HESI A2: Biology (Quiz 1) 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 8 (part 3): Ethical Practices and Obligations​​​​​​​​​​​​​​. (25 questions) Please click NEXT to start your Free Series 63 Practice Quizzes right away. Best of Luck! 1. Series 63, Ethical Practices and Obligations,Series 63 If a customer reveals material nonpublic information to an agent, that agent should A) notify the firm’s trading desk. B) confirm the rumor by checking with other agents. C) alert other customers who hold stock in that company. D) immediately report it to the supervisor and await further instructions. None 2. Series 63, Ethical Practices and Obligations,Series 63 When does a deliberate omission of a fact in a securities sale constitute fraud? A) Only when a new issue of securities is being offered B) If a reasonable person would base an investment decision on the omitted information C) Any time the information is known by more than 15 people D) Only if the information was known to be true None 3. Series 63, Ethical Practices and Obligations,Series 63 The Uniform Securities Act contains a number of broad references to activities that might be construed as being in violation of the act's antifraud provisions. An individual making a sales presentation for which of the following would be exempt from the antifraud provisions of the Uniform Securities Act? A) Options traded on a listed exchange B) Unit investment trusts registered with the SEC under the Investment Company Act of 1940 C) Bonds issued or guaranteed by the United States government D) Fixed annuities None 4. Series 63, Ethical Practices and Obligations,Series 63 James Jones, quarterback for a National Football League franchise team, deliberately misstated material information in the private sale of securities he owned. Jones claims he is not subject to the antifraud provisions of the Uniform Securities Act because he is not a registered agent and, secondly, the securities involved are exempt from registration requirements of the act. Which of the following statements is true?4 A) The antifraud provisions of the Uniform Securities Act do not apply to Jones because he is not suitably trained, nor does he have a securities license. B) As a professional athlete, Jones is not in the securities business and is therefore not subject to the antifraud provisions of the act. C) Jones’s failure to accurately state material facts does not constitute fraud because the securities he sold were exempt from registration. D) The antifraud provisions of the Uniform Securities Act apply to any person who acts fraudulently in connection with the offer, sale, or purchase of a security. None 5. Series 63, Ethical Practices and Obligations,Series 63 At dinner one night, your father-in-law, a member of the board of directors of ABC Company, tells you the firm failed to gain government approval of a new product under development. This information, when it is made public, will seriously harm the value of the company's stock. You should A) sell any holdings you have in ABC stock. B) advise your customers to sell ABC stock immediately. C) buy put options on ABC stock. D) keep this information confidential and not make any use of it that could lead to insider trading abuses. None 6. Series 63, Ethical Practices and Obligations,Series 63 All of the following are fraudulent sales practices except A) buying and selling intentionally to create market activity. B) buying on one exchange and selling on another. C) falsifying a quote. D) withholding a material fact from the buyer. None 7. Series 63, Ethical Practices and Obligations,Series 63 A person makes a sale that is in violation of the antifraud provisions of the Uniform Securities Act. Which of the following is not a true statement? A) The antifraud provisions apply to exempt transactions. B) The antifraud provisions apply to both exempt and nonexempt securities. C) If the sale is made by an agent registered in another state but not in this state, the antifraud provisions still apply. D) If the sale is made by someone not in the securities business, the antifraud provisions do not apply. None 8. Series 63, Ethical Practices and Obligations,Series 63 Which of the following sales would be exempt from the antifraud provisions of the Uniform Securities Act? A) Sale of an exempt security in an exempt transaction B) Sale of a nonexempt security C) Sale of a modified endowment policy D) Sale of an exempt security None 9. Series 63, Ethical Practices and Obligations,Series 63 An investment adviser representative recommends that a customer purchase shares of Silicon Switches. The representative indicates that the company has reduced market risk because it has graduated to the level of quality acceptable to the New York Stock Exchange. According to the Uniform Securities Act, the investment adviser's statement is A) permitted