Series 63 Test UPDATED ACTUAL Exam
Questions and CORRECT Answers
According to the Uniform Securities Act, if an employee of an issuer is soliciting employees of
that issuer for the purpose of selling securities, which of the following statements is TRUE -
CORRECT ANSWER - The employee would be considered an agent if she received
commissions or other remuneration
Generally, an employee of an issuer soliciting employees of that issuer for the purpose of selling
securities would be considered an agent of the issuer if the employee received commissions or
other remuneration (such as a bonus based on securities sales). According to the USA, these
transactions are not exempt if the employee receives a commission
Which of the following choices is NOT a security - CORRECT ANSWER - A universal
life insurance policy
A universal life insurance policy is a type of permanent life insurance policy that is regulated by
the insurance commissioner. Variable products, voting trust certificates, and oil, gas, and mining
interests are securities according to the Uniform Securities Act
Which of the following documents must be filed with the state Administrator for registration of
all broker-dealers, investment advisers, agents, and investment adviser representatives -
CORRECT ANSWER - The Consent to Service of Process
The Consent to Service of Process appoints the state Administrator to serve as the applicant's
attorney for the purpose of receiving and processing noncriminal complaints. It is required of all
registrants when they file for registration in a state. The other forms listed may or may not be
filed by certain persons, but the Consent to Service of Process is the only form that is required of
ALL persons
A new client approaches an agent regarding opening a new account but refuses to discuss his
financial status. The agent should - CORRECT ANSWER - Accept only unsolicited orders
until more information is known
,An agent may not solicit orders from a client when no information about the client's financial
status is known
An advisory client of your firm has contacted the Administrator of the state of Kentucky about a
possible violation of the Uniform Securities Act. The firm has its home office in Illinois and is
registered in both states. Which of the following actions would the Administrator of Kentucky be
LEAST likely to take regarding the possible violation?
a. Begin an investigation in Kentucky
b. Open an investigation in Illinois
c. Contact the Illinois Administrator
d. None - CORRECT ANSWER - None
The Administrator has the authority to begin an investigation if a violation has occurred or is
about to occur. The investigation may take place within or outside the state as deemed necessary
Under the Uniform Securities Act, which of the following choices is NOT a security?
a. Non-traded REITs
b. Stock futures
c. Keogh Participation Units
d. Options on currency futures - CORRECT ANSWER - Stock futures
Under the Uniform Securities Act, futures, forwards, currencies, and commodities are not
considered securities. Although futures are not securities, options on futures are. While a Keogh
Plan is not a security, a participation unit in the plan is defined as a security. A real estate
investment trust is a security regardless of how or if it is traded
A newly hired employee is applying for registration as an agent in State Z. What information
does the agent need to disclose on his application for registration (Form U4)?
,I.Any alias that the agent has used
II. A real estate partnership that the agent controlled that declared bankruptcy five years ago
III.The agent has an unsatisfied judgment against him as the result of an auto accident
IV.The fact that the agent's house is in foreclosure - CORRECT ANSWER - I, II, and III
only
An applicant for registration must disclose any alias used, choice (I). The applicant must also
disclose any personal bankruptcies or bankruptcies of entities that he controlled during the last
10 years, choice (II), and unsatisfied judgments, choice (III). Tax liens must also be reported. A
foreclosure is not a reportable item on Form U4
A no-load mutual fund has no:
I. 12b-1 fees
II. Front-end sales charges
III. Contingent deferred sales charges - CORRECT ANSWER - II and III only
A no-load mutual fund may not have any front-end sales charges (loads) or any contingent
deferred sales charges (back-end loads). It may have a 12b-1 fee as long as this fee does not total
more than .25% of the fund's average annual net assets
Decisions settled by arbitration:
a. May be appealed
b. Are not binding if either party contests the decision
c. Are binding upon all parties to the arbitration
d. Are not binding if both parties agree not to accept the decisions - CORRECT
ANSWER - Are binding upon all parties to the arbitration
Decisions settled by arbitration are binding upon all parties to the arbitration. The parties must
agree to accept the findings of the arbitration panel before submitting to arbitration
, Which of the following communications would be exempt from the sales literature and
advertising filing requirements of the Uniform Securities Act?
a. A brochure on U.S. Treasury securities
b. A form letter used to prospect for small business retirement plans
c. An ad espousing the tax advantages of condominium investments
d. A group e-mail sent to several existing clients explaining the advantages of annuity investing -
CORRECT ANSWER - A brochure on U.S. Treasury securities
The Administrator may require the filing of sales literature and advertising for nonexempt
securities. Ads concerning exempt securities (such as Treasuries) are not subject to the filing
requirements under the USA. Individual correspondence is not subject to filing with the
Administrator, but form letters and group e-mails that are considered sales literature, must be
filed
Under the Uniform Securities Act, an institutional investor:
a.Has more than $2.1 million of net worth
b.Has a minimum of $1 million under management with an investment adviser
c.Is designated by rule or order of the Administrator
d.Is any financial institution - CORRECT ANSWER - Is designated by rule or order of the
Administrator
Choices (a) and (b) provides the financial test that an individual must meet to be defined as a
qualified client. Financial intuitions are also defined as institutional investors, but the best
answer is choice (c). The Administrator has the power to designate a person as an institution, by
rule or order.
An agent promoting a new issue knows that one of the officers of the company concerned was
previously with another company that prospered because of her. The agent may:
Questions and CORRECT Answers
According to the Uniform Securities Act, if an employee of an issuer is soliciting employees of
that issuer for the purpose of selling securities, which of the following statements is TRUE -
CORRECT ANSWER - The employee would be considered an agent if she received
commissions or other remuneration
Generally, an employee of an issuer soliciting employees of that issuer for the purpose of selling
securities would be considered an agent of the issuer if the employee received commissions or
other remuneration (such as a bonus based on securities sales). According to the USA, these
transactions are not exempt if the employee receives a commission
Which of the following choices is NOT a security - CORRECT ANSWER - A universal
life insurance policy
A universal life insurance policy is a type of permanent life insurance policy that is regulated by
the insurance commissioner. Variable products, voting trust certificates, and oil, gas, and mining
interests are securities according to the Uniform Securities Act
Which of the following documents must be filed with the state Administrator for registration of
all broker-dealers, investment advisers, agents, and investment adviser representatives -
CORRECT ANSWER - The Consent to Service of Process
The Consent to Service of Process appoints the state Administrator to serve as the applicant's
attorney for the purpose of receiving and processing noncriminal complaints. It is required of all
registrants when they file for registration in a state. The other forms listed may or may not be
filed by certain persons, but the Consent to Service of Process is the only form that is required of
ALL persons
A new client approaches an agent regarding opening a new account but refuses to discuss his
financial status. The agent should - CORRECT ANSWER - Accept only unsolicited orders
until more information is known
,An agent may not solicit orders from a client when no information about the client's financial
status is known
An advisory client of your firm has contacted the Administrator of the state of Kentucky about a
possible violation of the Uniform Securities Act. The firm has its home office in Illinois and is
registered in both states. Which of the following actions would the Administrator of Kentucky be
LEAST likely to take regarding the possible violation?
a. Begin an investigation in Kentucky
b. Open an investigation in Illinois
c. Contact the Illinois Administrator
d. None - CORRECT ANSWER - None
The Administrator has the authority to begin an investigation if a violation has occurred or is
about to occur. The investigation may take place within or outside the state as deemed necessary
Under the Uniform Securities Act, which of the following choices is NOT a security?
a. Non-traded REITs
b. Stock futures
c. Keogh Participation Units
d. Options on currency futures - CORRECT ANSWER - Stock futures
Under the Uniform Securities Act, futures, forwards, currencies, and commodities are not
considered securities. Although futures are not securities, options on futures are. While a Keogh
Plan is not a security, a participation unit in the plan is defined as a security. A real estate
investment trust is a security regardless of how or if it is traded
A newly hired employee is applying for registration as an agent in State Z. What information
does the agent need to disclose on his application for registration (Form U4)?
,I.Any alias that the agent has used
II. A real estate partnership that the agent controlled that declared bankruptcy five years ago
III.The agent has an unsatisfied judgment against him as the result of an auto accident
IV.The fact that the agent's house is in foreclosure - CORRECT ANSWER - I, II, and III
only
An applicant for registration must disclose any alias used, choice (I). The applicant must also
disclose any personal bankruptcies or bankruptcies of entities that he controlled during the last
10 years, choice (II), and unsatisfied judgments, choice (III). Tax liens must also be reported. A
foreclosure is not a reportable item on Form U4
A no-load mutual fund has no:
I. 12b-1 fees
II. Front-end sales charges
III. Contingent deferred sales charges - CORRECT ANSWER - II and III only
A no-load mutual fund may not have any front-end sales charges (loads) or any contingent
deferred sales charges (back-end loads). It may have a 12b-1 fee as long as this fee does not total
more than .25% of the fund's average annual net assets
Decisions settled by arbitration:
a. May be appealed
b. Are not binding if either party contests the decision
c. Are binding upon all parties to the arbitration
d. Are not binding if both parties agree not to accept the decisions - CORRECT
ANSWER - Are binding upon all parties to the arbitration
Decisions settled by arbitration are binding upon all parties to the arbitration. The parties must
agree to accept the findings of the arbitration panel before submitting to arbitration
, Which of the following communications would be exempt from the sales literature and
advertising filing requirements of the Uniform Securities Act?
a. A brochure on U.S. Treasury securities
b. A form letter used to prospect for small business retirement plans
c. An ad espousing the tax advantages of condominium investments
d. A group e-mail sent to several existing clients explaining the advantages of annuity investing -
CORRECT ANSWER - A brochure on U.S. Treasury securities
The Administrator may require the filing of sales literature and advertising for nonexempt
securities. Ads concerning exempt securities (such as Treasuries) are not subject to the filing
requirements under the USA. Individual correspondence is not subject to filing with the
Administrator, but form letters and group e-mails that are considered sales literature, must be
filed
Under the Uniform Securities Act, an institutional investor:
a.Has more than $2.1 million of net worth
b.Has a minimum of $1 million under management with an investment adviser
c.Is designated by rule or order of the Administrator
d.Is any financial institution - CORRECT ANSWER - Is designated by rule or order of the
Administrator
Choices (a) and (b) provides the financial test that an individual must meet to be defined as a
qualified client. Financial intuitions are also defined as institutional investors, but the best
answer is choice (c). The Administrator has the power to designate a person as an institution, by
rule or order.
An agent promoting a new issue knows that one of the officers of the company concerned was
previously with another company that prospered because of her. The agent may:
