Question 1

Which of the following may an investment adviser not use in an attempt to solicit new clients?

Options :

A : testimonials of satisfied clients

B : a complete list of the stocks they have recommended in the past year, even if a statement is included that states that past performance is no guarantee of future performance

C : a free initial consultation, with no obligation on the part of the potential client

D : a free financial planning kit, with no obligation on the part of the potential client

Answer: A

Question 2

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?

Options :

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

B : 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.

C : Yes. Ken is guilty of the prohibited practice of “tailgating.”

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

Answer: A

Question 3

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

Options :

A : FINRA

B : NASAA

C : SEC

D : the state administrator

Answer: D

Question 4

While on vacation in Colorado, Mr. Moneybags became interested in the stock of a company called SafeAway, which designs and installs customized high-tech security systems in the multimillion dollar mansions located in Colorado’s pricier ski resort areas, such as Vail and Aspen. Upon returning to his home in Boston, he calls his broker-dealer with an order to purchase 10,000 shares of the stock, which he learned trades in the over-the-counter market. Fast Eddie, a registered agent with his broker-dealer, discovers that SafeAway’s stock is registered only in the states of Colorado and Wyoming. Neither Fast Eddie nor his broker-dealer are registered to do business in either of those states. Under these circumstances,

Options :

A : Fast Eddie cannot effect Mr. Moneybags purchase of SafeAway stock since neither he nor his broker are registered to do business in Colorado or Wyoming, and SafeAway stock is not registered for sale in the state of Massachusetts.

B : Fast Eddie can execute the trade for Mr. Moneybags since this would be considered an exempt transaction because it is a private placement.

C : Fast Eddie should contact a broker-dealer that is registered in either Colorado or Wyoming and negotiate a finder’s fee for referring Mr. Moneybags to them.

D : Fast Eddie can execute the trade for Mr. Moneybags since this would be considered an exempt transaction because it is an unsolicited transaction.

Answer: D

Question 5

Registration by coordination is provided for by which of the following federal securities acts?

Options :

A : Securities Act of 1933

B : Securities and Exchange Act of 1934

C : Investment Advisers Act of 1940

D : Investment Company Act of 1940

Answer: A

Free Series-63 Mock Exam – Practice Online Confidently

Buying Options: