1
Q
All of the following are true about compliance EXCEPT.
(A) Under a compliance model, our intentions (why we comply with the rules) are irrelevant.
(B) Under a compliance model. the assumption is that people act in accordance with regulations because they fear punishment.
(C) Compliance is adherence to a particular set of rules designed and enforced by regulators
(D) Ethics is identical to compliance.
A
(D) Ethics is identical to compliance.
2
Q
Which of the following is the best definition of *ethical fading”?
(A) when there are more bad people than good people in an organization
(B) the process of stripping the moral characteristics and motivation from an action
(C) renewed commitment to acting ethically
(D) social pressure to violate the rules
A
(B) the process of stripping the moral characteristics and motivation from an action
3
Q
All of the following are shared human characteristics EXCEPT:
(A) morality
(B) marriage
(C) capacity for pleasure and pain
(D) early infant development
A
(B) marriage
4
Q
Which of the following is a sphere that is governed by the virtue of justice:
(A) fear of important damages, especially death
(B) bodily appetites and their pleasure
(C) distribution of limited resources
(D) the planning of one’s life and conduct
A
(C) distribution of limited resources
5
Q
Which of the following is the best definition of moral relativism?
(A) Moral values are relative to cultures.
(B) There are certain moral statements that are universally true.
(C) There is no such thing as morality.
(D) Everyone should be tolerant of different moral views
A
(A) Moral values are relative to cultures.
6
Q
All of the following are consequences of moral relativism EXCEPT:
(A) The idea of moral progress is called into doubt.
(B) All societies are equally tolerant of other societies’ beliefs.
(C) We could decide whether actions are right or wrong by consulting the standards of our own society.
(D) We could no longer say that the beliefs of other societies were inferior to our own.
A
(B) All societies are equally tolerant of other societies’ beliefs.
7
Q
Which of the following is the guiding principle of Mill’s Utilitarianism?
(A) Actions are moral insofar as they promote the greatest good for the greatest number.
(B) Actions are moral insofar as they treat people as ends and not as means.
(C) Actions are moral if they align for a given society’s moral standards.
(D) Actions are moral if they are in accord with the virtues.
A
(A) Actions are moral insofar as they promote the greatest good for the greatest number.
8
Q
Which of the following is the guiding principle of Kant’s Deontology?
(A) Actions are moral insofar as they promote the greatest good for the greatest number.
(B) Actions are moral insofar as they treat people as ends and not as means.
(C) Actions are moral if they align for a given society’s moral standards.
(D) Actions are moral if they are in accord with the virtues.
A
(B) Actions are moral insofar as they treat people as ends and not as means.
9
Q
Which of the following is the guiding principle of Aristotle’s Virtue Ethics?
(A) Actions are moral insofar as they promote the greatest good for the greatest number.
(B) Actions are moral insofar as they treat people as ends and not as means.
(C) Actions are moral if they align for a given society’s moral standards.
(D) Actions are moral if they are in accord with the virtues.
A
(D) Actions are moral if they are in accord with the virtues.
10
Q
Which of the following is the best definition of psychological egoism?
(A) People always act only to promote their perceived self-interest.
(B) People should only be motivated by a desire to help other people.
(C) People usually choose to be selfish.
(D) People are inherently evil.
A
(A) People always act only to promote their perceived self-interest.
11
Q
Which of the following is NOT included in the four categories of information:
(A) known knowns
(B) known unknowns
(C) too hard to know
(D) unknown unknowns
A
(C) too hard to know
12
Q
An “unknown unknown” is a piece of information that is best described as
which of the following?
(A) information that we don’t know we don’t know
(B) information that we know confidently
(C) information we received from a dubious source
(D) information we know that we do not have
A
(A) information that we don’t know we don’t know
13
Q
Which of the following was an unintended consequence of the “recourse
rule”?
(A) Banks lost opportunities for profitability because they were “overcapitalized.”
(B) Banks were required to justify why reduced capital requirements were justified in their particular case.
(C) Banks were undercapitalized.
(D) The Basel Committee was disbanded.
A
(C) Banks were undercapitalized.
14
Q
All of the following are true about stakeholder groups EXCEPT:
(A) Stakeholder groups are continually in flux.
(B) Individuals can only be members of one stakeholder group at a time
(C) Stakeholders may not always be aware of their own interest.
(D) Stakeholders may disagree with the decision-maker’s interpretation of their interests.
A
(B) Individuals can only be members of one stakeholder group at a time
15
Q
Identifying stakeholder interests requires us to do which of the following?
(A) think about stakeholder interests from the point of view of the stakeholder
(B) broaden our definition of interest to include nonmaterial interests such as self-respect and autonomy
(C) think imaginatively about who could be harmed or benefitted by our actions
(D) all of the above
A
(D) all of the above
16
Q
Which of the following is the best definition of normative power as it is
described in the text?
(A) depends on the physical forces of violence or restraint
(B) results from “blackmail” or the possession of a strategic piece of information that the person does not want made public
(C) depends on the deployment of financial or matenal resources
(D) based on the use of symbolic resources
A
(D) based on the use of symbolic resources
17
Q
According to the text, which of the following offers the best definition of
procedural justice?
(A) The most powerful stakeholders get their way
(B) Every stakeholder receives an equal share of benefits and harms
(C) All stakeholders are allowed to participate in the determination of issues that impact them.
(0) The outcome is fair even if the process is not just.
A
(C) All stakeholders are allowed to participate in the determination of issues that impact them.
18
Q
According to the text, moral behavior is best described as which of the following goods?
(A) good for itself
(B) not good at all
(C) good for its consequences
(D) good for itself and its consequences
A
(D) good for itself and its consequences
19
Q
When we think about the consequences of our action, which of the following should we keep in mind?
(A) What are the short-term consequences of our actions?
(B) What are the long-term consequences of our actions?
(C) How might ethical standards change and how would these changes affect the moral quality of our actions?
(D) all of the above
A
(D) all of the above
20
Q
Which of the following is assessed by so-called “publicity tests”?
(A) whether you are willing to demonstrate to others that your action is in alignment with your values
(B) whether you seek publicity at the expense of your personal relationships
(C) whether you are willing to speak to the media about your personal ethics
(D) whether you believe everything you read
A
(A) whether you are willing to demonstrate to others that your action is in alignment with your values
21
Q
A hedonist is someone who believes that
(A) the only good with any value is pleasure.
(B) it is our moral duty to forsake physical enjoyment.
(C) the most important goal in life is to make money.
(D) we should love and cherish all animal life.
A
(A) the only good with any value is pleasure.
22
Q
All of the following are true about a vicious person (person with a corrupted
character) EXCEPT:
(A) Value other goods (such as wealth, pleasure or power) over moral action.
(B) Deny the existence of moral principles.
(C) Embrace the proposition that we should love our neighbor as ourselves.
(D) Cynically judge those that adhere to moral principles as naïve idiots.
A
(A) Value other goods (such as wealth, pleasure or power) over moral action.
23
Q
According to Aristotle’s account of how we develop a vicious character, which
of the following is true?
(A) We are born virtuous or vicious.
(B) It is easy to adapt a virtuous character after a life of vicious behavior.
(C) Vicious people are acutely aware of their defects and yearn to be more virtuous.
(D) We create our character through our actions.
A
(D) We create our character through our actions.
24
Q
The best definition of moral perception is which of the following?
(A) the willingness to act in accordance with our moral principles
(B) the capacity to see clearly into the future
(C) the ability to correctly recognize (and assign the appropriate weight to) the morally salient facts of a situation
(D) the art of persuading other people to see your point of view
A
(C) the ability to correctly recognize (and assign the appropriate weight to) the morally salient facts of a situation
25
The best definition of a morally salient fact is which of the following?
(A) fact that is disputed by all of the people involved
(B) fact that has been established by a scientific process
(C) fact that has always been accepted as true
(D) fact that reflects or impacts an ethical value or moral principle.
(D) fact that reflects or impacts an ethical value or moral principle.
26
All of the following statements about moral perception are true EXCEPT:
(A) Moral perception is skill that is acquired with education and practice.
(B) All adults share the exact same set of perceptual skills.
(C) We are trained as moral perceivers from childhood.
(D) Most of our moral education is acquired unconsciously through the actions we witness as we mature.
(B) All adults share the exact same set of perceptual skills.
27
All of the following are ways that moral perception can be distorted EXCEPT:
(A) practical wisdom
(B) ignorance of the particulars
(C) bad moral education
(D) cognitive bias
(A) practical wisdom
28
Which of the following best describes the "acceptability heuristic"?
(A) People often "seek out" information that serves to conform the response or position most acceptable to their superiors. Information is categorized by whether it will be acceptable or unacceptable to supervisors.
(B) the overestimation of one's actual ability, performance, level of control
or chance of success
(C) inclines decision-makers to gather information, process information and even remember information in such a manner as to advance their perceived self-interest and to support their preexisting views
(D) allowing one's opinions to be inappropriately influenced by the dynamics of the group
(A) People often "seek out" information that serves to conform the response or position most acceptable to their superiors. Information is categorized by whether it will be acceptable or unacceptable to supervisors.
29
Which of the following best describes "self-serving bias"?
(A) People often "seek out" information that serves to conform the response or position most acceptable to their superiors. Information is categorized by whether it will be acceptable or unacceptable to supervisors.
(B) the overestimation of one's actual ability, performance, level of control or chance of success
(C) inclines decision-makers to gather information, process information and even remember information in such a manner as to advance their perceived self-interest and to support their preexisting views.
(D) allowing one's opinions to be inappropriately influenced by the dynamics of the group
(C) inclines decision-makers to gather information, process information and even remember information in such a manner as to advance their perceived self-interest and to support their preexisting views.
30
All of the following are true about the person who gives into temptation
EXCEPT:
(A) committed to general moral principles
(B) have a corrupted and vicious character
(C) understand the moral action required by a particular situation
(D) lack the will power to do what they know that they should do
(B) have a corrupted and vicious character
31
Which of the following is a characteristic of a formal organizational culture?
(A) public
(B) private
(C) not endorsed by leadership
(D) created by the collective
(A) public
32
Which of the following statements is true about organizational culture?
(A) People's behavior is not impacted by culture.
(B) Organizational cultures can be easily changed by the efforts of one person.
(c) Most people are unaware of the characteristics of their own ethical culture.
(D) Unethical people never congregate together.
(c) Most people are unaware of the characteristics of their own ethical culture.
33
All of the following are true statements about codes of ethics. EXCEPT
(A) Codes of ethics are more effective if they are a part of an ethical culture.
(B) there are no consequences if senior leaders ignore the code of ethics.
(C) Codes of ethics define the value system within which the organization's goals should ho pursued.
(D) Codes of ethics are usually designed to achieve educational, regulatory and aspirational goals.
(B) there are no consequences if senior leaders ignore the code of ethics.
34
Which of the following is a true statement about reward systems?
(A) People are only incentivized by material rewards.
(B) It is wrong to reward people for acting ethically.
(C) A carefully crafted reward system is crucial for creating an environment in which it is easy to do the right thing.
(D) Incentives are irrelevant to people's behavior.
(C) A carefully crafted reward system is crucial for creating an environment in which it is easy to do the right thing.
35
Which of the following is a characteristic of informal ethical cultures?
(A) created by the collective
(B) public
(C) mandated by leadership
(D) legitimate
(A) created by the collective
36
All of the following are true about the role of stones in the organization,
EXCEPT
(A) Stones provide 'mental maps- that let people know what is important and how it is to be achieved.
(B) Stories play a crucial role in transmitting information to new arrivals.
(C) We can use stones to interpret the abstract principles articulated in the organization's code of ethics and other formal documents.
(D) It is irrelevant whether your audience believes the story.
(D) It is irrelevant whether your audience believes the story.
37
All the following hinder the use the moral language in the workplace, EXCEPT
(A) unwillingness to appear to place ourselves on the "moral high ground"
(B) fear that conversations about ethics do not have a natural terminus
(C) high degree of comfort with using moral terminology
(D) belief that someone who is willing to talk about ethics lacks the toughness to be an effective leader
(C) high degree of comfort with using moral terminology
38
All of the following are true of good organizational citizens, EXCEPT
(A) committed to the good of the organization for its own sake
(B) believe in the mission of the organization
(C) willing to help their colleagues. even when there is no direct personal benefit
(D) embrace an “Its-all-about-me" attitude
(D) embrace an “Its-all-about-me" attitude
39
Which of the following characteristics of incentive systems may reveal an unethical culture?
(A) focuses exclusively on results to the exclusion of process and means
(B) focuses on process and means in addition to results
(C) rewards people for acting cooperatively
(D) contains rewards that appeal to self-interest in a broader sense
(A) focuses exclusively on results to the exclusion of process and means
40
Which of the following is the best definition of ethical leadership?
(A) Ethical leaders raise the level of their followers' ethical behavior.
(B) Ethical leaders possess important personal virtues.
(C) Ethical leaders are terrible managers.
(D) Ethical leaders are moral people in managerial positions.
(A) Ethical leaders raise the level of their followers' ethical behavior.
41
Which of the following is one of the seven basic requirements for a discipline
to be considered a profession?
(A) Members of the profession must earn above a standard minimum level of income.
(B) Members of the profession cannot be self-declared as professionals.
(C) Members of the profession must hold a postgraduate degree from an accredited university.
(D) Members of the profession cannot enter the profession prior to a completion of a 7-year apprenticeship and successful completion of written examinations.
(B) Members of the profession cannot be self-declared as professionals.
42
The text advises that financial services professionals must be aware of
knowledge that is interrelated to the discipline of law. Consequently, in order to disperse this information properly
(A) an insured financial advisor is exempt from rules regarding the unauthorized practice of law
(B) attorneys are covered by rules forbidding the unauthorized practice of insurance-related advice
(C) technical advice to clients should be specific in nature
(D) technical advice to clients should be given in general terms
(D) technical advice to clients should be given in general terms
43
Under the law of torts, professionals
(A) are exempt from actions regarding bodily harm
(B) are exempt from standards of expertise due to their certified credentials
(C) have historically been held to higher standards of expertise and behavior than nonprofessionals
(D) have historically been held to lower standards of expertise and behavior
than nonprofessionals
(C) have historically been held to higher standards of expertise and behavior than nonprofessionals
44
How does the text suggest you handle requests from clients for specific tax
advice or legal matters?
(A) Refer your client to the appropriate specialist.
(B) First try to draft the requested documents yourself.
(C) Provide your client with doctored home-office prototype documents.
(D) Do not let the client call on the expertise of another professional.
(A) Refer your client to the appropriate specialist.
45
A code of ethics establishes which of the following for members of a profession?
(A) rules of law
(B) statutes of state
(C) standards of conduct
(D) rules of etiquette
(C) standards of conduct
46
All of the following are requirements of a profession EXCEPT
(A) any profession has at its core a body of subject matter
(B) entrance into the profession requires mastery of the technical subject matter
(C) a profession has as one of its hallmarks no barriers to entry
(D) members of the profession must conduct their affairs in an independent manner
(C) a profession has as one of its hallmarks no barriers to entry
47
All of the following are among the codes of ethics applicable to the financial
services professional EXCEPT
(A) the NAIC Code of Ethics
(B) The American College Code of Ethics
(C) the Society of Financial Service Professionals Code of Ethics
(D) the CFP® Code of Ethics
(A) the NAIC Code of Ethics
48
All of the following are practical steps that financial services professionals
can use to avoid legal liability EXCEPT
(A) Conduct a compliance audit of written sales materials.
(B) Conduct a compliance audit of your sales presentations.
(C) Overlook unnecessary documentation.
(D) Review licensing requirements.
(C) Overlook unnecessary documentation.
49
As stated in the text, being a professional carries with it all of the following
EXCEPT
(A) increased demands for service by clients
(B) increased risk of legal liability
(C) increased paperwork
(D) increased need to be aware of ethical issues
(C) increased paperwork
50
Clients ask themselves each of the following questions when judging whether
or not they are dealing with a professional EXCEPT
(A) Does the professional listen?
(B) Does the professional have a CPA?
(C) Has the professional educated me about the product?
(D) Does the professional handle money matters properly?
(B) Does the professional have a CPA?
51
After agent Smith has conducted a thorough fact finding with client Jones,
agent Smith should
(A) retain these records for use in future periodic reviews
(B) discard these records as quickly as possible to eradicate all
documentation of the sales process
(C) archive the records for 6 months before destroying
(D) forward all records to the client for documentation
(A) retain these records for use in future periodic reviews
52
The FINRA Conduct Rules
(A) constitute an undue and illegal hardship on financial advisors selling
variable products
(B) emphasize the need to provide proper client service, including
disclosure of confidential information regarding your company's
investment philosophy and trading positions
(C) are statutorily inapplicable to insurance agents
(D) emphasize the need to provide proper client service, including efforts
made to understand a client's current financial condition
(D) emphasize the need to provide proper client service, including efforts
made to understand a client's current financial condition
53
Which of the following statements is true concerning model legislation
promulgated by the National Association of Insurance Commissioners
(NAIC)?
(A) NAIC model legislation applies only to agents, not to home offices
(B) NAIC model legislation is designed to cover only home office marketing practices.
(C) NAIC model legislation is designed for implementation by the federal
government.
(D) NAIC model legislation gives state insurance commissioners substantial that powers to investigate both carriers and agents suspected of violating
the law.
(D) NAIC model legislation gives state insurance commissioners substantial that powers to investigate both carriers and agents suspected of violating
the law.
54
Which of the following is an example of an equity investment?
(A) a federal government bond with a 30-year duration
(B) a short-term certificate of deposit
(C) a local jurisdiction bond with a 5-year duration
(D) common stock
(D) common stock
55
Which of the following statements regarding risk tolerance is true?
(A) All clients maintain the same level of risk tolerance.
(B) Some clients can accept risk more easily than others.
(C) Risk tolerance is inapplicable to an agent's insurance practice
(D) Risk tolerance is applicable to property and casualty and inapplicable to an agent's life insurance practice.
(B) Some clients can accept risk more easily than others.
56
Agents should assume that most clients are
(A) risk-averse
(B) risk seekers
(C) tolerant of moderate levels of risk
(D) tolerant of high levels of risk
(A) risk-averse
57
Legislative risk involves
(A) the possibility that the law, which currently provides a favorable environment for an investment, may change
(B) the possibility that the law, which currently provides a hostile environment for an investment, may change
(C) exposure to investment default
(D) exposure to investment appreciation
(A) the possibility that the law, which currently provides a favorable environment for an investment, may change
58
A clients risk tolerance will
(A) remain static over time
(B) typically evolve over time
(C) be generally lowered due to media and cultural influences
(D) be generally unaffected by media and cultural influences
(B) typically evolve over time
59
All of the following are suggested methods of assessing a client's tolerance towards risk EXCEPT
(A) investment philosophy test
(B) 80/20 analysis
(C) examination of investment history
(D) review of investment objectives
(B) 80/20 analysis
60
All of the following are major categories of Investment risk EXCEPT
(A) purchasing power risk
(B) market risk
(C) default risk
(D) fluctuation risk
(D) fluctuation risk
61
Which of the following is a benefit of full disclosure?
(A) It provides unlimited avoidance of potential legal problems
(B) It includes state-mandated bonus commission structures.
(C) It results in a waiver of state licensing fees.
(D) It limits legal liability and cements sales.
(D) It limits legal liability and cements sales.
62
Client education is
(A) a function of the home office underwriting department
(B) a function of the agency manager
(C) limited to teaching
(D) part of the sales function
(D) part of the sales function
63
State insurance department "false advertising" laws typically apply to
(A) home office-prepared materials but exempt agency- and agent-prepared materials
(B) home office- and company-prepared materials, but exempt agent-prepared materials
(C) home-office, agency- and agent-prepared materials
(D) agency- and agent-prepared materials, but exempt home office-prepared materials
(C) home-office, agency- and agent-prepared materials
64
The obligation that an insurance professional must convey accurate information to a client applies
(A) only to written information supplied to a client
(B) only to oral statements made as part of a sales presentation to a client
(C) both to oral statements and written information, intentionally or unintentionally made or supplied to a client
(D) both to oral statements and written information, intentionally made or supplied to a client
(C) both to oral statements and written information, intentionally or unintentionally made or supplied to a client
65
The two ethical missteps referred to in chapter 7 of the text are
(A) replacement and rebating
(B) failure to fully disclose information and lying
(C) misrepresentation and false advertising
(D) forgery and fraud
(C) misrepresentation and false advertising
66
The text states that an insurance professional's full disclosure duties will
(A) not Include providing full and accurate application information to the carrier
(B) be limited to providing the applicant with an Insurance Buyer's Guide
(C) and with the defiling of the sale and the delivery of the insurance policy
(D) dictate that contact be maintained with the Client until the policy matures Or is terminated
(D) dictate that contact be maintained with the Client until the policy matures Or is terminated
67
The text states that marketing practices that financial services professionals (particularly those engaged in selling life insurance) should avoid include all of the following EXCEPT
(A) false advertising
(B) lack of full disclosure
(C) the use of illustrations
(D) unnecessary replacement
(C) the use of illustrations
68
Financial services professionals should document each of the following elements of every sale EXCEPT
(A) the reason for the product recommendation
(B) the illustration used as the basis of the sale
(C) the discovery agreement
(D) A disclosure statement
(C) the discovery agreement
69
Each of the following statements are among the keys to full disclosure EXCEPT
(A) Provide your client with information about the product.
