[Q105-Q120] PASS Series63 exam with FINRA Real Exam Questions – 100% Valid!

Series63 FINRA

admin • February 3, 2024

[Q105-Q120] PASS Series63 exam with FINRA Real Exam Questions – 100% Valid!

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PASS Series63 exam with FINRA Real Exam Questions – 100% Valid!

Actual Series63 Exam Recently Updated Questions with Free Demo

NEW QUESTION 105
Noah Aull is an investment adviser representative with Canto Investment Advisers. A client has called and told Noah that he heard about a firm that had recently completed an IPO at a party he had attended that weekend and instructed Noah to purchase shares of the company, which was now trading on the OTC Bulletin Board. Noah did some research and felt the company was far too risky an investment for this client, so he did not execute the trade. This turned out to be fortunate for his client since the firm became insolvent within six months of its IPO.
Has Noah done anything wrong?

Yes. Noah is guilty of misappropriation and could have his license revoked.

No. Noah did what he is hired to do-manage his clients’ accounts to the best of his ability.

Yes. Noah is guilty of not following a client’s instructions and could have his license revoked.

Yes. Noah is guilty of making an unauthorized transaction and could have his license revoked.

Explanation
Yes. Noah is guilty of not following a client’s instructions and could have his license revoked. A refusal to act on a client’s legitimate order is a prohibited practice, even if the client would have lost money after-the-fact.

NEW QUESTION 106
Which of the following is not a security, as defined by the Uniform Securities Act?
I. an option contract
II. a futures contract on gold
III. a 401K plan
IV. a variable annuity

None of the selections listed are securities.

Only Selection III is not a security.

Only Selections II and III are not securities.

Selections II, III and IV are not securities.

Explanation
Only Selections II and III are not securities. Neither retirement plans nor commodity futures contracts are deemed to be securities by the Uniform Securities Act. A 401K plan may be invested in securities, but it is not a security itself. A gold futures contract is a contract between two parties for the delivery of the underlying asset, gold. The profits (or losses) are not dependent on the performance of an outside party, which is a critical element, based on a 1946 U.S. Supreme Court decision, which defines a security as “an investment of money. .
. with profits to come solely from the efforts of others.”

NEW QUESTION 107
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

represent themselves as certified senior citizen investment advisers.

have the words “Senior-Citizen Investment Specialists” printed on their business cards.

indicate that they are certified by the ARP program since money was paid for their attendance.

do none of the above.

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 108
You have passed the necessary exams (congratulations!) and are applying for registration as a securities agent.
It is already the end of September. Therefore, you must pay

one-fourth of the annual fee required since only one quarter of the year remains.

the full annual fee, and your license will expire on September 30th next year.

the full annual fee, and your license will expire on December 31st next year.

the full annual fee, and your license will expire on December 31st this year.

Explanation
Once you have passed the necessary exams and are applying for registration as an agent, you must pay the full annual fee and your license will expire on December 31st of the current year, no matter how late in the year it is.

NEW QUESTION 109
Which of the following is not one of the criteria for a security to be eligible for registration by notification?

The issuer must have preferred stockholders as well as common stockholders.

The issuer must have a net worth of $4 million, or its net income before tax for at least two of the

The issuer must never have defaulted on any bond or long-term lease obligation.

If the security to be issued is an equity interest in the firm, its offer price has to be at least $5 a

Explanation
The issuer does not have to have both preferred stockholders and common shareholders in order to be eligible for registration by notification. If, however, the issuer does use preferred stock financing, it must not have missed a preferred stock dividend payment.

NEW QUESTION 110
Which of the following trades is illegal?

a short sale

a margin transaction

a market-not-held order

the sale of a mutual fund if the purchaser hasn’t received a prospectus

It is illegal to sell a mutual fund if the purchaser hasn’t received a prospectus. The purchaser
must receive this no later than the date on which the trade confirmation is due. Short sales, margin
transactions, and market-not-held orders are all legitimate.

NEW QUESTION 111
An individual who represents a broker-dealer in the buying and selling of securities is called a(n):

underwriter

issuer

agent

administrator

Explanation
An individual who represents a broker-dealer in buying and selling securities is called an agent or a registered representative. An agent may also work for an issuer, which refers to the entity that is selling securities to raise money for itself. An underwriter is the entity that aids the issuer in bringing the new securities to market.
Administrator is the title many states use to refer to the official in charge of enforcing the state’s securities regulations.

NEW QUESTION 112
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 acting as a dealer?

HiGrowth Corporation

Mr. Bigwig

BigFee Investment Bankers

GetErDone Broker-Dealers

BigFee Investment Bankers is acting as a dealer. In underwriting the securities, the firm is
purchasing them from HiGrowth and selling the securities to the public. If the securities don’t sell for the
amount that BigFee thinks they can, BigFee takes the loss as owner of the securities.

NEW QUESTION 113
Which of the following statements is false?

