Series 63 exam questions #2

When it comes to advertising by investment advisers and their representatives, which of the following would be most likely to be acceptable to the Administrator?

A "like" from a client on an investment adviser representative's Facebook page post that announced the birth of her most recent child.

Under the Uniform Securities Act, which of the following persons has to register as an investment adviser?

A broker-dealer who gives advice for which he charges a specific fee.

Under the Uniform Securities Act, which of the following is included in the definition of an investment adviser?

A broker-dealer who receives a flat fee for analyzing a customer's investment objectives and recommending a portfolio of securities

Which of the following is (are) NOT exempt from registration as an investment adviser representative in the state in which they maintain a place of business?

A certified financial planner who prepares financial plans and whose only compensation is commissions An insurance agent who prepares comprehensive financial plans and receives commissions on any insurance products purchased by his clients

Under the Uniform Securities Act, which of the following are defined as sales?

A gift of an assessable stock A security given as a bonus for purchasing a bond

Under the Uniform Securities Act, which of the following is an offer or a sale?

A gift of stock given as a bonus with a purchase of a parcel of real estate

Which of the following transactions is NOT exempt from registration?

A sale of an exempt security to an individual customer as a result of an agent's solicitation

Under the Uniform Securities Act, which of the following qualifies as an investment adviser representative?

A solicitor for an investment advisory firm who is paid a fee for his services

According to the Uniform Securities Act, a consent to service of process must accompany which of the following?

Agent's registration application Broker-dealer's initial registration application

Which of the following would be considered fraud under the Uniform Securities Act?

An agent knowingly sold a nonregistered nonexempt security in a nonexempt transaction because he thought it would eventually become registered

Under the terms of the Uniform Securities Act, which of the following is an investment adviser for purposes of state regulatory jurisdiction?

An investment subsidiary of a bank holding company located in the state that manages $70 million in assets

Under the Uniform Securities Act, who automatically becomes registered as an agent when a broker-dealer's registration becomes effective?

Certain partners, officers, or directors of the firm

unless qualifying for an exemption, which of the following advisory fee structures is NOT allowed under the USA?

Fees based on a percentage of the change in value of funds from quarter to quarter

Which of the following statements regarding agent registration under the Uniform Securities Act are TRUE?

In the absence of any action by the Administrator, the effective date of a registration is noon of the 30th day after the filing of a completed application. If, before the effective date of the registration, the Administrator requires amendments to the application, the registration will be considered to have first been filed upon filing of those amendments.

An agent submits a list of recommendations to a customer that includes 5 different securities. The customer chooses to buy a round lot of 1 of the 5 securities recommended (a stock in which the agent's broker-dealer makes a market). The firm, in completing the trade, charges a markup that is larger than normal for a stock transaction. Is this allowable under the Uniform Securities Act?

No, under the circumstances given, it is a prohibited practice to charge a higher than normal markup.

are securities

Options to purchase or sell commodity futures, options on stocks, and stocks

Which of the following activities by a registered agent of a broker-dealer would constitute a prohibited practice under the NASAA Statement of Policy on Dishonest or Unethical Business Practices of Broker-Dealers and Agents?

Personally raising capital, without written authorization from the broker-dealer, for a new high-tech venture being run by the agent's former college roommate

An investment adviser with no place of business in the state is exempt from registration with the state when making recommendations to all of the following

St. Amelia's college endowment Fund AAA Manufacturing Co., with respect to the quality of investment bankers available for an underwriting of AAA securities Amalgamated Bank

An Administrator does not have jurisdiction over an offer to sell that is made in a

TV broadcast originating outside the state newspaper published outside the state newspaper published inside the state where more than two-thirds of its circulation is outside the state

A broker-dealer suddenly incurs a liability that materially affects its net capital. Which of the following statements under the Uniform Securities Act is TRUE?

The broker-dealer must promptly notify the Administrator.

If an individual acting on behalf of an issuer engages in the sale of securities issued by a savings institution organized and supervised under the laws of any state, which of the following statements is TRUE?

The individual is not required to be registered.

According to the Uniform Securities Act, which of the following would be considered exempt transactions?

The sale of a unlisted corporate bond by an executor of an estate An unsolicited order from an individual client to purchase a nonexempt, unregistered security

Under NASAA's Model Rule on Unethical Business Practices of Investment Advisers, Investment Adviser Representatives, and Federal Covered Advisers, requirements of advisory contracts include which of the following?

They must describe the amount of any prepaid fee that will be returned to the client in the event the contract is terminated. They must prohibit the use of discretion without the client's authorization.

Which of the following are obligated to observe the prudent investor rule?