(B) Provide your client with information about the company that is offering
the product,
(C) Provide your client with information about the illustration used in your
tales presentation.
(D) Provide your client with information regarding your role in the sales process
(D) Provide your client with information regarding your role in the sales process
70
The text states that all the following are steps in the sales presentation process EXCEPT
(A)The agent selects one or two recommendations that best serve the client's needs.
(B) The agent meets with his or her client and provides the recommendation(s).
(C) The agent explains to the client the reasons behind the recommendation(s)
(D) The agent only discloses the attractive elements of the product and says nothing about any potential drawbacks.
(D) The agent only discloses the attractive elements of the product and says nothing about any potential drawbacks.
71
Which of the following statements regarding twisting and replacement of life
insurance policies is correct?
(A) Twisting is legal.
(B) Replacement is illegal.
(C) Twisting is illegal.
(D) Twisting is confined to internal policy transfers.
(C) Twisting is illegal.
72
Illustrations should be described as
(A) binding legal documents prepared by state insurance departments
(B) nonbinding legal documents prepared by state insurance departments
(C) ledger sheets of guaranteed numbers prepared by an insurance company
(D) ledger sheet of guaranteed and nonguaranteed figures prepared by an insurance company
(D) ledger sheet of guaranteed and nonguaranteed figures prepared by an insurance company
73
Rebating is legal in which of the following states?
(A) Colorado and Florida
(B) Connecticut and Florida
(C) California and Florida
(D) Colorado and Connecticut
(C) California and Florida
74
Which of the following statements best describes the text's definition of
rebating?
(A) Rebating is the process of reducing the premium from a secondary policy in order to credit another competing policy.
(B) Rebating involves reducing the premium or giving some other valuable consideration, not specified in the policy, to the buyer as an inducement to purchase insurance.
(C) Rebating involves reducing a premium or giving some other consideration to the writing agent as commission for a pending sale.
(D) Rebating is the process of giving the consumer added dividends from insurance company assets as compensation for poorly performing policies.
(B) Rebating involves reducing the premium or giving some other valuable consideration, not specified in the policy, to the buyer as an inducement to purchase insurance.
75
Professionals compensated within a fee-only model are compensated in all of the following ways, EXCEPT
(A) assets under management
(B) hourly rate
(C) commission only
(D) flat fee
(C) commission only
76
Which of the following influences the design of compensation models within the financial services industry?
(A) Financial services products and services are entirely and always tax deductible.
(B) Financial services professionals both provide advice and sell products and services.
(C) Financial services products and services are considered a luxury item, only available to the wealthy.
(D) The best financial services products are imported from overseas.
(B) Financial services professionals both provide advice and sell products and services.
77
In light of recent compliance concerns, which of the following statements is correct?
(A) Financial advisors should discontinue the use of all illustrations.
(B) Financial advisors should discontinue the use of illustrations that contain nonguaranteed values.
(C) Financial advisors should use illustrations with due regard for full disclosure.
(D) Financial advisors should use illustrations as their primary sales tool
(C) Financial advisors should use illustrations with due regard for full disclosure.
78
The sale of a life insurance policy issued by an unauthorized insurer may
(A) present no difficulty to policyowners because unauthorized carriers typically self-insure
(B) jeopardize policyowners because state guaranty funds typically cover losses only of admitted carriers
(C) be permitted in a jurisdiction in which neither the agent nor the insured maintains legal contacts
(D) add to unauthorized carrier costs by forcing carriers to contribute to multistate guaranty fund compacts
(B) jeopardize policyowners because state guaranty funds typically cover losses only of admitted carriers
79
All of the following are true about compensation models EXCEPT
(A) It is important to be transparent about how you are compensated.
(B) There is one conflict free compensation model that all advisors should adopt.
(C) It is important to truthfully answer your clients questions about your compensation.
(D) All compensation models pose potential conflicts of interest.
(B) There is one conflict free compensation model that all advisors should adopt.
80
Each of the following circumstances that involves an existing life insurance
policy or contract constitutes a replacement EXCEPT
(A) when a policy is lapsed, forfeited, surrendered or partially surrendered
(B) when a policy is converted to reduced paid-up insurance
(C) when a policy is reissued with any reduction in cash value
(D) when a policy is converted from term insurance to whole life insurance
(D) when a policy is converted from term insurance to whole life insurance
81
Agency involves what two basic concepts?
(A) law and ethics
(B) liability and power
(C) authority and liability
(D) authority and power
(D) authority and power
82
The text states that an insurance professional's full disclosure duties will:
(A) not include providing full and accurate application information to the carrier
(B) be limited to providing the applicant with an Insurance Buyer's Guide
(C) end with the closing of the sale and the delivery of the insurance policy
(D) dictate that contact be maintained with the client until the policy matures or is terminated
(D) dictate that contact be maintained with the client until the policy matures or is terminated
83
All the following actors outside the industry have impacted public's perception EXCEPT:
(A) scandals faced by other branches of the financial services-sector
(B) the savings and loans crisis-sparked public favor
(C) the greed of Wall Street brokers and their manipulation of the marketplace
(D) highly publicized charges of improper marketplace practices against agents
(B) the savings and loans crisis-sparked public favor
84
Concerning policy illustration history and evolution, the following Statements is (are) correct
1. The product portfolio began to change gradually with the introduction of universal life insurance
11. Illustrations began to change in the 1980's as technology became more sophisticated and facilitated the illustration of a greater range of variables
(A) 1 only
(B) 11 only
(C) Both 1 and 11
(D) Neither l nor 11
(C) Both 1 and 11
85
Which of the following statements regarding risk tolerance is true?
(A) All clients maintain the same level of risk tolerance
(B) Some clients can accept risks more readily than others
(C) Risk tolerance is inapplicable to an agent's insurance practice
(D) Risk tolerance is applicable to property and casualty and inapplicable to an agent's life insurance practice
(B) Some clients can accept risks more readily than others
86
Concerning suitability of investments, which of the following is (are) correct?
