Certification Training for Series63 Exam Dumps Test Engine [2024]
Nov 28, 2024 Step by Step Guide to Prepare for Series63 Exam
NEW QUESTION # 69
A broker-dealer of commodity futures contracts has been profiting by trading for its own account either before or after executing a client's trade on the same commodity, depending on which will be most advantageous.
Under the Uniform Securities Act, the broker-dealer is guilty of
- A. fraud.
- B. churning.
- C. nothing. The Uniform Securities Act (USA) deals only with securities, and a commodity futures contract is not a security.
- D. unauthorized transactions.
Answer: C
Explanation:
Explanation
A broker-dealer of commodity futures contracts is guilty of nothing under the Uniform Securities Act since a commodity futures contract is not a security as defined by the USA. The broker-dealer may, however, find himself in trouble with the Commodity Futures Trading Commission, which is the regulatory agency of the futures market.
NEW QUESTION # 70
"T + 3" refers to
- A. the fact that the settlement date will be three business days after the trade date, which is the "regular way settlement" for transactions involving stocks and corporate and municipal bonds.
- B. the form, also known as a "trade ticket," that is filled out when an order is entered into the market.
- C. the form that is filled out and sent to the client confirming that the trade has been executed.
- D. a procedure to minimize the potential for money laundering.
Answer: A
Explanation:
Explanation
"T + 3" is an abbreviation indicating that the settlement date will be three business days after the trade date, which is the "regular way settlement" for transactions involving stocks and corporate and municipal bonds.
NEW QUESTION # 71
A "market not held" order is
- A. a prohibited activity in which an agent engages in the purchase or sale of securities that are not offered
by his broker-dealer. - B. an order to sell securities that the investor owns if the stock decreases by a certain amount from the
current price. - C. an order in which the client tells the broker to use his own discretion in timing a purchase or sale in an
attempt to get a better price. - D. an order to buy or sell a stock at a specified price, which differs from the current market price.
Answer: C
Explanation:
A "market not held" order is one in which the client tells the broker to use his own discretion
in timing a purchase or sale in an attempt to get a better price than the current market price. An order to
buy or sell stock at a specified price is a limit order. An order to sell securities that the investor owns if the
stock decreases by a certain amount is known as a stop sell order or a stop loss sell order.
NEW QUESTION # 72
Treadwater Bank and Trust is selling a portfolio of municipal bonds it owns to the SafeRisk Insurance
Corporation. Under the Uniform Securities Act (USA), in this transaction Treadwater is defined as a
- A. broker-dealer.
- B. issuer.
- C. agent.
- D. none of the above.
Answer: D
Explanation:
When Treadwater Bank and Trust sells municipal bonds it owns to SafeRisk, it does not
meet the USA definition of a broker-dealer, an agent, or an issuer. As a bank, Treadwater is automatically
excluded as a broker-dealer. Nor can Treadwater be defined as an agent since an agent can only be an
individual. Treadwater is not the issuer of the securities; the state and local governments that originally
issued the securities are.
NEW QUESTION # 73
You have recently discovered that a security you purchased has not been registered with the state, nor is
it exempt from registration. You can file a civil claim against the seller as long as you do so within
- A. three years from discovery or five years from the event, whichever comes first.
- B. one year from discovery.
- C. five years.
- D. two years from discovery or three years from the event, whichever comes first.
Answer: D
Explanation:
If you discover that a security you purchased has not been registered with the state and was
sold unlawfully, you can file a civil claim against the seller as long as you do so within two years from
discovery or three years from the event, whichever comes first, under the guidelines of the Uniform
Securities Act. Therefore, if you know about an unlawful sale for more than two years or if the sale took
place more than three years ago, you cannot sue. The statute of limitations has expired.
NEW QUESTION # 74
BondsRUs is a broker-dealer that (unsurprisingly) specializes in bonds. The firm has found that it is able to sell Treasury bonds that it buys for $90 per $100 of par value for $99 per $100 of par value to some of its more naive clients, who never pay attention to the confirmation statements BondsRUs sends them. BondsRUs is guilty of
- A. fraud.
- B. nothing. It is acting as a dealer in bonds and, as such, can charge its clients whatever the clients are willing to pay.
- C. both B and C.
