Finra Series-63 Exam Questions Instant Access

Question 1

Rich Quick is a broker-dealer licensed in the state of Massachusetts and has offices only within the state. Two of Rich Quick's clients regularly vacation in Florida during the winter months, and Rich Quick executes trades for them when they call him from out-of-state.

Based on these facts,

I . Rich Quick needs to register as a broker-dealer in the state of Florida as well.

II . Rich Quick needs to register only as an agent in the state of Florida.

III . Rich Quick needs to establish an office in the state of Florida in order to transact business.

IV . Rich Quick need not register in Florida.

AStatements I and III are true.

BStatements II and III are true.

COnly Statement I is true.

DOnly Statement IV is true.

Answer : D

Based on the facts provided, Rich Quick need not register in Florida since he has no offices in the state of Florida, and he is conducting business for existing clients who are merely vacationing in Florida and are not residents of the state.

Question 2

To continue operating as an agent, broker-dealer, investment adviser, or investment adviser representative next year, you must pay the filing fee to renew your license with the state Administrator by

AJanuary 15th of the new year.

BJanuary 30th of the new year.

CDecember 31st of this year.

Dthe anniversary date of the original issue date on your license.

Answer : C

To continue operating as an agent, broker-dealer, investment adviser, or investment adviser representative next year, you must pay your filing fee to renew your license by December 31st of this year. Otherwise, your license will expire. There is no grace period.

Question 3

Barring no irregularities (such as a license revocation by another state last year), after you have filed for registration as an agent, your license will be granted within

A10 business days.

B14 business days.

C30 days.

D45 days.

Answer : C

Barring no irregularities, after you have filed for registration as an agent, you should receive your license within 30 days. More specifically, your license will be approved ''no later than noon of the 30th day after filing.''

Question 4

A ''notice filing'' refers to

Athe right of an issuer to run tombstone ads in the newspapers and other publications upon filing a registration application with the state Administrator.

Bthe filing by a federal covered investment adviser of forms already filed with the SEC along with a consent to service of process with the state Administrator.

Ca document that the issuer must file with the SEC informing the SEC that the firm has applied to the state for registration of its new security.

Dnotification to the public by the issuer or its underwriters that the issue is being sold on an ''all or nothing'' basis.

Answer : B

A ''notice filing'' refers to the filing by a federal covered investment adviser of forms filed with the SEC along with a consent to service of process with the state Administrator. The notice filing must be accompanied by the requisite state filing fee as well.

Question 5

Which of the following compensation arrangements between an investment adviser and an individual client with a net worth of $600,000 would be disallowed?

AThe client agrees to pay the investment adviser an hourly fee of $60.00.

BThe investment adviser will receive 0.1% of the total value of the client's assets under management as of the end of each month.

CThe investment adviser will receive 0.1% of the gross capital gains earned on the portfolio each quarter.

DAll of the above are legitimate compensation arrangements between and investment adviser and an individual client with a net worth of $600,000.

Answer : C

A compensation arrangement between an investment adviser and an individual client with a net worth of $600,000 that stipulates the adviser will receive 0.1% of the gross capital gains earned on the portfolio would be disallowed. An investment adviser of an individual client cannot be compensated with a share of the capital gains earned on the portfolio unless that client has a net worth of at least $1.5 million or has at least $750,000 invested through that investment adviser.

Question 6

An arrangement wherein a terminally ill person sells a second party his life insurance policy at a discount from its face value, giving the buyer the right to the policy's face value when the seller dies is called a:

Adeath warrant.

Bviatical settlement.

Cdeceased option.

Dlife straddle.

Answer : B

A viatical settlement is an arrangement under which a terminally ill person sells a second party his life insurance policy at a discount from its face value. When the terminally ill person dies, the buyer of the policy receives its face value. Some states consider viatical settlements to be securities, and they have come under the scrutiny of the NASAA since there is a significant potential for fraud in the writing of these contracts.

Question 7

''Federal covered securities'' were defined and exempted from state registration requirements by the:

ANational Securities Markets Improvement Act of 1996 (NSMIA.)

BGramm-Leach-Bliley Act of 1999 (GLBA.)

CUniform Securities Act (USA.)

DNational Conference of Commissioners on Uniform State Laws (NCCUSL.)

Answer : A

The National Securities Markets Improvement Act of 1996 defined ''federal covered securities'' and exempted them from state registration requirements. The Gramm-Leach-Bliley Act focused on financial institutions and provided for their registration as broker-dealers under certain conditions. The National Conference of Commissioners on Uniform State Laws (NCCUSL) is the organization that drafted the Uniform Securities Act, which is not comprised of actual laws itself, but is, instead, just a guideline for each state to use when formulating its own securities laws.

Finra Uniform Securities State Law Examination Series-63 Exam Questions