1 Most clients tailor their programs more than ever before, at the price of fewer
guarantees
11 A greater proportion of the investment risk inherent in the product is now borne
by the clients
(A) 1 only
(B) 11 only
(C) Both 1 and 11
(D) Neither 1 nor 11
(B) 11 only
87
Higher legal standards that are being applied to financial services professionals and their
companies have created a business ethic environment where:
(A) Caveat emptor is still sufficient
(B) Caveat emptor is not sufficient
(C) Caveat vendor is not sufficient
(D) Caveat vendor is not applicable
(B) Caveat emptor is not sufficient
88
State insurance department "false advertising" laws typically apply to:
(A) Home office prepared materials but exempt agency- and agent- prepared materials
(B) Home office- and company- prepared materials but exempt agent-prepared materials
(C) Home office- , agency-, and agent- prepared materials
(D) Agency- and agent- prepared materials but•exempt home office-prepared materials
(C) Home office- , agency-, and agent- prepared materials
89
All of the,following are characteristics of a profession EXCEPT:
(A) possesses a spirit of loyalty to fellow practitioners
(B) is involved in a vocation that inspires and promotes his business only
(C) abandons strictly commercial views
(D) his vocation requires expert knowledge in his practice
(C) abandons strictly commercial views
90
In light of recent compliance concerns, which of the following statements is correct?
(A) Financial advisors should discontinue the use of all illustrations
(B) Financial advisors should discontinue the use of illustrations that contain nonguaranteed values
(C) Financial advisors should use illustrations with due regard for full disclosure
(D) Financial advisors should use illustrations as their primary sales tools
(C) Financial advisors should use illustrations with due regard for full disclosure
91
All of the following are definitions of misrepresentation EXCEPT:
(A) insurance products described as savings vehicles or retirement plans
(B) premium payments referred to as deposits or capital transfers
(C) agents referring to themselves as retirement representatives
(D) presenting the product in the best possible light
(C) agents referring to themselves as retirement representatives
92
Failure to following company 'illustration guidelines is:
(A) Inconsequential because they generally impede a financial advisor's ability in an
ethical manner
(B) Likely to create unrealistic expectations on the part of the client
(C) Immaterial tithe legal liability faced 'by the carrier
(D) A valid and recognized method of avoiding the conflict-of-interest dilemma between
carriers and insurers
(B) Likely to create unrealistic expectations on the part of the client
93
The term windowing refers to:
(A) Agents using illustrations that may be deceptive in nature
(B) Agents signing clients' signatures on their, insurance forms
(C) Agents' omission of facts to the client's detriment
(D) Agents selling products without a clear understanding of them
(B) Agents signing clients' signatures on their, insurance forms
94
All of the following are reasons why rebating should not be allowed EXCEPT:
(A) rebating has a positive impact on companies' financial condition
(B) rebating would be unfair
(C) rebating leads to unnecessary replacements
(D) rebating weakens the quality of the policy owner's decision making powers
(A) rebating has a positive impact on companies' financial condition
95
Which of the following is an example of an equity investment?
(A) a federal government bond with a 30-year duration
(B) a short-term certificate of deposit
(C) a local jurisdiction bond with a 5-year duration
(D) common stock
(D) common stock
96
Which of the following is one of the seven'basic requirements for a discipline to be considered a
profession?
(A) members of the profession must earn above a standard minimum level of'income
(B) members of the profession cannot be self-declared as professionals
(C) members of the profession,must hold a. postgraduate degree from an accredited university
(D) members of the profession cannot enter the profession prior to a'completion of a 7-year apprenticeship and successful completion of written exams
(B) members of the profession cannot be self-declared as professionals
97
All of the following are key factors that have contributed to the changes in the financial services
marketplace over the past ten years EXCEPT:
(A) Technological advancements
(B) A changing legal environment
(C) An increase in the financial services workforce
(D) The integration of financial services
(C) An increase in the financial services workforce
98
Which of the following is a benefit of full disclosure?
(A) It provides unlimited avoidance of potential legal problems
(B) It includes the state-mandated bonus commission structures
(C) It results in a waiver of state licensing fees
(D) It limits legal liability and cements sales
(D) It limits legal liability and cements sales
99
All of the following statements concerning morals are correct EXCEPT:
(A) All cultures have the same basic moral principles
(B) Any adult of any group comes equipped with a set of moral or ethical rules in his or her head that he or she Inherited" from his or her culture
(C) In some cases, moral codes are developed in conjunction with religious beliefs
(D) In some cases; moral codes are developed as a result of customs founded to
promote human harmony
(A) All cultures have the same basic moral principles
100
All of the following are general guidelines that should help agents avoid confusion about the
nature of their fiduciary duties to their carriers EXCEPT:
(A) agents represent their insurer when insurance is being placed
(B) agents represent their insurer in maintaining policy records
(C) agents represent themselves when delivering insurance policies
(D) agents represent their insurer when premiums are collected
(C) agents represent themselves when delivering insurance policies
101
Errors and omissions coverage typically:
1. Protect you in situations of intentional deceit and fraud
11. Typically provides excellent legal counsel and helps defray legal costs involved
(A) 1 only
(B) 11 only
(C) Both 1 and 11
(D) Neither 1 nor 11
(D) Neither 1 nor 11
102
Which of the following statements regarding the relationship between compliance and ethics is
true?
(A) being in compliance with the law is the equivalent of being ethical
(B) being in compliance with the law is not the equivalent of being ethical
(C) to equate following the law with being ethical is a mistaken view
(D) being in compliance and satisfying the letter of the law will improve ethical behavior
(B) being in compliance with the law is not the equivalent of being ethical
103
According to Stanley Cavel, a "social institution and/or God-given set of laws) composed of a
set of standards about practices, defining right or wrong, for the purpose of rationally adjudicating disputes•while allowing relationships to continue" is called:
(A) rules
(B) ethics
(C) love
(D) morality
(D) morality
104
All of the following are "other marketplace practice issues in today's selling environment' that
require careful conduct EXCEPT:
(A) product identification
(B) company ratings
(C) guaranty fund advertising
(D) unauthorized practice of law
(B) company ratings
105
All of the following are situations which cause ethical reflection EXCEPT:
(A) When the standards or rules we were taught are-not clear and- subject to interpretation
(B) When the rules and standards have been accepted by all those around us
(C) When the rules or standards conflict with one another
(D) When those standards or rules conflict with those of other groups of people
(B) When the rules and standards have been accepted by all those around us
106
The text states that the marketing practices which financial services professionals (particularly
those engaged 'in selling life insurance) should avoid include all of the following EXCEPT:
(A) False advertising
(B) Lack of full disclosure
(C) The use of illustrations
(D) Unnecessary replacement
(C) The use of illustrations
107
Clients ask themselves each of the following questions when judging whether or not they are
dealing With a professional 'EXCEPT:'
(A) Does the professional listen?
(B) Does the professional ask me questions?
(C) Has the professional educated me about the product?
(D) Does the professional handle money matters properly?
(B) Does the professional ask me questions?