because an investment adviser may recommend listed stocks. B) not permitted because it is misleading to imply that meeting listing requirements reduces market risk. C) permitted because the NYSE sets stringent earnings requirements for listed stocks. D) not permitted because the transaction is not suitable for the customer. None 10. Series 63, Ethical Practices and Obligations,Series 63 An agent omits facts that a prudent investor requires to make informed decisions. Under the Uniform Securities Act, this action is A) not fraudulent if there was willful intent to omit the information. B) fraudulent for both exempt and nonexempt securities. C) fraudulent for exempt securities only. D) fraudulent for nonexempt securities only. None 11. Series 63, Ethical Practices and Obligations,Series 63 An agent engaging in which of the following would not be considered to be acting fraudulently? A) Providing customers with all the material facts about an investment B) Misrepresenting the status of a customer’s account C) Making use of material nonpublic inside information D) Participating in a series of trades where there is no change to beneficial ownership None 12. Series 63, Ethical Practices and Obligations,Series 63 Watson, a customer of Gibraltar Securities, wishes to place an order to buy 50 shares of a thinly traded stock priced at $8 per share. Because the stock is so thinly traded, Gibraltar Securities feels it needs to charge Watson a commission of $100 to justify the time it must spend locating a seller of the stock. Which of the following statements best describes this action? A) It would not be considered a prohibited practice for Gibraltar to charge Watson $100 to complete the transaction, provided Gibraltar disclosed the $100 commission prior to the transaction and Watson chose to proceed with the trade. B) Gibraltar Securities is not required to disclose the amount of the commission in advance to Watson. However, it must receive clearance from the Administrator before charging a commission in an amount exceeding 10% of the value of the securities traded under the transaction. C) A commission of $100 on a transaction involving $400 worth of stock would generally not be deemed excessive. D) It would not be considered a prohibited practice for Gibraltar to charge Watson $100 to complete the transaction. None 13. Series 63, Ethical Practices and Obligations,Series 63 Which of the following may not be used as the basis for a recommendation to customers? A) Information obtained while acting in a fiduciary capacity for a corporation that indicates the strong possibility of future mergers B) Recommendations of private firms charging special fees for their research C) The best estimate of the agent’s firm regarding the potential movement of a stock D) Recommendations of major financial publications generally available through newsstand purchases None 14. Series 63, Ethical Practices and Obligations,Series 63 Which of the following would not be an example of market manipulation? A) Three broker-dealers begin trading shares of ABC common stock between themselves at successively higher prices with no effective change of ownership. B) A principal of an SEC-registered broker-dealer leaks a rumor that ABC is going to acquire LMN. After a few days, the broker-dealer sells short LMN for its own account. C) A market maker in an over-the-counter stock buys and sells stock for its own account. D) Matched orders None 15. Series 63, Ethical Practices and Obligations,Series 63 All of the following statements regarding customer complaints sent by email are correct except A) once received and reviewed, they may be discarded. B) they are sometimes referred to as electronic communications. C) they must be retained in the same fashion as any other record. D) customer complaints received by email are considered to be in writing. None 16. Series 63, Ethical Practices and Obligations,Series 63 Which of the following activities are unethical or fraudulent for agents? I. Stating that a specific stock always follows the performance of the Dow Jones Average II. Stating that the agent will always follow the client's account and recommend changes prior to a market shift III. Recommending speculative, low-priced stocks with no knowledge of the client's financial condition IV. Stating that the client will always make money investing prior to quarterly reports A) I, II, III, and IV B) I and III C) I and II D) I and IV None 17. Series 63, Ethical Practices and Obligations,Series 63 An agent tells his customer that a corporation has graduated to the level of quality acceptable for trading on the New York Stock Exchange and, therefore, has less market risk. If he recommends the stock to the customer based on the exchange's listing requirements, the agent has acted A) lawfully because returns were not guaranteed. B) fraudulently because