Series 63 final 3
13, How many years do broker-dealers have to keep most records for? A 1 B 2 C 3 D 5
C = 3
55, When a broker-dealer application becomes effective in a State, who is NOT required to separately register? A Directors of the broker dealer B Salespersons of the broker dealer C Supervisors of salespersons of the broker dealer D Managing directors that oversee marketing of broker dealer services
A = Directors of the broker dealer
27, When a market maker executes a market order based on privately held knowledge pertaining to an imminent block transaction in the market, he or she engages in an illegal activity known as A Front running B Painting the tape C Churning D Ramping
A = Front running
28, Which term refers to the unethical practice of buying or selling shares of stock immediately prior to executing an order for your customer? A Front running B Back-loading C Market making D Twisting
A = Front running
10, In which of the following states would a broker-dealer be required to register? I Any state in which it has an office Il. A state in which it has no office and its only three clients are non-institutional clients Ill. A state in which it has no office and its only clients are 15 institutional clients A I and II B II and III C I and III D I Il and Ill
A = I and II
7, What actions may the Administrator take against a violator of the Act? I. order a person to cease and desist the activity without a prior hearing Il. have a receiver appointed over the violator's assets III. initiate a criminal action against the violator IV. sentence the violator to a prison term A I and Il B I II. Ill. and IV C II Ill and IV D Ill and IV
A = I and Il
14, Which of the following is considered an agent under the Uniform Securities Act? 1. Brenda, who works for Lightweight Brokers, selling US government securities II. Bob, who works for the US Government, selling US government securities A I only B II only C both l and Il D neither I nor Il
A = I only
15, Grant is hired to perform clerical work to assist Heidi, who is an agent for a broker-dealer. Grant is not a registered person. Heidi asks Grant to cover the phones while she steps away for lunch. Grant takes a call from Mary, a client. Mary asks for pricing information on a bond, and she also informs Grant she would like to sell some stock positions. Which of the following can Grant do to assist Mary? I. Give Mary the quote for the bond she is interested in Il. Accept Mary's order to sell the stock positions IlI. Give Mary a tip on a hot new stock, and see if she would like to place an order to purchase it A I only B I and II only C I ll. and Ill D Neither I II nor III
A = I only
12, Which of the following applicants may the Administrator issue a deny order against? I A person whose license was suspended in another state eight years ago for violating security law Il. A person whose right to engage in business as a broker-dealer was suspended in another country eight years ago IlI. A person who was convicted of a securities-related misdemeanor in the past eight years IV. A person who was convicted of a non-securities-related felony in the past eight years A I, III IV B I II. III, IV C I II. III D II III IV
A = I, III IV
30, A broker-dealer does not have a place of business in a state, has five non-institutional clients in that state, and has no institutional clients in that state. The broker-dealer: A Must register in that state B is not required to register in that state C May not do business in that state D May only do business in that state if they are approved by the state securities administrator
A = Must register in that state
25, Which of the following is true concerning a registered representative opening an account with a broker-dealer firm that is different from the firm that employs him? A Prior to opcning the account, consent from the employer firm must be given to the rep, but only notification needs to be provided the firm with which the rep is trading. B It is never permitted. C Copies of confirmations. statements, and any other information related to the outside account must always be provided to the employer firm. D Such an arrangement can only happen if the rep becomes employed by both firms.
A = Prior to opcning the account, consent from the employer firm must be given to the rep, but only notification needs to be provided the firm with which the rep is trading.