- D. overcharging its clients by unreasonable markups. A $9 dealer's spread on Treasury bonds is unwarranted.
Answer: D
Explanation:
Explanation
BondsRUs is guilty of overcharging its clients by unreasonable markups. A $9 dealer's spread on a risk-free investment such as a Treasury bond is unwarranted, and this practice is prohibited.
Based on the information provided, BondsRUs is not guilty of fraud since it appears that the firm is revealing the markup in its confirmation statements. The clients just aren't paying attention.
NEW QUESTION # 75
Individual states are prohibited from requiring a broker-dealer or investment adviser to file financial reports more frequently than:
- A. twelve times a year.
- B. once a year.
- C. four times a year.
- D. twice a year.
Answer: C
Explanation:
Explanation
Individual states are prohibited from requiring a broker-dealer or investment adviser to file financial reports more frequently than four times a year. Under the Securities and Exchange Act of 1934, individual states are prohibited from imposing more stringent requirements than those already required by the SEC, and the SEC requires quarterly reporting. Therefore, a state may not require that a broker-dealer or investment adviser file monthly reports with it.
NEW QUESTION # 76
Which of the following would a firm not be expected to provide to the Administrator when registering an issue of securities with the state?
- A. the agreement between the issuing firm and the underwriters.
- B. The firm will be expected to provide all of the above to the Administrator when registering an issue of securities with the state.
- C. the agreement among the underwriters themselves.
- D. all sales and advertising materials that will be used in conjunction with the offering.
Answer: B
Explanation:
Explanation
The firm will be expected to provide all of the above-sales and advertising materials to be used in the offering, the agreement between the issuing firm and its underwriters, and the agreement among the underwriters themselves.
NEW QUESTION # 77
While on vacation in Colorado, Massachusetts resident Ms. Jetset meets Mr. Snow, a registered
representative with a Colorado broker-dealer, on a ski lift and accepts a dinner engagement with him later
that evening, during which he obtains her cell phone number. A week later, while she is lounging around
in her Florida beach condo, he calls and interests her in a local software company that is selling its
preferred stock to investors and encourages her to buy it. Ms. Jetset tells Mr. Snow she'll think about it
and calls him after she returns to her home in Massachusetts to tell him to buy the stock for her and sends
him a check via express mail. Later, Ms. Jetset learns that the preferred stock certificate that she received
is-and always was-a worthless piece of paper, and that, in fact, no such company ever existed. Which
state Administrator has jurisdiction in this instance?
I. the Administrator of the state of Colorado
II. the Administrator of the state of Florida
III. the Administrator of the state of Massachusetts
- A. I only
- B. I and II only
- C. I, II, and III
- D. I and III only
Answer: C
Explanation:
All three state administrators have jurisdiction since Mr. Snow made the offer to sell from
Colorado, to a person who was in Florida at the time, and Ms. Snow accepted the offer and received the
certificate in her home state of Massachusetts. According to NASAA, an Administrator has jurisdiction
over all offers and all acceptances of offers to purchase or sell securities if they "originate from, are
directed to, or are accepted in a state.
NEW QUESTION # 78
Which of the following statements is false?
- A. The minimum net capital requirement for investment advisers that take custody of their clients' assets is higher than the net capital requirement for advisers who do not take custody of the assets.
- B. None of the above statements is false; all are true statements.
- C. A state cannot require a higher minimum net capital for investment advisers than the amount specified by the Investment Advisers Act of 1940.
- D. A state cannot require a higher minimum net capital for broker-dealers than the amount specified by the Securities Exchange Act of 1934.
Answer: C
Explanation:
Explanation
"A state cannot require a higher minimum net capital for investment advisers than the amount specified by the Investment Advisers Act of 1940" is a false statement. The Investment Advisers Act of 1940 does not specify a minimum net capital requirement. The Act simply indicates that if an investment adviser is already registered in one state and meeting that state's minimum net capital requirement, a second state can't impose a higher net capital requirement on it.
NEW QUESTION # 79
In order to maintain its registration with a state, a broker-dealer may be required to:
I. take a written or oral exam.
II. pay an annual filing fee.
III. maintain a minimum net capital.
IV. file all advertising material with the Administrator.
- A. I, II, III, and IV
- B. II and III only
- C. II, III, and IV only
- D. I and II only
Answer: A
Explanation:
Explanation
In order to maintain its registration with a state, a broker-dealer may be required to take a written or oral exam, pay an annual filing fee, maintain a minimum net capital, and file all advertising material with the state's Administrator. The Administrator of each state has the authority to determine the specific requirements for the state. All of the selections are within the realm of the Administrator's jurisdiction.
NEW QUESTION # 80
Elizabeth is the owner of Lizbeth Investment Advisers, a small, state-registered investment advisory firm.
She has decided that her firm needs a niche and has learned that a consulting group is coming to the area
and offering a 3-day seminar on asset allocation for senior citizens offered by Advantage for Retirement
Persons (ARP). The seminar will cost $1,000 per individual, but after attending the seminar, each
attendee will receive a certificate verifying their involvement in the program. Elizabeth decides this is the
niche she has been looking for and signs up herself and her three investment adviser representatives for
the program. After attending the seminar and receiving their certificates, Elizabeth and her team can
- A. have the words "Senior-Citizen Investment Specialists" printed on their business cards.
- B. indicate that they are certified by the ARP program since money was paid for their attendance.
- C. represent themselves as certified senior citizen investment advisers.
- D. do none of the above.
Answer: D
Explanation:
After attending the ARP seminars on asset allocation for senior citizens, Elizabeth and her
team cannot represent themselves as certified senior citizen investment advisers, print "Senior-Citizen
Investment Specialists" on their business cards, or indicate that they are certified by the ARP program.
Under the NASAA model rules, their attendance does not entitle them to say they are in any way
especially certified to serve senior citizens. The attendance certification they received does not have any
competency requirements attached.
NEW QUESTION # 81
Which of the following securities would not necessarily be exempt from state registration?
- A. a stock listed on the Tokyo Stock Exchange
- B. a stock listed as a NASDAQ National Market Issue.
- C. a bond issued by another state's employees' credit union
- D. a bond guaranteed by the Canadian government
Answer: A
Explanation:
Explanation
Stocks listed on the Tokyo Stock Exchange would not necessarily be exempt from state registration. Stocks that are registered with the SEC, such as NASDAQ National Market Issue stocks, securities issued or guaranteed by the Canadian government, and securities issued or guaranteed by banks or credit unions are all exempt.
NEW QUESTION # 82
Which of the following entities is subject to be accused of churning?
I. investment advisers
II. investment adviser representatives
III. broker-dealers
IV. agents
- A. I, II, III, and IV
- B. II, III, and IV only
- C. I and III only
- D. II and IV only
Answer: A
Explanation:
Selections I, II, III, and IV-investment advisers, their representatives, and broker-dealers and
their agents-are subject to accusations of churning. Any activity on the part of any of these parties that
suggests that they are engaged in encouraging excessive trading on the accounts of their clients makes
them subject to allegations of churning their customers' accounts.
NEW QUESTION # 83
Mr. Teche is an agent with broker-dealer CanDo, and his only compensation is the commissions he earns on trades he executes. He has applied for and been granted an adjunct teaching position with a local university that will allow him to earn money while he is establishing himself.
Which of the following statements are true?
- A. CanDo can deny Mr. Teche permission to accept the adjunct teaching position.
- B. Mr. Teche is, in essence, an independent contractor with broker-dealer CanDo and can engage in any other business activity at will.
- C. Both A and B are true.
- D. As an agent with broker-dealer CanDo, Mr. Teche must notify CanDo in writing of this position prior to accepting it.
Answer: C
Explanation:
Explanation
Both statements A and B are true. As an agent for broker-dealer CanDo, Mr. Teche is required to inform CanDo in writing before accepting any outside position that will provide him with additional compensation, and CanDo has the right to deny Mr. Teche the permission to accept this position.
NEW QUESTION # 84
uestion No: 157
An investment adviser may act as a custodian for a client's securities if
I. the Administrator of the state doesn't have a rule prohibiting custodial arrangements.
II. he informs the state Administrator in writing that he will be acting as a custodian for the client.
III. he arranges to pay an independent certified public accountant to perform an unannounced audit of his books each year so that the accountant can report his findings to the state Administrator.
