[Oct-2023] FINRA Series63 Exam Basic Questions With Answers [Q32-Q53] : Top Exam Collection : http://blog.topexamcollection.com

NO.32 You are an agent with a broker-dealer and have learned of limited partnership interests being sold by a
small company that is planning to come out with a product that you think is going to “wow” the market.
You would like to get in on the action, but the minimum investment needed is $10,000, and you don’t have
that kind of dough lying around. You talk to your brother, who is also one of your clients, and get him
interested in investing in the firm, too. The two of you decide to pull your money together, each putting in
$ 5,000, and you agree to split any profits or losses. Is this permitted?

No. Under no circumstances can an agent enter a joint investment with a client under the guidelines of
the Uniform Securities Act.

Yes. This is permitted since the agreement is between you and a family member.

Maybe. But it will require written consent from both your brother and your firm.

Yes, as long as your brother provides your firm with his written consent.

NO.33 Which of the following securities would be exempt from state registration requirements, according to the Uniform Securities Act?
I. a municipal bond issued by the Canadian province of Nova Scotia
II. a bond issued by the county of Cork, Ireland
III. a bond issued by Nationwide Insurance Company

All of the selections would be exempt from state registration requirements under the Uniform

Selection I only

Selection I and III only

Selection III only

NO.34 You are a newly licensed agent and are making cold calls to generate business. According to the Telephone Consumer Protection Act of 1991 (TCPA), you may only place your calls between the hours of

8 a.m. and 9 p.m., based on your time zone.

8 a.m. and 9 p.m., based on your prospective customer’s time zone.

8 a.m. and 7 p.m., based on your prospective customer’s time zone.

8 a.m. and 7 p.m., based on the Pacific Time Zone.

NO.35 MoeMoney Investment Advisers uses the services of two broker-dealers exclusively when it executes trades for its clients’ accounts. The larger of the two broker-dealers provides MoeMoney with research from its analyst department in return for the business and also serves as the custodian for some of MoeMoney’s clients’ accounts. The smaller of the two broker-dealers picks up the utility bill for MoeMoney. MoeMoney is careful to disclose this form of “soft dollar” compensation to its clients.
Is it in violation of any securities laws?

Yes. Investment advisers are prohibited from receiving any soft dollar compensation whatsoever.

No. Investment advisers are entitled to receive soft dollar compensation from broker-dealers with which it has a relationship as long as they disclose this to their clients.

Yes. Although investment advisers are permitted to receive some forms of soft dollar compensation from broker-dealers with which it has a relationship, such as research or custodial services, other forms of soft dollar compensation, including the payment of overhead expenses,are prohibited.

Yes. Investment advisers are required to use more than two broker-dealers when executing trades on its clients’ accounts.

NO.36 Which of the following constitutes a non-punitive order?

summary license suspension

registration cancellation

registration denial

All of the above are punitive orders.

NO.37 Julia Hasty has recently applied with the Administrator to be a registered investment adviser in the state. Eager to open her new business, she has business cards printed that indicate that she is a “state-registered” investment adviser and visits some local businesses, asking them for permission to put some of her cards in their waiting rooms.
Has Julia violated any of the provisions of the Uniform Securities Act by distributing her business cards?

No. As long as her application has been submitted and is pending acceptance, Julia has not violated any provisions of the Uniform Securities Act.

No. The provisions of the Uniform Securities Act relate to securities, not people.

Yes. Julia is not permitted to advertise as a “state-registered” investment adviser until she receives notification of the acceptance of her application by the state Administrator.

No. Julia has merely put her business cards in waiting rooms. She has not opened her business to clients yet.

NO.38 Which of the following entities are subject to post-registration provisions?
I. broker-dealers
II. agents
III. investment advisers
IV. investment adviser representatives

I and II only

I and III only

II and IV only

All of the entities are subject to post-registration provisions.

NO.39 Your next-door neighbor’s brother works for a large pharmaceutical company and confided in her that one
of the company’s chemists has just discovered a compound that will cure baldness and that the firm plans
to make the discovery public later in the week. Your next-door neighbor passes this information on to you
over a cup of coffee the next morning. You immediately call your broker and place an order to buy shares
of the company’s stock. Has any illegal insider trading taken place?

Yes. The agent who executes your purchase order has engaged in illegal insider trading.

No. You are in no way related to your next-door neighbor’s brother, and she could have been lying.

Yes. You, your neighbor, and her brother are all guilty of illegal insider trading.

Yes. You are guilty of illegal insider trading because you traded on information that had not yet been
made publicly available.

NO.40 Which of the following statements regarding “registration by qualification” is true?

Registration by qualification refers to the fact that certain categories of securities are exempt from state
registration requirements.

Registration by qualification is the preferred method used by issuers since it requires the least amount
of paperwork.

In its simplest form, registration by qualification requires the issuer to supply voluminous amounts of
information about both the firm and its directors, officers, and major shareholders.

Registration by qualification refers to the fact that the highest quality bonds, i.e., those with a AAA
rating, are exempt from registration with the state.

NO.41 The current yield on a bond fund refers to

the percentage increase in the fund’s net asset value.

the return that the fund earned because of the capital appreciation of the securities in the fund.

the total return that the fund has earned over the most recent 12-month period.

the return that the fund earned based only on the interest income it received

NO.42 Moe is a registered investment adviser doing business under the name of MoeMoney Investment
Advisers, LLC. Larry, Curly, and Mary all hold positions with the firm. Larry is on the board of directors;
Mary is a sales representative for the firm; and Curly is an administrative assistant, who performs clerical
duties. Given that Moe is already a registered investment adviser, which of the other three are
automatically registered as investment adviser representatives?

