Investment Company and Variable Contracts Products Representative (Series 6)Practice Exam

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What does the acronym IA Act of '40 designate?

Investment Advisers Act of 1940
Incorporated Advisory Act
Investment Agreement of 1940
Internal Advisory Act

The correct answer is: Investment Advisers Act of 1940

The acronym IA Act of '40 refers to the Investment Advisers Act of 1940. This legislation is crucial in the regulation of investment advisers and defines who qualifies as an investment adviser, setting the standards for their registration and practices. The Act mandates that investment advisers must act in the best interest of their clients, providing a fiduciary duty that is essential for maintaining ethical standards in the investment advisory field. It aims to protect investors by ensuring that advisers are transparent about their activities, fees, and potential conflicts of interest. Understanding this Act is fundamental for professionals working in investment-related roles, as it directly influences how investment advisers interact with clients and contributes to investor protection.