- A. I only
- B. I and II only
- C. I and III only
- D. I, II and III
Answer: D
Explanation:
Explanation
Selections I, II, and III are true statements. In order for an investment adviser to act as a custodian for a client's securities, he must first make certain that the Administrator of the state in which he's registered does not prohibit it. Then he must inform the Administrator in writing that he will be acting as a custodian for the client, and he has to pay for an independent CPA to audit his books once a year to make certain that everything is copasetic, upon which the CPA reports his findings to the state Administrator. There are also other requirements that must be met.
NEW QUESTION # 85
Under the guidelines of the Bank Secrecy Act (BSA), the Treasury Department now requires
broker-dealers to obtain and keep certain information relating to clients that make or receive funds
transfers that involve
- A. $5,000 or more.
- B. $100,000 or more.
- C. $10,000 or more.
- D. $3,000 or more.
Answer: D
Explanation:
Under the guidelines of the BSA, the Treasury Department now requires broker-dealers to
obtain and keep information relating to clients that make or receive funds transfers that involve $3,000 or
more. If the transaction is a cash transaction over $10,000, the same rules apply, and a Currency
Transaction Report must be filed with FinCEN. Under the USA Patriot Act, if the broker-dealer thinks that
a transaction of $5,000 or more is suspect, the broker-dealer must file a suspicious activity report (SAR.)
NEW QUESTION # 86
A tombstone advertisement is
- A. the only type of advertisement that an investment advisory firm is allowed to use.
- B. the announcement of a new security that may become available for purchase.
- C. an offer to sell a new security that is being issued by an Arizona firm.
- D. an offer to sell a new security.
Answer: B
Explanation:
A tombstone advertisement is an announcement of a new security that may become
available for purchase. It is the only type of advertisement that is allowed during the "cooling off period"
once a firm has filed a registration statement for a new security. It is not an offer to sell the security, an act
that is strictly prohibited during this period.
NEW QUESTION # 87
Mr. Teche is an agent with broker-dealer CanDo, and his only compensation is the commissions he earns
on trades he executes. He has applied for and been granted an adjunct teaching position with a local
university that will allow him to earn money while he is establishing himself. Which of the following
statements are true?
- A. CanDo can deny Mr. Teche permission to accept the adjunct teaching position.
- B. As an agent with broker-dealer CanDo, Mr. Teche must notify CanDo in writing of this position prior to
accepting it. - C. Both A and B are true.
- D. Mr. Teche is, in essence, an independent contractor with broker-dealer CanDo and can engage in any
other business activity at will.
Answer: C
Explanation:
Both statements A and B are true. As an agent for broker-dealer CanDo, Mr. Teche is
required to inform CanDo in writing before accepting any outside position that will provide him with
additional compensation, and CanDo has the right to deny Mr. Teche the permission to accept this
position.
NEW QUESTION # 88
Shady Corporation's executives are concerned over the firm's steadily declining stock price and decide to
do something about it. They each decide to make significantly large purchases of their firm's stock in
order to stabilize and hopefully even to drive up its price, reasoning that they can sell the stock for the
higher price down the road and profit from the transaction. You are a broker-dealer for the firm's
executives. Are Shady's executives planning to do anything illegal?
- A. No. It's a win-win. They are using their own money to buy stock of their firm, and this can help drive the
stock price up and put profits in their pockets. - B. No. As long as they follow the rules and report their purchases to the SEC, it is not illegal for them to
purchase shares of their firm's stock. - C. Yes. Although it is not illegal for them to purchase shares of their firm's stock, they cannot do so in
order to try to manipulate the price of the stock. - D. Yes. To purchase shares of their own company is considered to be illegal insider trading.
Answer: C
Explanation:
Yes. Although it is not illegal for Shady's executives to purchase shares of their firm's stock,
in this case they are planning to do something illegal in deciding to make significantly large purchases of
their firm's stock in order to manipulate the price. This is an example of price pegging.
NEW QUESTION # 89
An investment adviser may not
- A. also be registered as a broker-dealer in the state.
- B. accept any kind of soft dollar compensation for using certain broker-dealers to execute trades on their clients' accounts.
- C. take a position-either long or short-in securities in which any of its clients have a position.
