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Free Series 54 Practice Questions

10 free, exam-style Series 54 Municipal Advisor Principal (Series 54) practice questions with answers and explanations. No signup required. Work through them below, then take the full free Series 54 practice test to study every exam domain.

These 10 free Series 54 questions are organized by exam domain, so you can see how each part of the Series 54 Municipal Advisor Principal blueprint is tested. Reveal the answer and explanation under each question.

Domain 1: Understanding the Municipal Advisor Regulatory Framework 25% of exam

Question 1

A firm responds to a municipality's published request for proposals, describing its qualifications and general approach but making no recommendation particularized to the issuer. Under the SEC municipal advisor rules, this activity:

  1. Always constitutes municipal advisory activity requiring SEC registration
  2. Falls within an exclusion and is not municipal advisory activity
  3. Is treated as a solicitation of a municipal entity on behalf of a third party
  4. Immediately triggers a fiduciary duty owed to the municipality
Show answer & explanation

Correct answer: B - Falls within an exclusion and is not municipal advisory activity

Question 2

A municipal advisor provides advice to an obligated person in connection with a conduit financing. Which standard of conduct does the advisor owe this client under MSRB Rule G-42?

  1. Both the duty of care and the duty of loyalty, as with a municipal entity
  2. The duty of loyalty only, with no accompanying duty of care
  3. The duty of care only
  4. No fiduciary obligation at all, only fair dealing under MSRB Rule G-17
Show answer & explanation

Correct answer: C - The duty of care only

Domain 2: Supervising Municipal Advisory Activities 35% of exam

Question 3

A municipal advisor has a conflict of interest with a municipal entity client that it determines cannot be appropriately managed or mitigated. To satisfy its duty of loyalty under MSRB Rule G-42, the advisor must:

  1. Disclose the conflict in writing and continue the engagement on existing terms
  2. Proceed after obtaining the client's written, informed consent to the conflict
  3. Refrain from engaging in the municipal advisory activities with that client
  4. Reduce its fee in proportion to the severity of the identified conflict
Show answer & explanation

Correct answer: C - Refrain from engaging in the municipal advisory activities with that client

Question 4

A municipal entity client offers to sign an agreement waiving the fiduciary duty its municipal advisor owes under MSRB Rule G-42. This waiver is:

  1. Not permitted; the standards of conduct cannot be waived
  2. Valid once the client has received independent legal advice on the waiver
  3. Valid as to the duty of care but never as to the duty of loyalty
  4. Valid so long as every material conflict has been disclosed in writing
Show answer & explanation

Correct answer: A - Not permitted; the standards of conduct cannot be waived

Question 5

All of the following are prohibited under MSRB Rule G-42(e) EXCEPT:

  1. Fee-splitting with the underwriter on a transaction the advisor advised on
  2. Submitting an invoice that is materially inaccurate as to the work performed
  3. Receiving compensation that is excessive relative to the services performed
  4. Providing the client full and fair written disclosure of a material conflict
Show answer & explanation

Correct answer: D - Providing the client full and fair written disclosure of a material conflict

Question 6

A municipal advisor previously advised a city on a bond issue and now wishes to make a bank loan to that city. Under MSRB Rule G-42, the loan is treated as an 'other similar financial product' subject to the principal-transaction prohibition only when its aggregate principal amount is at least:

  1. $1,000,000
  2. $250,000
  3. $100,000
  4. $5,000,000
Show answer & explanation

Correct answer: A - $1,000,000

Domain 3: Supervising Municipal Advisor Firm Operations 40% of exam

Question 7

Under MSRB Rule G-44, which supervisory function may be performed by a qualified third party who is NOT an employee of the municipal advisor firm?

  1. The designated municipal advisor principal responsible for day-to-day supervision
  2. The chief compliance officer
  3. The chief executive officer who signs the required annual compliance certification
  4. Each associated person who engages in municipal advisory activities for the firm
Show answer & explanation

Correct answer: B - The chief compliance officer

Question 8

A municipal advisor professional who is entitled to vote for a city's mayor contributes $250 to the mayor's reelection campaign. Under MSRB Rule G-37, the firm is:

  1. Banned from municipal advisory business with the city for the next two years
  2. Subject to a ban unless it secures a timely return of the contribution
  3. Not banned, because the contribution falls within the de minimis exception
  4. Banned from business with the city for a period of six months
Show answer & explanation

Correct answer: C - Not banned, because the contribution falls within the de minimis exception

Question 9

Under MSRB Rule G-9, a municipal advisor's records of its designation of a chief compliance officer must be preserved for:

  1. The period of the designation plus at least six years after any change
  2. Four years measured from the date of the original designation
  3. Three years following the end of the individual's designation
  4. Five years measured from the date of the original designation
Show answer & explanation

Correct answer: A - The period of the designation plus at least six years after any change

Question 10

Under MSRB Rule G-40, before its first use a municipal advisor's advertisement must be:

  1. Filed in advance with the MSRB for its prior review and clearance
  2. Approved in writing by a municipal advisor principal
  3. Reviewed and cleared by the firm's outside legal counsel
  4. Submitted to the SEC as an amendment to the firm's Form MA
Show answer & explanation

Correct answer: B - Approved in writing by a municipal advisor principal

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