HESI A2: Basic Math Skills (Quiz 2) Welcome to your Series 63 Practice Quizzes. Note: We designed four (4) parts of practice quizzes for each Domain. Each part has 25 questions. Domain 7 (part 3): Communications with Customer and Prospects. (25 questions) Please click NEXT to start your Free Series 63 Practice Quizzes right away. Best of Luck! 1. Series 63, Communications with Customer and Prospects,Series 63 A customer calls his agent to inquire about something he read on a recent trade confirmation. It said, "The firm acted as a contra party to the trade," and the customer does not know what that means. The agent would explain that the broker-dealer A) acted as a principal in the trade. B) acted in an agency capacity in the trade. C) was not familiar with the party on the other side of the trade." D) acted contrary to the best interest of the customer. None 2. Series 63, Communications with Customer and Prospects,Series 63 Which of the following clients of a registered investment adviser is exempt from the requirement to receive annual delivery of the adviser's brochure? A) The NewBean Municipal Bond Fund, a unit investment trust registered with the SEC B) Peter Platinum, an accredited investor C) Family Investment Planning (FIP), a registered broker-dealer D) Katalyst Investment Advisers (KIA), a registered investment adviser None 3. Series 63, Communications with Customer and Prospects,Series 63 According to the NASAA investor advisory regarding fees charged by broker-dealer firms for services and maintenance of investment accounts, A) as long as the schedule is available in electronic form, it is not necessary to provide a paper version to retail customers. B) the schedule should be made available on the broker-dealer’s public website without requiring any login or password. C) fee schedules should only be delivered by hand or postal mail to reduce cyber security threats. D) the schedule should be made available on the broker-dealer’s public website and should be password protected. None 4. Series 63, Communications with Customer and Prospects,Series 63 You receive a note from your firm congratulating you on passing the exam and indicating that they have received notice from the Administrator that your registration as an agent is effective. At this point, you could not A) indicate to prospects that you are approved by the state. B) state that you have passed the required licensing exams. C) begin to accept orders from clients resident in the state. D) begin to prospect for new clients in the state. None 5. Series 63, Communications with Customer and Prospects,Series 63 When a security is registered with the Administrator, it means that A) the Administrator has approved of the issue. B) it is probably a federal covered security. C) the security may be legally sold in the state. D) it is now exempt from the advertising filing requirements of the Uniform Securities Act. None 6. Series 63, Communications with Customer and Prospects,Series 63 NASAA has created a Model Rule dealing with the creation of and delivery requirements for an investment adviser brochure. Unless qualifying for an exception, a registered investment adviser shall deliver, I. within 90 days of the end of its fiscal year, a free updated brochure and related brochure supplements, which include or are accompanied by a summary of material changes. II. within 120 days of the end of its fiscal year, a free updated brochure and related brochure supplements, which include or are accompanied by a summary of material changes. III. within 120 days of the end of its fiscal year, a summary of material changes that includes an offer to provide a copy of the updated brochure and supplements and information on how the client may obtain a copy of the brochures and supplements. IV. not later than entering into a new advisory agreement, a summary of material changes that includes an offer to provide a copy of the updated brochure and supplements and information on how the client may obtain a copy of the brochures and supplements. A) I and III B) II and III C) I and IV D) II and IV None 7. Series 63, Communications with Customer and Prospects,Series 63 In reviewing prospectuses and registration statements, the Administrator A) guarantees the adequacy of the disclosures made in a prospectus. B) passes on the merits of a particular security covered by a registration statement. C) certifies the accuracy of the disclosures made in a prospectus. D) does not approve or disapprove of the issue. None 8. Series 63, Communications with Customer and Prospects,Series 63 In the securities industry, when a person is acting in an agency capacity, the form of compensation received is A) markups or markdowns. B) commissions. C) fees. D) account maintenance charges. None 9. Series 63, Communications with Customer and Prospects,Series 63 When the compensation arrangements or incentives for the broker-dealer or its agents could affect whether employees recommend or offer a particular security or transaction to a client, it is required that the firm A) sell as much of that security as possible to maximize the firm’s earnings. B) refuse to recommend that security. C) disclose the potential conflict of interest. D) only accept unsolicited orders for that security. None 10. Series 63, Communications with Customer and Prospects,Series 63 In general, a broker-dealer will disclose its fee schedule A) when requested by the client. B) at the time of the account opening. C) to its agents who are then responsible for sharing with client. D) within 30 days following any changes in fees or charges. None 11. Series 63, Communications with Customer and Prospects,Series 63 In general, a broker-dealer will disclose any changes to its fee schedule A) when requested by the client. B) within 30 days following the change. C) to the Administrator and then to the clients. D) by notifying clients of the change in advance. None 12. Series 63, Communications with Customer and Prospects,Series 63 NASAA has developed a model fee disclosure schedule and related accessibility guidelines to help investors better understand and compare various broker-dealer service and maintenance-related fees. Which of the following are considered acceptable methods of disclosure? I. Charts II. Lists III. Tables A) I, II, and III B) I and II C) I and III D) II and III None 13. Series 63, Communications with Customer and Prospects,Series 63 A new client of your broker-dealer makes her first purchase. After receiving the confirmation of the trade, she calls to inquire why she was not charged any commission. The most likely reason is A) your firm acted as a principal in the trade and charged a markup. B) your firm has a policy of not charging for the initial trade in a new account. C) the firm’s cashiering department forgot to include the commission on the confirmation. D) the commission was built into the purchase price. None 14. Series 63, Communications with Customer and Prospects,Series 63 Broker-dealers are required to furnish clients with a fee disclosure document. All of the following are true statements about that document except A) changes to the fee schedule may be shown on the firm’s website. B) changes to the fee schedule must be announced in advance. C) it must be up to date. D) it must be filed with the Administrator of the state in which the broker-dealer’s principal office is located. None 15. Series 63, Communications with Customer and Prospects,Series 63 Which of the following pairs are correctly matched? I. Broker = dealer II. Broker = agency III. Dealer = agency IV. Dealer = principal A) I and IV B) II and IV C) II and III D) I and III None 16. Series 63, Communications with Customer and Prospects,Series 63 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 must be delivered to prospective and new advisory clients no later than 48 hours after entering into the advisory contract. B) Annual delivery of the brochure to existing clients must be made within 90 days of the end of the adviser’s fiscal year. C) The brochure must be delivered to prospective and new advisory clients at least 48 hours prior to entering into the advisory contract. D) The brochure must be delivered to prospective and new advisory clients no later than entering into the advisory contract. None 17. Series 63, Communications with Customer and Prospects,Series 63 Which of the following clients of a registered investment adviser is exempt from the requirement to receive annual delivery of the adviser's brochure? A) The Global Macro Hedge Fund with $1 billion in assets B) Balanced Investment Planning, a broker-dealer registered with the SEC and the state C) The ABC Corporation employee benefit plan with assets of $10 million D) Doris Diamond, a client with a net worth of $5 million, who receives impersonal advisory services billed at a quarterly rate of $120 None 18. Series 63, Communications with Customer and Prospects,Series 63 After a string of losing recommendations, an agent's client is threatening to close the account and move it to a competing broker-dealer. In an effort to save the account, the agent promises a return of no less than 10% over the next 12 months and offers to make up any deficit personally. In so doing, A) the agent must indicate that past performance is no guarantee of future success. B) it is possible that the agent could receive a prison term of as long as three years. C) the agent must be certain to deposit sufficient funds in escrow to guarantee the promise. D) the agent has violated the prohibition against performance guarantees. None 19. Series 63, Communications with Customer and Prospects,Series 63 Trade confirmations sent by broker-dealers to their customers must always include A) the current market price of the security traded. B) the amount of commission charged. C) the amount of markup or markdown charged. D) the tax identification number of the customer. None 20. Series 63, Communications with Customer and Prospects,Series 63 Active Technicians (AT) is a state-registered investment adviser. In its brochure supplement, it would include information relating to each of the following individuals except A) those providing investment advice and having direct contact with retail clients in the state. B) those exercising discretion over assets of clients in this state, even if no direct contact is involved. C) those providing investment advice and having direct contact with institutional clients in the state. D) members of AT’s board of directors who are active in the firm’s business. None 21. Series 63, Communications with Customer and Prospects,Series 63 Under the Uniform Securities Act, an investment adviser's current clients must be delivered a brochure A) annually​, but only​ if the adviser has neither custody nor discretion. B) within 48 hours of renewal. C) quarterly if the adviser has both discretion and custody. D) annually, whether or not the adviser has custody or discretion. None 22. Series 63, Communications with Customer and Prospects,Series 63 It would not be a prohibited practice under the Uniform Securities Act for an agent to tell a client that A) registered nonexempt securities may properly be sold in the state. B) her commissions are structured so she makes money only if the client makes money. C) registration of securities implies tacit approval of the Administrator. D) the fact that she passed her licensing exams is ample proof of her qualifications. None 23. Series 63, Communications with Customer and Prospects,Series 63 Delivery of the brochure and related brochure supplements required by subsections of the NASAA Model Rule on investment adviser brochures need not be made to clients who receive only impersonal advice and who pay less than A) $1,000 per year in fees. B) $1,200 per year in fees. C) $200 per year in fees. D) $500 per year in fees. None 24. Series 63, Communications with Customer and Prospects,Series 63 The Uniform Securities Act defines a guaranteed security as one A) where the payment of interest and principal (bond) or dividends (stock) is guaranteed by a party other than the issuer. B) that may only be sold to institutional investors. C) involving a guarantee of a minimum profit by a party other than the issuer. D) where a party other than the issuer offers a guarantee that investors are assured of never receiving less than their original investment. None 25. Series 63, Communications with Customer and Prospects,Series 63 Active Technicians (AT), a state-registered investment adviser serving primarily retail accounts, would be in compliance if it A) filed a brochure with the Administrator, noting that it was available to clients upon request. B) sent a brochure within 150 days of the end of AT’s fiscal year. C) sent a copy of Form ADV Part 1A and Part 1B within 120 days of the end of AT’s fiscal year. D) did not send an annual brochure to its clients because there was no material change from the previous year. None 1 out of 25 Time is Up! Time's up