listing on the New York Stock Exchange does not reduce the client’s loss exposure; therefore, the agent misled his client. C) fraudulently because the NYSE listing requirements are not a matter of public knowledge. D) lawfully because the New York Stock Exchange requires that the companies it lists be substantially capitalized. None 18. Series 63, Ethical Practices and Obligations,Series 63 Al Watson, a customer of Billy Baird (an agent of Gibraltar Securities), is considering the purchase of 2,000 shares of Kansas Plains Gas and Electric Company common stock. Watson has stock in 10 other utilities companies in his portfolio, and this stock trades on the New York Stock Exchange (NYSE). Baird tells Watson that the company has been increasing its dividend for the past 19 years and will surely continue to do so. Which of the following statements best reflects this situation? A) Baird has acted fraudulently, misleading Watson by stating that increased dividend distributions from Kansas Plains Gas and Electric Company are a sure thing. B) Baird has acted unethically because he made an unsuitable recommendation to Watson. C) Baird has acted ethically because he did not guarantee profits or the absence of potential loss to Watson. D) Baird has acted ethically in recommending the purchase of a stock with a long history of dividends. None 19. Series 63, Ethical Practices and Obligations,Series 63 Which of the following are prohibited by the antifraud provisions of the Uniform Securities Act? I. A misstatement of a material fact II. An omission of a fact important for understanding other statements that are made III. A deceptive sales presentation that does not result in a sale A) I, II, and III B) I and II C) I only D) I and III None 20. Series 63, Ethical Practices and Obligations,Series 63 A broker-dealer is not acting fraudulently if the firm is A) engaging in trades between other broker-dealers to increase or decrease the price of securities. B) engaging in transactions that do not result in the transfer of ownership between buyers and sellers. C) acting as agent for both buyer and seller on a transaction. D) trading securities between house accounts and customer accounts to create trading volume or the appearance of interest in a security. None 21. Series 63, Ethical Practices and Obligations,Series 63 Walt and Bryan are old friends who are agents with different broker-dealers. Bryan attends one of Walt's investment seminars and, at a prearranged point in the presentation, stands up and exclaims that his rich brother-in-law wisely purchased the same investment. This action is A) a legitimate sales tactic known as priming the pump. B) a deliberate attempt to mislead and deceive investors. C) only problematic if someone invests in the product and loses money. D) a dubious sales practice but not strictly prohibited. None 22. Series 63, Ethical Practices and Obligations,Series 63 It would be considered fraud for an agent to intentionally do all of the following except A) tell a client that a subordinated debenture is a prior lien mortgage bond. B) tell a client that a bond is yielding 10% when the actual yield is 1%. C) tell a client that you are so sure the client will not lose money that you have placed funds in escrow equal to the amount of the purchase to cover any possible loss. D) share commissions with another agent in your office without disclosing this fact to the client. None 23. Series 63, Ethical Practices and Obligations,Series 63 Under the Uniform Securities Act, an agent who deliberately gives a fictitious quote to a customer A) is guilty of a felony and subject to criminal penalties. B) has committed a fraudulent act. C) is committed to selling or buying only 100 shares at that price. D) must execute at the price quoted, regardless of the market. None 24. Series 63, Ethical Practices and Obligations,Series 63 Under the Uniform Securities Act, it is not considered unlawful if an agent A) omitted a material fact because she knew she did not have time to cover everything in a short presentation. B) deliberately failed to follow a customer’s instructions. C) made an untrue statement of a material fact. D) actively solicited orders in unregistered exempt securities. None 25. Series 63, Ethical Practices and Obligations,Series 63 In which of the following situations is an agent committing a prohibited practice? A) Accepting an order from the customer’s brother to purchase a security in the customer’s account while awaiting written receipt of trading authority B) Buying a security on one exchange and simultaneously selling it on another to take advantage of a price disparity C) Accepting a customer’s order to purchase an unregistered nonexempt security D) Buying a security on behalf of a customer and then reselling it before the customer has paid for it None 1 out of 25 Time is Up! Time's up
