Series 63 - Practice Exam Questions with Correct
Answers
An existing customer of a broker-dealer registered in State A is
vacationing in State B. Can the broker-dealer solicit the customer?
Correct Answer-The broker-dealer may solicit the customer in State B
without registering in State B.
If a broker-dealer effects a transaction in a state (unless an exemption is
available), the broker-dealer must be registered in that state. One of the
exemptions available, however, covers the instance where an existing
customer of a registered broker-dealer is vacationing in another state.
That customer may be contacted while on vacation in the other state
without the broker-dealer being required to register in that state.
Which of the following is/are defined as either a "sale" or an "offer to
sell" common stock of an issuer?
I. Any offer to sell the common stock for value
II. Any solicitation of an offer to buy the common stock for value III.
The sale of a bond with detachable warrants to buy the common stock of
that issuer
IV. The gift of the common stock to an employee of the issuer Correct
Answer-I, II, & III
The definition of a "sale" is every contract of sale, contract to sell, or
disposition of a security or interest in a security for value. The definition
of an "offer to sell" is every attempt or offer to dispose of or solicitation
of an offer to buy a security. In addition, the sale or offer of a security
that includes rights or warrants to buy another security is considered to
,be an offer or sale of the other security. The gift of a security is not
considered to be a sale unless the security is assessable. Common stock
is non-assessable; therefore, it is simply a gift, not a sale.
An applicant's registration can be denied by the Administrator if that
individual was convicted within the past ___________ of any
misdemeanor involving a security or any aspect of the securities
business or any felony. Correct Answer-10 years
An applicant's registration can be denied if he or she was convicted of a
misdemeanor involving securities or any felony within the past 10 years.
It is prohibited for an investment adviser to be compensated only on the
basis of __________ achieved. It is allowable for the adviser to receive a
percentage of all assets under management (even if this value includes
capital gains) or for a fixed fee arrangement to be established. Correct
Answer-capital gains
Securities that are sold through a private placement _________. Correct
Answer-are unregistered
Securities sold through a private placement are unregistered and are an
exempt transaction. Under Uniform State Law, a private placement is
defined as an offer to no more than 10 persons in a 12 month period.
The Administrator is NOT empowered to __________. Correct Answer-
Issue injunctions
, The Administrator can issue subpoenas even to persons outside the
Administrator's state. It is also possible for the Administrator to conduct
investigations to determine if any securities laws have been broken and
to hold hearings. It is not possible, however, for the Administrator to
issue an injunction against the alleged violator. The Administrator may
only petition the appropriate court to issue an injunction.
Under the Uniform Securities Act, the term 'sale' or 'sell' includes which
of the following? I. A disposition of a security for consideration
II. A stock dividend given to stockholders in lieu of a cash dividend
III. An exchange of stock in a merger transaction which is approved by
stockholders Correct Answer-I only
To be considered to be a sale, there must be some consideration or
exchange of value. Sales do not include bona fide pledges of securities
as collateral for loans, stock dividends, corporate mergers approved by
stockholders, the exchange of corporate assets in consideration of stock
of another corporation, or acts incidental to judicially-approved
reorganizations in which securities are issued in exchange for other
outstanding securities.
Which of the following actions could constitute fraud?
I. Omission of any material fact II. Omission of any known fact
III. A deceptive statement made in connection with the sale of a
government bond Correct Answer-I & III only
Answers
An existing customer of a broker-dealer registered in State A is
vacationing in State B. Can the broker-dealer solicit the customer?
Correct Answer-The broker-dealer may solicit the customer in State B
without registering in State B.
If a broker-dealer effects a transaction in a state (unless an exemption is
available), the broker-dealer must be registered in that state. One of the
exemptions available, however, covers the instance where an existing
customer of a registered broker-dealer is vacationing in another state.
That customer may be contacted while on vacation in the other state
without the broker-dealer being required to register in that state.
Which of the following is/are defined as either a "sale" or an "offer to
sell" common stock of an issuer?
I. Any offer to sell the common stock for value
II. Any solicitation of an offer to buy the common stock for value III.
The sale of a bond with detachable warrants to buy the common stock of
that issuer
IV. The gift of the common stock to an employee of the issuer Correct
Answer-I, II, & III
The definition of a "sale" is every contract of sale, contract to sell, or
disposition of a security or interest in a security for value. The definition
of an "offer to sell" is every attempt or offer to dispose of or solicitation
of an offer to buy a security. In addition, the sale or offer of a security
that includes rights or warrants to buy another security is considered to
,be an offer or sale of the other security. The gift of a security is not
considered to be a sale unless the security is assessable. Common stock
is non-assessable; therefore, it is simply a gift, not a sale.
An applicant's registration can be denied by the Administrator if that
individual was convicted within the past ___________ of any
misdemeanor involving a security or any aspect of the securities
business or any felony. Correct Answer-10 years
An applicant's registration can be denied if he or she was convicted of a
misdemeanor involving securities or any felony within the past 10 years.
It is prohibited for an investment adviser to be compensated only on the
basis of __________ achieved. It is allowable for the adviser to receive a
percentage of all assets under management (even if this value includes
capital gains) or for a fixed fee arrangement to be established. Correct
Answer-capital gains
Securities that are sold through a private placement _________. Correct
Answer-are unregistered
Securities sold through a private placement are unregistered and are an
exempt transaction. Under Uniform State Law, a private placement is
defined as an offer to no more than 10 persons in a 12 month period.
The Administrator is NOT empowered to __________. Correct Answer-
Issue injunctions
, The Administrator can issue subpoenas even to persons outside the
Administrator's state. It is also possible for the Administrator to conduct
investigations to determine if any securities laws have been broken and
to hold hearings. It is not possible, however, for the Administrator to
issue an injunction against the alleged violator. The Administrator may
only petition the appropriate court to issue an injunction.
Under the Uniform Securities Act, the term 'sale' or 'sell' includes which
of the following? I. A disposition of a security for consideration
II. A stock dividend given to stockholders in lieu of a cash dividend
III. An exchange of stock in a merger transaction which is approved by
stockholders Correct Answer-I only
To be considered to be a sale, there must be some consideration or
exchange of value. Sales do not include bona fide pledges of securities
as collateral for loans, stock dividends, corporate mergers approved by
stockholders, the exchange of corporate assets in consideration of stock
of another corporation, or acts incidental to judicially-approved
reorganizations in which securities are issued in exchange for other
outstanding securities.
Which of the following actions could constitute fraud?
I. Omission of any material fact II. Omission of any known fact
III. A deceptive statement made in connection with the sale of a
government bond Correct Answer-I & III only
