FINRA Series63 Dumps Questions [2024] Pass for Series63 Exam
Updated FINRA Study Guide Series63 Dumps Questions
NEW QUESTION # 137
The Uniform Securities Act (USA) is
- A. federal legislation that requires all states to adopt the same registration requirements for all.
- B. a set of guidelines for individual states to follow when formulating their own securities' laws.
- C. a group of laws requiring state-issued securities, such as municipal bonds, to be registered with.
- D. a body of laws governing the purchase and sale of securities within a single state.
Answer: B
Explanation:
Explanation
The Uniform Securities Act (USA) provides a model for states to follow when formulating their own securities laws. It does not, itself, contain any laws.
NEW QUESTION # 138
In an arrangement between MoeMoney Investment Advisers and one of the firm's clients, the YourMoney mutual fund, part of MoeMoney's compensation is based how the fund performs compared to the S&P 500 Index. If the return on the fund exceeds the return on the index, MoeMoney gets a bonus. The S&P 500 had a return of negative 8% this year, and the fund returned a negative 2%, so MoeMoney invoiced the client for the bonus.
Has MoeMoney violated any securities laws?
- A. No. The fund beat the return on the S&P 500 Index, so MoeMoney is entitled to the bonus, based on its agreement with YourMoney.
- B. Yes. It is a violation of the Uniform Securities Act for an investment adviser to earn a bonus if a portfolio it manages loses money.
- C. Yes. Under no circumstances can a bonus be part of an investment adviser's compensation package according to the Uniform Securities Act.
- D. Yes. An investment adviser's compensation cannot be based on the capital appreciation of the portfolio.
Answer: A
Explanation:
Explanation
No. MoeMoney has not violated any securities laws. Even though the fund's return was negative, it still beat the return on the S&P 500 Index, and MoeMoney is entitled to the bonus. The Uniform Securities Act does not prohibit compensation agreements like this one as long as the client is a sophisticated investor, such as a mutual fund. This would not be permitted if the client were your average individual investor.
NEW QUESTION # 139
Your client calls you with a market order to purchase 500 shares of the stock of Oracle and asks when payment will be due. If today is Wednesday, September 15th, you inform the client that payment is due on
- A. Friday, September 17th.
- B. Saturday, September 18th.
- C. Thursday, September 16th.
- D. Monday, September 20th.
Answer: D
Explanation:
Explanation
If your client places an order to purchase 500 shares of Oracle on the open market on Wednesday, September
15th, payment will be due on Monday, September 20th. The settlement date for stock transactions is T + 3, which means the third business day after the trade. Saturday is not a business day.
NEW QUESTION # 140
Painting the tape refers to
- A. the unethical practice of investment advisers who issue "buy" recommendations for stocks that they
own themselves without disclosing the fact. - B. the practice of buying large amounts of a security to drive its price up artificially.
- C. the prohibited practice of excessively trading on a client's account that is used by some broker-dealers
and/or their agents to generate more commissions for themselves. - D. the illegal activity of a group of investors who buy and sell a security among themselves to create an
artificially high volume of trading in hopes of luring investors to buy the security.
Answer: D
Explanation:
Painting the tape refers to the illegal activity of a group of investors who buy and sell a
security among themselves to create an artificially high volume of trading in hopes of luring investors to
buy the security. This is an attempt to manipulate the market and, as such, is illegal.
NEW QUESTION # 141
Which of the following is a security as defined by the Uniform Securities Act (USA)?
- A. a debenture
- B. a futures option contract on wheat
- C. a term life insurance policy
- D. Both A and B are securities as defined by the Uniform Securities Act.
Answer: D
Explanation:
Both a debenture and a futures option contract on wheat are securities as defined by the
USA. A debenture is a long-term, unsecured debt instrument and is specifically listed as a security in the
Act. Although commodity futures contracts are not considered to be securities as defined by the Act,
options on commodity futures contracts are.
NEW QUESTION # 142
Registration by coordination is provided for by which of the following federal securities acts?
