[Dec 10, 2023] Series63 Practice Exam Dumps - 99% Marks In FINRA Exam
Updated Verified Series63 Q&As - Pass Guarantee or Full Refund
NEW QUESTION # 59
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?
- A. Yes. This is permitted since the agreement is between you and a family member.
- B. Maybe. But it will require written consent from both your brother and your firm.
- C. Yes, as long as your brother provides your firm with his written consent.
- D. No. Under no circumstances can an agent enter a joint investment with a client under the guidelines of
the Uniform Securities Act.
Answer: B
Explanation:
It may be permissible for you and your brother to open a joint account to invest in this
partnership since he is a family member, but it will require the written consent of both your brother and
your firm, and your firm is under no obligation to give its consent.
NEW QUESTION # 60
Shady Corporation's executives are concerned over the firm's steadily declining stock price and decide to
do something about it. They each decide to make significantly large purchases of their firm's stock in
order to stabilize and hopefully even to drive up its price, reasoning that they can sell the stock for the
higher price down the road and profit from the transaction. You are a broker-dealer for the firm's
executives. Are Shady's executives planning to do anything illegal?
- A. No. It's a win-win. They are using their own money to buy stock of their firm, and this can help drive the
stock price up and put profits in their pockets. - B. No. As long as they follow the rules and report their purchases to the SEC, it is not illegal for them to
purchase shares of their firm's stock. - C. Yes. Although it is not illegal for them to purchase shares of their firm's stock, they cannot do so in
order to try to manipulate the price of the stock. - D. Yes. To purchase shares of their own company is considered to be illegal insider trading.
Answer: C
Explanation:
Yes. Although it is not illegal for Shady's executives to purchase shares of their firm's stock,
in this case they are planning to do something illegal in deciding to make significantly large purchases of
their firm's stock in order to manipulate the price. This is an example of price pegging.
NEW QUESTION # 61
What criminal penalties are specified for "willful violations" of the Uniform Securities Act?
- A. up to 3 years in prison or a $5,000 fine, or both.
- B. license suspension.
- C. up to 5 years in prison or a $10,000 fine, or both.
Answer: C
Explanation:
Explanation
The criminal penalties specified by the Uniform Securities Act for "willful violations" of the act are up to 3 years in prison or a $5,000 fine, or both, for each violation.
NEW QUESTION # 62
Which of the following is not a method that can be used to register securities with the state?
- A. registration by notification
- B. registration by exception
- C. registration by coordination
- D. registration by qualification
Answer: B
Explanation:
Registration by exception is not a method that is used to register securities with the state.
Registration by notification is a method available for those securities that meet a certain set of criteria and
requires the least amount of paperwork. Registration by coordination is the method used for most
securities. Registration by qualification is the most burdensome method, requiring a voluminous amount
of paperwork.
NEW QUESTION # 63
Ari Gaunt is a registered agent employed by Small &Associates Broker-Dealers. He has been notified of a hearing regarding the revocation of his license for making unauthorized trades on some of his clients' accounts.
Which of the following statements is necessarily true?
- A. If Ari is found guilty and has his license revoked, Small & Associates will have its license revoked as well and must reapply for reinstatement by filling out an application and paying the requisite filing fees.
- B. If Ari is found guilty and has his license revoked, he can appeal the decision in a court of law if he files the appeal within sixty days.
- C. The Administrator of the state can assess Ari with both civil and criminal penalties.
- D. If Ari is found guilty and has his license revoked, Small & Associates will be subject to a fine.
Answer: B
Explanation:
Explanation
If Ari is found guilty of making unauthorized trades on his clients' accounts and has his license revoked, he can appeal the decision in a court of law if he files the appeal within sixty days. Small & Associates license is not in danger as long as the firm has been providing competent supervision of Ari and its other agents. It will not be required to pay a fine based on Ari's fraudulent activities. Ari may end up with civil and criminal penalties, but the Administrator cannot assess them. Only a court of law can do that.
NEW QUESTION # 64
Which of the following actions is the Administrator of a state empowered to take?
- A. gather evidence
- B. The Administrator of a state has the authority to take all of the above actions.
- C. require restitution for the victims of a scam
- D. impose civil penalties in cases of fraud
Answer: A
Explanation:
Explanation
The Administrator of a state can gather evidence, but it cannot impose any civil penalties, including the requirement of restitution to victims. These actions can only be performed by a court of law.
NEW QUESTION # 65
Under NASAA Model Rules, it is permissible for the registered representative of a broker-dealer to split his or her commission with
I. a client.
II. the broker-dealer with which the registered representative is affiliated.
III. another registered representative working for the same broker-dealer.
IV. the administrative assistant who directs calls to the registered representative and provides other services for the agent.
- A. I, II, and III only
- B. II and III only
- C. II, III, and IV only
- D. I, II, III, and IV
Answer: B
Explanation:
Explanation
Only Selections II and III are correct. Under NASAA Model Rules, a registered representative of a broker-dealer is entitled to split his or her commission only with his or her broker-dealer or with another registered representative of that broker-dealer. He is not permitted to share commissions with a client or with anyone who works for the broker-dealer, but is not a registered agent.
NEW QUESTION # 66
BigCash Broker-Dealers is registered in the state and is in the process of purchasing a smaller
broker-dealer, Target Investments, as a subsidiary. Target Investments is also registered in the state.
After completing the purchase, what actions must BigCash take regarding registration of its new
subsidiary?
- A. BigCash must file a new application with the state to register its new subsidiary, but will be able to
utilize the remainder of any annual filing fees that Target Investments had paid for the year. - B. BigCash need do nothing since Target Investments was already duly registered with the state as a
broker-dealer. - C. BigCash must file a new application with the state to register its new subsidiary and must also pay the
annual filing fees required by the Administrator. - D. BigCash will need to pay the annual filing fees required by the Administrator, but will not need to file a
new registration application.
Answer: A
Explanation:
After completing the purchase, BigCash will have to file a new registration application for its
new subsidiary, but BigCash can utilize the remainder of any annual filing fees that Target Investments
had paid for the year. Although registration applications are never transferable, annual filing fees are.
NEW QUESTION # 67
The Administrator may not introduce a stop order to deny, revoke, or suspend the effective registration of a security based on facts that were disclosed during the registration process unless he does so within
- A. 60 days.
- B. 1 year.
- C. 30 days.
- D. 45 days.
Answer: C
Explanation:
Explanation
The Administrator may not introduce a stop order against the registration of a security based on facts that were disclosed during the registration process unless he does so within 30 days.
NEW QUESTION # 68
Which of the following would not be found in a tombstone advertisement?
- A. the price at which the security will be offered
- B. the interest rate and time to maturity of a bond issue
- C. the name of the issuer
- D. the names of the underwriters
Answer: A
Explanation:
The price at which the security will be offered will not be found in a tombstone advertisement.
A tombstone advertisement is not an offer to sell the security and, in any case, it is unlikely that the final
offer price will have even been decided on at this point.
NEW QUESTION # 69
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?
- A. Larry, Mary and Curly
- B. Larry and Mary only
- C. Larry only
- D. Mary and Curly only
Answer: C
Explanation:
As a director of the firm, Larry would automatically be registered as an investment adviser
representative of MoeMoney Investment Advisers. Although directors and officers of the firm are
automatically registered as investment adviser representatives, Mary, as a sales representative, would
have to apply for her own registration. Curly does not need to be registered since he performs only clerical
duties.
NEW QUESTION # 70
Ms. Naivete gave Mr. Smooth, owner of Smooth Construction, $40,000 in return for a promissory note that promised to pay interest at the rate of 8% a quarter, with a repayment of principal at the end of two years. The money would be used by Mr. Smooth to rehab a few beach condo units that had been severely hurricane-damaged and that Mr. Smooth had been able to purchase for "pennies on the dollar," or so he said.
