FINRA Uniform Securities Agent State Law Examination - Series_63 Exam Questions

QUESTION NO: 1
Which of the following would not fall under the classification of "institutional investor"?

QUESTION NO: 2
Which of the following would fall under the definition of "agent," as defined by the Uniform Securities Act
(USA)?

QUESTION NO: 3
You are an investment adviser representative. Your client, Mr. I. M. Pulse, calls you with what he thinks is
exciting news. He just passed a restaurant and saw Microsoft's Bill Gates having lunch with a local
entrepreneur who owns a small firm in the computer software industry that trades on the OTC pink sheets.
He is sure that this means Microsoft is negotiating a purchase of the smaller company and instructs you to
take the cash balance in his account and buy shares of the local company. You should

QUESTION NO: 4
Individual states are prohibited from requiring a broker-dealer or investment adviser to file financial
reports more frequently than:

QUESTION NO: 5
Which of the following persons is required to maintain its records in accordance with state dictates and
meet the minimum net capital requirement imposed by the state?
I. federal covered adviser
II. state-registered investment adviser
III. investment adviser representative

QUESTION NO: 6
Nat Smart was employed as an investment adviser representative and sold many of his clients on a
municipal bond fund of which he was fond, telling his clients that the returns earned on it were completely
free from federal taxation. Unfortunately, he had some unhappy clients when, at the end of the year, they
discovered that they had to pay federal tax on the capital gains earned by the fund when it sold some of
the bonds it held. Nat was as surprised as they were. Based on these facts, which of the following
statements is necessarily true?
I. Because Nat was as surprised as they were, he is guiltless.
II. Nat is subject to civil liability payments.
III. Nat will be subject to the criminal penalties for fraud and may spend time in prison.

QUESTION NO: 7
Mr. Bigwig, CEO of HiGrowth Corporation, meets with the president of BigFee Investment Bankers and
arranges for BigFee to underwrite an Initial Public Offering (IPO) for the firm. When the IPO comes to
market, GetErDone Broker-Dealers is part of the selling group, which handles the sale of the stock to the
public. In this scenario, which party is the issuer?

QUESTION NO: 8
Bootstraps, Inc. is a family-owned business that has experienced enormous growth in the last couple of
years. The business needs more cash to support this growth and has decided to issue some promissory
notes, each with a face value of $5,000, for sale to the general public. The firm plans to hire three
individuals to help them sell these notes. These individuals will earn a commission based on the notes
they sell. Given these facts, which of the following is true?

QUESTION NO: 9
Goldie Locks is an agent with Bear Broker-Dealers. One of her clients is a single woman, Annie Spinster,
who is retired and needs income from her investment portfolio to meet her current needs for liquidity. In
addition to investing in mutual funds, Annie likes the thrill of investing in single stocks and asks Goldie for
recommendations. Goldie recommends Annie invest some of her money in Alcon (ACL), a medical
instrument and supplies company selling on the NYSE, based on the fact that it has a high dividend yield
and is paying a dividend of $2.21 a share, which is guaranteed to continue or even increase, Goldie
assures Annie. Has Goldie violated any laws or engaged in any prohibited practices?

QUESTION NO: 10
Harry Lange manages the investment portfolio for the Fidelity Magellan Mutual Fund. Mr. Lange is a(n)

QUESTION NO: 11
Which of the following laws deals with identity theft protection?

QUESTION NO: 12
In an arrangement between MoeMoney Investment Advisers and one of the firm's clients, the YourMoney
mutual fund, part of MoeMoney's compensation is based how the fund performs compared to the S&P
5 00 Index. If the return on the fund exceeds the return on the index, MoeMoney gets a bonus. The S&P
5 00 had a return of negative 8% this year, and the fund returned a negative 2%, so MoeMoney invoiced
the client for the bonus. Has MoeMoney violated any securities laws?

QUESTION NO: 13
Which of the following statements would not be in violation of NASAA rules regarding the sale of
investment company shares?
I. "Investing your money in shares of this money market mutual fund is identical to putting your money in a
savings account at a bank, except the money market fund provides a higher return."
II. "Our U.S. government bond fund is invested only in government bonds issued by the U.S. government
and is, therefore, a risk-free investment."
III. "You are investing $22,000 in this fund today. The fund has a 5% load at this investment level, but if
you sign a letter of intent to invest another $3,000 within the next 13 months, your load will be reduced to
4 %. If something comes up and you can't invest the extra $3,000 within 13 months, you will only need to
pay the difference in the two loads."

QUESTION NO: 14
A "notice filing" refers to

QUESTION NO: 15
Which of the following conditions is necessary for an act involving securities fraud to be considered
criminal and subject to criminal penalties?