SERIES-63 practice question 15 of 35
An investment adviser representative with Capital Investment Advisors, Inc. advised his client to invest $5,000 in bonds of a firm that the adviser…
Choose your answer, then check it against the explanation.
An investment adviser representative with Capital Investment Advisors, Inc. advised his client to
invest $5,000 in bonds of a firm that the adviser claimed was an investment “almost as risk-free as
investing in U.S. government bonds; maybe even more so, given the magnitude of the government
deficit these days.” The client paid a total of $200 for this advice. The bonds paid interest at the rate
of 6%, with semiannual payments, and the client received $300 in interest payments before the firm
went belly-up at the end of a year, and its bonds were deemed worthless. The client has filed suit,
and its attorneys’ fees and court costs are expected to be $1,000. When the investment is a bond, the
state has recently been assessing an interest rate equal to the interest rate paid by the security as an
equitable interest payment guideline in civil penalties.
The maximum the client can expect in civil penalties is
Question 15 of 35
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