The first units would be completed within a month, and the rents would be used to make the interest payments.
The investment was almost as risk-free as U.S. government bonds, Mr. Smooth claimed. By the end of the second year, Ms. Naivete had received a lot of fast talk and only one of the promised interest payments.
Have there been any violation of securities laws in this instance?
- A. Yes. Mr. Smooth was required to register the promissory note before he offered it for sale.
- B. Yes. Ms. Naivete has been defrauded by Mr. Smooth.
- C. Both B and C are true statements.
- D. No. This was simply a loan transacted between two parties.
Answer: C
Explanation:
Explanation
Yes, there have been violations of securities laws in this instance; the promissory note required registration, and Ms. Naivete has been defrauded. Promissory notes are considered to be securities as defined by the Uniform Securities Act and, as such, must be registered with the state before they can be offered for sale.
Furthermore, a promissory note is a promise to repay, and Mr. Smooth has defaulted on this promise after telling Ms. Naivete that the investment was close to being risk-free. In essence, he took Ms. Naivete's money under false pretenses when he sold her the note, and that is the definition of fraud.
NEW QUESTION # 71
The current yield on a bond fund refers to
- A. the return that the fund earned because of the capital appreciation of the securities in the fund.
- B. the total return that the fund has earned over the most recent 12-month period.
- C. the percentage increase in the fund's net asset value.
- D. the return that the fund earned based only on the interest income it received
Answer: D
Explanation:
Explanation
The current yield on a bond fund is the return that the fund earned from interest income only. The return from interest income plus the return due to the capital appreciation of the securities make up the total return earned by the fund. The investor's total return is equal to the return on the income received from the fund plus any change in the net asset value of the fund.
NEW QUESTION # 72
In order to maintain its registration with a state, a broker-dealer may be required to
I. take a written or oral exam.
II. pay an annual filing fee.
III. maintain a minimum net capital.
IV. file all advertising material with the Administrator.
- A. I and II only
- B. I, II, III, and IV
- C. II and III only
- D. II, III, and IV only
Answer: B
Explanation:
In order to maintain its registration with a state, a broker-dealer may be required to take a
written or oral exam, pay an annual filing fee, maintain a minimum net capital, and file all advertising
material with the state's Administrator. The Administrator of each state has the authority to determine the
specific requirements for the state. All of the selections are within the realm of the Administrator's
jurisdiction.
NEW QUESTION # 73
Finn Nance has recently passed his CFP exam and is now a certified financial planner. He has new business cards printed that have the words "Certified Financial Planner" printed under his picture. In doing so,
- A. Finn has violated a securities law. The Uniform Securities Act prohibits anyone from using the word
"certified" on any advertisement for services. - B. Finn has possibly violated a state securities regulation. The Administrator in many states prohibits the use of the word "certified" on any advertisement for services.
- C. Finn is not in violation of any laws as long as he has notified the state Administrator of his new designation and his new logo.
- D. Finn has not violated any laws or engaged in any prohibited practices.
Answer: D
Explanation:
Explanation
Finn has not violated any laws or engaged in any prohibited practices in using the words "Certified Financial Planner" on his business cards. Had he indicated he had been certified or approved by the state, he would have been in violation, but he is allowed to indicate a certification with a professional organization in any advertising literature.
NEW QUESTION # 74
Which of the following entities is subject to be accused of churning?
I. investment advisers
II. investment adviser representatives
III. broker-dealers
IV. agents
- A. II and IV only
- B. I, II, III, and IV
- C. II, III, and IV only
- D. I and III only
Answer: B
Explanation:
Selections I, II, III, and IV-investment advisers, their representatives, and broker-dealers and
their agents-are subject to accusations of churning. Any activity on the part of any of these parties that
suggests that they are engaged in encouraging excessive trading on the accounts of their clients makes
them subject to allegations of churning their customers' accounts.
NEW QUESTION # 75
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