FINRA-SERIES-63 Online Practice Questions and Answers

Mr. Bigwig, CEO of HiGrowth Corporation, meets with the president of BigFee Investment Bankers and arranges for BigFee to underwrite an Initial Public Offering (IPO) for the firm. When the IPO comes to market, GetErDone Broker-Dealers is part of the selling group, which handles the sale of the stock to the public.

In this scenario, which party is the broker?

A. HiGrowth Corporation

B. Mr. Bigwig

C. BigFee Investment Bankers

D. GetErDone Broker-Dealers

In which of the following instances is it permissible for an investment adviser to borrow money from a client?

A. It is never permissible for an investment adviser to borrow money from a client.

B. The investment adviser may borrow money from a client if the client is a bank.

C. The investment adviser may borrow money from a client if the client is a close friend of the majority owner of the investment advisory firm.

D. The investment adviser may borrow money in either of the scenarios described

Which of the following does not necessarily have to be included in the contract between an investment adviser and an individual client, according to the Uniform Securities Act (USA)?

A. the compensation agreement, which cannot be a percentage of the capital gains or capital appreciation earned on the portfolio for all but the wealthiest of individual clients.

B. a statement stipulating that the contract cannot be assigned to another party without the client's consent

C. if the investment adviser is a partnership, a statement indicating that the client will be notified

D. if there is any change in the partners within a reasonable time perioda statement of the investment policy that has been agreed upon between the adviser and the client

Which of the following persons falls under the definition of "broker-dealer," as defined by the Uniform Securities Act (USA)?

A. Marge is a loan officer at Treadwater Bank and Trust.

B. Juan is employed by TrustUs Corporation to sell shares of the firm's stock to the firm's employees and receives a commission on the shares he sells.

C. Michaela is employed by GetErDone broker-dealers and sells both exempt and non- exempt securities to GetErDone's clients.

D. MyTrades is a sole proprietorship owned by Nathan Newmoney, who has established the firm solely to make trades on his own account, thereby avoiding the commissions he would have to pay a middleman.

Sam Shyster had his day in court-and lost. His license to do business as an investment adviser in the state has been revoked. What legitimate options does Sam have available to him now?

A. Sam can move to another state and apply for registration as an investment adviser there.

B. Sam has 45 days in which to file an appeal with the attorney general.

C. Sam can register with the SEC as an investment adviser, which will exempt him from state registration requirements.

D. Sam has 60 days to file an appeal of the decision in a court of law.

Mr. Bigwig, CEO of HiGrowth Corporation, meets with the president of BigFee Investment Bankers and arranges for BigFee to underwrite an Initial Public Offering (IPO) for the firm. When the IPO comes to market, GetErDone Broker-Dealers

is part of the selling group, which handles the sale of the stock to the public.

In this scenario, which party is acting as a dealer?

A. HiGrowth Corporation

B. Mr. Bigwig

C. BigFee Investment Bankers

D. GetErDone Broker-Dealers

A bond issue has recently been registered with the state Administrator.

Which of the following statements are true?

A. An investor can feel secure in buying the bond because it has recently been registered, which means that the state Administrator finds it to be of sound quality at this point in time.

B. The bond may now be offered for sale in the state.

C. The issuer may now offer this bond for sale, and any other bonds that the issuer may want to offer for sale in the future will be able be sold after the issuer executes a notice filing.

D. Both A and B are true statements.

Which of the following are accurate statements regarding the minimum financial requirements for investment advisers according to the NASAA Model Rules?

I. Any investment adviser who has discretionary authority over a client's assets, but who does not have actual custody of client funds or securities, is required to maintain a minimum net worth of $10,000 at all times.

II. An investment adviser who requires that a fee of more than $500 from his clients be paid six months or more in advance must maintain a positive net worth at all times.

III.

Only an investment adviser who has actual custody of client assets is subject to a minimum net worth requirement, which the NASAA Model Rules specifies is $10,000.

A.

I only

B.

I and II only

C.

II and III only

D.

III only

The discretionary powers over a clients' accounts differ between broker-dealers and investment advisers in that

A. An investment adviser can execute a discretionary transaction for a client upon receiving only verbal authority initially, followed up by written authority to be received within 10 days of the order, whereas a broker-dealer must require that written authority for the transaction is in the mail before proceeding with the transaction.

B. An investment adviser can execute a discretionary transaction for a client upon receiving only verbal authority initially, followed up by written authority to be received within 10 days of the order, whereas a broker-dealer must require that written authority for the transaction is provided before the transaction even takes place.

C. A broker-dealer can execute a discretionary transaction for a client upon receiving only verbal authority initially, followed up by written authority to be received within 10 days of the order, whereas an investment adviser must require that written authority for the transaction is in the mail before proceeding with the transaction.

D. A broker-dealer can execute a discretionary transaction for a client upon receiving only verbal authority initially, followed up by written authority to be received within 10 days of the order, whereas an investment adviser must require that written authority for the transaction is provided before the transaction even takes place.

Joe Romeo is a broker-dealer registered with the state. He has recently hired Betty Buxom as his administrative assistant. As part of her duties, he has given her the responsibility for effecting the purchases and sales of securities for some of

his firm's smaller accounts. Ms. Buxom has never applied for nor been granted registration as a broker-dealer or agent.

Based on these facts,

A. the Administrator is required by the Uniform Securities Act to revoke Joe Romeo's registration and file criminal and civil charges against him.

B. there is no problem as long as Ms. Buxom registers with the state as an agent within thirty days.

C. the Administrator may elect to revoke or suspend Joe Romeo's registration, and Joe may also face both civil and criminal penalties.

D. the Administrator is required to turn the case over to the state's district attorney, who will file criminal charges against both Joe Romeo and Betty Buxom.