51, A Registered Investment Adviser that is headquartered in State A has offices in States A, B and C. The IARs in each State only solicit clients in that State. The RIA must comply with the recordkeeping rules of: A State A only B States A, B and C respectively covering the transactions occurring in cach State C the most restrictive State only D the Securities and Exchange Commission
A = State A only
48, Who is responsible for filing a U-5 Form with IARD when an investment adviser representative is terminated and associates with another advisory firm? A The investment adviser that is the former employer is responsible B The investment adviser that is the new employer is responsible C The Investment adviser representative is responsible D No one is responsible for notifying IARD when the investment adviser representative is terminated
A = The investment adviser that is the former employer is responsible
16, ABC Brokers, a registered broker-dealer, files an application for registration of a successor firm. XYZ Brokers, for the unexpired portion of the year. Which of the following is true? A There is no filing fee B The filing fee is equal to the amount paid by ABC Brokers on its most recent registration renewal C The filing fee is based on the initial net capital of XYZ Brokers D The filing fee is $250
A = There is no filing fee
17, When may the Administrator audit the records maintained by a broker-dealer? A at any time B quarterly C semi annually D annually
A = at any time
59, Under the provisions of the Uniform Securities Act of 1956, as amended, the maximum penalty that the State Administrator can impose against a broker-dealer that sells an unregistered non-exempt security in the State is compelling the broker-dealer to: A buy back the security at original cost B buy back the sccurity at current market value C buy back the security at original cost plus pay treble domages D buy back the security at current market value plus pay treble damages
A = buy back the security at original cost
47, When a security is being registered in a State by coordination alongside a federal registration for that security being performed under the Securities Act of 1933, what information must be filed in the State? A consent to service of process, copies of the prospectus. and a copy of the articles of incorporation and bylaws B disclosure document that details the names and background of the company's directors covering the past 5 years. along with their salarics C copy of the prospectus in final form D notice filing
A = consent to service of process, copies of the prospectus. and a copy of the articles of incorporation and bylaws
61, An agent of a broker-dealer with discretionary authority has a customer that currently is invested in ABC Speculative Fund. The agent enters an order to sell the ABC Speculative Fund holding and, using the proceeds, enters another order for the client to buy XYZ Speculative Fund. The agent: A must show that there is a marked difference between the two funds and that the trade was justified B must show that the commissions carea on the transactions were not a factor in the investment decision C has committed an unethical practice because the account is being churned D will be ordered by the Administrator to reverse the trades and refund commissions corned to the client
A = must show that there is a marked difference between the two funds and that the trade was justified
42, Under NASAA rules, a customer must sign and return the margin agreement: A promptly after the initial transaction in the account B prior to settlement of the first trade in the account C within 1 day of the first transaction in the account D within 3 days of the first transaction in the account
A = promptly after the initial transaction in the account
23, Investment advisers are required to maintain all records required by the Administrator for period of at least: A 2 years B 5 years C 10 years D 3 years
B = 5 years
29, Brokers and dealers are different in which of the following ways? A Brokers help effoct securities transactions, whereas dealers do not. B Brokers make money from commissions, whereas dealers make money from markups and markdowns. C Brokers buy and sell their own sccurities, whereas dealers are just a go between for a buyer and seller. D Brokers are involved in both sales and purchases, whereas dealers are only involved in sales.
B = Brokers make money from commissions, whereas dealers make money from markups and markdowns.
