Texas Securities Agent Licensing Exam – Full Test
Bank 2025/2026 (150 Practice Questions + Verified
Answers & Rationales)
1. What is the primary purpose of the Texas Securities Act?
A. To regulate national banking policy
B. To enforce federal securities laws
C. To protect Texas investors from securities fraud (correct answer)
D. To set interest rates for financial institutions
Rationale:
The Texas Securities Act is designed to safeguard Texas investors by preventing
fraud, misrepresentation, and unethical practices. It ensures fair dealing in securities
transactions.
2. Who is responsible for administering the Texas Securities Act?
A. FINRA
B. SEC
C. Texas State Securities Board (TSSB) (correct answer)
D. Treasury Department
Rationale:
The TSSB oversees licensing, registration, enforcement, and education. It ensures
compliance with state-level securities requirements.
3. What is the primary role of a securities agent?
A. Managing client portfolios
B. Creating new investment products
C. Buying or selling securities on behalf of clients (correct answer)
D. Regulating broker-dealers
Rationale:
Agents execute securities transactions for clients under a registered broker-dealer.
They must follow state and federal laws to protect investors.
4. Which of the following requires registration as a securities agent in
Texas?
A. Clerical work for a broker-dealer
B. Soliciting securities sales (correct answer)
,C. Filing paperwork for clients
D. Providing general economic advice
Rationale:
Anyone soliciting or effecting securities transactions on behalf of a broker-dealer
must register as an agent.
5. Which investment is considered a security under Texas law?
A. Fixed annuity
B. Whole life insurance
C. Variable annuity (correct answer)
D. Term insurance
Rationale:
Variable annuities involve market risk and are treated as securities because they are
tied to investment performance.
6. What is required before a security may be legally sold in Texas?
A. FINRA approval
B. Registration with the TSSB or an exemption (correct answer)
C. A federal insurance backing
D. A suitability waiver
Rationale:
All securities must be registered or qualify for an exemption before being offered to
Texas residents.
7. A Texas securities agent must be employed by:
A. Any financial institution
B. A registered broker-dealer (correct answer)
C. A bank only
D. A federal regulator
Rationale:
An agent cannot be licensed independent of a broker-dealer; sponsorship and
supervision are required.
8. What is the purpose of the agent’s registration exam?
A. To test federal tax knowledge
B. To ensure competency in securities regulation and ethics (correct answer)
C. To evaluate sales quotas
D. To measure creditworthiness
,Rationale:
The exam confirms knowledge of laws, products, ethics, and suitability requirements.
9. Which of the following is TRUE regarding an agent’s license?
A. It is valid without firm sponsorship
B. It becomes inactive if the agent leaves their broker-dealer (correct answer)
C. It transfers automatically to a new firm
D. It is permanent
Rationale:
Licensing is firm-specific. If an agent terminates employment, their license becomes
inactive until reassociated.
10. Which of the following is considered a prohibited practice?
A. Recommending suitable investments
B. Giving clients prospectuses
C. Misrepresenting investment risks (correct answer)
D. Documenting transactions
Rationale:
Misrepresentation violates both state and federal securities laws and is a major
regulatory violation.
11. What is “churning” in a client account?
A. Buying conservative investments
B. Excessive trading for the purpose of generating commissions (correct answer)
C. Diversifying for risk reduction
D. Rebalancing a portfolio
Rationale:
Churning occurs when an agent trades excessively to create commissions, harming the
client.
12. Agents must maintain which duty when recommending
investments?
A. Partial disclosure
B. Fair dealing and suitability (correct answer)
C. Profit guarantees
D. Loyalty only to the broker-dealer
, Rationale:
Agents must evaluate the client’s needs, goals, risk tolerance, and financial situation.
13. Which of the following is a security?
A. Precious metals
B. A home mortgage
C. Corporate bonds (correct answer)
D. Physical gold
Rationale:
Debt securities issued by corporations fall under securities regulations.
14. Under Texas law, advertising that is false or misleading is:
A. Discouraged but allowed
B. Allowed with disclaimers
C. Prohibited (correct answer)
D. Only regulated by federal law
Rationale:
Anti-fraud laws forbid deceptive or exaggerated claims in marketing materials.
15. A broker-dealer must supervise:
A. Only federal securities transactions
B. All activities of its agents (correct answer)
C. Only securities sales
D. Only new agents
Rationale:
Firms must oversee all agent activities to prevent fraud and ensure compliance.
16. What is the definition of an accredited investor?
A. Anyone with a college degree
B. High-net-worth individuals and institutions meeting SEC standards (correct
answer)
C. Anyone who files a tax return
D. Anyone with a stock account
Rationale:
Accredited investors are presumed to have financial sophistication and lower need for
protections.
Bank 2025/2026 (150 Practice Questions + Verified
Answers & Rationales)
1. What is the primary purpose of the Texas Securities Act?
A. To regulate national banking policy
B. To enforce federal securities laws
C. To protect Texas investors from securities fraud (correct answer)
D. To set interest rates for financial institutions
Rationale:
The Texas Securities Act is designed to safeguard Texas investors by preventing
fraud, misrepresentation, and unethical practices. It ensures fair dealing in securities
transactions.
2. Who is responsible for administering the Texas Securities Act?
A. FINRA
B. SEC
C. Texas State Securities Board (TSSB) (correct answer)
D. Treasury Department
Rationale:
The TSSB oversees licensing, registration, enforcement, and education. It ensures
compliance with state-level securities requirements.
3. What is the primary role of a securities agent?
A. Managing client portfolios
B. Creating new investment products
C. Buying or selling securities on behalf of clients (correct answer)
D. Regulating broker-dealers
Rationale:
Agents execute securities transactions for clients under a registered broker-dealer.
They must follow state and federal laws to protect investors.
4. Which of the following requires registration as a securities agent in
Texas?
A. Clerical work for a broker-dealer
B. Soliciting securities sales (correct answer)
,C. Filing paperwork for clients
D. Providing general economic advice
Rationale:
Anyone soliciting or effecting securities transactions on behalf of a broker-dealer
must register as an agent.
5. Which investment is considered a security under Texas law?
A. Fixed annuity
B. Whole life insurance
C. Variable annuity (correct answer)
D. Term insurance
Rationale:
Variable annuities involve market risk and are treated as securities because they are
tied to investment performance.
6. What is required before a security may be legally sold in Texas?
A. FINRA approval
B. Registration with the TSSB or an exemption (correct answer)
C. A federal insurance backing
D. A suitability waiver
Rationale:
All securities must be registered or qualify for an exemption before being offered to
Texas residents.
7. A Texas securities agent must be employed by:
A. Any financial institution
B. A registered broker-dealer (correct answer)
C. A bank only
D. A federal regulator
Rationale:
An agent cannot be licensed independent of a broker-dealer; sponsorship and
supervision are required.
8. What is the purpose of the agent’s registration exam?
A. To test federal tax knowledge
B. To ensure competency in securities regulation and ethics (correct answer)
C. To evaluate sales quotas
D. To measure creditworthiness
,Rationale:
The exam confirms knowledge of laws, products, ethics, and suitability requirements.
9. Which of the following is TRUE regarding an agent’s license?
A. It is valid without firm sponsorship
B. It becomes inactive if the agent leaves their broker-dealer (correct answer)
C. It transfers automatically to a new firm
D. It is permanent
Rationale:
Licensing is firm-specific. If an agent terminates employment, their license becomes
inactive until reassociated.
10. Which of the following is considered a prohibited practice?
A. Recommending suitable investments
B. Giving clients prospectuses
C. Misrepresenting investment risks (correct answer)
D. Documenting transactions
Rationale:
Misrepresentation violates both state and federal securities laws and is a major
regulatory violation.
11. What is “churning” in a client account?
A. Buying conservative investments
B. Excessive trading for the purpose of generating commissions (correct answer)
C. Diversifying for risk reduction
D. Rebalancing a portfolio
Rationale:
Churning occurs when an agent trades excessively to create commissions, harming the
client.
12. Agents must maintain which duty when recommending
investments?
A. Partial disclosure
B. Fair dealing and suitability (correct answer)
C. Profit guarantees
D. Loyalty only to the broker-dealer
, Rationale:
Agents must evaluate the client’s needs, goals, risk tolerance, and financial situation.
13. Which of the following is a security?
A. Precious metals
B. A home mortgage
C. Corporate bonds (correct answer)
D. Physical gold
Rationale:
Debt securities issued by corporations fall under securities regulations.
14. Under Texas law, advertising that is false or misleading is:
A. Discouraged but allowed
B. Allowed with disclaimers
C. Prohibited (correct answer)
D. Only regulated by federal law
Rationale:
Anti-fraud laws forbid deceptive or exaggerated claims in marketing materials.
15. A broker-dealer must supervise:
A. Only federal securities transactions
B. All activities of its agents (correct answer)
C. Only securities sales
D. Only new agents
Rationale:
Firms must oversee all agent activities to prevent fraud and ensure compliance.
16. What is the definition of an accredited investor?
A. Anyone with a college degree
B. High-net-worth individuals and institutions meeting SEC standards (correct
answer)
C. Anyone who files a tax return
D. Anyone with a stock account
Rationale:
Accredited investors are presumed to have financial sophistication and lower need for
protections.