- D. recommend a stock to a client that the adviser itself holds without disclosing to the client that the adviser owns the stock.
Answer: D
Explanation:
Explanation
An investment adviser may not recommend a stock to the client that the adviser holds without disclosing to the client that it owns the stock. They are permitted to also be registered as a broker-dealer in the state and to accept certain types of soft dollars as compensation from brokers. And they can have positions in securities that their clients have positions in-just as long as this is disclosed.
NEW QUESTION # 90
John Ketchum is an investment adviser representative with Load Investment Advisers, which has a family of load funds that it encourages its representatives to promote. Representatives of the firm that sell shares in these funds to their clients receive a greater share of the load than they do if they sell load funds offered by other firms.
Based on these facts, which of the following statements is true?
- A. Both A and B are true.
- B. John is obligated to try to sell his clients the funds offered by Load first since he is affiliated with them and has a fiduciary responsibility to them.
- C. If, after reviewing the information form a client has filled out, John believes that one of Load's funds is an appropriate investment, John can recommend that the client invest in that fund. There is no disclosure requirement necessary if the recommendation is a sound one that can be proved to be based on the client's specific situation.
- D. John must provide his clients with a written disclosure that he will receive a greater remuneration for selling shares in the Load family of funds than if he sells them shares in other funds before he provides his clients with any investment advice.
Answer: D
Explanation:
Explanation
As a representative for a family of load funds who receives greater remuneration for selling those funds, John must provide his clients with a written disclosure of this fact before providing any advice, according to NASAA Model Rules. This constitutes a material conflict of interest that must be disclosed "to clients in writing before any advice is rendered." John is not obligated to try to sell his clients the funds offered by Load first. His fiduciary responsibility is to his clients, not his employer.
NEW QUESTION # 91
Penny Swyne, an agent employed by Bear Broker-Dealers, has received a written complaint via e-mail
from Mr. Wolf regarding her performance as his agent. What are Ms. Swyne's legitimate options?
- A. Ms. Swyne must provide Bear Broker-Dealers with a copy of the complaint.
- B. As illegal as it may sound, since the complaint was via e-mail, Ms. Swyne can hit the delete button and
make it all go away. - C. Ms. Swyne must forward the complaint to the state Administrator.
- D. Ms. Swyne can call Mr. Wolf and offer to meet him for a romantic dinner and try to convince him to
revoke the complaint.
Answer: A
Explanation:
Ms. Swyne must provide Bear Broker-Dealers with a copy of the complaint sent by Mr. Wolf.
Bear Broker-Dealers is required to respond to this complaint in writing and keep a record of it. E-mails are
treated the same as snail-mails.
NEW QUESTION # 92
Which of the following would not appear on a trade confirmation?
- A. the client's account number
- B. the settlement date
- C. the commission
- D. All of the above items appear on a trade confirmation.
Answer: D
Explanation:
Explanation
All of the items listed appear on a trade confirmation-the client's account number, the commission, and the settlement date-as well as a lot of additional information.
NEW QUESTION # 93
Broker-Dealer Wheeler has no offices in the state. Wheeler does, however, sell corporate bonds from his portfolio to banks and insurance companies located in the state that purchase the bonds for their investment portfolios. He executes about twelve of these transactions a year. Wheeler profits from the price appreciation of the bonds during the time he held them, but receives no other form of compensation. Based on these facts,
- A. Wheeler must register as a broker-dealer in the state, and the securities must also be registered before they can be sold to in-state investors.
- B. Wheeler need not register in the state, and the securities are also exempt from registration.
- C. Wheeler need not register in the state, but the securities must be registered before they can be sold to in-state investors.
- D. Wheeler must register as a broker-dealer in the state, but the securities do not need to be registered.
Answer: B
Explanation:
Explanation
Since Wheeler has no offices in the state and is selling bonds from his portfolio to institutional investors, Wheeler need not register in the state, and the securities are exempt from registration. Broker-dealers with no physical location in a state that are doing business with other broker-dealers or with institutional investors such as banks and insurance companies that do have offices in that state are exempted from registering in the state.
Securities sales to institutional investors are exempt transactions, and securities sold in exempt transactions are themselves exempt from state registration requirements.
NEW QUESTION # 94
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