- A. Securities and Exchange Act of 1934
- B. Investment Advisers Act of 1940
- C. Securities Act of 1933
- D. Investment Company Act of 1940
Answer: C
Explanation:
The Securities Act of 1933 is the Act that requires that all new securities be registered and
provides for registration by coordination.
NEW QUESTION # 143
Under the Uniform Securities Act (USA), which of the following statements would be disallowed?
- A. The government of the U.S. guarantees a 3% interest rate, to be paid semiannually, on a new 5-year
Treasury note. - B. Neither the statements in Selections B or C would be allowed under the guidelines of the Uniform
Securities Act. - C. An insurance company guarantees a fixed payment of $300 a month for life on an annuity it is selling.
- D. A sales representative of GetErDone Broker-Dealers guarantees that a client can expect an average
annual rate of return of 2% on a mutual fund investment the sales representative is selling, pointing to the
fact that the fund has returned an average annual rate of return of 6% over the past ten years.
Answer: D
Explanation:
A sales representative (aka an agent) of a broker-dealer may not make any guarantees.
Only three entities are allowed to make guarantees under the Act: Parent companies, which may
guarantee the securities of one of its subsidiaries, the U.S. government, and insurance companies.
NEW QUESTION # 144
Registered agent Ina Scent has had her license suspended by the state Administrator prior to an
administrative hearing on the order. Which of the following statements is true regarding Ina's situation?
- A. Ina can make a written request that a hearing on the issue be scheduled within fifteen business days of
her request and may not continue working with clients unless the Administrator vacates the order until
final determination. - B. Ina can sue the Administrator because she was not afforded a hearing before the suspension took
place. - C. Ina can make a written request that a hearing on the issue be scheduled within ten business days of
her request and may continue working with clients while waiting for her day in court. - D. Ina can immediately file an appeal of the suspension in a court of law.
Answer: A
Explanation:
When Ina receives notice of her license suspension, she can make a written request that a
hearing on the issue be scheduled within fifteen business days of her request. She cannot continue
working with clients unless the Administrator vacates the order until final determination because her
license is still suspended pending final determination. If, after the hearing, the order still stands, Ina can
file an appeal of the suspension with a court of law if she does so within 60 days.
NEW QUESTION # 145
Which of the following would fall under the definition of "agent," as defined by the Uniform Securities Act (USA)?
- A. Freedom broker-dealers executes the purchase and sale of securities for its customers.
- B. TrustUs Bank has a subsidiary operation that sells mutual funds to the public.
- C. Joe works as an administrative assistant for broker-dealer GetErDone, doing data entry, filing client forms that contain confidential information, and directing calls to registered representatives of the firm.
- D. None of the above would fall under the definition of "agent," as defined by the Uniform Securities Act (USA.)
Answer: D
Explanation:
Explanation
None of the selections describe an "agent," as defined by the Uniform Securities Act (USA.) Joe is not executing trades for clients of the broker-dealer, and clerical assistants are not classified as agents.
Agents must be individuals, so a firm like Freedom broker-dealers would not be considered an agent. A bank is not an individual, and banks are even excluded from the definition of a broker-dealer.
NEW QUESTION # 146
Mr. Noah Scruples is a registered representative with CanDo Broker-Dealers. A client calls and wants
Noah to purchase shares of a mutual fund the client has read about. CanDo is not authorized by this
particular fund to effect purchases or sales of the fund shares. Can Noah execute the order anyway?
- A. No. This would be considered money laundering, which is highly illegal.
- B. Yes. Since this is an unsolicited trade, Noah can execute the transaction on behalf of his client.
- C. No. This is a prohibited practice known as front running.
- D. No. This is a prohibited practice known as selling away.
Answer: D
Explanation:
No. If CanDo is not authorized to effect purchases and sales of the fund, Noah would be
engaged in the prohibited practice known as selling away if he were to execute the order. If his
broker-dealer is not authorized to trade a security, Noah can't either.
NEW QUESTION # 147
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?
- A. 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.
- B. Yes. Ken is engaging in churning, a prohibited practice and can have his license revoked or suspended.
- 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: B
Explanation:
Explanation
Yes. If Ken is getting up each morning in order to collect news that he can use to pressure his clients to buy and sell their securities, Ken is engaging in churning and can have his license revoked or suspended for this prohibited practice. A lot of the news might have a short-term effect on a particular industry, but any profits gained by trying to time the market will often not be sufficient to cover the commissions that the investor had to pay on the transactions and the taxes they may have to pay on the short-term capital gains they realized when they sold securities. Regardless, it doesn't matter whether his clients' accounts show a profit or not.
NEW QUESTION # 148
Which of the following are examples of the prohibited practice of manipulation in the securities markets?
I. Broker-Dealer Joker is unhappy with its investment in the stock of a speculative firm and engages
another broker-dealer to purchase a large number of shares from it, with the unofficial agreement to buy
back those shares, offer more shares which the second broker-dealer will purchase, and so on.
II. Broker-Dealer Joker has a large short position in the stock of a certain corporation. Joker offers a
bonus to its agents who effect sale transactions in the stock.
III. A client calls Broker-Dealer Joker with a request to purchase 20 bonds issued by Massachusetts
Institute of Technology (MIT.) The bonds are currently selling for their par value of $1,000. Knowing this,
Joker offers to sells the client the bonds for $120 per $100 of par, or $1,200 per $1,000 bond.
- A. I only
- B. I, II, and III
- C. I and II only
- D. I and III only
Answer: C
Explanation:
Only Selections I and II are examples of manipulation in the securities market. It is
considered to be manipulation if one firm engages another firm to make a series of purchases and sales
that will make it appear that there is very active trading in the security; it is also considered manipulation if
a broker-dealer encourages its agents to solicit sales of a security in which it has a short position since
that broker-dealer is hoping that the sales will drive the price of the security down, thereby making the
firm's position profitable. Although the offer to sell a client bonds at a much higher price than their market
price is illegal, it is not an example of price manipulation.
NEW QUESTION # 149
Nancy's Aunt Ethel died, making Nancy executrix of her estate. In going through Aunt Ethel's belongings,
Nancy discovered some stock certificates that she learned had been issued by a small New Jersey firm
that was still in business. The problem lay in the fact that Nancy's Aunt Ethel had moved from New Jersey
to Florida years ago, and the stock is registered only in the state of New Jersey. Nancy herself is a
resident of Massachusetts. What does Nancy have to do in order to sell this stock?
- A. Nancy will need to contact a securities law firm in Florida to help her register the stock in the state of
Florida. - B. Nancy will need to contact a broker-dealer licensed in the state of New Jersey to help her with the sale
of this stock. - C. Nancy can sell the stock without a problem as executrix of her aunt's estate.
- D. Nancy will have to establish a mailing address in New Jersey before she can legally sell this stock.
Answer: C
Explanation:
Nancy can sell the stock without a problem as executrix of her aunt's estate. This is
considered to be a fiduciary transaction and, as such, it is an exempt transaction.
NEW QUESTION # 150
The settlement date refers to
- A. the date the order to purchase or sell the security is sent to the market.
- B. the latest date on which broker-dealers can file their quarterly financial statements with the
Administrator of the state. - C. the date the buyer must pay for the securities purchased.
- D. the date the order to purchase or sell a security is actually executed. This may differ from the date that
the order is sent to the market in the cases of limit or stop orders.
Answer: C
Explanation:
The settlement date is the date that the buyer must pay for the securities purchased. For
stocks and bonds other than U.S. Treasury securities, this date is the third business day after the trade.
For U.S. Treasuries and options that sell on exchanges, the settlement date is the next business day.
NEW QUESTION # 151
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
- A. December 31st of this year.
- B. the anniversary date of the original issue date on your license.
- C. January 30th of the new year.
- D. January 15th of the new year.
Answer: A
Explanation:
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.
NEW QUESTION # 152
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