FINRA Uniform Securities Agent State Law Examination - Series_63 Exam Practice Test

George Geek is a computer programmer who tired of working for others and started his own company. He
convinced forty investors that he could design software that would rival Microsoft, and sold them each a
1 0% partnership interest in his firm for $25,000. He designed and printed up the partnership certificates
himself. George told the investors that he had a product that was on the verge of being marketable and
that when it did-within the next two months-revenues would pour into the company, and he would begin
paying dividends. He told them they could expect a 20% return on their money this year, with even higher
returns in the years to come. As it turned out, George wasn't quite the programmer he thought he was,
and he wasn't able to get all the bugs out of the program to make it marketable within the promised two
months. Within a year, George had tired of the project and was too busy picking up chicks in his new
Corvette when he wasn't on the island of St. Bart overseeing the construction of his new beach
mansion-and picking up chicks. His activities, of course, were financed by the extremely generous
"salary" he paid himself from the investors' monies. Under the Uniform Securities Act, do the investors
have any civil claims against George?

Bob Gogetter is an agent with CanDo Broker-Dealers. One of Bob's clients is out of the country and
cannot be contacted. The client holds some stock in a company that just released some information that
should make its stock price soar. Bob knows that this client would probably want to increase his holdings,
so Bob opens a margin account for his client and borrows the money to buy shares. As it happened, the
stock price did soar, and Bob's client earned a sizeable profit. Is Bob in violation of any securities acts?

When selling shares in a closed-end investment company, an agent must inform the client of any
I. commissions
II. underwriting fees
III. miscellaneous offering expenses

Which of the following describes an "exempt security," as defined by the Uniform Securities Act (USA)?

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

Kevin has a pair of season tickets to the Boston Red Sox games. He and his wife can't attend all the
games themselves, so Kevin has created "packages" of eight games each that he is listing for sale on
Craig's List. Do these "packages" meet the definition of securities, and, if so, does Kevin need to register
them with the state before offering them for sale?

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

In which of the following scenarios will the investment adviser be subject to criminal fraud charges?

The Administrator may not introduce a stop order to deny, revoke, or suspend the effective registration of
a security based on facts that were disclosed during the registration process unless he does so within

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?

Which of the following statements best explains the difference between an agent and a broker-dealer?

Broker-dealer Small & Associates has received a complaint about one of its agents, Mr. Ari Gaunt. Small
& Associates is required to

Which of the following statements about agents is (are) false?

Under NASAA Model Rules, it is permissible for the registered representative of a broker-dealer to split
his or her commission with
I. a client.
II. the broker-dealer with which the registered representative is affiliated.
III. another registered representative working for the same broker-dealer.
IV. the administrative assistant who directs calls to the registered representative and provides other
services for the agent.