Larry only

Larry and Mary only

Larry, Mary and Curly

Mary and Curly only

NO.43 Which of the following does not describe a prohibited practice for broker-dealers under the NASAA Model Rules?
I. SecureMoney Broker-Dealers has received a request from a client who wants SecureMoney to “identify a few solid firms in the Asian market and invest up to $20,000 in them.” SecureMoney executes the purchases and receives the requisite signed discretionary authorization from the client before the settlement date.
II. CanDo Broker-Dealers executes a margin transaction for a client, promptly receiving a signed, written margin agreement from the client after the transaction takes place.
III. GetErDone Broker-Dealers receives a call from a client who wants to purchase some securities on margin.
GetErDone has the client come into the office to sign a properly executed margin agreement prior to effecting the transaction.

None of the selections are prohibited practices.

I and III only

II and III only

III only

NO.44 S. White and Associates is an investment adviser registered in the state of Kentucky and, as such, is meeting Kentucky’s minimum net capital requirement for investment advisers. The firm recently registered with the state of Virginia and has opened an office there. Virginia has a significantly higher net capital requirement for its investment advisers.
Which of the following statements is true?

According to the Uniform Securities Act, S. White will have to meet Virginia’s higher requirement.

According to the Investment Advisers Act of 1940, S. White needs only to meet the net capital requirement of Kentucky.

According to the Securities Exchange Act of 1934, S. White needs to meet at least the minimum net capital requirement specified by that Act since it is now operating in multiple states.

According to the Investment Advisers Act of 1940, S. White will have to maintain a minimum net capital equal to the average of the net capital requirements of the two states.

NO.45 Jack Bean is employed by Giant Investment Advisers, LLC. His job duties include advising clients on the
asset allocations of their portfolios. Jack Bean is

an investment adviser representative.

an investment adviser.

an administrative assistant.

an agent.

NO.46 Bootstraps, Inc. is a family-owned business that has experienced enormous growth in the last couple of years.
The business needs more cash to support this growth and has decided to issue some promissory notes, each with a face value of $5,000, for sale to the general public. The firm plans to hire three individuals to help them sell these notes. These individuals will earn a commission based on the notes they sell.
Given these facts, which of the following is true?

The notes must be registered with the state, and the three individuals hired to sell the notes must be registered as agents with the state.

The notes must be registered with the state, but the individuals hired to sell them are not required to be registered.

Neither the notes nor the individuals selling the notes need to be registered with the state.

Either the firm must register the notes with the state, or the individuals that are hired to sell the notes must be registered as agents with the state, but not both.

NO.47 Which of the following would a firm not be expected to provide to the Administrator when registering an issue of securities with the state?

all sales and advertising materials that will be used in conjunction with the offering.

the agreement between the issuing firm and the underwriters.

the agreement among the underwriters themselves.

The firm will be expected to provide all of the above to the Administrator when registering an issue of securities with the state.

NO.48 You execute a stock transaction for a client on Thursday, September 23rd. The settlement date on the
order ticket will be

Thursday, September 23rd.

Monday, September 27th.

Friday, September 24th.

Tuesday, September 28th.

NO.49 The 1988 Insider and Securities Enforcement Act indicates that a person convicted of insider trading can be subject to which of the following penalties?

up to 10 years in prison and a fine of $1 million or up to 3 times the amount of profits gained, or

up to 3 years in prison, a $5,000 fine, or both

up to 5 years in prison and a fine of $1,500,000 or both

up to 7 years in prison and a fine equal to 200% of the amount of profits gained or losses avoided

NO.50 Most individual state securities laws today are based on:

the Uniform Securities Act of 1956.

the Uniform Securities Act of 2002.

the National Securities Markets Improvement Act of 1996.

the Gramm-Leach-Bliley Act of 1999.

NO.51 Which of the following scenarios describes activities that are disallowed under the NASAA Model Rules?
I. Broker-dealer Anon observes that a client placed a stop loss order to sell her 1,500 shares of
Amazon.com stock for $131 when the stock was selling for $134. Anon sold the stock for $133 when it
started to fall during the day and credited the client’s account with $131 per share when stock dropped
further to $129 a share.
II. Penny is an agent with Broker-dealer Anon. She recently recommended that a client buy a stock that
Penny thought would do well. As it turned out, Penny was wrong, and she offers to refund the commission
that the client paid her.
III. Broker-dealer Anon is part of the selling group of a hot new IPO. As such, the firm purchases 50% of
the shares for its own portfolio and sells the remainder to the public.

I only

I and II only

I and III only

I, II, and III

NO.52 Switch Advisory is a small investment adviser partnership registered in a single state. A larger investment adviser firm, Bait Investment Adviser, is registered in the same state as well as two other states. Bait has offered to buy out three of Switch’s partners who want to retire. This will give Bait a 60% ownership in Switch Advisory.
Which of the following statements are true?
I. Switch Advisory must obtain the approval of its clients before the partners can sell their interests to Bait.
II. Switch Advisory must notify the state Administrator of this event.
III. Switch Advisory must notify their clients of this event, but does not need the clients’ approval.
IV. Switch Advisory must notify the SEC of this event.

I only

I and II only

II, III, and IV only

I, II, and IV only

NO.53 Which of the following is not a prohibited practice for a broker-dealer?

waiting 36 hours before mailing a check after receiving a request for a cash withdrawal from a client if
the client has that much cash available in his account

requiring that a client who is engaged in margin transactions leave the securities with the broker-dealer
in “street name”

recommending a security to a new client without first ascertaining that client’s level of risk tolerance

executing a trade for an account holder based on instructions from the account holder’s spouse