Try and practice the latest FINRA : Series63 real questions & answers

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.

• A. I only
• B. I, II, and III
• C. I and II only
• D. I and III only

Which of the following describes an "exempt security," as defined by the Uniform Securities Act (USA)?

• A. An exempt security is any security being sold as a private placement.
• B. An exempt security is one that need not be registered in the state in which it is sold.
• C. An exempt security is any security that is being sold in an isolated non-issuer transaction.
• D. An exempt security is any security that is being sold by an institutional investor, such as a bank, to another institutional investor, such as another bank or an insurance company.

Which of the following does not necessarily have to be included in the contract between an investment adviser and an individual client, according to the Uniform Securities Act (USA)?

• A. a statement stipulating that the contract cannot be assigned to another party without the client's consent
• B. if the investment adviser is a partnership, a statement indicating that the client will be notified
• C. the compensation agreement, which cannot be a percentage of the capital gains or capital appreciation earned on the portfolio for all but the wealthiest of individual clients.
• D. if there is any change in the partners within a reasonable time perioda statement of the investment policy that has been agreed upon between the adviser and the client

The Turnover Corporation, a firm with 25,000 employees, has recently hired 50 new employees, many of whom have been hired to replace middle-level managers who have retired. Turnover has omitted this fact from its prospectus. Turnover is guilty of

• A. nothing. The hiring of 50 new employees by a firm with 25,000 employees is not a material fact.
• B. misrepresentation.
• C. fraud.
• D. misusing insider information.

Joe Treader is the owner of a small, state-registered investment advisory firm that is on the verge of becoming insolvent. One of his clients who has become like a mother to him is aware of his financial difficulties and has offered to sell off some of the assets that he manages for her and loan him the money to get him through this period of economic uncertainty until he is able to get on his feet again.
Can Joe take her up on her offer?

• A. Yes. Based on the facts presented, it is an unsolicited offer and, as such, Joe can (and should) accept it.
• B. Yes, but only if Joe draws up a formal loan agreement with a fair interest rate, based on the going market rates, stated in the agreement as well as a firm date for principal repayment.
• C. Both A and B are true.
• D. No. As the client's investment adviser, he has a fiduciary relationship with the client. Entering a loan agreement with this client could lead to conflicts of interest.