How many questions are on the Series 63 practice exam?

The Series 63 practice exams have the same number of questions as the actual exam. That means full-length practice exams have 65 multiple-choice questions. Out of the 65 questions, five are unscored. The exam takes 75 minutes. That's 1 hour and 15 minutes.

What does the Series 63 test on?

The Investment Company and Variable Contracts Products Representative Qualification Exam tests: - Principles of state securities regulations and rules (45% of the exam) - Administrative provision (10% of the exam questions) - Customer communication (20% of the exam questions) - Ethical practices (25% of exam questions)

Securities industry professionals aspiring to work as broker-dealer agents in most states, except for Florida, Colorado, Louisiana, New Jersey, Maryland, Ohio, the District of Columbia, Vermont, and Puerto Rico, are required to take the Series 63 exam to sell and buy securities products.

Is the Series 63 exam hard?

The Uniform Securities Agent State Law examination is hard because of the complex question structure. The questions are tricky. You must read them carefully. Also, the test duration is short. You have a few minutes to answer the questions. Take many practice exams to familiarize yourself with the exam.

What is the Series 63 pass rate?

FINRA doesn't publish the pass rate for the Series 63 exam. However, sources such as Pass Perfect project 70-75% pass rate. That means a quarter of the first-time test-takers fail the exam. The Series 63 exam requires 30-40 hours of test prep to increase your chances of passing.

What is the best Series 63 study material?

The best Series 63 exam prep courses include ExamFX, Pass Perfect, Kaplan, and Securities Training Corporation. The materials you'll get include: - Series 63 flashcards - Series 63 cheat sheets - Series 63 practice questions - Series 63 study plan The study materials vary from one provider to the next.

What is the cost of the Series 63?

This North American Securities Administrators Association exam costs $147. If you fail the exam the first time, you'll be required to pay the same amount to retake it after 30 days. You don't need sponsorship from a FINRA member firm or a self-regulatory organization to take this licensing exam.

What can you study to prepare for the Series 63 exam?

Sign up for a Series 63 exam prep course. Go through the Series 63 study materials provided, including the study guide, flashcards, and cheat sheet. Take practice tests and end-of-chapter quizzes. Ensure you've covered the exam content outline as highlighted on the Financial Industry Regulatory Authority website.

FREE Series 63 Practice Exams 2023 - 1100 practice questions

Welcome to yet another in-depth guide to the Series 63 practice exam.

In this fourth article in our Series 63 study series, you’ll have access to five full-length Series 63 practice exams.

We’ll also give you access to practice questions for each of the Series 63 exam domains, a total of 1,100 practice questions.

By the end of it all, you’ll have heads-up on how you can make the most of our free practice tests and some excellent tips on why these practice exams may be your lifesaver when preparing for this FINRA exam.

In brief, we’ll cover:

Making the most of the free Series 63 practice exam
Why take the Series 63 practice exam

Other free series 63 study materials:

Series 63 exam prep
Series 63 study plan
Series 63 study guide
Series 63 practice exams
Series 63 flashcards
Series 63 cheat sheet
Series 63 Exam FAQ
Best Series 63 study materials

Table of Contents

FINRA Series 63 Practice Exams
Series 63 Practice Quizzes by Domains
Domain 1: Regulation of Investment Advisers including state-registered and federal covered advisers
Domain 2: Regulation of Investment Adviser Representatives
Domain 3: Regulations of Broker Dealers
Domain 4: Regulations of Agents Broker-Dealers
Domain 5: Regulation of Securities and Issuers
Domain 6: Remedies and Administrative Provisions
Domain 7: Communications with Customer and Prospects
Domain 8: Ethical Practices and Obligations
Making the Most of Our Free Series 63 Practice Exam
Why Take the Series 63 Practice Exam
Conclusion
Series 63 Practice Exam Frequently Asked Questions (FAQs)

FINRA Series 63 Practice Exams

We have five full-length Series 63 practice exams you can use to test your exam readiness.

We’ve also put together practice questions for each Series 63 exam domain.

The practice exams will help you identify the Series 63 exam domains that you are weak in.

Let’s jump straight in.

Series 63 Practice Exam 1

Welcome to your Series 63 Practice Exam 1

This test is designed to prepare you mentally for the actual Series 63 Exam with the same number of (60 questions) and the same time allowed (75 minutes) as the actual exam.

The Series 63 Exam is breakdown into Eight (8) Parts.

Here are the Eight (8) Domains of the Series 63 Exam with the weightage and number of questions in this practice exam:

1. Regulation of Investment Advisers including state-registered and federal covered advisers [03 Questions] - 05%

2. Regulation of Investment Adviser Representatives [03 Questions] - 05%

3. Regulations of Broker Dealers [09 Questions] - 15%

4. Regulations of Agents Broker-Dealers [09 Questions] - 15%

5. Regulation of Securities and Issuers [03 Questions] - 05%

6. Remedies and Administrative Provisions [06 Questions] - 10%

7. Communications with Customer and Prospects [12 Questions] - 20%

8. Ethical Practices and Obligations [15 Questions] - 25%

Please click NEXT to start your Free Series 63 PRACTICE EXAM right away.

Best of Luck!

An investment adviser registered with the state who maintains custody of customer funds and securities is generally required to provide the Administrator with a surety bond in the minimum amount of $35,000. The bond provides protection to advisory clients when

A) the Administrator in one of the states where the investment adviser does business determines that the firm is not properly registered in that state.

B) a customer following recommendations made by the investment adviser loses more than the fees charged for the advice.

C) the investment adviser or one of its representatives converts customer funds for personal use.

D) the investment adviser is operating at a loss.

As found in the Uniform Securities Act, which of the following would not be an issuer?

A) A metal refinery whose stock is traded in the OTC market

B) A smelter producing gold bullion for sale to investors

C) A person who has proposed to issue a security but has not yet issued it

D) A finance company offering promissory notes

When a security is sold in a manner that creates an exemption from registration in a state, it is

A) an exempt transaction.

B) an illegal transaction.

C) a federal transaction.

D) an exempt security.

Under the Uniform Securities Act, all of the following are excluded from the definition of an investment adviser except

A) broker-dealers and their agents.

B) a federal covered adviser.

C) banks.

D) a person in the business of providing advice on municipal bonds for compensation.

Registration as an investment adviser or investment adviser representative under the Uniform Securities Act is required of

A) an officer of a trust company handling investments for trust accounts.

B) an agent of a broker-dealer who recommends model portfolios to clients in exchange for them executing their trades through him.

C) a tax attorney who, as an incidental part of his tax practice, recommends that his high tax bracket clients investigate the use of municipal bonds in their portfolios.

D) an economics professor at a local community college who gives lectures in the evenings to public groups about portfolio analysis for which he charges a nominal fee.

Under the Uniform Securities Act, an investment adviser is exempt from registration if it has no place of business in a state and its only clients are any of the following except

A) other investment advisers.

B) broker-dealers.

C) investment companies.

D) accredited investors.

A broker-dealer with no place of business in the state would not be required to register with the Administrator if its only clients were

A) executors of an estate.

B) limited to five or fewer retail investors over any 12-month period.

C) savings institutions.

D) accredited investors.

A broker-dealer registered in States P, S, and U has several clients in State C. If the firm does not have a place of business in State C, the firm would need to register in State C if any of its clients in the state are

A) property and casualty insurance companies.

B) retail investors.

C) trust companies.

D) investment companies.

Broad Street Securities (BSS) is a broker-dealer based in State P with offices in no other state. In addition to its State P clients, BSS has 4 retail customers living in State M. During the winter, if 14 existing customers vacation in State A for up to two months at a time, BSS meets the Uniform Securities Act's definition of a broker-dealer in

A) States M and A.

B) State P only.

C) States P, M, and A.

D) States P and M.

10.

Under the Uniform Securities Act, the term broker-dealer would include

A) an issuer distributing its own common stock offering.

B) agents registered under the act who from time to time sell stock from their personal brokerage accounts.

C) a person with no office in the state who effects securities transactions with over 25 different insurance companies domiciled in the state.

D) a person with no office in the state who sells variable life insurance policies to no more than five retail investors residing in the state during any 12-month period.

11.

If an incorporated entity sells nonexempt securities to public customers, receives a commission on the sale of the securities, and pays commissions to the employees who sell them, according to the Uniform Securities Act, the corporation is

A) a corporation selling only to sophisticated investors.

B) a corporation selling to an employee pension fund.

C) a broker-dealer engaging in exempt transactions.

D) a broker-dealer that must be registered.

12.

An individual recently inherited $100,000 and would like to invest some of that money into stocks and bonds. To purchase those securities, the individual would most likely use the services of

A) a broker-dealer.

B) a mutual fund.

C) an accountant.

D) a bank.

13.

Which of the following would meet the Uniform Securities Act's definition of broker-dealer?

A) Rushmore Investments, a person specializing in the sale of mutual funds

B) Strathmore Investments, a person specializing in buying and selling physical gold

C) Cranmore Secured Investments, a person specializing in the sale of foreclosed single-family homes

D) Baltimore Investment Specialists, a person concentrating in buying and selling rare stamps

14.

A broker-dealer with no place of business in a state is not defined as a broker-dealer in that state when its only clients in that state are

A) an employee benefit plan with assets of $800,000.

B) registered investment companies.

C) an individual who meets the definition of accredited investor.

D) non-profit organizations.

15.

Under the Uniform Securities Act, which of the following is, by definition, a broker-dealer in a state?

A) XYZ broker-dealer without an office in the state whose only clients are insurance companies

B) XYZ broker-dealer with an office in the state whose only clients are banks

C) A broker-dealer with no place of business in the state who only does business with other broker-dealers

D) An agent effecting transactions for a broker-dealer

16.

The registration of a broker-dealer in this state would automatically register as an agent

A) an investment adviser representative of the broker-dealer.

B) an agent who sits on the board of directors of the broker-dealer.

C) a secretary who has been employed by the firm for the past five years.

D) all employees of the broker-dealer.

17.

The Administrator may require an applicant for registration as an agent to do all of the following except

A) submit fingerprints.

B) place an advertisement in one or more newspapers circulated in the state.

C) pay a registration fee.

D) pass a qualification examination.

18.

Under the Uniform Securities Act, the registration requirements for agents would never include

A) a consent to service of process.

B) an examination.

C) minimum capital.

D) surety bonding.

19.

A Canadian broker-dealer is registered in the province of Alberta. The firm has clients who vacation in Arizona, New Mexico, and Texas, and they would like to continue to do business with them while on their holidays. Under the Uniform Securities Act,

A) this would only be permitted if the trades were executed through an affiliated domestic broker-dealer who is licensed in those states.

B) this is permissible only if the broker-dealer is registered with the SEC.

C) this is permissible if the broker-dealer is properly registered in Alberta, deals only with existing clients, and registers in each of the states.

D) the broker-dealer may only accept unsolicited orders from their existing clients while they are vacationing in the U.S.

20.

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

A) Any individual who has contributed capital to fund the organization

B) Any partner, officer, or director of the firm who is active as an agent in the firm's securities business

C) All individuals for whom an agent's application has been filed

D) Any individual who directly handles securities

21.

An agent's registration is considered effective

A) once the licensing fee has been paid.

B) when approval has been granted by the Administrator.

C) when approval has been granted by FINRA.

D) upon passing the Series 63 Uniform Securities Agent State Law exam.

22.

Jamal is registered as an agent with Dearborn Distinctive Investments (DDI), a broker-dealer registered with the SEC and a number of states. Due to some poor management mishaps, the SEC revokes DDI's registration as a broker-dealer. How does this affect Jamal's registration as an agent?

A) His registration is not affected.

B) His registration is revoked.

C) His registration is no longer active.

D) His registration remains active as long as he registers with an active broker-dealer within 30 days.

23.

Under the Uniform Securities Act, an agent's license is effective for

A) 20 years.

B) 18 months, of which the first 6 months is a probationary period.

C) 1 year initially and then renewing as of the following December 31.

D) the time remaining until December 31 of that year, at which time it must be renewed.

24.

Under the Uniform Securities Act, a person who has passed the appropriate NASAA examination but whose license has not yet been issued can participate in

A) giving a seminar on the benefits of whole life insurance versus term insurance.

B) prospecting for new clients by mail.

C) prospecting for new clients in person.

D) accepting unsolicited orders.

25.

A study of the Uniform Securities Act would reveal that not included in the definition of a security would be

A) preferred stock in the Colonel Corn Processing Corporation.

B) common stock in the Shining Silver Mining Company.

C) whole life insurance policies issued by the Dividend Mutual Life Insurance Association of America.

D) debentures issued by the XYZ Retirement Planning Company.

26.

As defined in the Uniform Securities Act, which of the following is not a security?

A) A preorganization certificate

B) A bond whose interest payments are guaranteed by a state government

C) $10,000 worth of gold ingots

D) Treasury stock

27.

All of the following are correct statements when referring to a nonissuer transaction except

A) it does not benefit the issuer.

B) it is a secondary transaction.

C) it is between two persons on a stock exchange or over the counter.

D) it must take place in the over-the-counter market rather than on the floor of an organized stock exchange.

28.

An investor who resides in New York reads an ad for advisory services in a newspaper published in New Jersey. More than 80% of the newspaper's circulation is in the state of New York. According to the Uniform Securities Act, an offer has been made in

A) New Jersey.

B) New York.

C) New Jersey and New York.

D) neither New Jersey nor New York.

29.

DMF Securities, a registered broker-dealer, is advertising securities through direct mail. Which of the following is considered an offer to sell securities in this state?

A) A client inquires about purchasing securities from a broker-dealer.

B) A prospective client located in a neighboring state receives, at his home address, a direct letter offering securities for sale.

C) A prospective client located in the state receives, at his home address, a direct letter offering securities for sale.

D) A prospective client residing in another state, whose mail has been forwarded to her children's home in this state, receives, at their address, a direct letter offering securities for sale.

30.

Under the Uniform Securities Act, Administrators of all of the following states have jurisdiction except

A) the state in which an offer to sell securities was accepted.

B) the state into which an offer to sell securities was directed.

C) the state from which payment for the purchase of securities was made.

D) the state from which an offer to sell securities originated.

31.

An agent works in Buffalo, New York and is registered in New York and Ohio. If the agent contacts a retail client in Ohio recommending the purchase of an unregistered non-exempt security, jurisdiction over this violation of the Uniform Securities Act would lie with the Administrator(s) of

A) neither state until a transaction takes place.

B) both New York and Ohio.

C) New York.

D) Ohio.

32.

An agent based in Alabama directs a solicitation to a customer who lives in Connecticut while the customer is temporarily in Indiana. The customer does not accept the offer until he arrives back in Connecticut. According to the Uniform Securities Act, the Administrators of which of the following states have jurisdiction?

A) Indiana and Connecticut

B) Alabama and Indiana

C) Alabama and Connecticut

D) Alabama, Connecticut, and Indiana

33.

What is the difference between an offer and a sale?

A) An offer must be approved by a branch manager and a sale needs no approval.

B) An offer can be made only by a customer and a sale can be made only by a broker-dealer.

C) An offer is the attempt to sell and a sale is a binding contract to transfer a security for value.

D) An offer is a binding proposal to sell and a sale is a nonbinding proposal to sell.

34.

A prospective client would like information on the post-secondary schools attended by those employees of an investment adviser who will be making advisory decisions. That information can be found by requesting

A) Form ADV Part 1B.

B) Form ADV Part 1A.

C) Form ADV Part 2B.

D) Form ADV Part 2A.

35.

A state-registered investment adviser offers wrap fee programs to certain clients. Which of the following statements about wrap fee arrangements is not true?

A) Material changes to wrap fee programs must be filed promptly with the Administrator.

B) Nonmaterial changes to wrap fee programs must be disclosed to the Administrator within 90 days of fiscal year-end.

C) Because this investment adviser offers wrap fee programs, it must make certain annual disclosures to the SEC.

D) Information on Appendix 1 of Form ADV Part 2A must also be contained in client disclosure documents.

36.

NASAA has created a Model Rule dealing with the creation of and delivery requirements for an investment adviser brochure. Which of the following statements correctly identify the delivery requirements?

A) The brochure may be delivered to prospective and new advisory clients at the time of entering into any such contract if the advisory client has a right to terminate the contract without penalty within five business days after entering into the contract.

B) Annual delivery of the brochure to prospective clients must be made within 120 days of the end of the adviser’s fiscal year.

C) The brochure may be delivered to prospective and new advisory clients no later than 48 hours after entering into the advisory contract if the advisory client has a right to terminate the contract without penalty within five business days after entering into the contract.

D) The brochure may be delivered to prospective and new advisory clients at least 48 hours prior to entering into the advisory contract if the advisory client has a right to terminate the contract without penalty within five business days after entering into the contract.

37.

A broker-dealer publishes a list of securities it approves for inclusion in IRAs. This means

A) the broker-dealer has committed an unethical business practice because use of the word approved is prohibited.

B) the broker-dealer has evaluated these securities and believes they would be suitable for inclusion for retirement planning.

C) an agent for the broker-dealer can place these in clients’ IRAs, knowing that the suitability requirements have been met.

D) the broker-dealer has consulted with the regulatory bodies and has received approval from them to recommend these securities for IRAs.

38.

James Douglas, an agent with Government Securities Specialists (GSS), a broker-dealer registered in this state, sells his client 10 U.S. government bonds due to mature in 30 years. According to NASAA's Statement of Policy on Dishonest or Unethical Business Practices of Broker-Dealers and Agents, which of the following statements may Douglas legally make?