108
All of the following are suggested methods of accessing a client's tolerance towards risk
EXCEPT:
(A) the investment philosophy test
(B) the 80/20 analysis
(C) the examination of investment history
(D) the review of investment objectives
(B) the 80/20 analysis
109
Regarding the relationship of laws to ethics, laws usually establish:
(A) Minimum requirements for professional,behavior
(B) Optimum standards for,professional behavior
(C) Standards that only the most ethical individuals could follow
(D) Rewards for those who act ethically
(A) Minimum requirements for professional,behavior
110
Under the law of torts, professionals:
(A) Are exempt from actions regarding bodily harm
(B) Are exempt from standards of expertise due to their certified credentials
(C) Have historically been held to higher standards of expertise and behavior than non-professionals
(D) Have historically been held to lower standards of expertise' and behavior than non-professionals
(C) Have historically been held to higher standards of expertise and behavior than non-professionals
111
Federal regulation if the insurance industry is accomplished through the:
(A) NAIC Model Code
(B) Uniform Commercial Code
(C) McCarran-Fergusson Act
(D) Smith-Cooley Act
(C) McCarran-Fergusson Act
112
This ethics course has been developed to help financial services professionals:
(A) Respond to the increased legal pressure that the public has placed upon them
(B) Respond to the expectations and responsibilities the public has placed upon them
(C) Deal with the allegations the public has charged them with
(D) Help insurance companies, banks, and securities firms deflect their increased exposure to legal liability
(B) Respond to the expectations and responsibilities the public has placed upon them
113
Concerning agent licensing, which of the following statements is (are) correct?
1. Sales of policies by either an unauthorized insurer or agent are allowed
11. Insurance brokers are also subject to state licensing rules
(A) 1 only
(B) 11 only
(C) Both 1 and 11
(D) Neither 1 nor 11
(B) 11 only
114
All of the following are major constituencies to whom the financial services professional has an
ethical obligation EXCEPT:
(A) the client
(B) the company
(C) the law
(D) the state
(D) the state
115
All of the following are roles of the federal government in insurance regulation EXCEPT:
(A) pension and retirement planning
(B) the promotion and sale of variable life and annuity products
(C) the deregulation of the health insurance industry and standardization of MediCare supplemental policies
(D) the taxation of insurance companies
(B) the promotion and sale of variable life and annuity products
116
The Graham-Leach-Bliley Act caused:
(A) The deregulation of the insurance industry
(B) The construction of barriers between banking investment. banking and insurance industries
(C) The elimination of barriers between the banking, investment banking, and insurance industries
(D) The reversal of the McCarran-Fergusson Act
(C) The elimination of barriers between the banking, investment banking, and insurance industries
117
All of the following are federal acts aimed at providing proper disclosure regarding the solicitation
and sale of securities products EXCEPT:
(A) The Securities Act of 1933
(B) The Securities and Exchange Act of 1934
(C) The Investment Advisers Act of 1940
(D) The Securities Act of 1942
(C) The Investment Advisers Act of 1940
118
All of the following are major categories of investment risk EXCEPT:
(A) purchasing power risk
(B) market risk
(C) default risk
(D) fluctuation risk
(D) fluctuation risk
119
As stated in the text, being a professional carries with it all of the following added responsibilities
EXCEPT:
(A) increased demands for service by clients
(B) increased risk of legal liability
(C) increased paperwork
(D) increased need to be aware of ethical issues
(C) increased paperwork
120
The obligation that an insurance professional must convey accurate information to a client
applies:
(A) only written information supplied to a client
(B) only oral statements made as part of a sales presentation to a client
(C) both to oral statements and written information intentionally or unintentionally made or supplied to a client
(D) both to oral statements and written information intentionally made or supplied to a client
(C) both to oral statements and written information intentionally or unintentionally made or supplied to a client
121
Which of the following statements is true concerning model legislation promulgated by the
National Association of Commissioners (NAIC)?
(A) NAIC model legislation applies only to agents, not to home offices
(B) NAIC model legislation is designed to cover only home office marketing practices
(C) NAIC model legislation is designed.far,implementation by the federal government
(D) NAIC model legislation gives state insurance commissioners substantial powers to investigate both carriers and agents suspected of violating the law
(D) NAIC model legislation gives state insurance commissioners substantial powers to investigate both carriers and agents suspected of violating the law
122
Ethics means:
1. Rules people live by
11. The customary way of doing something
(A) 1 only
(B) 11 only
(C) Both 1 and 11
(D) Neither 1 nor 11
(D) Neither 1 nor 11
123
One of the implications that the agency contract between an agent and an insurer carries with it
is that:
(A) The acts of the insurance carrier are considered acts of the agent
(B) The acts of the insurance agent are considered the act of the insurer
(C) the agent's primary legal obligation is to the state
(D) the agent's primary legal obligation is to his or her profession
(B) The acts of the insurance agent are considered the act of the insurer
124
The text states that all of the following are steps in the sales presentation process EXCEPT:
(A) The agent selects one or two recommendations that best serve the client's needs
(B) The agent meets with his or her client and makes the recommendation(s)
(C) The agent explains to the client the reasons behind the recommendation(s)
(D) The agent allows the client time to think over the recommendations
(D) The agent allows the client time to think over the recommendations
125
Registration under the Investment Advisers Act:
(A) is an endorsement of competence by the SEC
(B) is not an endorsement of competence by the SEC
(C) may inform clients of their SEC endorsement
(D) allows for the sale of all financial products
(A) is an endorsement of competence by the SEC
(unsure about this answer)
its either A or B
126
Which of the following statements regarding twisting and replacement of life insurance policies is
correct?
(A) Twisting is legal
(B) Replacement is illegal
(C) Twisting is illegal
(D) Rebating is illegal in all states
(C) Twisting is illegal
127
What type of financial services professional solicits business exclusively on behalf of an
insurance carrier?
(A) captive agent
(B) broker
(A) consultant
(B) financial planner
(A) captive agent
128
Which of the following best describes the term ethics?
(A) Ethics asks what should be done in a given situation
(B) Ethics deals with what is done in a given situation
(C) Ethics is the process of planning philantrophy
(D) Ethics means living in a self-interested manner
(A) Ethics asks what should be done in a given situation
129
Adam Smith in The Wealth of Nations provided us with an ethical framework for modem
business that is often called the:
(A) Golden Rule Model
(B) Enlightened Self-interest Model
(C) Planned Philantrophy Model
(D) Utilitarian Model
(B) Enlightened Self-interest Model
130
All of the following are obligations that an agent has to his or her carrier EXCEPT:
(A) an obligation of loyalty
(B) an obligation to perform with skill,and care
(C) an obligation of continuing education,
(D) an obligation of full disclosure of information
(C) an obligation of continuing education,
131
Which of the following statements best describes the text's definition of rebating?
(A) Rebating is the process of reducing the premium from a secondary policy in order to credit another competing policy
(B) Rebating involves reducing the premium or giving some other valuable consideration
not specified in the policy to the buyer as an inducement to purchase insurance
(C) Rebating involves reducing a premium or giving some other consideration to the writing agent as commission for a' pending sale
(D) Rebating is the process of giving the customer added dividends from insurance company assets as compensation for'poorly performing policies
(B) Rebating involves reducing the premium or giving some other valuable consideration
not specified in the policy to the buyer as an inducement to purchase insurance
132
Which of the following types of relationships entails a high level of trust and the obligation to
act according to high ethical standards of conduct?
