2.1 Definitions Under the Uniform Securities Act

Under the USA, the definition of person includes which of the following? An unincorporated investment club. An individual who buys and sells securities only for his own account. Associations and partnerships whether or not they issue certificates. The U.S. government. A) I, II, III and IV. B) I and II. C) II and III. D) III and IV.

A

Under the Uniform Securities Act, the term person would include: a minor who has a valid U.S. passport. a political subdivision. an unincorporated association. an inter vivos trust. A) II, III and IV. B) I and II. C) II and III. D) III and IV.

A

Which of the following statements are TRUE? The Uniform Securities Act is not the actual law of any state or territory of the United States. The National Securities Markets Improvement Act of 1996 requires states and the federal government to have identical registration requirements. The state securities Administrator has responsibility for the enforcement and administration of a state's securities law. A) I and III. B) I and II. C) II and III. D) I, II and III.

A) I and III. The Uniform Securities Act is not the actual law of any state or territory. Rather, it is model legislation that states use as a guide in drafting their own securities laws. Those laws give the responsibility to the state Administrator for enforcement and administration of those laws. The NSMIA's purpose is to eliminate dual registration, not to require identical laws.

Under the Uniform Securities Act, which of the following parties is a natural person? A) Mark Spencer. B) The estate of Mark Spencer. C) Mark Spencer and Associates, a general partnership. D) Mark Spencer Architects, Incorporated.

A) Mark Spencer. Under the USA, only an individual human being is a natural person. Business entities such as corporations and partnerships are legal persons. An estate is also an entity that is regarded as a legal, rather than a natural person.

As defined in the Uniform Securities Act (USA), which of the following parties is not considered a person? A) A retailer operating as a sole proprietor. B) A 12-year-old movie star making $500,000 in the current year. C) The American Cancer Society. D) Microsoft, Inc.

B

By their very nature, mutual funds offer investors: A) guaranteed returns. B) diversification. C) current income. D) tax deferral.

B

Which of the following is a natural person? A) Limited liability company. B) Agent. C) Estate. D) Business trust.

B

As defined in the Uniform Securities Act, the term person would include: a limited partnership. a political subdivision. an unincorporated association. the executor of an estate for a deceased individual. A) I and IV. B) II and III. C) I, II, III and IV. D) I, II and III.

C

Which of the following is NOT a person as defined by the Uniform Securities Act? A) A small unincorporated investment club. B) Guelph, a small city outside of Toronto, Ontario, that maintains an investment account at a brokerage house to invest surplus funds. C) A child prodigy for whom his mother, as custodian, opened an account at a major securities firm. D) XYZ Dry Cleaners, Inc., whose shareholders all work on the premises and also offer financial advice to customers who request it.

C) A child prodigy for whom his mother, as custodian, opened an account at a major securities firm.

The Securities Act of 1933 covers all of the following EXCEPT: A) prospectus requirements. B) full and fair disclosure. C) blue-sky laws. D) liabilities for misleading filings.

C) blue-sky laws. The purpose of the Securities Act of 1933 is to provide investors with full disclosure about a new securities issue. The act is federal in scope, whereas blue-sky laws refer to state securities regulations.

A discussion referring to blue-sky laws would include all of the following EXCEPT: A) forms requiring issuers selling securities in the state to comply with state securities laws. B) a state securities law that grants state securities Administrators the power to deny or revoke a broker/dealer's or an agent's registration within its state. C) the Securities Act of 1933 and Securities Exchange Act of 1934. D) state laws that are designed to protect the public against fraud in securities sales within a state.

C) the Securities Act of 1933 and Securities Exchange Act of 1934.

Which of the following is responsible for the administration of the USA in a state? A) State judiciary system. B) Executive department. C) Securities and Exchange Commission. D) The Administrator.

D

Under the Uniform Securities Act (USA), a person is best defined as a(n): A) human being. B) adult human being. C) party that is subject to federal income tax. D) individual or entity considered able to enter into an enforceable contract.

D According to the Uniform Securities Act (USA), a person is a competent adult individual or an entity that is able to enter into an enforceable contract. For example, the American Red Cross is a person (legal entity), although as a charitable organization, it is not subject to federal income tax.

Which of the following types of investments would have the lowest liquidity risk? A) Preferred stock. B) Gold. C) Real estate. D) Money-market funds.

D Money market funds offer check-writing privileges permitting their investors to cash out virtually immediately.

What is the official designation of the person or agency that enforces the USA in each state? A) Transfer agent. B) Registrar. C) Issuer. D) Administrator.

D) Administrator

**Which of the following statements is NOT true? A broker/dealer must be a firm or corporation (legal person) as opposed to a natural person (human being). An investment adviser must be a firm or a corporation as opposed to a natural person. An investment adviser representative (IAR) cannot, under any circumstances, be employed by a registered broker/dealer. A) I and II. B) I and III. C) II and III. D) I, II and III.

D) I, II and III. A broker/dealer or investment adviser can be either a natural person (i.e., organized as a sole proprietorship) or a legal person (i.e., a corporation or partnership). There is no prohibition against an investment adviser representative also being licensed as an agent with a broker/dealer.

Blue-sky laws pertain to all of the following EXCEPT the: A) registration of securities within a state. B) regulation of securities transactions in a state. C) registration of securities salespeople in a state. D) regulation of securities trading in other countries.

D) regulation of securities trading in other countries.

When comparing exchange-traded funds (ETFs) to mutual funds, some features available in ETFs that are NOT found in the mutual funds would include the ability to: correlate to a specific index. sell short. be bought and sold on margin. represent an entire portfolio, or basket of securities. A) III and IV. B) II and III. C) I and II. D) I and IV.

Unlike mutual fund shares, ETF shares can be traded on margin and sold short. They are similar in that they both represent an entire portfolio or basket of securities and both can have portfolios correlated to a specific index.