49, Which is NOT a security? A Warrant B Commodities Futures Contract C Right D American Depositary Receipt
B = Commodities Futures Contract
44, Which of the following is the LAST step in opening a new account for a customer? A Completing the new account form B Executing the first transaction C The manager signing new account form D Completing the order ticket for first order
B = Executing the first transaction
1, Which of the following is not an example of market manipulation? A Participating in a fake purchase or sale B Making trades in a customer's account simply for the sake of receiving extra commission fees C Using false information to open an account from which a broker dealer sells securities to public investors D Buying or selling a security in a series of transactions in order to drive the price up
B = Making trades in a customer's account simply for the sake of receiving extra commission fees
21, Desiree is an investment adviser representative with her only office located in the state of Mountains. She has four non-institutional clients in the state of Prairie. Where must Desiree register? A Mountains and Prairie B Mountains only C Prairie only D neither Mountains nor Prairie
B = Mountains only
41, Sarah Sacks has an individual account at a broker-dealer. Sarah calls her agent at the broker-dealer and states that she wishes to open an account for her sister Sally in her sister's name and buy 1.000 shares of PDQ stock. Which statement is TRUE? A The agent can open the account B The agent can open the account only if the sister Sally gives authorization in writing C The agent can open the account only it the manager approves in writing D The account cannot be opened unless the sister Sally orally approves
B = The agent can open the account only if the sister Sally gives authorization in writing
40, A broker-dealer wishes to charge its customers that engage in options trading a separate account service charge in addition to a commission on each trade. The new service charge will be based on the volume of options trading in the account, with the fee set at 10% of the value of monthly options trades, but no less than $25 per month. The arrangement is disclosed to all of the broker-dealer's options customers. Which statement is TRUE? A Broker-deolers are not permitted to charge accounts service fees. so this arrangement is uncthicol B This represents an excessive account fee and is a prohibited practice C The service fee can be charged because the firm's customers were notified of the new fee D This service fee can be charged becouse it is fair and reasonable
B = This represents an excessive account fee and is a prohibited practice
38, Under the provisions of the Uniform Prudent Investor Act, a trust: A can only invest in sccurities that are included on that State's "Legal List" B can customize its investments based on suitability as determined by the needs of the beneficiaries C must determine that cach individual investment is prudent D gives the trustec complete discretion as to which investments are suitable
B = can customize its investments based on suitability as determined by the needs of the beneficiaries
32, To open an options account, inquiry must be made into the customer's financial situation and needs in order to do all of the following EXCEPT to: A determine the restrictions. if any. to be placed in the Options Agrecment B determine whether the customer should reccive an Options Disclosure Document C determine if it is appropriate to open the account D make suitable customer recommendations
B = determine whether the customer should reccive an Options Disclosure Document
36, An agent persuades a client with a conservative risk tolerance to invest in speculative securities. On settlement date, he tells the client to sell those investments and use the proceeds to buy other speculative securities. This pattern continues for several months. This is called: A selling away B excessive trading C front running D free riding and withholding
B = excessive trading
57, Under the provisions of the Uniform Securities Act, the determinant of whether an investment adviser can take custody of client funds is whether the RIA: A is named as the trustec of a client trust account B has taken out a surety bond C has a signed power of attorney D has at least $25 million of assets
B = has taken out a surety bond
54, A firm is retained by a company that wishes to make acquisitions of other companies to act as a finder. The finder can be considered to be a broker-dealer: A under no circumstances B if it reccives compensation contingent on the closing of a deal C if it receives a flat fee for services rendered D if it signs a written contract with the company
B = if it reccives compensation contingent on the closing of a deal
5, The Uniform Securities Act prohibits many activities, including: A refusing an order to sell from a third party to an account B telling a client that you are state approved to give financial recommendations C charging a yearly advisory fee that is based on the value of the client's account D none of these choices arc prohibited
B = telling a client that you are state approved to give financial recommendations
18, All of the following would be considered "agents" EXCEPT: A representative of a broker dealer speciolizing in initial public offerings (IPOs) B director of sales of an issuer C receptionist of a broker-dealer D trading desk opcrator of a broker dealer
C = receptionist of a broker-dealer
31, John, who owns 100 shares of Sky Upward stock, posts information on several social media sites in hopes of inflating the value of his securities. Largely as a result of claims made by John, which are based on a great deal of inaccurate information, many investors are encouraged to buy the stock. In turn, the value of Sky Upward shares increases rapidly. John then decides to sell his shares and profit from the increase. What John has just done is best described as which of the following? A Touting a security B Ahigh-yield investment program C "pump and dump" D Providing a misleading opinion
C = "pump and dump"
24, Jake is terminated as an agent for broker-dealer ABC Co. and is then hired as an agent for issuer XYZ Inc. Which form must each company complete? A ABC completes o BD W and XYZ completes a U 4 B ADC completes a U 5 and XYZ completes an ADV C ABC completes a U 5 and XYZ completes a U 4 D ABC docs not need to complete a form and XYZ completes an ADV
C = ABC completes a U 5 and XYZ completes a U 4
53, An Investment Adviser can give advice on: I NYSE listed securities Il Options Ill Commodity futures IV Variable annuities A I only B I and Ill only C I Il and IV D 1. II. III. IV
C = I Il and IV
52, Under the Uniform Securities Act, an unregistered agent would be permitted to sell: I ownership interests in real estate limited partnerships Il fractional ownership interests in a mining company ||| certificates of deposit issued by a federally chartered bank IV shares of a federally chartered credit union A I and Il only B Ill and IV only C Ill only D I II III. IV
C = Ill only
2, Excellent Investment, a state-registered investment adviser, publishes an advertisement in its local newspaper. The advertisement includes two client testimonials related to the firm's services that were sent by clients to the firm. Which of the following statements is true of this advertisement? A It is permitted as long as the testimonials came from an independent third party social media site B It is permitted as long as the testimonials came from an independent third party social media site and includes all of the testimonials reloted to Excellent Investment that appeared on the site C It is not permitted because testimonials for state-registered investment advisers are never permitted in advertisements D It is not permitted because all types of advisers are prohibited from using testimonials in their advertisements
C = It is not permitted because testimonials for state-registered investment advisers are never permitted in advertisements
8, Jenny is an administrative assistant who mans the phones over the lunch hour for a broker-dealer. She occasionally takes orders while the sales staff is on lunch, but does not solicit orders. She is not compensated directly for the orders she takes. Which of the following is true under the Uniform Securities Act? A Jenny does not need to register if she only takes unsolicited orders. B Jenny docs not need to register since her job function is mostly clerical in nature. C Jenny needs to register as an agent for the broker dealer. D Jenny does not need to register because she is not compensated for the orders she takes.
C = Jenny needs to register as an agent for the broker dealer.
58, A 79-year old widowed client telephones you, her representative, telling you the following: "I just received a phone call telling me that I have won the Mega Millions International Lottery, and that in order to release my winnings, I must wire $10,000 to pay for the international taxes due." She gives you the interational wiring instructions and directs you to send out the wire. What action should you take? A Follow the customer's instructions B Do not follow the customer's instructions and freeze the account from all transactions or removal of assets C Notify the trusted contact person on the account. who is listed as the client's daughter. and ploce a hold on the requested wire transfer D Close the account and reopen a new account in the name of the trusted contoct person, who is listed as the client's daughter
C = Notify the trusted contact person on the account. who is listed as the client's daughter. and ploce a hold on the requested wire transfer
46, An IAR (Investment Adviser Representative) is employed by a Registered Investment Adviser in a State. The lAR has a young, wealthy, client with an investment objective of aggressive growth. To meet the objective, the IAR engages in active trading strategies, using an outside broker to effect the trades at a discounted rate. The IAR receives a small payment from the broker for these trades. Which statement is TRUE? A Because the payment reccived by the IAR is small, there is no requirement to notify the client of the payment arrangement with the exccuting broker B Because the client has an investment objective of aggressive growth, requiring an active trading strategy, there is no requirement to notify the client of the payment arrangement with the executing broker C The IAR must notify the client of the payment arrangement with the executing broker D The IAR must notify RIA of the payment arrangement with the exc
C = The IAR must notify the client of the payment arrangement with the executing broker
19, When a broker-dealer withdraws its registration, what happens to the registrations of agents employed by the broker-dealer? A the agents' registrations are lost until they register with another broker-dealer B the agents' registrations are null and void and they must repeat all necessary licensing examinations C the agents' registrations remain active as long as they register with another broker dealer within 30 days D the agents' registrations remain active
