Uniform Securities Agent State Law Examination

Question 1

Julia Hasty has recently applied with the Administrator to be a registered investment adviser in the state. Eager to open her new business, she has business cards printed that indicate that she is a "state-registered" investment adviser and visits some local businesses, asking them for permission to put some of her cards in their waiting rooms.
Has Julia violated any of the provisions of the Uniform Securities Act by distributing her business cards?

A. Yes. Julia is not permitted to advertise as a "state-registered" investment adviser until she receives notification of the acceptance of her application by the state Administrator.

B. No. The provisions of the Uniform Securities Act relate to securities, not people.

C. No. Julia has merely put her business cards in waiting rooms. She has not opened her business to clients yet.

D. No. As long as her application has been submitted and is pending acceptance, Julia has not violated any provisions of the Uniform Securities Act.

Correct Answer: A

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Question 2

Which of the following would meet the requirements for an "exempt security?"

A. a $500,000 promissory note that matures in two years

B. a $25,000 promissory note that matures in three months

C. commercial paper with a $100,000 face value and a maturity of five months that is rated AA by Standard and Poors

D. commercial paper with a $200,000 face value and a maturity of three months that is rated BB by Standard and Poors

Correct Answer: C

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Question 3

Newbie Corporation is considering the possibility of an interstate initial public offering (IPO) of its stock. In the initial meetings with BigFee Investment Bankers, Newbie has learned that the underwriting spread will be
15%. Although the actual offering price won't be set until Newbie's registration statement is approved by the SEC, BigFee has indicated that the offer price will probably be between $3 and $4 a share and that the stock will initially be listed on the OTC Bulletin Board.
What methods for state registration does Newbie have available?
I. registration by coordination
II. registration by notification
III. registration by qualification

A. Method II only

B. Methods I and III only

C. Newbie may elect to register by any one of the above methods although registration by qualification would be the most burdensome choice.

D. Method I only

Correct Answer: B

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Question 4

Under the Uniform Securities Act (USA), the term "investment adviser" does not apply to
I. an investment advisory firm owned and operated by a sole proprietor.
II. a bank or savings institution.
III. an investment adviser representative.
IV. a broker-dealer or its agents if the advice is incidental to the business although there is a nominal charge for any specific investment advice given.

A. II, III and IV only.

B. I, II, III, or IV.

C. II and III only.

D. I, II, and III only.

Correct Answer: C

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Question 5

The current yield on a bond fund refers to

A. the return that the fund earned based only on the interest income it received

B. the total return that the fund has earned over the most recent 12-month period.

C. the return that the fund earned because of the capital appreciation of the securities in the fund.

D. the percentage increase in the fund's net asset value.

Correct Answer: A

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Question 6

Which of the following is not a method that can be used to register securities with the state?

A. registration by exception

B. registration by notification

C. registration by coordination

D. registration by qualification

Correct Answer: A

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Question 7

To say a security is "exempt," means that
I. it is exempt from the state's anti-fraud laws.
II. it is exempt from state registration requirements.
III. any transaction involving it is considered to be an exempt transaction.

A. I and II only

B. II and III only

C. I, II, and III

D. II only

Correct Answer: D

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Question 8

Ken Con is an agent with Blue Sky Broker-Dealers. He gets up early each morning so that he can study any late-breaking news that may affect the markets and figure out ways to incorporate this news into conversations with select clients in order to pressure them to restructure their portfolios by selling holdings they have in one particular industry to invest the money in another particular industry.
Ken has been very successful with this strategy and executes more trades for his clients than any other agent with the firm, but is he in danger of losing his license?

A. Yes. Ken is guilty of the prohibited practice of "tailgating."

B. Yes. Ken is engaging in churning, a prohibited practice and can have his license revoked or suspended.

C. It depends. If his clients have lost money, Ken may lose his license; but if a review indicates that his clients' accounts earn profits, then his license is safe.

D. No. Ken is just a successful sales person who is working harder than the other agents in the firm.

Correct Answer: B

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Question 9

Under the 2002 Uniform Securities Act, registration by coordination allows:

A. both state-registered and out-of-state investment bankers to participate in the underwriting and registration of a new security issue.

B. securities that do not fall within the category of federal covered securities to be registered simultaneously with the SEC and with the states in which the securities will be offered for sale.

C. federal covered securities to be registered simultaneously with the SEC and with the states in which the securities will be offered for sale.

D. issuers of federal covered securities to submit only a notice filing with the Administrator of states in which the securities will be offered for sale.

Correct Answer: B

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Question 10

Which of the following practices would be prohibited in connection with the sale of investment company shares?
I. selling a client shares of a load stock fund when a no load stock fund with the same investment objective exists II. selling the client shares of five S&P 500 Index mutual funds, offered by different fund families III. encouraging a client to swap his money between two funds in the same family without informing him that this creates a taxable event

A. I and II only

B. I and III only

C. II and III only

D. I, II, and III

Correct Answer: C

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Question 11

Once you have passed the Series 63 examination, which entity must then approve your application to sell securities?

A. SEC

B. FINRA

C. NASAA

D. the state administrator

Correct Answer: D

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Question 12

Maddie, a registered agent affiliated with broker-dealer QuikDeals, quit her job on the spur of the moment.
Under the guidelines of the Uniform Securities Act (USA), who is responsible for notifying the Administrator?

A. Maddie has the sole responsibility for notifying the Administrator.

B. QuikDeals has the sole responsibility for notifying the Administrator. Maddie is no longer deemed to be an agent after she terminated her relationship with QuikDeals, so she need do nothing.

C. It depends. If Maddie becomes affiliated with another broker-dealer within thirty days, then she must notify the Administrator of her termination with QuikDeals and her current affiliation with the new firm.
Otherwise, only QuikDeals must notify the Administrator.

D. Both QuikDeals and Maddie are responsible for notifying the Administrator.

Correct Answer: D

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FINRA Uniform Securities Agent State Law Examination - Series63 Exam Practice Test

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