A) “The U.S. government guarantees that principal and interest payments will keep pace with inflation.”

B) “The bonds are guaranteed as to principal and interest payments by the U.S. government.”

C) “There is no way to lose money on the safest security on earth.”

D) “The full faith and credit backing of the U.S. government means virtually no chance of loss.”

39.

Keshawn is registered as an agent with Execrable Investment Returns (EIR), a broker-dealer registered with the SEC and the Administrator. Keshawn just opened an account with a new customer, someone who has never invested in securities. In an effort to curb the customer's anxiety over market fluctuations, Keshawn explains a program he worked out with EIR that provides a cash deposit to a customer's account whenever the price of a stock in that account declines by more than 5%. This program is

A) prohibited because agents and their broker-dealers cannot offer a guarantee against loss.

B) permitted, as long as the customer’s account is approved for margin trading.

C) sure to make this customer less anxious.

D) likely to make this customer recommend Keshawn and EIR.

40.

MaryJo Barkley is the CEO of MJB Securities. MJB is distributing an offering of ABC common stock to investors. Barkley has been telling potential investors that the registration of the stock indicates approval by the state. Under the Uniform Securities Act, she is committing misrepresentation of

A) registration.

B) qualification.

C) material information.

D) authorization.

41.

As an incentive to encourage clients to invest in a particular stock recommended by the broker-dealer, clients are told that any time within six months after the purchase date, they may sell the stock back to the firm at original cost plus interest at the state's legal rate. This would be

A) a prohibited guarantee against loss.

B) an offer that could only be made to accredited investors.

C) a violation of the antifraud provisions of the Uniform Securities Act.

D) a right of rescission.

42.

According to the Uniform Securities Act, the investment adviser brochure must include the business backgrounds of

A) institutional clients.

B) each member of the investment committee or group that determines general investment advice to be given to clients.

C) affiliated broker-dealers.

D) all employees of the adviser.

43.

As an agent of a registered broker-dealer, one of the benefits of selling a security registered with the Administrator is

A) being able to deliver a prospectus containing the information an investor needs to make the investment decision.

B) the protection it gives the agent against a civil suit by a customer.

C) removal of the need for the agent to register in that Administrator’s state.

"D) the confidence it gives the investor that a regulatory body has approved of the sale of the issue.

44.

Stephanie Whitworth, an agent with a nationally known broker-dealer, has uncovered an unusual investment opportunity that she believes is perfect for one of her clients. When presenting the recommendation to the client, it becomes clear that the client is concerned about the potential of loss. To alleviate that concern, Whitworth tells the client that she agrees to repurchase the security from the client anytime within the next 60 days at the original purchase price. In so doing, Whitworth

A) has acted ethically because she has not guaranteed a profit to the client.

B) has committed the unethical business practice of guaranteeing against loss.

C) has acted ethically because her actions are in the client’s best interest, not her own.

D) has committed the unethical business practice of recommending a wash sale.

45.

An agent is discussing a guaranteed security with a customer. That means

A) there is absolutely no way the customer can lose money.

B) a profit on the security is guaranteed by a third party other than the issuer.

C) the broker-dealer will make up any loss suffered by the client.

D) the security has a guarantee from a third party other than the issuer covering the payment of principal and interest or dividends.

46.

Under the Uniform Securities Act, an agent may not make which of the following statements to a customer?

A) “This security is approved for sale by the Administrator.”

B) “This security is registered with the state.”

C) “This security is exempt from registration.”

D) “This security has been registered with the Administrator.”

47.

The procedure for entering an order to purchase a security for the account of a customer is to complete an order ticket. Which of the following would be found on an order ticket?

A) Customer name, execution price, time of order entry, and time of execution or cancellation

B) Account number, execution price, time of order entry, time of execution or cancellation, and terms and conditions of the order

C) Account number, customer address, time of order entry, and terms and conditions of the order

D) Customer name, customer address, execution price, and time of execution or cancellation

48.

The head of research for your firm has just prepared a very positive report on DEF Industries, Inc. The report will be placed on the firm's website later today, and copies will be mailed to clients for whom the security is deemed appropriate. Tonight, this analyst will be appearing on CNBC and will be describing why he has issued this strong buy recommendation. As an agent, you would

A) never be permitted to contact your clients with this recommendation.

B) be permitted to contact your clients with this recommendation right now.

C) be required to send your clients to the firm’s website before making any comments regarding this security.

D) not be permitted to contact your clients until it is determined that the report was officially released to the public.

49.

Which of the following practices could be considered fraudulent under the Uniform Securities Act?

A) Altering the customer’s order at the request of a customer, which subsequently results in a substantial loss

B) Failing to inform the firm’s principal of frequent verbal customer complaints

C) Promising services that an agent cannot realistically perform because of his broker-dealer’s limitations

D) Participating in active trading of a security in which an unusually high trading volume has occurred

50.

51.

An agent at a broker-dealer firm is excited about new earnings projections he received from TechEd, which sells at a market value of $10; it paid a $1 dividend this past year, and its earnings projections for the next year amount to an increase of 30%. The agent calls his clients to solicit purchases of TechEd stock and says if they buy now at $10 per share, they will realize a profit of 30%. The agent should

A) practice due diligence and call TechEd to verify that these earnings predictions are still current.

B) refrain from making this statement because it is a misrepresentation.

C) show his clients how he came to his calculations, sending them charts that have been approved by his principal.

D) not say anything yet because this is inside information.

52.

An agent has inside information on a public corporation that will probably cause the price of the stock to fall when it becomes generally known. A good customer calls with an order to buy a large amount of that stock. The agent should

A) discuss the matter with the broker-dealer’s compliance officer.

B) ignore the order.

C) tell the customer the inside information and let him decide what to do.

D) enter a sell order on the customer’s behalf along with the buy order in order to cover the customer’s losses.

53.

Which of the following is defined as fraud under the Uniform Securities Act?

A) An agent unknowingly offers for sale a security that enhances the wealth of his clients in a transaction prohibited by the state Administrator.

B) An agent unknowingly sells an unregistered nonexempt security in which the client loses a large portion of his net worth.

C) An agent sold securities that were discovered to be fraudulent four years after the sale.

D) An agent engages in transactions that his state legislature has declared fraudulent, but no judicial body or case law has found such transactions to be fraudulent.

54.

Deliberately failing to disclose sufficient information pertinent and relevant to a client making an informed investment decision is

A) churning an account without discretion.

B) effecting transactions without specific authority.

C) a fraudulent business practice because a client must have sufficient information to make a rational decision.

D) an example of guaranteeing returns.

55.

Under the Uniform Securities Act, an agent may use material nonpublic inside information as a basis for recommendations only

A) after the information is released to the public.

B) if the securities are exempt from registration.

C) if the agent reports the information as rumor and not fact.

D) until the information is released to the public.

56.

Which of the following practices is fraudulent?

A) Marking up a security by 10% more than industry standards with the customer’s knowledge and consent

B) Marking up a security by 5% but indicating to the client that the markup is only 2%

C) Failing to state all the facts related to a security

"D) Selling a security to a customer with a commission that exceeds industry standards"

57.

If an agent recommends the purchase of a technology company with an impressive growth record but fails to inform the client that the company's technology will become obsolete pending the approval of a competitor's patent, the agent has

A) not committed a prohibited business practice.

B) not violated the Uniform Securities Act because no untrue statements were made.

C) failed to disclose material information.

D) committed a prohibited business practice by selling an unsuitable investment.

58.

While having lunch at his club, an agent overhears a conversation that Technotalk (a publicly traded company) has just lost its biggest account to a competitor. Upon returning to the office, the only person the agent informs of the conversation is his supervisor. In this situation, the agent has acted

A) ethically because he did not profit from selling Technotalk common stock short in his own account.

B) unlawfully because he failed to report nonpublic information to the SEC.

C) ethically because he did not make use of material nonpublic information.

D) unlawfully because he failed to inform his customers of the negative news immediately.

59.

An agent was soliciting sales in XYZ stock six months ago when the market value was $16 per share. One of the agent's more aggressive clients did not purchase the stock at the time. The agent has read that there is a class action lawsuit pending against XYZ, and the market value has dropped to $5 per share. If the client were to contact the agent now and ask to purchase XYZ stock, what should he say or do in accordance with the Uniform Securities Act?

A) Enter the order.

B) Point out that the company has the lawsuit pending.

C) Refuse the order.

D) Point out that the price has dropped and that the client can purchase almost three times the number of shares as on the original date he was first contacted.

60.

An agent's customer says that ABC Corporation is about to be bought out. The customer wishes to place an order to buy ABC common stock based upon this yet-unreleased information, which he claims he learned from an officer in the company. How should the agent respond in this situation?

A) Discuss the matter with other more experienced agents of the firm to evaluate the validity of the information.