C = the agents' registrations remain active as long as they register with another broker dealer within 30 days
37, A new customer wants to open a discretionary account by initially depositing $20,000 in cash. He signs the authorization form and indicates to an agent that his investment objective is long-term growth. He wishes that the agent immediately invest his money to take advantage of market timing. Which statement is TRUE? A As long as the customer is an American Citizen born in the United States and this is verified, the agent may invest the money in a manner consistent with the customer's objective B Once the new account form is opproved by the State Administrator, the agent can start investing as long as the investment is consistent with the customer's objective C The agent should contact her branch manager as cash deposits or withdrawals exceeding $10.000 must be reported to the Department of Treasury D The agent should contact her State Administrator as amounts exceeding $10.000 must be reported to the Secretary of
C = The agent should contact her branch manager as cash deposits or withdrawals exceeding $10.000 must be reported to the Department of Treasury
50, Which of the following can cause the Administrator to deny an application for registration? A The applicant was convicted of a Driving Under the Influence misdemeanor 1 yars ago B The applicant plead guilty to a minor traffic violation 2 ycars ago C The applicant is the subject of an order from a Canadian court suspending registration as a securities representative D The applicant declared bankruptcy in another State 5 ycars ago
C = The applicant is the subject of an order from a Canadian court suspending registration as a securities representative
9, An interational banking institution with headquarters outside the U.S. wants to offer banking-only services to U.S. customers in a certain state. However, its bonds and certificates of deposit (CDs) may be bought and resold to retail investors in the state by unafflated broker-dealers. Which of the following statements is true, assuming the state has adopted the Uniform Securities Act? A The bank is required to register as a broker dealer with both FINRA and the state. B The bank is required to register as a broker dealer with FINRA, but not the state. C The bank is exempt from state registration as a broker dealer. D Because securities issued by the bank are sold to investors within the statc. the state must register as a broker dealer.
C = The bank is exempt from state registration as a broker dealer.
56, An investment adviser in State A has an investment adviser representative who gives advice to his client, a bank. in State B When would the investment adviser representative (IAR) be required to be registered in State B? A The investment adviser representative would never be required to register in State B because the investment adviser repres cntative is already registered in State A B The investment adviser representative would have to register in State B when the firm has 3 other clients in Stote B C The investment adviser representative would have to register in State B when the investment adviser opens an office in State D The investment adviser representative would have to register in State B if he or she has 3 clients in State A and 3 clients in State B
C = The investment adviser representative would have to register in State B when the investment adviser opens an office in State
43, What is a good definition of "suitability"? A When, in o securities transoction for a customer. a represchtative chooses the sccurity to be traded. the amount to be traded. and the price and time of exccution B When, prior to recommending a sccurities transaction to a customer, information is obtained concerning the customer's financial stotus. tox stotus, investment objectives and investment needs C When a represchtative has reasonable grounds for believing that his or her recommendation is appropriate for the client. based the client's financial situation and needs. investment objectives. risk tolerance and other security holdings D When the represciative considers the client's risk tolerance. financial situation, financial needs. investment objectives and oth& security holdings in relation to the firm's list of recommended securitics
C = When a represchtative has reasonable grounds for believing that his or her recommendation is appropriate for the client. based the client's financial situation and needs. investment objectives. risk tolerance and other security holdings
11, Even though you've recently passed all required exams for your securities license, a state administrator could act against your license for which of the following reasons? A You were charged with a non securities-related misdemeanor from one ycor ago B Your lack of experience C You are subject to an order of the administrator revoking a different professional license D Based upon facts known at the time that the registration was initially granted
C = You are subject to an order of the administrator revoking a different professional license
26, A business entity effecting transactions in securities for the account of others or for its own account is known as A a securitics exchange B an investment adviser C a broker dealer D a dealer-trader
C = a broker dealer
20, Who must notify the Administrator when an agent begins or terminates employment with a broker-dealer or issuer? A the agent only B the broker dealer or issuer only C both the agent and the broker dealer or issuer D neither the agent nor the broker dealer or issuer