A state cannot require a higher minimum net capital for broker-dealers than the amount specified by
the Securities Exchange Act of 1934.

A state cannot require a higher minimum net capital for investment advisers than the amount specified
by the Investment Advisers Act of 1940.

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.

None of the above statements is false; all are true statements.

“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 114
A broker-dealer cannot legally be

a partnership.

an individual.

a sole-proprietorship.

A broker-dealer can be any of the above.

A broker-dealer can be a partnership, an individual, or a sole-proprietorship under the
guidelines of the Uniform Security Act.

NEW QUESTION 115
A variable annuity is:

not a security and, therefore, does not have to be registered with the state.

not a security, but is still required to be registered with the state before it can be offered for sale.

a security and, therefore, has to be registered with the state before it can be offered for sale.

a security, but is exempt from state registration.

Explanation
A variable annuity is defined as a security, but is exempt from state registration in the opinion of the North American Securities Administrators Association (NASAA.) The Supreme Court of the U.S. passed a ruling that deemed a variable annuity to be a security. The National Securities Market Improvement Act of 1996 (NSMIA) established variable annuities to be federal covered securities, however, since they are, for all intents and purposes, mutual funds. Federal covered securities are exempt from state registration.

NEW QUESTION 116
Stable Corporation registered a bond issue that it plans to offer for sale in the state with the Administrator.
The bond has a par value of $1,000 and will pay interest of 7% a year, with the principal to be repaid in 5
years. The registration became effective on September 8th. The registration is effective

until the maturity date on the bond.

for one full year.

until December 31st of the same year

for two full years.

The bond’s registration is effective for one full year from the effective date of the registration.

NEW QUESTION 117
A broker-dealer will be found guilty of churning an account if the account has a turnover ratio of

four.

five.

eight.

There is no specified turnover ratio assigned to the prohibited practice of churning.

There is no specified turnover ratio assigned to the prohibited practice of churning since
some investors are simply more frequent traders than others.

NEW QUESTION 118
An investment adviser or its representative may

only exercise any discretionary power in the purchase or sale of securities for a client’s account after
receiving written authority prior to the execution of the transactions.

exercise discretionary power in the purchase or sale of securities for a client’s account as long as it
receives written discretionary authority over the account within 10 business days of the first discretionary
transaction placed, assuming oral authority has already been given.

exercise discretionary power in the purchase or sale of securities for a client’s account as long as

exercise discretionary power in the purchase or sale of securities for a client’s account only after

An investment adviser or its representative may exercise discretionary power in the
purchase or sale of securities for a client’s account as long as it receives written discretionary authority
over the account within 10 business days of the first transaction placed, assuming oral authority has
already been given.

NEW QUESTION 119
Which of the following is an example of commingling?

Sly is an agent with a broker-dealer who recently executed a stock purchase for his client and had the client make the check for the purchase out to Sly for deposit in Sly’s broker-dealer account.

In order to generate more commissions for herself Ms. Fox makes trades on some of her client’s accounts and has the trade confirmations sent to a P.O box she owns.

Mr. Hawk encourages his clients to leave their securities in “street name” with the broker-dealer for which Mr. Hawk works.

All of the above are examples of commingling.

Explanation
When Sly has his client pay for a stock purchase by making the check out to Sly himself, he has engaged in the prohibited practice of commingling. Ms. Fox is also engaged in a prohibited practice, but she is engaged in making unauthorized transactions. Mr. Hawk is doing nothing wrong. It is typical for clients to leave securities on deposit with their broker-dealers in what is called “street name.” This makes it easier for the client to sell the securities later on since he physically will not have to deliver the securities to the broker, for one thing.

NEW QUESTION 120
Joe Romeo is a broker-dealer registered with the state. He has recently hired Betty Buxom as his
administrative assistant. As part of her duties, he has given her the responsibility for effecting the
purchases and sales of securities for some of his firm’s smaller accounts. Ms. Buxom has never applied
for nor been granted registration as a broker-dealer or agent. Based on these facts,

the Administrator is required by the Uniform Securities Act to revoke Joe Romeo’s registration and file
criminal and civil charges against him.

there is no problem as long as Ms. Buxom registers with the state as an agent within thirty days.

the Administrator may elect to revoke or suspend Joe Romeo’s registration, and Joe may also face
both civil and criminal penalties.

the Administrator is required to turn the case over to the state’s district attorney, who will file criminal
charges against both Joe Romeo and Betty Buxom.

Since Joe Romeo has allowed Betty Buxom to execute trades, a duty that can legally be
performed only by a registered broker-dealer or agent, the Administrator may elect to revoke or suspend
Joe Romeo’s registration, and Joe may also face civil and criminal penalties. Ms. Buxom needed to be
registered as an agent prior to effecting any transactions in the securities markets; there is no grace
period. The Administrator is not required to take any action, however.

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