B) Bring the information to the attention of the state securities Administrator.

C) Bring the information to the attention of the firm’s supervisory individual named to handle such matters in the Supervisory Procedures Manual.

D) Accept the customer’s order and mark it solicited.

1 out of 60

Time is Up!

Time's up

Series 63 Practice Exam 2

Welcome to your Series 63 Practice Exam 2

This test is designed to prepare you mentally for the actual Series 63 Exam with the same number of (60 questions) and the same time allowed (75 minutes) as the actual exam.

The Series 63 Exam is breakdown into Eight (8) Parts.

Here are the Eight (8) Domains of the Series 63 Exam with the weightage and number of questions in this practice exam:

1. Regulation of Investment Advisers including state-registered and federal covered advisers [03 Questions] - 05%

2. Regulation of Investment Adviser Representatives [03 Questions] - 05%

3. Regulations of Broker Dealers [09 Questions] - 15%

4. Regulations of Agents Broker-Dealers [09 Questions] - 15%

5. Regulation of Securities and Issuers [03 Questions] - 05%

6. Remedies and Administrative Provisions [06 Questions] - 10%

7. Communications with Customer and Prospects [12 Questions] - 20%

8. Ethical Practices and Obligations [15 Questions] - 25%

Please click NEXT to start your Free Series 63 PRACTICE EXAM right away.

Best of Luck!

Because the Series 63 is a law exam, it is incumbent on Series 63 students to recognize the difference between several similar terms. For example, in which of these cases would a person not be defined as a broker-dealer?

A) The person is excluded from the definition of a broker-dealer.

B) The person is exempt from registration as a broker-dealer.

C) The person limits its securities business to securities listed on a stock exchange.

D) The person limits its securities business to a single state.

Which of the following is the best definition of a person who manages accounts or portfolios of clients of an investment adviser?

A) A financial advisor

B) A portfolio manager

C) An account executive

D) An investment adviser representative

Blue-sky laws pertain to all of the following except

A) the regulation of securities transactions in a state.

B) the regulation of securities trading in foreign countries.

C) the registration of securities within a state.

D) the registration of securities salespeople in a state.

According to the Uniform Securities Act, which of the following statements is true?

A) An investment adviser with only a small branch office in the state, who conducts business exclusively with insurance companies located in the state, need not register in the state.

B) An investment adviser with no place of business in the state, who conducts business exclusively with insurance companies located in the state, need not register in the state.

C) If an agent is hired away from his broker-dealer by another broker-dealer, only the new broker-dealer must notify the Administrator.

D) Only the employing adviser, not the investment adviser representative, must register in the state.

Under the Uniform Securities Act, investment advisers are exempt from registration in a state where they have no office if they direct business communications to fewer than six retail clients within any

A) 12-month period.

B) 2-year period.

C) 6-month period.

D) 30-day period.

Which of the following situations would require registration as an investment adviser? I. A broker-dealer provides investment research services to a customer and charges a fee for the service. II. An agent of a broker-dealer recommends the purchase of ABC securities to a customer, who then purchases 100 shares, and the agent earns a commission. III. An agent of a broker-dealer prepares a complete financial plan for a customer with a one-time charge of $950. The plan recommends specific securities transactions, which the customer orders. The agent earns commissions on the securities transactions. IV. A broker-dealer charges its customers a fee for collecting dividends and account maintenance, in addition to commission charges for transactions executed.

A) I, II, III, and IV

B) I and III

C) I and II

D) I, III, and IV

Which of the following persons are excluded from the definition of, or exempt from registration as, a broker-dealer under the Uniform Securities Act? I. A broker-dealer with no office in the state that effects trades exclusively with other broker-dealers in the state II. A trust company with an office in the state that deals with the general public III. A broker-dealer with no office in the state that has no more than five retail clients resident in the state within the past year IV. A broker-dealer with no office in the state that effects securities trades exclusively with trust companies or other broker-dealers

A) I and II

B) I, II, and IV

C) I, II, III, and IV

D) III and IV

An existing customer of Broker-dealer A is on vacation in State N. Broker-dealer A, who is registered in and maintains offices only in State F, wishes to make the vacationing customer aware of an investment opportunity that has just become available. Which of the following is true?

A) Broker-dealer A must notify the State N Administrator before calling this customer in that state.

B) Broker-dealer A may solicit this customer in State N.

C) Broker-dealer A may not solicit this customer in State N unless Broker-dealer A and the agent making the call are registered in State N.

D) Broker-dealer A may not solicit this customer in State N unless the broker-dealer has a branch office registered in that state.

Under the Uniform Securities Act, which of the following are not excluded from the definition of broker-dealer?

A) Issuers of securities

B) Agents

C) Banks

D) Persons who effect securities transactions as part of a regular business solely for their own accounts

10.

Under the Uniform Securities Act, each of the following is specifically excluded from the definition of a broker-dealer except

A) an international bank.

B) an agent.

C) an issuer.

D) an investment adviser.

11.

In our everyday lives, we often come across the term dealer. It might be an automobile dealer, an appliance dealer, or a furniture dealer. In each case, the adjective describes the product handled by that dealer. In the case of a broker-dealer registered with the Administrator, the product is

A) life insurance.

B) securities.

C) investments.

D) brokers.

12.

Under the Uniform Securities Act, which of the following statements regarding the business structure of a broker-dealer are true? I. It can be a sole proprietorship. II. It can be a corporation. III. It can be a stock exchange. IV. It can be a partnership.

A) II and IV

B) I and III

C) I, II, III, and IV

D) I, II, and IV

13.

The Uniform Securities Act refers to a broker-dealer by using the language any person. Although that is a broad term, it would be unusual to find a broker-dealer structured as

A) a limited liability company (LLC).

B) a corporation.

C) a sole proprietorship.

D) a partnership.

14.

A broker-dealer having no place of business in a state is not required to be registered in that state if the broker-dealer does no business in that state other than with

A) a maximum of five retail investors over a 12-month period.

B) other broker-dealers.

C) investment advisers registered in that state.

D) accredited investors.

15.

Under the Uniform Securities Act, a broker-dealer is defined as any person who

A) buys securities.

B) sells securities.

C) is registered with the SEC.

D) is in the business of effecting securities transactions for its own account or for the accounts of others.

16.

Adrian sells life insurance as an independent licensed insurance producer for several large insurance companies. Selling variable life insurance also requires registration as an agent with a broker-dealer handling that product. Supervisory responsibility over Adrian's sales of variable life is that of

A) the insurance company underwriting the variable life insurance policy.

B) the broker-dealer with whom Adrian is registered.

C) the state insurance commissioner.

D) the Administrator of the state where the policy is sold.

17.

The Administrator wishes to examine the books of a broker-dealer registered in her state. She may do so

A) anytime she wishes.

B) only after an appointment has been made with the broker-dealer.

C) no more frequently than on a quarterly basis.

D) only if the broker-dealer has a place of business in the state.

18.

Charles Horse is the CEO of Farrier and Nail, a new broker-dealer applying for registration in a number of states. In completing the application, which of the following events in the CEO's life must be disclosed?

A) Any charge, conviction, or guilty plea to a misdemeanor involving investments or an investment-related business or bribery, forgery, extortion, or similar offenses

B) Any charge, conviction, or guilty plea to a misdemeanor involving investments or an investment-related business or bribery, forgery, extortion, or similar offenses, limited to the past 10 years

C) Any charge, conviction, or guilty plea to a misdemeanor involving failure to pay child support or alimony or similar domestic offenses

D) Financial condition and history including a recent credit report

19.

High Performance Securities (HPS) is a broker-dealer registered in States A, B, and E. State E is the location of the HPS principal office. If a customer of HPS files a complaint with the Administrator of State A,

A) the State A Administrator has no jurisdiction and must forward the complaint to the State E Administrator.

B) the State A Administrator can pay a surprise visit to the principal office in State E during normal business hours and demand to see the records relevant to the customer's complaint.

C) the State A Administrator must make an appointment with the designated HPS supervisor and schedule the investigation at a time convenient for both.

D) the State E Administrator will use the consent to service of process filed by HPS to act as the attorney for HPS.

20.

Registration with the Administrator as a broker-dealer generally requires the filing of

A) Form U4.

B) Form BD.

C) Form Broker-Dealer.

D) Form ADV.

21.

On the basis of information gathered from reliable sources, an Administrator has reason to believe that a broker-dealer located in the state is engaging in practices that might be a violation of the Uniform Securities Act. As a result, the Administrator assembles a task force to conduct a surprise audit of the firm's operations. In doing so, the Administrator's task force would be able to enter the broker-dealer's premises

A) at any time during regular business hours without prior notice.

B) upon 15 days' notice.

C) upon 1 day's notice.

D) upon 1 hour's notice.

22.

Pelf Securities and Investments, Inc., (PSII) has been in business as a registered broker-dealer in State Z since 1932. During that time, control of the company was in the hands of the descendants of the founder. With no one in the current generation interested in continuing the firm's legacy, the board of directors votes to withdraw PSII's registration. Which of the following statements is true?

A) The Administrator may bring an action against PSII for a period of 2 years after the effective date of the withdrawal.

B) The withdrawal from registration will normally take place on the 60th day after filing.

C) Once the application for withdrawal is filed, any pending actions against the firm are canceled.

D) The withdrawal from registration will normally take place on the 30th day after filing.

23.

A control affiliate of a broker-dealer applying for state registration could be the cause of a statutory disqualification if its Form BD disclosed that the control affiliate was

A) indicted for committing a securities-related misdemeanor two years ago.

B) charged with committing a securities-related felony two years ago.

C) convicted of a non-securities-related felony eight years ago.

D) convicted of a non-securities-related misdemeanor eight years ago.

24.

Parlous Professional Investors (PPI) is applying for registration as a broker-dealer in State X. Which of the following would not be included in the registrant's application?

A) A description of PPI's form of business structure

B) Fingerprint cards for each of PPI's officers who will be registered as agents

C) A disclosure if the applicant has ever been the subject of any adjudications by the SEC or any securities SRO

D) The location of PPI's principal office

25.

An interest in which of the following is a security under the Uniform Securities Act? I. Merchandising marketing scheme II. Multilevel distributorship arrangement III. Oil and gas drilling program IV. Cattle feeding program

A) I, II, III, and IV

B) II and III

C) I only

D) III only

26.

As defined in the Uniform Securities Act, which of the following is not a security?

A) A fixed annuity

B) A debenture

C) A transferable share

D) A corporate bond

27.

Which of the following are not classified as securities under the Uniform Securities Act?

A) Options on commodities futures

B) Options on stocks

C) Commodities futures

D) Stocks

28.

According to the Uniform Securities Act, a sale is

A) a solicitation of an offer to buy.

B) an attempt to transfer ownership of a security.

C) an offer of an equivalent contract.

D) a contract to transfer ownership of a security for value.

29.

As defined in the Uniform Securities Act, which of the following is not an offer or a sale?

A) A contract of sale for a security

B) An NYSE-listed corporation declares a 2-for-1 stock split

C) A purported gift of assessable stock

D) The sale of a warrant

30.

Which of the following involves an offer or sale?

A) A stock dividend with no cost to the shareholder

B) A pledge of stock as collateral for a loan

C) An exchange of securities due to a corporate reorganization

D) A gift of an assessable security

31.

Under the Uniform Securities Act, a sale includes all of the following except

A) a contract of sale.

B) a disposition of a security for value.

C) a pledge of securities for the purpose of obtaining a margin loan.

D) a contract to sell.

32.

Under the Uniform Securities Act, which of the following constitutes an offer of a security?

A) A stock dividend distributed to current shareholders at no cost to them

B) The delivery of a prospectus to a prospective purchaser

C) A tombstone advertisement

D) An agreement between an issuer and an underwriter

33.

As defined in the Uniform Securities Act, the terms sale or sell would include

A) an investor using a cash dividend to automatically purchase additional shares of the issuer.

B) the receipt of a stock dividend.

C) the pledging of securities as collateral for a loan.

D) a gift of nonassessable stock.

34.

Typical broker-dealer fees that must be disclosed as part of a fee disclosure document would include I. a charge when a client requests proceeds of a sale be wired to her bank account. II. a commission charge when a client sells an exchange-listed security. III. the fee charged by the firm when customers transfer their accounts to another broker-dealer. IV. fees for providing advisory services when acting in the capacity of an investment adviser.

A) II and III

B) III and IV

C) I and IV

D) I and III

35.

All of the following statements regarding the disclosure investment adviser brochure rule of the Uniform Securities Act are true except

A) the disclosure brochure must be delivered no later than 48 hours before entering into an advisory contract for there to be no requirement to offer a five-day refund right.

B) the disclosure brochure must contain essentially the same information as is contained in Form ADV Part 2A and, if applicable, Part 2B.

C) the disclosure brochure must be signed by an officer or partner of the firm.

D) the brochure rule permits advisers to deliver the disclosure brochure when the client enters the contract, provided the client is allowed to cancel the contract without penalty within five business days.

36.

When an agent has competing interests or loyalties between his customers and an issuer of securities, it is considered

A) a potential conflict of interest.

B) an unethical and dishonest act.

C) a normal business practice.

D) an obligation to recuse himself from the transaction.

37.

Jim contracts with XYZ Advisory Services for the design of a financial plan and investment advice. He pays an up-front fee when the contract is signed and receives XYZ's disclosure brochure at that time. After three days, Jim decides to cancel the investment advisory service with XYZ. According to the Uniform Securities Act, which of the following statements is true?

A) The advisory firm must cancel the contract but may keep all fees collected.

B) The advisory firm must cancel the contract and return all fees collected.

C) The advisory firm must cancel the contract but can keep a proportionate amount of the fee as compensation for services performed by the cancellation date.

D) The contract is binding, and XYZ has no obligation to return any fees collected.

38.

In the securities industry, the term contra party refers to

A) a securities regulator who begins an investigation against a securities professional.

B) the person identified on the trade confirmation as a broker.

C) the person on the other side of a civil suit.

D) the person on the other side of the trade.

39.

Under the Uniform Securities Act, it is legal for an agent to tell a customer that

A) a registered security has been approved for sale in the state by the Administrator.

B) an exempt security is not required to be registered because it is generally regarded as being safer than nonexempt securities.

C) her qualifications have been found satisfactory by the Administrator.

D) a registered security may lawfully be sold in the state.

40.

An agent has a conservative investor looking for income. The agent recommends a bond of a company the investor has never heard of. To allay the client's fear of loss, the agent states that the payment of interest and principal is guaranteed by a well-known blue-chip company. Under the Uniform Securities Act,

A) agents should always recommend securities that are familiar to the investor.

B) the agent is possibly committing fraud.

C) a guaranteed security only guarantees payment of interest or dividends.

D) the agent is describing a guaranteed security.

41.

Broker-dealers are required to disclose the capacity in which they acted on any transaction with a retail customer. That disclosure is always made

A) on the new account form.

B) on the trade confirmation.

C) as part of the broker-dealer’s fee disclosure statement.

D) at or before the time of the transaction.

42.

A corporation offering securities registered under the Uniform Securities Act may make which of the following statements? I. "The Administrator has passed on the merits of these securities as an investment." II. "The Administrator has released our securities for sale to the public." III. "The Administrator has passed on the accuracy of the information in our prospectus." IV. "The Administrator has declared this prospectus effective."

A) II and III

B) I and IV

C) I and III

D) II and IV

43.

The NASAA Model Rule on investment adviser brochures contains one condition where verification of receipt of a readable copy of the brochure and supplements by the customer is required. That is the case

A) of an initial delivery to a potential client in electronic form.

B) of an initial delivery to a potential client in paper form.

C) when the investment adviser will be maintaining custody of customer funds and securities.

D) of an annual delivery to an existing client in electronic form.

44.

An agent tells a customer that by investing in U.S. Treasury bonds, he is guaranteed to make money. Under the NASAA Statement of Policy on Dishonest or Unethical Business Practices of Broker-Dealers and Agents, which of the following statements is true?

A) This is unethical if the customer loses money but not if he at least breaks even.

B) This is ethical if the Treasury bonds mature in less than one year.

C) This is unethical because it constitutes a guarantee against market risk.

D) This is ethical because U.S. Treasury bonds carry no risk.

45.

Typical broker-dealer fees that must be disclosed as part of a fee disclosure document would include I. a charge when a client requests that a stock certificate be issued in his name. II. a commission charge when a client buys a security on a listed exchange. III. the interest charged by the firm on money owed by customers in their margin accounts. IV. fees for providing advisory services to high-net-worth individuals.

A) II and III

B) I and IV

C) I and III

D) III and IV

46.

Agent B is working late in the office one night and happens to notice something on Agent C's desk. It is a report stamped Confidential. Agent B opens the report and sees that it indicates that XYZ Company is in terrible financial condition. The next morning, Agent B begins contacting his clients urging them to get out of their positions in XYZ. Under the Uniform Securities Act, this would be

A) legal because Agent B did not actively seek out the information.

B) a smart thing to do to save Agent B’s clients’ money.

C) the fraudulent practice of acting on inside information.

D) a violation of Agent C’s confidentiality agreement.

47.

A customer buys 200 shares of a common stock at $30 per share. On a day when the stock's price is down $5, the customer calls her agent and inquires as to its current price; the agent tells her the price is around where she bought it. In the next few weeks, the stock's price turns around and the customer liquidates the shares at $35 per share, realizing a $5 per share profit excluding commission. In this situation, the agent has acted

A) ethically because he prevented the customer from losing a profit opportunity.

