Series 63 - Practice Exam Questions
An existing customer of a broker-dealer registered in State A is vacationing in State B.
Can the broker-dealer solicit the customer? - Question and answersThe 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 - Question and answersI,
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. - Question and answers10 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. - Question and answerscapital gains
Securities that are sold through a private placement _________. - Question and
answersare 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 __________. - Question and answersIssue
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 -
Question and answersI 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 -
Question and answersI & III only
The intentional omission of any material information is fraud. Even though government
bonds are exempt securities, they are not exempt from the anti-fraud provisions and
deceptive statements are always considered fraud. Immaterial facts need not be
disclosed.
If a broker-dealer receives an unsolicited customer order to buy a security in the
secondary market, this is a(n): - Question and answersExempt transaction whether the
security involved is exempt or non-exempt
Unsolicited customer orders in the secondary market by or through a broker-dealer are
considered to be exempt transactions under the Act whether the securities involved are
exempt or non-exempt. The Administrator may require that the customer acknowledge
that the sale was unsolicited in writing.
An existing customer of a broker-dealer registered in State A is vacationing in State B.
Can the broker-dealer solicit the customer? - Question and answersThe 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 - Question and answersI,
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. - Question and answers10 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. - Question and answerscapital gains
Securities that are sold through a private placement _________. - Question and
answersare 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 __________. - Question and answersIssue
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 -
Question and answersI 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 -
Question and answersI & III only
The intentional omission of any material information is fraud. Even though government
bonds are exempt securities, they are not exempt from the anti-fraud provisions and
deceptive statements are always considered fraud. Immaterial facts need not be
disclosed.
If a broker-dealer receives an unsolicited customer order to buy a security in the
secondary market, this is a(n): - Question and answersExempt transaction whether the
security involved is exempt or non-exempt
Unsolicited customer orders in the secondary market by or through a broker-dealer are
considered to be exempt transactions under the Act whether the securities involved are
exempt or non-exempt. The Administrator may require that the customer acknowledge
that the sale was unsolicited in writing.
