SERIES 63 - PRACTICE EXAM
QUESTIONS & ANSWERS LATEST
1. An existing customer of a broker-dealer registered in State A is vacationing
in State B. Can the broker-dealer solicit the customer? - CORRECT
ANSWER ✔✔ - The broker-dealer may solicit the customer in State B
without registering in State B.
If a broker-dealer effects a transaction in a state (unless an exemption is
available), the broker-dealer must be registered in that state. One of the
exemptions available, however, covers the instance where an existing
customer of a registered broker-dealer is vacationing in another state. That
customer may be contacted while on vacation in the other state without the
broker-dealer being required to register in that state.
2. Which of the following is/are defined as either a "sale" or an "offer to sell"
common stock of an issuer?
I. Any offer to sell the common stock for value
II. Any solicitation of an offer to buy the common stock for value III.
The sale of a bond with detachable warrants to buy the common
stock of that issuer
III. The gift of the common stock to an employee of the issuer -
CORRECT ANSWER ✔✔ - I, II, & III
The definition of a "sale" is every contract of sale, contract to sell, or
disposition of a security or interest in a security for value. The definition of
an "offer to sell" is every attempt or offer to dispose of or solicitation of an
offer to buy a security. In addition, the sale or offer of a security that
includes rights or warrants to buy another security is considered to be an
offer or sale of the other security. The gift of a security is not considered to
be a sale unless the security is assessable. Common stock is non-assessable;
therefore, it is simply a gift, not a sale.
3. An applicant's registration can be denied by the Administrator if that
individual was convicted within the past ___________ of any misdemeanor
involving a security or any aspect of the securities business or any felony. -
CORRECT ANSWER ✔✔ - 10 years
, An applicant's registration can be denied if he or she was convicted of a
misdemeanor involving securities or any felony within the past 10 years.
4. It is prohibited for an investment adviser to be compensated only on the
basis of __________ achieved. It is allowable for the adviser to receive a
percentage of all assets under management (even if this value includes
capital gains) or for a fixed fee arrangement to be established. - CORRECT
ANSWER ✔✔ - capital gains
5. Securities that are sold through a private placement _________. -
CORRECT ANSWER ✔✔ - are unregistered
Securities sold through a private placement are unregistered and are an
exempt transaction. Under Uniform State Law, a private placement is
defined as an offer to no more than 10 persons in a 12 month period.
6. The Administrator is NOT empowered to __________. - CORRECT
ANSWER ✔✔ - Issue injunctions
7. The Administrator can issue subpoenas even to persons outside the
Administrator's state. It is also possible for the Administrator to conduct
investigations to determine if any securities laws have been broken and to
hold hearings. It is not possible, however, for the Administrator to issue an
injunction against the alleged violator. The Administrator may only petition
the appropriate court to issue an injunction.
Under the Uniform Securities Act, the term 'sale' or 'sell' includes which of
the following? I. A disposition of a security for consideration
II. A stock dividend given to stockholders in lieu of a cash dividend
III. An exchange of stock in a merger transaction which is approved by
stockholders - CORRECT ANSWER ✔✔ - I only
8. To be considered to be a sale, there must be some consideration or exchange
of value. Sales do not include bona fide pledges of securities as collateral for
loans, stock dividends, corporate mergers approved by stockholders, the
exchange of corporate assets in consideration of stock of another
corporation, or acts incidental to judicially-approved reorganizations in
which securities are issued in exchange for other outstanding securities.
Which of the following actions could constitute fraud?
I. Omission of any material fact II. Omission of any known fact
QUESTIONS & ANSWERS LATEST
1. An existing customer of a broker-dealer registered in State A is vacationing
in State B. Can the broker-dealer solicit the customer? - CORRECT
ANSWER ✔✔ - The broker-dealer may solicit the customer in State B
without registering in State B.
If a broker-dealer effects a transaction in a state (unless an exemption is
available), the broker-dealer must be registered in that state. One of the
exemptions available, however, covers the instance where an existing
customer of a registered broker-dealer is vacationing in another state. That
customer may be contacted while on vacation in the other state without the
broker-dealer being required to register in that state.
2. Which of the following is/are defined as either a "sale" or an "offer to sell"
common stock of an issuer?
I. Any offer to sell the common stock for value
II. Any solicitation of an offer to buy the common stock for value III.
The sale of a bond with detachable warrants to buy the common
stock of that issuer
III. The gift of the common stock to an employee of the issuer -
CORRECT ANSWER ✔✔ - I, II, & III
The definition of a "sale" is every contract of sale, contract to sell, or
disposition of a security or interest in a security for value. The definition of
an "offer to sell" is every attempt or offer to dispose of or solicitation of an
offer to buy a security. In addition, the sale or offer of a security that
includes rights or warrants to buy another security is considered to be an
offer or sale of the other security. The gift of a security is not considered to
be a sale unless the security is assessable. Common stock is non-assessable;
therefore, it is simply a gift, not a sale.
3. An applicant's registration can be denied by the Administrator if that
individual was convicted within the past ___________ of any misdemeanor
involving a security or any aspect of the securities business or any felony. -
CORRECT ANSWER ✔✔ - 10 years
, An applicant's registration can be denied if he or she was convicted of a
misdemeanor involving securities or any felony within the past 10 years.
4. It is prohibited for an investment adviser to be compensated only on the
basis of __________ achieved. It is allowable for the adviser to receive a
percentage of all assets under management (even if this value includes
capital gains) or for a fixed fee arrangement to be established. - CORRECT
ANSWER ✔✔ - capital gains
5. Securities that are sold through a private placement _________. -
CORRECT ANSWER ✔✔ - are unregistered
Securities sold through a private placement are unregistered and are an
exempt transaction. Under Uniform State Law, a private placement is
defined as an offer to no more than 10 persons in a 12 month period.
6. The Administrator is NOT empowered to __________. - CORRECT
ANSWER ✔✔ - Issue injunctions
7. The Administrator can issue subpoenas even to persons outside the
Administrator's state. It is also possible for the Administrator to conduct
investigations to determine if any securities laws have been broken and to
hold hearings. It is not possible, however, for the Administrator to issue an
injunction against the alleged violator. The Administrator may only petition
the appropriate court to issue an injunction.
Under the Uniform Securities Act, the term 'sale' or 'sell' includes which of
the following? I. A disposition of a security for consideration
II. A stock dividend given to stockholders in lieu of a cash dividend
III. An exchange of stock in a merger transaction which is approved by
stockholders - CORRECT ANSWER ✔✔ - I only
8. To be considered to be a sale, there must be some consideration or exchange
of value. Sales do not include bona fide pledges of securities as collateral for
loans, stock dividends, corporate mergers approved by stockholders, the
exchange of corporate assets in consideration of stock of another
corporation, or acts incidental to judicially-approved reorganizations in
which securities are issued in exchange for other outstanding securities.
Which of the following actions could constitute fraud?
I. Omission of any material fact II. Omission of any known fact