B) unlawfully because accurate quotes must be provided to the customer at all times.

C) unlawfully because the customer could easily discern that the price quoted by the agent did not match readily available quotes in the financial media.

D) ethically because the interim price fluctuation did not impact the customer’s results.

48.

An agent omits certain details about an issue during a sales presentation. These omissions would be fraudulent if

A) this were a solicited transaction.

B) the information was material and was necessary to make other statements not misleading.

C) made to an individual client, but not to an institution.

D) the information was not available in the prospectus.

49.

Which of the following statements regarding an agent is true?

A) The agent is not subject to the antifraud provisions of the Uniform Securities Act when engaged in securities sales activities.

B) The agent is exempt from the Uniform Securities Act’s antifraud provisions if her broker-dealer has fewer than three clients residing in the state.

C) It is unlawful under the Uniform Securities Act for an agent to deceive another person when engaged in securities-related sales activities.

D) It is unlawful under the Uniform Securities Act for an agent to deceive another person when engaged in non-securities-related activities.

50.

If an investor bought stock on one exchange and sold it at a higher price on another exchange, this practice constitutes

A) a violation under both the Uniform Securities Act and federal law.

B) an offense punishable by three years in the county jail.

C) a violation of the Uniform Securities Act.

D) a perfectly acceptable market arbitrage.

51.

Which of the following would not be considered a fraudulent practice under the Uniform Securities Act?

A) An investment adviser omits a material fact to a client during the sales presentation, but the client ends up making money.

B) An investment adviser correctly advises a client, but the client ends up losing money.

C) An investment adviser tells a client that registered securities are approved by the SEC.

D) An investment adviser omits a material fact, but the investor makes the purchase anyway.

52.

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

A) is probably an investment adviser or investment adviser representative.

B) is not covered by the Uniform Securities Act.

C) has not violated the Uniform Securities Act if the sale was made to an institutional account.

D) has committed fraud in violation of the Uniform Securities Act.

53.

You are an agent for a fully licensed broker-dealer and one of your clients is the chairman of a drug company who tells you that the government will shortly disapprove a patent for a new drug. According to the Uniform Securities Act, you should

A) contact the SEC because you have inside information.

B) tell your best customers to sell their holdings of the corporation immediately.

C) promptly inform your supervisor.

D) sell the company’s shares short for your discretionary customer accounts.

54.

Baird, a registered agent, receives an order from Miller, her customer, for an unusually large order of common stock in XYZ, Inc. He states that he overheard the CFO of XYZ, Inc., telling his golfing partner that XYZ was close to being acquired by Monolith Communications, Inc. In light of ethical standards under the Uniform Securities Act, which of the following actions is most acceptable?

A) Baird purchases 1,000 shares of XYZ for her personal account.

B) Baird takes Miller’s order and does not discuss the conversation she had with Miller regarding XYZ and Monolith with anyone.

C) Within the trading day, Baird recommends XYZ to 20 of her customers who have indicated aggressive growth as their main trading objective.

D) Baird tells her immediate supervisor (principal) of Miller’s intent to trade based upon material nonpublic (inside) information.

55.

With regard to the Uniform Securities Act, which of the following statements regarding the omission of a material fact by an agent is not true?

A) It is a violation even if material facts were unknowingly omitted.

B) It is not a violation if the security is exempt from registration under the Uniform Securities Act.

C) It is a violation even if the client failed to make a transaction.

D) It is a violation because it is an unethical or fraudulent practice.

56.

The antifraud provisions of the Uniform Securities Act apply to I. registered securities. II. exempt securities. III. federal covered securities. IV. exempt transactions.

A) I, II, III, and IV

B) II only

C) I only

D) I, III, and IV

57.

According to the Uniform Securities Act, market manipulation includes all of the following except

A) buying and selling intentionally to show market activity.

B) giving a false quote.

C) buying on one exchange and selling on another.

D) pegging.

58.

An agent learns of material nonpublic information (MNPI) regarding a company that is publicly held. Which of the following, with respect to the information, would not violate the Uniform Securities Act?

A) Discussing the information at a seminar but not making an investment recommendation

B) Soliciting orders based on this information

C) Discussing the situation with a superior or compliance officer in the agent’s firm

D) Trading for the agent’s personal account based on this information

59.

According to the Uniform Securities Act, which of the following is an example of market manipulation?

A) Creating the illusion of active trading

B) Omitting material facts in a presentation

C) Transactions in excess of a customer’s financial capability

D) Guaranteeing performance of a security

60.

Alan Richards is the next-door neighbor of Marc Terry, the CEO of a Nasdaq Stock Market security. Terry tells Richards that a major NYSE-listed corporation is in the process of submitting an offer to buy out his company at a very handsome premium over the current market price. Richards would be permitted to I. immediately purchase shares of Terry's company. II. immediately purchase shares of the NYSE-listed company. III. purchase shares of Terry's company once the news becomes known to the investing public. IV. purchase shares in the NYSE-listed company once the news becomes known to the investing public.

A) III and IV

B) I and II

C) II and III

D) I and IV

1 out of 60

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Series 63 Practice Exam 3

Welcome to your Series 63 Practice Exam 3

This test is designed to prepare you mentally for the actual Series 63 Exam with the same number of (60 questions) and the same time allowed (75 minutes) as the actual exam.

The Series 63 Exam is breakdown into Eight (8) Parts.

Here are the Eight (8) Domains of the Series 63 Exam with the weightage and number of questions in this practice exam:

1. Regulation of Investment Advisers including state-registered and federal covered advisers [03 Questions] - 05%

2. Regulation of Investment Adviser Representatives [03 Questions] - 05%

3. Regulations of Broker Dealers [09 Questions] - 15%

4. Regulations of Agents Broker-Dealers [09 Questions] - 15%

5. Regulation of Securities and Issuers [03 Questions] - 05%

6. Remedies and Administrative Provisions [06 Questions] - 10%

7. Communications with Customer and Prospects [12 Questions] - 20%

8. Ethical Practices and Obligations [15 Questions] - 25%

Please click NEXT to start your Free Series 63 PRACTICE EXAM right away.

Best of Luck!

One of the distinguishing characteristics of a stock exchange is that

A) stock prices are determined by auction.

B) it is where unlisted securities trade.

C) trading takes place 24 hours per day.

D) stock prices are determined by negotiation.

The federal act that essentially eliminated the dual system of state and federal registration of certain securities is

A) the Dual Registration Elimination Act of 2001.

B) the National Securities Markets Improvement Act of 1996.

C) the Securities and Exchange Act of 1934.

D) the Uniform Securities Act of 1956.

If the Administrator has summarily suspended an investment adviser representative's registration, the registrant may request a hearing by written request and the hearing will be granted within

A) 60 days.

B) 15 days.

C) 45 days.

D) 30 days.

An investment adviser need not register in a state if it has

A) a place of business in the state and advises fewer than 5 banks.

B) a place of business in the state and only advises employee benefit plans with $1 million or more in assets.

C) no place of business in the state and only advises 33 insurance companies located in the state.

D) no place of business in the state, does not direct business communications in the state, and advises no more than 10 high-net-worth individuals located in the state.

An investment adviser need not register in a state if it has

A) no place of business in the state, does not direct business communications in the state, and advises more than five high-net-worth individuals located in the state.

B) a place of business in the state and advises fewer than five banks.

C) a place of business in the state and only advises employee benefit plans with more than $1 million.

D) no place of business in the state and only advises three insurance companies located in the state.

In which of the following cases would the Uniform Securities Act require registration of an investment adviser who had no place of business in the state?

A) Under no circumstances if there is no place of business in the state.

B) He had more than five institutional clients domiciled in the state.

C) His website was seen by residents of the state.

D) He had more than five noninstitutional clients who were residents of the state.

A broker-dealer registered with the SEC has offices in States L, A, and M. The firm has several clients in State G. If the firm does not have a place of business in State G, when would registration as a broker-dealer in that state be required?

A) If one of its clients was the CDL Corporation Employee Pension Trust with assets in excess of $9 million

B) If the client meets the SEC's annual income standard to qualify as an accredited investor

C) If any of its clients are state-chartered banks

D) Never, because once a broker-dealer registers with the SEC, state registration is no longer required

A broker-dealer would likely have to register in a state when

A) one of the firm's agents sends an email to a resident of that state.

B) the firm does not maintain a place of business in the state and only deals with banks.

C) individual residents of that state are able to view a listing of the firm's office locations on the firm's website.

D) the firm's website provides a list of recommendations based on general criteria such as income or growth.

Under the Uniform Securities Act, which of the following is considered a broker-dealer in a state?

A) First Federal Company Trust

B) A broker-dealer with no place of business in the state who only does business with other broker-dealers

C) An agent effecting transactions for a broker-dealer

D) XYZ broker-dealer with an office in the state whose only clients are insurance companies

10.

Which of the following is included in the definition of a broker-dealer under the Uniform Securities Act?

A) Out-of-state broker-dealer with no office in this state that services only other broker-dealers located in this state

B) Agent

C) One who effects securities transactions for his own account or on behalf of others

D) Issuer of securities

11.

The Uniform Securities Act provides several exclusions from the definition of broker-dealer. Those include all of the following except

A) any person engaged in the business of effecting transactions in commodities for the accounts of others or for his own account.

B) any person engaged in the business of effecting transactions in securities for the accounts of others or for his own account.

C) any person engaged in the business of effecting transactions in rare coins for the accounts of others or for his own account.

D) any person engaged in the business of effecting transactions in real estate for the accounts of others or for his own account.

12.

In compliance with the Uniform Securities Act, a broker-dealer without a place of business in a state meets the definition of a broker-dealer when

A) it limits its clientele in that state to registered investment companies.

B) it has fewer than six retail clients who reside in the state.

C) it confines its business in the state to dealing to other broker-dealers.

D) the only clients of the firm in the state are employee benefits plans with assets in excess of $3 million.

13.

The Uniform Securities Act would not consider which of the following to be broker-dealers?

A) Individual investors actively trading their own accounts

B) Persons in the business of buying or selling securities for their own account

C) Persons in the business of underwriting new securities issues

D) Persons in the business of buying or selling securities on behalf of others

14.

A broker-dealer registered in States P, S, and U has several clients in State C. If the firm does not have a place of business in State C, the firm would avoid the need to register in State C if its only clients in the state are

A) savings and loan associations.

B) registered as investment advisers in State C.

C) individuals registered as agents with other broker-dealers.

D) high-net-worth individuals.

15.

Rachel passed her life insurance license exam six months ago and is now studying the Kaplan material for the Series 63 exam. During this period, Rachel would be permitted to sell

A) mutual funds.

B) whole life insurance.

C) NYSE-listed stocks.

D) variable life insurance.

16.

Under the Uniform Securities Act, when must a consent to service of process be filed with the Administrator?

A) With the original application and renewal

B) With the original application only

C) Only when requested by the Administrator

D) When a case is pending

17.

Under the Uniform Securities Act, which of the following statements is true regarding registration of a broker-dealer if the application has not been amended?

A) Unless specified earlier, registration becomes effective no later than 90 days after the application is filed.

B) Unless specified earlier, registration becomes effective no sooner than 15 days after the application is filed.

C) Unless specified earlier by the Administrator, the registration becomes effective no later than noon on the 30th day after application.

D) Unless specified earlier by the Administrator, the registration becomes effective at noon on the 60th day after application.

18.

Pinnacle Asset Management (PAM) is an SEC-registered broker-dealer. PAM is also registered in more than 25 states. The net capital rule of the SEC requires PAM's net capital to be at least $50,000, and at its most recent calculation, it had net capital of $58,000. One of the states where PAM is registered has a bonding requirement of $60,000. To be in compliance,

A) PAM would not be required to post a surety bond.

B) PAM would need to post a surety bond of $63,000.

C) PAM would need to post a surety bond of $50,000.

D) PAM would need to post a surety bond of $60,000.

19.

USATrade Securities, a FINRA member broker-dealer, is registered in 10 Midwestern states. Regarding financial requirements, USATrade must meet those of

A) the state with the most stringent financial requirements.

B) the SEC.

C) FINRA.

D) the state in which the principal office of the member is located.

20.

When filing the consent to service of process, which of the following is true?

A) It is supplied with the initial registration and remains on file permanently.

B) It must be filed annually on the dates specified by the Administrator.

C) It expires simultaneously with the registration on December 31.

D) It is not required of investment adviser representatives, only investment advisers.

21.

Gamma Delta LLC (GDL) is a broker-dealer registered with the Administrator. The nature of Gamma Delta's business is such that the Administrator requires a $30,000 surety bond. In lieu of the bond, GDL could

A) submit a personal guarantee from the LLC's members.

B) deposit $30,000 of nonmarketable securities.

C) supply a surety bond in the amount of $30,000.

D) deposit $30,000 cash.

22.

Which of the following can be substituted for a surety bond?

A) Real estate

B) Cash or commodities

C) Cash or marketable securities

D) Commodities, cash, or securities

23.

If the Administrator wishes to conduct an examination of a broker-dealer's books and records, how much advance notice must be given?

A) 15 days

B) 60 days

C) 30 days

D) None

24.

A consent to service of process allows the Administrator to

A) exercise the power of attorney on behalf of the registrant.

B) verify the accuracy and completeness of registration without obtaining the registrant's prior approval.

C) terminate a registrant's application.

D) ensure that the legal appeal process is expedited as a result of the Administrator's access to information.

25.

Which of the following is not a security?

A) Treasury stock

B) Commercial paper with less than 270 days to maturity

C) Limited partnership in a cattle breeding program

D) A condominium purchased as a primary residence

26.

In the Howey decision, the U.S. Supreme Court held that a security must represent

A) personal interest in a business.

B) debt in a publicly traded corporation whose managers are engaged in commercial activity.

C) an investment of money in a common enterprise with the expectation of profit from the efforts of the investor.

D) an investment of money in a common enterprise with the expectation of profit from the managerial efforts of others.

27.

A primary issue is

A) a secondary market transaction in a security recently offered to the public.

B) the first transaction between two parties in the over-the-counter market.

C) a sale between investors of securities traded on the New York Stock Exchange.

D) a new offering of an issuer sold to investors.

28.

An Administrator has jurisdiction over an offer to sell securities if it is made in a newspaper published out of his state

A) with at least a third of its circulation in the state.

B) with at least two-thirds of its circulation in the state.

C) under no circumstances.

D) with at least half of its circulation in the state.

29.

There is a stock that you believe is perfect for your customer's portfolio. However, the stock is not registered for sale in the customer's state of residence, nor is it exempt from registration. You suggest that the customer should enter an unsolicited order for the stock because you will be able to accept that. This is

A) an offer to sell only if it is accepted.

B) an unsolicited trade.

C) an offer to purchase.

D) an offer to sell.

30.

Under the Uniform Securities Act, which of the following fits the definition of a sale?

A) Issuing a prospectus

B) An attempt to dispose of a security for value

C) A contract to dispose of a security for value

D) A solicitation of an offer to buy a security for value

31.

As defined in the Uniform Securities Act, a sale or an offer to sell would not include

A) a sale or an offer of a warrant or right to purchase or subscribe to another security of the same or another issuer.

B) any security given or delivered with, or as a bonus on account of, any purchase of securities.

C) a purported gift of nonassessable stock.

D) a stock dividend that requires only a nominal payment by the shareholder.

32.

An automobile dealer advertises that anyone purchasing a new car this month will receive a $1,000 U.S. Treasury bond as a bonus. Under the Uniform Securities Act, the dealer is

A) engaging in the offering for sale of a security.

B) committing fraud.

C) offering a warrant to buy securities.

D) engaging in an unlawful competitive marketing practice.

33.

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

A) The use of securities as collateral for a car loan at a bank

B) A gift of stock from a mother to a son

C) A 10-for-1 stock split paid to shareholders

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

34.

A customer of a broker-dealer viewing a trade confirmation notices that there was a commission subtracted from the proceeds of the sale of her stock. This tells the customer that the broker-dealer

A) probably purchased the stock for its own account.

B) acted in an agency capacity.

C) acted in a principal capacity.

D) acted in an unethical manner.

35.

Associated Wealth Managers (AWM) is registered with the Administrator as a registered investment adviser. Therefore, if there have been any material changes, AWM must send a copy of its brochure or a summary of the changes

A) to all nonexempt clients within 120 days of the end of its fiscal year.

B) to all nonexempt clients within 60 days of the end of its fiscal year.

C) to all nonexempt clients within 90 days of the end of its fiscal year.

D) within 7 days of receiving a request from a client.

36.

The NASAA Model Brochure Rule for investment advisers requires delivery of a brochure containing information about the adviser's background and business practices in all of the following situations except I. when the service provided is an individual supervisory service. II. when the client is an investment company. III. when the contract is for an impersonal advisory service requiring payment of less than $500. IV. when the client is an individual with a net worth of more than $1 million.

A) I, III, and IV

B) I and II

C) II and III

D) II, III, and IV

37.

Toby is registered as an agent with Execrable Investment Returns (EIR), a broker-dealer registered with the SEC and the Administrator. Toby has a customer who is concerned about the possible decline in the value of her invested capital. Toby has suggested a U.S. Treasury bond maturing in 15 years, telling the client that you cannot lose money on a Treasury security. Toby has

A) misstated the facts because Treasury bonds do fluctuate in value.

B) made an unsuitable recommendation because she will have to wait 15 years to receive the return of her invested capital.