C = both the agent and the broker dealer or issuer
33, An Investment Adviser Representative has filed a registration application with the State, which the Administrator has denied. This could happen because the IAR was convicted of a: A breach of the peace misdemeanor 5 years ago B driving under the influence misdemcanor B years ago C investment related misdemcanor 5 years ago D shoplifting misdemeanor 8 years ago
C = investment related misdemcanor 5 years ago
6, A non-issuer transaction of common stock sold by a broker-dealer is considered what type of transaction? A exempt B registered C non exempt D unregistered
C = non exempt
45, An IAR discusses a trading strategy with one of her clients, who tells the lAR to sell her ABC stock position whenever you see an opportunity. After this conversation, the client leaves the lAR's office for a vacation. Two days later, the IAR sees that ABC stock has risen in price and believes that this is an opportune time to sell the position. The IAR should: A not place the order and try and contact the client B place the trade and notity the client in writing within 2 business days C place the trade and get written discretionary authority from the customer within 10 business days D get approval from his or her direct manager before placing the trade
C = place the trade and get written discretionary authority from the customer within 10 business days
39, The transmission of unsolicited recommendations to buy or sell securities through all of the following are "red flags" for fraud ЕХСЕРТ: A Twitter B Facebook C Hot Stocks Chatroom D Broker-Dealer Website
D = Broker-Dealer Website
4, Which of the following is not required in a client's investment advisory contract according to the NASAA Model Rule? A The term of the contract must be disclosed B The advisory fee and formula for calculating the fec must be disclosed, as well as the amount of any termination fee C Specific wording that the contract may not be assigned to another investment advisory firm without the client's consent D Explicit disclosure if any client's rights have been waived
D = Explicit disclosure if any client's rights have been waived
3, Helen Thompson has passed the regulatory requirements to start doing business as a state-covered investment advisor representative. In her marketing brochure, in addition to her professional experience and educational background, she notes that she is Series 65 certified and that her services have been approved by her state's securities regulator. Which of the following statements is true? A If this information is contained in her marketing brochure. it must be disclosed in Form ADV-ll as well. B She must not imply that her services are "approved" by her state securities administrator but she has not committed any other violations. C She cannot mention licensing examinations in her marketing brochure or Form ADV lI but she has not committed any other violations. D She has committed at least two violations.
D = She has committed at least two violations.
34, An agent is conducting securities activities on the premises of a bank. Which statement is TRUE? A This is an unethical practice B This is permitted it the agent discloses orally to the customer that the products offered are not bunk products, are not FDIC insured: and may lose value C This is permitted if the agent discloses in writing to the customer that the products offered are not bank products, are not FDIC insured: and may lose value D This is permitted if the agent discloses both orally and in writing to the customer that the products offered are not bank product are not FDIC insured: and may lose value
D = This is permitted if the agent discloses both orally and in writing to the customer that the products offered are not bank product are not FDIC insured: and may lose value
62, What document provides information contained in the registration statement of a security and must be provided to investors of that security after the effective date for the security while the security is still a new issue? A trust indenture B tombstone edvertisement C red herring D final prospectus
D = final prospectus
60, An investment adviser has been experiencing a business decline due to a weak local economy and a weak investment outlook. To rebuild her business base, the investment adviser puts an advertisement in the local newspaper that says: "Because times are tough for all of us, we are offering, for a limited time only, a free investment consultation and free year-end tax preparation to anyone who signs a 1-year advisory contract for an introductory rate of only 525 per month." This is permitted: A under no circumstances B as long as the duration of the limited time offer is included in the advertiscment C as long as the adviser accepts all potential clients that respond to the offer made in the advertisement D only if the word "free is removed twice from the advertisement
D = only if the word "free is removed twice from the advertisement
35, Under the provisions of the Uniform Securities Act, for willful violations, the State Administrator can: A institute criminal proceedings B impose a monetary finc C file suit under civil liability provisions D revoke recistration of persons
D = revoke recistration of persons
22, If an IA representative wants to register with a state, all of the following are or may be required except: A filing an application B passing an cxam C payment of filing fees D submission of the ADV form
D = submission of the ADV form