SERIES 63 EXAM (STC) | FINAL EXAM QUESTIONS AND
WELL ELABORATED ANSWERS LATEST UPDATE
2025/2026
1. Which of the following statements is TRUE concerning the posting of bonds
by a broker-dealer?
A. There is no bond requirement if the broker-dealer does not have custody or
discretionary authority
B. There is no bond requirement if the broker-dealer is registered in another
state
C. The bond may be waived if the broker-dealer has been in business for at
least 10 years
D. The Administrator may not waive the bond requirement for any broker-deal-
er: A. There is no bond requirement if the broker-dealer does not have custody or
discretionary authority
Not every broker-dealer maintains custody of client assets. Some, for example,
employ clearing firms to take care of this responsibility.
The Administrator may require broker-dealers to post bonds if they have custody of,
or discretionary authority over, client funds or securities.
The bond is waived if the broker-dealer's net capital exceeds a specified amount.
The Administrator may determine this amount. (75577)
2. A company is conducting an IPO. Its shares will be listed on Nasdaq. For
how long does a broker-dealer that is part of the selling group need to make
the prospectus available to investors?
A. 25 days
B. 10 days
C. 90 days
D. 40 days: A. 25 days
All investors who purchase new issues must receive prospectuses, which may be
made available electronically. This obligation to provide a prospectus continues for
25 days after the effective date for securities that will be listed on a national exchange
,or Nasdaq, which is the situation described in the question.
A firm that sells a new issue in the aftermarket shortly after it begins trading may
also be required to give prospectuses to its customers.
For secondary offerings of securities that will trade over-the-counter (securities that
are not eligible to be listed on Nasdaq or other exchanges), this obligation lasts for
40 days.
It is 90 days if the offering is an IPO. (89653)
3. Which of the following actions would violate the NASAA Statement of
Policy on Dishonest and Unethical Business Practices of Broker-Dealers and
Agents?
A. A broker-dealer states that it will charge extra for certain transactions
B. An agent opens a joint account with a client with the written permission of
her employer
C. An agent creates a marketing brochure for distribution to clients that
includes only the positive facts from the prospectus
D. A broker-dealer executes a transaction in a margin account shortly before
the client's signed margin account agreement arrives in the mail: C. An agent
creates a marketing brochure for distribution to clients that includes only the positive
facts from the prospectus
A marketing brochure that contained only the positive facts from the prospectus
and none of the negative ones (risk factors) would be considered misleading and
deceptive.
A broker-dealer may execute an initial transaction in a margin account as long
as a properly executed (signed) written margin agreement is obtained promptly
afterward.
A broker-dealer may charge a client a higher-than-normal commission under certain
circumstances, such as when a security is particularly difficult to obtain, as long as
this is disclosed to the client.
An agent may open a joint account with a client as long as she has the written
permission of both the broker-dealer and the client. (75690)
4. According to the Uniform Securities Act, which of the following statements
is/are NOT TRUE concerning a broker-dealer or investment adviser filing an
,application for registration as a successor firm?
I. The successor firm must be in existence prior to the filing of the application
for registration
II. The successor firm's registration will be effective for the unexpired portion
of the year
III. The successor firm must submit a filing fee with the application for regis-
tration
A. III only
B. I and II only
C. I and III only
D. II only: C. I and III only
When you encounter a question that is asking you to find a statement that is NOT
TRUE, the question is asking you to identify the statement that is FALSE. Since
this is a Roman Numeral style question, it is possible that there are more than one
FALSE statement. In this question, there are two.
If a registered broker-dealer's or investment adviser's ownership structure is
changed (from a partnership to a corporation, for example), or is bought or sold by
another person, it is permitted to file an application for registration as a successor
firm.
According to the Act, this can be accomplished whether or not the successor firm
was in existence prior to the filing and is effective for the unexpired portion of the
year.
A filing fee is not required when the application is submitted. (89545)
5. Under the USA, which of the following transactions would NOT be consid-
ered exempt?
A. A transaction by an executor of an estate
B. An unsolicited issuer transaction effected through a registered broker-deal-
er
C. A transaction by a trustee that is involved in a bankruptcy proceeding
D. An offer to an investment company: B. An unsolicited issuer transaction effect-
ed through a registered broker-dealer
Under the Uniform Securities Act, any offer to an investment company or other
, institutional investor, a transaction by an executor of an estate, or a trustee involved
in a bankruptcy, would be defined as an exempt transaction.
An unsolicited non-issuer transaction may qualify as an exempted transaction.
(62648)
6. According to the Uniform Securities Act, an entity can avoid meeting the
definition of a broker-dealer if it:
I. Has no office in the state
II. Only deals with institutional clients
III. Does not hold customer funds or securities
A. I and II only
B. II and III only
C. II only
D. I only: A. I and II only
If a broker-dealer has no office in a state and effects transactions only with institu-
tional clients, it would be exempt from the definition of a broker-dealer.
An institutional broker-dealer cannot qualify for this exemption if it has an office in
the state, even if it avoids holding customer funds and securities. (75478)
7. ***A broker-dealer is participating in an initial public offering of a security
that will be listed on Nasdaq. Which of the following documents is the bro-
ker-dealer required to deliver to a client who purchases in the after-market
immediately after completion of the offering?
A. There is no requirement for additional documentation
B. A final prospectus
C. A research report
D. A list of all of the broker-dealers involved in the offering: B. A final prospectus
A client purchasing securities as part of an offering must receive either a final
prospectus or a preliminary prospectus along with an additional document from the
broker-dealer executing the transaction.
The final prospectus must be provided for a certain period after the completion of
the offering.
For an IPO, if it is listed on the NYSE or Nasdaq, after-market prospectus delivery
is 25 days.