C) made a highly suitable recommendations because the repayment of principal is guaranteed by the Treasury.

D) made an unsuitable recommendation because an investment in common stock will likely provide a greater return.

38.

Which of the following statements regarding Form ADV Part 2 is true?

A) It must be delivered no later than 48 hours prior to entering into an investment advisory contract.

B) Unless there are no material changes, it must be delivered to clients annually.

C) It must always accompany the investment adviser’s brochure.

D) It must be delivered no later than receipt of the client’s funds.

39.

Which of following legal or disciplinary actions occurring within the past 10 years would not have to be disclosed on an investment adviser's brochure?

A) Conviction of a misdemeanor involving an investment-related business

B) SEC or other federal regulatory agency proceedings in which the person was found in violation of an investment-related statute

C) Conviction of a misdemeanor in a civil action regarding payment of motor vehicle violations

D) A proceeding before FINRA in which the person was barred or suspended from membership

40.

Caelan is registered as an agent with Execrable Investment Returns (EIR), a broker-dealer registered with the SEC and the Administrator. Caelan is excited about the prospects of a specific stock. For those customers for whom this stock is suitable, Caelan assures them that this stock will double within the year. To back up this claim, Caelan provides a lawyer's letter stating that, for each investor, there will be a cash deposit made to the lawyer's escrow account sufficient to equal the promised return should it not actualize. In this case, Caelan

A) has committed the prohibited act of guaranteeing a result.

B) is doing a great service for these investors by protecting their investment with the escrow deposit.

C) must obtain the approval of a designated supervisor in order to make this claim.

D) has committed the prohibited act of introducing an unregistered lawyer to customers.

41.

Under the Uniform Securities Act, a guaranteed security is protected by someone other than the issuer against loss of all of these except

A) dividends on equity securities.

B) principal on equity issues.

C) principal repayment at maturity on debt securities.

D) interest on debt securities.

42.

A working group convened by NASAA has developed a model fee disclosure schedule to help investors better understand the costs involved in doing business with their broker-dealer. The template has broker-dealers disclose all of the following except

A) account inactivity fees.

B) charges for late payments.

C) advisory fees.

D) fees for issuance of a stock certificate.

43.

With regard to an investment adviser's brochure, disclosure must be made to all current clients and to prospective clients regarding material disciplinary action. Which of the following would not have to be disclosed?

A) A court of competent jurisdiction levied a civil fine of $100,000 against the firm resulting from a lawsuit filed by a newsletter publisher claiming the adviser used the publisher’s intellectual property without permission

B) Court proceedings, such as a permanent or temporary injunction, against the firm or management person pertaining to an investment-related activity or any felony

C) State or regulatory proceedings in which the adviser or a management person was found to have violated rules or statutes that led to the denial, suspension, or revocation of the firm’s or the individual management person’s registration

D) Self-regulatory organization proceedings in which the adviser or management person caused the business to lose its registration; the firm or individual was barred, suspended, or expelled; or a fine in excess of $2,500 or a limitation was placed on the adviser or management person’s activities

44.

A) markups and markdowns on trades done as a principal.

B) interest on debit balances in margin accounts.

C) the cost of overnight delivery services.

D) safekeeping of customer funds and securities.

45.

An agent tells a customer that by investing in U.S. Treasury bonds, he is guaranteed to be able to sell them at a higher price in the future. Which of the following statements is true?

A) This is prohibited if the customer loses money but not if he at least breaks even.

B) This is ethical if the Treasury bonds mature in less than one year.

C) This is prohibited because it constitutes a guarantee of making a profit.

D) This is ethical because U.S. Treasury bonds carry no risk.

46.

Under the Uniform Securities Act, an agent who has inside information that ABC Company stock is about to fall

A) may recommend that customers sell ABC but may not tell them why.

B) must pass this information on to customers or face charges of withholding information.

C) may not trade for his own account or base recommendations to customers on the information.

D) may trade on the information for his own account but may not pass on the information.

47.

This morning's financial section of your newspaper has an article discussing several significant material facts relating to a stock held in the portfolio of several of your clients. You would be able to share these facts with your clients

A) only if the statement without this fact would make your previous statements misleading.

B) only if the customer did not work for the issuer and did not know this information.

C) under no circumstances until the clients have had a chance to read the article themselves.

D) with or without the issuer’s permission.

48.

An agent implies to his customers that he has inside information that will have a dramatic effect upon the price of the company's stock. In truth, he does not have this kind of information and no trades result. Under the antifraud provisions of the Uniform Securities Act, this is

A) fraudulent because he is giving misleading information to his clients.

B) not fraudulent because the policy does not deal with braggarts.

C) not fraudulent because no sale based on inside information actually took place.

D) fraudulent because he is acting on inside information.

49.

Which of the following persons are subject to the antifraud provisions of the Uniform Securities Act? I. An investment adviser who receives a fee directly from clients II. An agent who receives no compensation directly from customers but is paid by a broker-dealer III. A broker-dealer who advises customers on the value of securities but is compensated only in the form of commissions on sales

A) I and III

B) I and II

C) I, II, and III

D) I only

50.

One of your clients has called you to discuss an interesting investment opportunity discovered on one of the LinkedIn groups she participates in. Which of the following factors might increase the likelihood that this is a scam? I. A registration statement with the SEC is available on the website of the proposed investment. II. The purchase money must be wired to an offshore account. III. One of the members of the group is a principal in the company being offered. IV. Bonus shares are offered for recruiting friends into the deal.

A) I and III

B) I, II, III, and IV

C) II and IV

D) II, III, and IV

51.

If an agent fails to inform a client that a company whose security he is selling is changing the investment managers of its employees' pension plan, under the Uniform Securities Act, this omission constitutes

A) no violation.

B) a misdemeanor.

C) a civil violation punishable by a fine up to $5,000.

D) a criminal violation punishable by up to three years in prison.

52.

Which of the following sales would be exempt from the antifraud provisions of the Uniform Securities Act?

A) Sale of an exempt security

B) Sale of an exempt security in an exempt transaction

C) Sale of a nonexempt security

D) Sale of a term life insurance policy

53.

An agent has a client who works in the legal department of ABC Manufacturing Corp. The client informs the agent that the company is going to be taken over by a competitor at a sizeable premium to the current market price. If the agent uses this information to solicit buy orders from clients and prospects, this is an example of

A) a violation of the prohibition against using inside information.

B) doing a good job in finding undervalued companies like ABC.

C) being a well-informed agent.

D) using all the resources an agent has available in developing good investment ideas.

54.

Under the antifraud provisions of the Uniform Securities Act, agents are prohibited from all of the following except

A) engaging in any fraudulent or deceitful practice in the normal course of business.

B) employing any device, scheme, or artifice to defraud.

C) omitting nonmaterial information from a sales presentation.

D) engaging in any practice that the Administrator defines by rule as unethical.

55.

An agent receives inside information concerning an impending merger. Under the Uniform Securities Act, the agent may divulge the information to

A) anyone after public notice.

B) no one other than the Administrator until there is a public announcement.

C) her best customers three days before a public announcement.

D) anyone three days before a public announcement.

56.

An agent has been recommending that customers buy common stock in XYZ Company. If on a visit to XYZ he overhears unreleased news that XYZ has just lost its biggest account, the agent should I. discuss the situation with his supervisory principal. II. continue to recommend the security to customers and prospects. III. stop recommending the security to customers and prospects. IV. sell the stock short in his brother's account.

A) I only

B) III only

C) I and III

D) I, III, and IV

57.

Under the Uniform Securities Act, all of the following are improper actions except

A) an agreement by the agent to repurchase the security from the customer for the same price at a future date.

B) excessive transaction costs.

C) a statement by the agent that the security will be listed on an exchange once the company announces its intention to do so.

D) a two-month delay in delivering the security to the customer.

58.

In cases of fraudulent sales practices or advice with respect to securities, state securities Administrators may I. not take enforcement action against federal covered investment advisers. II. take enforcement action against federal covered investment advisers. III. not take enforcement action against state-registered investment advisers. IV. take enforcement action against state-registered investment advisers.

A) III and IV

B) I and II

C) II and IV

D) III only

59.

If an agent misrepresents the price of a customer's stock by $10 per share to encourage the client to sell, this activity is

A) a misrepresentation and a fraudulent act.

B) allowed if the customer ultimately makes a profit in the account.

C) allowed if the agent views the difference as a service charge.

D) a misrepresentation but not a fraudulent act.

60.

Which of the following is not a fraudulent practice?

A) Entering a buy order for a stock at the same time another agent enters a sale order for the purpose of creating the appearance of market activity in the stock

B) Protecting a nervous client by inflating the value of her account

C) Buying shares of stock on one exchange and simultaneously selling the same shares on another exchange to take advantage of a price differential

D) Quoting a lower-than-market price to get an order, then telling the customer that the price jumped after the order was taken

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