STC Series 63 Chapter 1, 2, 3, and 4 Questions
with 100% Correct Answers
Are securities professionals permitted to solicit and sell
unregistered, exempt securities? Correct Answer: The
exam may get creative with language and may
reference a security as being unregistered, exempt. It
may seem that because the security is unregistered, its
sale would be prohibited. However, the reason the
security is unregistered is because it's exempt.
Although securities professionals are permitted to sell
unregistered, exempt securities, it's a violation to solicit
the sale of unregistered, non-exempt securities.
Define the following terminology for the Series 63:
- State
- Security
- Person
- Issuer
,- Broker Dealer
- Agent Correct Answer: - State: Uniform Securities Act
includes a state, commonwealth, territory, or possession
of the United States, including the District of Columbia
and the Commonwealth of Puerto Rico.
- Security: common stock, bonds, option contracts, and
variable annuities. If securities are non-exempt, they
must be registered in order to be offered or sold in a
state. In addition to recognizing the securities that are
exempt or non-exempt, it may be necessary to
determine the basis for an exemption.
- Person: A person is defined as any legal entity that's not
deceased, is not a minor, and is not mentally
incompetent. Under the Uniform Securities Act, the term
person may include individuals, corporations,
partnerships, sole proprietorships, issuers, and state
Administrators (both the office and the individual). So,
,keep in mind, the definition of a person is very broad—
including individuals as well as organizations.
- Issuer: any person who issues or proposes to issue any
security. The term issuer includes the U.S., state, local, or
foreign governments, corporations, and partnerships.
- Broker Dealer: a person in the business of effecting
securities transactions for the accounts of others or for its
own account.
A firm is acting in the capacity of a broker when it
effects securities transactions on behalf of its clients. In
other words, a broker will locate the other side of the
trade—finding the buyer when representing the seller, or
finding the seller when representing the buyer. A broker
charges its customers a commission for providing this
service.
A firm is acting in the capacity of a dealer when it
effects securities transactions for its own account. A
, dealer stands ready to take the other side of any
transaction—buying for its own inventory with a
markdown or selling from its own inventory and charging
a markup. A dealer pr
Differentiate between an Agent of a Broker-Dealer &
Agent of an Issuer? Correct Answer: Agent of a Broker-
Dealer= a non-clerical individual who represents a
broker-dealer in effecting securities transactions. Without
exception, salespersons of broker-dealers who effect
securities transactions are considered agents and must
be registered. However, not every employee of a
broker-dealer is considered an agent and subject to
registration. An individual who simply performs clerical
tasks, such as filing paperwork or answering the phone,
is not considered an agent. Consider the following
example to determine whether an individual is defined
as an agent of a broker-dealer.
* Registered Representatives and Agents ... While your
firm may have a different title for you, such as registered
representative or financial adviser, the Series 63
with 100% Correct Answers
Are securities professionals permitted to solicit and sell
unregistered, exempt securities? Correct Answer: The
exam may get creative with language and may
reference a security as being unregistered, exempt. It
may seem that because the security is unregistered, its
sale would be prohibited. However, the reason the
security is unregistered is because it's exempt.
Although securities professionals are permitted to sell
unregistered, exempt securities, it's a violation to solicit
the sale of unregistered, non-exempt securities.
Define the following terminology for the Series 63:
- State
- Security
- Person
- Issuer
,- Broker Dealer
- Agent Correct Answer: - State: Uniform Securities Act
includes a state, commonwealth, territory, or possession
of the United States, including the District of Columbia
and the Commonwealth of Puerto Rico.
- Security: common stock, bonds, option contracts, and
variable annuities. If securities are non-exempt, they
must be registered in order to be offered or sold in a
state. In addition to recognizing the securities that are
exempt or non-exempt, it may be necessary to
determine the basis for an exemption.
- Person: A person is defined as any legal entity that's not
deceased, is not a minor, and is not mentally
incompetent. Under the Uniform Securities Act, the term
person may include individuals, corporations,
partnerships, sole proprietorships, issuers, and state
Administrators (both the office and the individual). So,
,keep in mind, the definition of a person is very broad—
including individuals as well as organizations.
- Issuer: any person who issues or proposes to issue any
security. The term issuer includes the U.S., state, local, or
foreign governments, corporations, and partnerships.
- Broker Dealer: a person in the business of effecting
securities transactions for the accounts of others or for its
own account.
A firm is acting in the capacity of a broker when it
effects securities transactions on behalf of its clients. In
other words, a broker will locate the other side of the
trade—finding the buyer when representing the seller, or
finding the seller when representing the buyer. A broker
charges its customers a commission for providing this
service.
A firm is acting in the capacity of a dealer when it
effects securities transactions for its own account. A
, dealer stands ready to take the other side of any
transaction—buying for its own inventory with a
markdown or selling from its own inventory and charging
a markup. A dealer pr
Differentiate between an Agent of a Broker-Dealer &
Agent of an Issuer? Correct Answer: Agent of a Broker-
Dealer= a non-clerical individual who represents a
broker-dealer in effecting securities transactions. Without
exception, salespersons of broker-dealers who effect
securities transactions are considered agents and must
be registered. However, not every employee of a
broker-dealer is considered an agent and subject to
registration. An individual who simply performs clerical
tasks, such as filing paperwork or answering the phone,
is not considered an agent. Consider the following
example to determine whether an individual is defined
as an agent of a broker-dealer.
* Registered Representatives and Agents ... While your
firm may have a different title for you, such as registered
representative or financial adviser, the Series 63
