals who earned more than $200,000/year for the last two years, or married couples who jointly earned more than $300,000/year for the last two years, or individuals (or married couples) who have a net worth greater than $1,000,000, excluding their primary residence. To qualify as an accredited investor on the basis of income, the individual or married couple must have exceeded the threshold for the past two years. .