Series 63 Final Exam 5 UPDATED
ACTUAL Exam Questions and CORRECT
Answers
An investment adviser's compensation could be based on: - CORRECT ANSWER -A
percentage of the value of the fund averaged over a prescribed period
Under the National Securities Markets Improvement Act (NSMIA) investment advisers are
required to register at the state level or the federal level, unless exempt. Which TWO of the
following statements are TRUE regarding investment advisers with $95 million of assets under
management? - CORRECT ANSWER - I. They generally must register in any states in
which they will conduct business.
III. They must register with the SEC if the state in which they conduct business has no
requirement for registration of investment advisers.
Which of the following investments by a fiduciary MOST likely violates prudent investor
standards? - CORRECT ANSWER - Recommending that 100% of a client's retirement
assets be invested in employer stock
At retirement, a client wants to invest a rollover from a 401(k) account into an IRA. Which of the
following investments is the most suitable recommendation? - CORRECT ANSWER -A
balanced fund
An agent, who is registered in State A, receives a call from a prospective client in State B. The
client wants to place an order to buy some stock, but the agent is not registered in State B. The
prospective client's mother, however, lives in State A. The agent should: - CORRECT
ANSWER - Refuse the order
A high-ranking executive wants to sell his shares of his company's stock. The company is about
to announce its quarterly earnings. The executive may sell this stock: - CORRECT
ANSWER - After the company issues a press release stating its earnings
, An agent's application includes which of the following choices? - CORRECT ANSWER -
I. A filing fee
II. Work history
III. A Consent to Service of Process
Under the Uniform Securities Act, which of the following persons automatically becomes
registered as an investment adviser representative when the investment adviser's registration
becomes effective? - CORRECT ANSWER - Only those officers, directors, and partners
with management responsibilities
A broker-dealer is registered in State A. Which TWO of the following statements are TRUE
regarding the examination of that broker-dealer's records by the Administrator of State A? -
CORRECT ANSWER - I. The Administrator may examine the broker-dealer's records
even if they are located in State B
IV. The Administrator may examine the broker-dealer's records with good reason
The maximum civil penalty for insider trading violations is: - CORRECT ANSWER -
Treble damages
A purchaser wishes to take action against a seller to recover money paid for securities issued in
violation of blue-sky laws. Under the Uniform Securities Act, the burden to prove that the stock
was sold in violation is on the: - CORRECT ANSWER - Purchaser
An agent for a broker-dealer is registered in State A. The agent has a prospective client who lives
in State B and wants to open an account, but neither the agent nor the broker-dealer is registered
in State B. The agent suggests that the client use her parents' address to open the account since
they reside in State A and she is currently visiting them. May the broker-dealer open the
account? - CORRECT ANSWER - Under no circumstances
An investment adviser is registered in State A, where all of its offices are currently located. One
of its representatives lives in State B and is in the process of opening a satellite office there to see
if she can attract more clients in State B. Right now, the adviser's only clients in State B are
institutions. What must take place before the IAR may commence doing business from her new
ACTUAL Exam Questions and CORRECT
Answers
An investment adviser's compensation could be based on: - CORRECT ANSWER -A
percentage of the value of the fund averaged over a prescribed period
Under the National Securities Markets Improvement Act (NSMIA) investment advisers are
required to register at the state level or the federal level, unless exempt. Which TWO of the
following statements are TRUE regarding investment advisers with $95 million of assets under
management? - CORRECT ANSWER - I. They generally must register in any states in
which they will conduct business.
III. They must register with the SEC if the state in which they conduct business has no
requirement for registration of investment advisers.
Which of the following investments by a fiduciary MOST likely violates prudent investor
standards? - CORRECT ANSWER - Recommending that 100% of a client's retirement
assets be invested in employer stock
At retirement, a client wants to invest a rollover from a 401(k) account into an IRA. Which of the
following investments is the most suitable recommendation? - CORRECT ANSWER -A
balanced fund
An agent, who is registered in State A, receives a call from a prospective client in State B. The
client wants to place an order to buy some stock, but the agent is not registered in State B. The
prospective client's mother, however, lives in State A. The agent should: - CORRECT
ANSWER - Refuse the order
A high-ranking executive wants to sell his shares of his company's stock. The company is about
to announce its quarterly earnings. The executive may sell this stock: - CORRECT
ANSWER - After the company issues a press release stating its earnings
, An agent's application includes which of the following choices? - CORRECT ANSWER -
I. A filing fee
II. Work history
III. A Consent to Service of Process
Under the Uniform Securities Act, which of the following persons automatically becomes
registered as an investment adviser representative when the investment adviser's registration
becomes effective? - CORRECT ANSWER - Only those officers, directors, and partners
with management responsibilities
A broker-dealer is registered in State A. Which TWO of the following statements are TRUE
regarding the examination of that broker-dealer's records by the Administrator of State A? -
CORRECT ANSWER - I. The Administrator may examine the broker-dealer's records
even if they are located in State B
IV. The Administrator may examine the broker-dealer's records with good reason
The maximum civil penalty for insider trading violations is: - CORRECT ANSWER -
Treble damages
A purchaser wishes to take action against a seller to recover money paid for securities issued in
violation of blue-sky laws. Under the Uniform Securities Act, the burden to prove that the stock
was sold in violation is on the: - CORRECT ANSWER - Purchaser
An agent for a broker-dealer is registered in State A. The agent has a prospective client who lives
in State B and wants to open an account, but neither the agent nor the broker-dealer is registered
in State B. The agent suggests that the client use her parents' address to open the account since
they reside in State A and she is currently visiting them. May the broker-dealer open the
account? - CORRECT ANSWER - Under no circumstances
An investment adviser is registered in State A, where all of its offices are currently located. One
of its representatives lives in State B and is in the process of opening a satellite office there to see
if she can attract more clients in State B. Right now, the adviser's only clients in State B are
institutions. What must take place before the IAR may commence doing business from her new
