Try and practice the latest FINRA : Series_63 real questions & answers

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FINRA Uniform Securities Agent State Law Examination Sample Questions:

1. Which of the following persons is required to maintain its records in accordance with state dictates and
meet the minimum net capital requirement imposed by the state?
I. federal covered adviser
II. state-registered investment adviser
III. investment adviser representative

A) I, II, and III
B) II and III only
C) I and II only
D) II only

2. While on vacation in Colorado, Mr. Moneybags became interested in the stock of a company called
SafeAway, which designs and installs customized high-tech security systems in the multimillion dollar
mansions located in Colorado's pricier ski resort areas, such as Vail and Aspen. Upon returning to his
home in Boston, he calls his broker-dealer with an order to purchase 10,000 shares of the stock, which he
learned trades in the over-the-counter market. Fast Eddie, a registered agent with his broker-dealer,
discovers that SafeAway's stock is registered only in the states of Colorado and Wyoming. Neither Fast
Eddie nor his broker-dealer are registered to do business in either of those states. Under these
circumstances,

A) Fast Eddie cannot effect Mr. Moneybags purchase of SafeAway stock since neither he nor his broker
are registered to do business in Colorado or Wyoming, and SafeAway stock is not registered for sale in
the state of Massachusetts.
B) Fast Eddie should contact a broker-dealer that is registered in either Colorado or Wyoming and
negotiate a finder's fee for referring Mr. Moneybags to them.
C) Fast Eddie can execute the trade for Mr. Moneybags since this would be considered an exempt
transaction because it is a private placement.
D) Fast Eddie can execute the trade for Mr. Moneybags since this would be considered an exempt
transaction because it is an unsolicited transaction.

3. Which of the following describes an investment adviser that is not required to register with the state
Administrator?

A) Financial Freedom Investment Advisers has no offices in the state although it does advise six wealthy
individuals who are residents of the state.
B) Buckeye Investment Advisers has no offices in the state, but it provides portfolio management services
to an insurance company located in the state.
C) CanDo Broker-Dealers is a state-registered broker-dealer. It has begun to offer asset management
services to a few of its wealthier clients for a small management fee equal to 0.1% of the assets under
management.
D) MoeMoney Investment Advisers, LLC has an office in the state with a client base of fifty individuals.

4. In its prospectus, the YourMoney Mutual Fund provides charts and tables of its average annual return
over the past year, three years, five years, and ten years. The fund's return has indeed been phenomenal
over this time period, beating the S&P 500 Index by at least 15%. The prospectus states that this is
because the fund invests in securities that are riskier and that, therefore, an investor can expect the fund
to continue earning a return higher than the S&P 500 Index. Is YourMoney guilty of any security
violations?

A) No. Regulations require only that the mutual fund provide charts and tables of its average annual
returns, with a statement comparing the fund performance with a relevant market index.YourMoney has
done this and more.
B) Yes. There is no way the fund could have beaten the S&P 500 Index by at least 15% over the past ten
years. The fund is obviously misstating its returns.
C) Yes. YourMoney is guilty of fraud in claiming that "an investor can expect the fund to continue earning
a return higher than the S&P 500 Index." Past performance is no indication of future performance.
D) No. YourMoney properly revealed to prospective investors the fact that its higher than average returns
are the result of its investment in riskier securities.

5. If a person has had its license revoked by the Administrator of the state and has appealed the decision to
a court of law, that person

A) is considered to have a revoked license until the courts rule otherwise.
B) must notify the Administrator of the state that it has appealed the decision.
C) can continue business as usual pending the resolution of the appeal.
D) Both B and C are true statements.

Solutions: