Finra Series-63 Uniform Securities State Law Examination Exam Practice Test

A margin transaction refers to a transaction

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

Alter Advisers & Associates is a small investment adviser partnership registered only in a single state. One of the partners has died, and the surviving spouse has sold that partnership interest to the surviving partners.

Which of the following statements are true?

I . Alter Advisers must inform the state Administrator of this event.

II . Alter Advisers must inform the SEC of this event.

III . Alter Advisers must notify the firm's clients of this event.

Ms. Connie Fused sent her investment adviser a check, payable to a mutual fund that he had recommended to her.

What must the adviser do in order to avoid being considered the custodian of this account and, thereby, subject to some strict requirements, including a higher minimum net capital?

Which of the following scenarios describes activities that are disallowed under the NASAA Model Rules?

I . Broker-dealer Anon observes that a client placed a stop loss order to sell her 1,500 shares of Amazon.com stock for $131 when the stock was selling for $134. Anon sold the stock for $133 when it started to fall during the day and credited the client's account with $131 per share when stock dropped further to $129 a share.

II . Penny is an agent with Broker-dealer Anon. She recently recommended that a client buy a stock that Penny thought would do well. As it turned out, Penny was wrong, and she offers to refund the commission that the client paid her.

III . Broker-dealer Anon is part of the selling group of a hot new IPO. As such, the firm purchases 50% of the shares for its own portfolio and sells the remainder to the public.

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

You are employed as an agent with CanDo Broker-Dealers. Your brother is software engineer with VideoMagic. When you were talking to him on the phone the other day, he told you that he overheard a conversation by some of the firm's executives that indicated that VideoMagic was about to take over another software company.

Which of the following would violate insider trading rules?

I . The next day, you get an unsolicited call from a client requesting that you sell his shares in Video Magic, and you execute the trade.

II . You buy stock in Video Magic's target firm in anticipation that its stock price will rise when the information becomes public.

III . You recommend the stock of Video Magic's target firm to investors based on the fact that, on average, the stock price of target firms increases.