(A) professional relationship
(B) fiduciary relationship
(C) business relationship
(D) working relationship
(B) fiduciary relationship
133
Financial services professionals should document each of the following elements of every
sale EXCEPT:
(A) the reason for the product recommendation
(B) the illustration used as the basis of, the sale
(C) the discovery agreement
(D) a disclosure statement
(C) the discovery agreement
134
After Agent Smith has conducted a thorough fact finding with client Jones, agent Smith
should:
(A) Retain these records for use in future periodic reviews
(B) Discard these records as quickly as possible to eradicate all documentation of the
sales process
(C) Archive the records for 6 months before destroying
(D) Forward all documents to the client for documentation
(A) Retain these records for use in future periodic reviews
135
```
On the second anniversary of his or her registration and every, three years thereafter, every
registered representative (unless exempted) must complete a uniform computer-based continuing education training program called the:
```
(A) firm element
(B) regulatory element
(C) securities element
(D) registration element
(B) regulatory element
136
An important cause of change in the financial services marketplace is the demographic
change that occurred in the last half of the 20th century due largely to:
(A) individuals outliving their income source
(B) computers
(C) the emergence of the two-earner family
(D) approval rating resurgence
(A) individuals outliving their income source
137
The sale of a life insurance policy issued by an unauthorized issuer may:
(A) present no difficulty to policy owners because unauthorized carriers typically self-insure
(B) jeopardize policy-owners because state guarantee funds typically cover losses only of admitted carriers
(C) be permitted in a jurisdiction in which neither the agent nor the insured maintains legal contacts
(D) add to unauthorized carrier costs by forcing carriers to contribute to multistate guaranty fund contracts
(B) jeopardize policy-owners because state guarantee funds typically cover losses only of admitted carriers
138
A code of ethics establishes which of the following for members of a profession?
(A) rules of law
(B) statutes of behavior
(C) standards of conduct
(D) rules of etiquette
(C) standards of conduct
139
How does the text suggest you handle requests from clients for specific tax advice or legal
matters?
(A) Refer your client to the appropriate specialist
(B) First try to draft the requested documents yourself
(C) Provide your client with doctored home-office prototype documents
(D) Do not let the client call on the expertise of another professional
(A) Refer your client to the appropriate specialist
140
All of the following are major unethical practices in which the abuse of professionalism has
Occurred EXCEPT:
(A) misuse of illustrations
(B) necessary policy replacement
(C) product misrepresentation
(D) forgery
(B) necessary policy replacement
141
Legislative risk involves:
(A) The possibility that the law, which currently provides a favorable environment for an investment, may change
(B) The possibility that the law, which currently provides a hostile environment for an investment, may change
(C) exposure to investment default
(D) exposure to investment appreciation
(A) The possibility that the law, which currently provides a favorable environment for an investment, may change
142
Concerning improper licensing, all of the following statements are correct EXCEPT:
(A) improper licensing does not afflict the financial services professionals in general
(B) agents are required to have the proper licenses to sell their products
(C) licenses to sell insurance differ from those to sell securities products
(D) license infractions usually involve the improper crossing of state jurisdictional boundaries
(A) improper licensing does not afflict the financial services professionals in general
143
All of the following are practical steps that financial services professionals can use to avoid
legal liability EXCEPT:
(A) conduct a compliance'audit of written sales materials
(B) conduct a compliance audit of your sales presentations
(C) overlook unnecessary documentation,
(D) review licensing requirements
(C) overlook unnecessary documentation,
144
All of the following are major ethical requirements facing the financial services professional
EXCEPT:
(A) Proper identification of skills
(B) Identifying and meeting customer needs
(C) The need for complaince training
(D) Honest marketing
(C) The need for complaince training
145
Concerning policy illustration history and evolution, the following statements is (are) correct:
1. The product portfolio began to change gradually with the introduction of universal life insurance
11. Illustrations began to change in the 1980's as technology became more -sophisticated and facilitated the illustration of a greater range of variables.
(A) 1 only
(B) 11 only
(C) Both 1 and 11
(D) Neither 1 nor 11
(C) Both 1 and 11
146
What is the purpose of rules?
(A) To control the lives of citizens
(B) To make society an orderly place
(C) To reveal who are the followers and who are the leaders
(D) To create conformity to a standard of behaviour
(B) To make society an orderly place
147
Rebating is legal in which of the following states?
(A) Colorado and Florida
(B) Connecticut and Florida
(C) California and Florida
(D) Colorado and Connecticut
(C) California and Florida
148
Agents should assume that most clients are:
(A) risk averse
(B) risk seekers
(C) tolerant of moderate levels of risk
(D) tolerant of high levels of risk
(A) risk averse
149
Which of the following concerning full disclosure is (are) correct?
1. Because the insurer draws up the contract courts have ruled that the insurer bears
the burden of making things clear to the policy owner
11. Because the agent represents the insurance company to the policy owner, it is
the duty of the carrier to educate the client
(A) 1 only
(B) 11 only
(C) Both 1 and 11
(D) Neither 1 nor 11
(D) Neither 1 nor 11
150
The text states that ethics is essential to business for all of the following reasons EXCEPT:
(A) If there were no ethics in business, there would bell no trust
(B) If there were no ethics in business, no one would keep promises
(C) If there were no ethics in business, there would be no lawsuits
(D) If there were no ethics in business, there would ,be no reliability
(C) If there were no ethics in business, there would be no lawsuits
151
Each of the following circumstances that involves an existing life insurance policy or contract
constitutes a replacement EXCEPT:
(A) when a policy is lapsed, forfeited, surrendered or partially surrendered
(B) when a policy is converted to reduced paid-up insurance
(C) when a policy is reissued with any reduction in cash value
(D) when a policy is converted from term insurance to whole life insurance
(A) when a policy is lapsed, forfeited, surrendered or partially surrendered
152
Compared to the consumer of the past, today's consumer of financial products is generally:
(A) Better educated and more docile
(B) Better educated and less docile
(C) Less educated and more docile
(D) Less educated and less docile
(B) Better educated and less docile
153
A client's risk tolerance will:
(A) remain static over time
(B) typically evolve over time
(C) be generally lowered due to media and cultural influences
(D) be generally unaffected by media and cultural, influences
(B) typically evolve over time
154
All of the following are requirements ofa profession. EXCEPT:
(A) Any profession has at its core a body of subject matter
(B) Entrance into the profession requires mastery of the technical subject matter
(C) A profession has as one of its hallmarks no barriers to entry
(D) Members of the profession must conduct their affairs in an independent manner
(C) A profession has as one of its hallmarks no barriers to entry
155
There are two reasons for obeying the law and being ethical:
1. It is the right thing to do
11. We do not want to get caught and be punished
(A) 1 only
(B) 11 only
(C) Both 1 and 11
(D) Neither 1 nor 11
(A) 1 only
156
All of the following are general ethical principles EXCEPT:
(A) Be fair
(B) Keep your word
(C) Be true to yourself
(D) Always have goals
(D) Always have goals
157
Insurance professionals act in what three capacities for purposes of the law of agency?
(A) Captive agent, broker and consultant
(B) Trustee, fiduciary and administrator
(C) Solicitors prospector and administrator
(D) Field underwriter, manager and general agent
(A) Captive agent, broker and consultant
158
The following statements concerning moral and positive law is (are) correct:
1. Moral law (ethical rules) is not written except in places like the Bible and professional codes
11. Positive law is "the public's agency" for translating moral laws into explicit social guidelines and practices
(A) 1 only
(B) 11 only
(C) Both 1 and 11
(D) Neither 1 nor 11
(C) Both 1 and 11
159
Universal life policy illustrations:
(A) Have increased in accuracy due to the introduction of computer technology in the 1980's
(B) Contractually lock in projections of illustrated cash values
(C) Should be prepared showing guaranteed values, current return values, and current return values reduced according to NAIC guidelines
(D) Should be prepared solely on the basis of historical past returns
(C) Should be prepared showing guaranteed values, current return values, and current return values reduced according to NAIC guidelines
160
Legal jurisdiction over the insurance industry has historically been primarily a function of:
(A) the federal government
(B) the NAIC
(C) the state insurance departments
(D) the U. S. Trade Commission
(C) the state insurance departments
(unsure about this answer)
B or C
161
The following statements about ethics and morals is (are) correct:
1. The purpose of ethical rules is to help the advisor's sales process function smoothly
11. The main purpose of morality is to help settle disputes while preserving relationships.
(A) 1 only
(B) 11 only
(C) Both 1 and 11
(D) Neither 1 nor 11
(B) 11 only
162
State insurance departments have primary legal responsibility over:
(A) pension plan regulations
(B) antitrust regulations
(C) taxation of life insurance products
(D) insurance product approvals
(D) insurance product approvals
163
Each of the following are among the keys to full disclosure EXCEPT:
(A) Provide your client with information about the product
(B) Provide your client with information about the company that is offering the product
(C) Provide your client with information about the illustration used in your sales presentation
(D) Provide your client with information regarding your role in the sales process
(D) Provide your client with information regarding your role in the sales process
164
All of the following are the purposes of ethics EXCEPT:
(A) to help us achieve what we want
(B) to impress upon us our beliefs, by members of the culture into which we were born
(C) the resolution of interpersonal disputes in which the individual is the only player
(D) is that branch of philosophy concerned with analyzing, explaining and/or justifying the rules of right and wrong
(C) the resolution of interpersonal disputes in which the individual is the only player
165
Illustrations should be described as:
(A) Binding legal documents prepared by state insurance departments
(B) Nonbinding legal documents prepared by state insurance departments
(C) Ledger sheets of guaranteed numbers prepared by an insurance
company
(D) Ledger sheets of guaranteed and non-guaranteed figures prepared by an insurance company
(D) Ledger sheets of guaranteed and non-guaranteed figures prepared by an insurance company
166
The Securities Act of 1933:
(A) provides for the registration of previously issued securities
(B) provides for the registration of newly issued securities
(C) requires the publication of confidential financial data in the financial media
(D) requires corporate officers to own corporate stock in order to maintain the integrity of the marketplace
(B) provides for the registration of newly issued securities
167
What is the essential message in the Golden Rule?
(A) You shall not commit adultery
(B) One is motivated by an inner drive to improve the quality of life
(C) The pursuit of one's interest is at the expense of another
(D) Do unto others as you would have them do unto you
(D) Do unto others as you would have them do unto you
168
The NASD (National Association of Securities Dealers) is:
(A) a self-regulatory organization of Congress
(B) a self-regulatory organization of the securities industry
(C) a federal authority administered by a consortium of major insurance carriers
(D) a federal authority created by Congress
(B) a self-regulatory organization of the securities industry
169
In today's marketplace, the financial services professional is exposed to:
(A) Increased legal liability and career risks
(B) A stagnant level of legal liability and career risks
(C) Decreased legal liability and career risks
(D) A low-level legal' liability and career risks
(A) Increased legal liability and career risks
170
The two ethical missteps referred to in chapter 7 of the text are:
(A) replacement and rebating
(B) failure to fully disclose information and lying
(C) Misrepresentation and false advertising
(D) forgery and fraud
(C) Misrepresentation and false advertising
171
The NASD Conduct Rules:
(A) Constitute an undue and illegal hardship on financial advisors selling variable products
(B) Emphasize the need to provide proper client service, including disclosure of confidential information regarding your company's investment philosophy and trading positions
(C) Are statutorily inapplicable to insurance agents
(D) Emphasize the need to provide proper client service, including efforts made to understand a client's current financial condition
(D) Emphasize the need to provide proper client service, including efforts made to understand a client's current financial condition
172
Which of the following types of agent authority involves the validation of an unauthorized act
by the person or entity on whose behalf the action purportedly took place?
(A) express authority
(B) implied authority
(C) apparent authority
(D) ratification
(D) ratification
173
The NAIC (National Association of Insurance Commissioners) is:
(A) an organization of state insurance supervisory officials formed in 1871
(B) an organization of federal insurance formed in 1905 that supervises officials
(C) an agency of the federal government formed as a result of the Armstrong Commission findings of 1905
(D) a state insurance organization formed in 1991 in response to federal solvency investigations of the industry that supervises officials
(A) an organization of state insurance supervisory officials formed in 1871
174
All the following are investment decision factors EXCEPT:
(A) liquidity
(B) risk appreciation
(C) diversification
(D) tax consequences
(A) liquidity
175
Client education is:
(A) A function of the home-office underwriting department
(B) A function of the agency manager
(C) Limited to teaching
(D) Part of the sales function
(D) Part of the sales function
176
All of the following are among the codes of ethics applicable to the financial services
professional EXCEPT:
(A) The NAIC code of ethics
(B) The American College Code of Ethics ,
(C) The Society of Financial Service Professionals Code,of Ethics
(D) The CFP Code of Ethics
(C) The Society of Financial Service Professionals Code,of Ethics
177
The text advises that financial services professionals must be aware of knowledge that is
interrelated to the discipline of law. Therefore,
(A) An insured financial advisor is exempt from rules regarding the unauthorized practice of law
(B) Attorneys are covered by rules forbidding the unauthorized practice of insurance related advice
(C) Technical advice to clients should be specific in nature
(D) Technical advice to clients should be given in general terms
(D) Technical advice to clients should be given in general terms
178
The agency contract specifically authorizes the agent to do all of the following activities
EXCEPT:
(A) solicit insurance applications
(B) describe coverage
(C) provide service to the company's policyholders (D) comingle premiums
(D) comingle premiums
179
The reason for this course is to emphasize the need for professional advisors to:
1. Know both their legal obligations and their ethical obligations
11. Understand how their personal value system can mesh with their day-to-day business activities
(A) 1 only
(B) 11 only
(C) Both 1 and 11
(D) Neither 1 nor 11
(A) 1 only
180
All of the following are definitions of a broker EXCEPT:
(A) the role of a true broker is the same as that of a licenses agent with several companies
(B) a broker acts in the interests of the insurance applicant when making the insurance application
(C) a true broker is in the business of bringing insurance buyers and sellers together
(D) a broker acts in the interests of the insurance carrier when collecting premiums and delivering the policy
(A) the role of a true broker is the same as that of a licenses agent with several companies
Ethics
flashcards
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