WELL ELABORATED ANSWERS LATEST UPDATE
2025/2026
1. Which of the following statements is TRUE concerning the posting of bonds
by a broker-dealer?
A. There is no bond requirement if the broker-dealer does not have custody or
discretionary authority
B. There is no bond requirement if the broker-dealer is registered in another
state
C. The bond may be waived if the broker-dealer has been in business for at
least 10 years
D. The Administrator may not waive the bond requirement for any broker-deal-
er: A. There is no bond requirement if the broker-dealer does not have custody or
discretionary authority
Not every broker-dealer maintains custody of client assets. Some, for example,
employ clearing firms to take care of this responsibility.
The Administrator may require broker-dealers to post bonds if they have custody of,
or discretionary authority over, client funds or securities.
The bond is waived if the broker-dealer's net capital exceeds a specified amount.
The Administrator may determine this amount. (75577)
2. A company is conducting an IPO. Its shares will be listed on Nasdaq. For
how long does a broker-dealer that is part of the selling group need to make
the prospectus available to investors?
A. 25 days
B. 10 days
C. 90 days
D. 40 days: A. 25 days
All investors who purchase new issues must receive prospectuses, which may be
made available electronically. This obligation to provide a prospectus continues for
25 days after the effective date for securities that will be listed on a national exchange
,or Nasdaq, which is the situation described in the question.
A firm that sells a new issue in the aftermarket shortly after it begins trading may
also be required to give prospectuses to its customers.
For secondary offerings of securities that will trade over-the-counter (securities that
are not eligible to be listed on Nasdaq or other exchanges), this obligation lasts for
40 days.
It is 90 days if the offering is an IPO. (89653)
3. Which of the following actions would violate the NASAA Statement of
Policy on Dishonest and Unethical Business Practices of Broker-Dealers and
Agents?
A. A broker-dealer states that it will charge extra for certain transactions
B. An agent opens a joint account with a client with the written permission of
her employer
C. An agent creates a marketing brochure for distribution to clients that
includes only the positive facts from the prospectus
D. A broker-dealer executes a transaction in a margin account shortly before
the client's signed margin account agreement arrives in the mail: C. An agent
creates a marketing brochure for distribution to clients that includes only the positive
facts from the prospectus
A marketing brochure that contained only the positive facts from the prospectus
and none of the negative ones (risk factors) would be considered misleading and
deceptive.
A broker-dealer may execute an initial transaction in a margin account as long
as a properly executed (signed) written margin agreement is obtained promptly
afterward.
A broker-dealer may charge a client a higher-than-normal commission under certain
circumstances, such as when a security is particularly difficult to obtain, as long as
this is disclosed to the client.
An agent may open a joint account with a client as long as she has the written
permission of both the broker-dealer and the client. (75690)
4. According to the Uniform Securities Act, which of the following statements
is/are NOT TRUE concerning a broker-dealer or investment adviser filing an
,application for registration as a successor firm?
I. The successor firm must be in existence prior to the filing of the application
for registration
II. The successor firm's registration will be effective for the unexpired portion
of the year
III. The successor firm must submit a filing fee with the application for regis-
tration
A. III only
B. I and II only
C. I and III only
D. II only: C. I and III only
When you encounter a question that is asking you to find a statement that is NOT
TRUE, the question is asking you to identify the statement that is FALSE. Since
this is a Roman Numeral style question, it is possible that there are more than one
FALSE statement. In this question, there are two.
If a registered broker-dealer's or investment adviser's ownership structure is
changed (from a partnership to a corporation, for example), or is bought or sold by
another person, it is permitted to file an application for registration as a successor
firm.
According to the Act, this can be accomplished whether or not the successor firm
was in existence prior to the filing and is effective for the unexpired portion of the
year.
A filing fee is not required when the application is submitted. (89545)
5. Under the USA, which of the following transactions would NOT be consid-
ered exempt?
A. A transaction by an executor of an estate
B. An unsolicited issuer transaction effected through a registered broker-deal-
er
C. A transaction by a trustee that is involved in a bankruptcy proceeding
D. An offer to an investment company: B. An unsolicited issuer transaction effect-
ed through a registered broker-dealer
Under the Uniform Securities Act, any offer to an investment company or other
, institutional investor, a transaction by an executor of an estate, or a trustee involved
in a bankruptcy, would be defined as an exempt transaction.
An unsolicited non-issuer transaction may qualify as an exempted transaction.
(62648)
6. According to the Uniform Securities Act, an entity can avoid meeting the
definition of a broker-dealer if it:
I. Has no office in the state
II. Only deals with institutional clients
III. Does not hold customer funds or securities
A. I and II only
B. II and III only
C. II only
D. I only: A. I and II only
If a broker-dealer has no office in a state and effects transactions only with institu-
tional clients, it would be exempt from the definition of a broker-dealer.
An institutional broker-dealer cannot qualify for this exemption if it has an office in
the state, even if it avoids holding customer funds and securities. (75478)
7. ***A broker-dealer is participating in an initial public offering of a security
that will be listed on Nasdaq. Which of the following documents is the bro-
ker-dealer required to deliver to a client who purchases in the after-market
immediately after completion of the offering?
A. There is no requirement for additional documentation
B. A final prospectus
C. A research report
D. A list of all of the broker-dealers involved in the offering: B. A final prospectus
A client purchasing securities as part of an offering must receive either a final
prospectus or a preliminary prospectus along with an additional document from the
broker-dealer executing the transaction.
The final prospectus must be provided for a certain period after the completion of
the offering.
For an IPO, if it is listed on the NYSE or Nasdaq, after-market prospectus delivery
is 25 days.