Trustee. Executor. Custodian. Agent who has been granted discretionary authority.

suspending registration requires

a hearing

A broker-dealer may act as

agent for both buyer and seller in a transaction

Solicited trades with individuals

are not exempt transactions,

Commodities such as gold, silver, wheat, and pork bellies

are not securities

Adell, a retiring social worker living in State A, has some money to invest. An agent suggests she look into investing in a private placement security that is raising money to build apartment buildings in State B. According to the Uniform Securities Act

building projects are not appropriate for retirees who typically need immediate income private placements are not usually appropriate for retiring individuals because they are not liquid

An offer is not made when a newspaper is circulated

but not published in the state

On determining that a registrant or applicant for registration is no longer in existence or has ceased doing business as either an agent or a broker-dealer, the Administrator may

cancel the registration or application

In designing a client's portfolio, a registered investment adviser representative of Greater Wealth Advisory Services recommends the purchase of several stocks from the inventory of Greater Wealth's wholly owned broker-dealer. Under current regulations, this activity requires written

disclosure to the client and consent prior to completion of the transaction

receipt of a completed options agreement.

does not have to be completed by the time customers enter their first option trade

When opening an account at a broker-dealer, if the most recent copy of the firm's fee schedule is not available, NASAA recommends that the client

does not place any assets in the account until it is provided

In response to an evolving marketplace, the SEC, through Release IA-1092, expanded the coverage of the definition of investment adviser to include

financial planners and pension consultants

One of the concerns about social media is the opportunity for affinity fraud. This occurs when

fraudulent offers are aimed at groups of people who share a similar interest

If a person who is not an agent or broker-dealer makes a false statement of material fact in connection with the sale of a security, that person

has committed fraud in violation of the Uniform Securities Act

If a licensed agent believed that interest rates were about to fall and contacts all of her clients and suggests they purchase high quality debt securities with long-term maturities, this action

has probably violated the Uniform Securities Act's suitability standards

A customer with liquid net worth of $25,000 tells an agent that she has $1,000 to invest. Explaining how diversification can reduce risk, the agent recommends that the customer purchase 8 different over-the-counter stocks, each trading at approximately $1 per share. With regard to the above situation,

high-risk penny stocks are not suitable recommendations for this low-net-worth customer

​Fusion Financial is a broker-dealer registered in States A, B and C with its home office in State B. A complaint is filed against the firm by a client who resides in State A. Under the powers granted under the Uniform Securities Act, the Administrator of State B could do all of the following EXCEPT

issue an injunction against Fusion Financial

excluded from definition of broker dealer

issuers of securities Agents Banks

Under the Uniform Securities Act, an offer is made in a state when

it originates in that state

Under NASAA's Model Rule on Unethical Business Practices of Investment Advisers, Investment Adviser Representatives, and Federal Covered Advisers, an investment adviser's fee

may be considered unreasonable if it is not competitive with fees charged by other investment advisers for essentially the same services

An applicant for registration as an investment adviser discloses on its application to the Administrator that it plans to use palm readers to help determine which investments are most suitable for their clients. Under the Uniform Securities Act, the Administrator

may only justify denial for reasons listed in the Uniform Securities Act

options agreement

must be signed and returned by the customer within 15 days of account approval.

Under the Uniform Securities Act, investment advisory contracts

must contain a description of fees

A woman wants to buy from an agent who is not registered in her state. She decides to use a friend's address in the state in which the agent is licensed. This action is

not acceptable because there are no circumstances under which you are permitted to use someone else's address as yours

The Administrator does

not have the power to invoke criminal penalties

An investment adviser representative is assuring clients of steady returns on an investment. Under the NASAA Model Rule on Unethical Business Practices of Investment Advisers, Investment Adviser Representatives and Federal Covered Advisers, this activity is

prohibited because the IAR is guaranteeing a profit

If information on file with the Administrator changes, a broker-dealer must give notification

promptly

An investment adviser hires two individuals to solicit new customers for the firm's wealth management service. Under the USA

registration as investment adviser representatives is required

An Administrator wishing to set the net capital requirement for a broker-dealer may not require an amount greater than that

required under the Securities Exchange Act of 1934

Alice Allison, an agent with Winmore Securities, a registered broker-dealer, introduced some of her clients to an old college friend who was raising funds for a new start-up venture. Those who invested in the deal did so by having Alice transfer funds from their account at Winmore to the start-up. Alice did not charge or receive any compensation for doing this. Because of this limited role, Alice did not notify her supervisor at Winmore. Under the NASAA Statement of Policy on Dishonest or Unethical Business Practices of Broker-Dealers and Agents, Alice has engaged in the unethical business practice of

selling away.

A broker-dealer is registered in State X. It has no offices in State Y, although it does do business in that state. Under the Uniform Securities Act, registration in State Y is required if the client is a(n)

state employee

fixed annuities are not securities therefore

they do not require resistration

investment adviser representative

those who give advice, attempt to attract new clients, and supervise those who advise or sell

Included in the USA's definition of exempt transaction would be a transaction by any of the following

trustee in bankruptcy guardian marshal

The term used to describe a customer initiated order that includes all of the details except time and price is

unsolicited