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

After passing the necessary exams, you must submit which of the following to the state Administrator when applying for registration as an agent?

• U-4
• Form ADV
• a recent photograph of yourself
• proof that you meet the state’s minimum net capital requirement

Big Bo is an investment adviser representative who has a lot of the members of a well-known professional football team as clients. In advertising his services, Big Bo can

• list the names of the players he’s advising as long as he lists the names of all his other clients, too.
• list the names of the players he’s advising as long as he doesn’t provide any other specifics, such as the amount each one has invested with him.
• list the names of the players he’s advising as long as he has their written permission to do so.
• use testimonials from any of the players who willingly provide them without compensation.

Rich Quick is a broker-dealer registered in the state of Massachusetts. He occasionally trades on abnormalities he observes in bond yield spreads for his own account, short selling a bond that appears to be overpriced based on its yield and buying a bond that is identical in almost every respect except for the price, which is less than that of the other bond. He has been able to earn arbitrage profits 95% of the time when he does this. Rich Quick

• is in violation of securities laws. Arbitrage is a prohibited activity.
• is skilled if he is able to earn profits 95% of the time using this strategy.
• is trading on insider information, which is a violation of securities laws.
• engaged in a fraudulent activity.

In order to maintain its registration with a state, a broker-dealer may be required to:

• . take a written or oral exam.
• . pay an annual filing fee.
• . maintain a minimum net capital.
• . file all advertising material with the Administrator.
• I and II only
• II and III only
• II, III, and IV only
• I, II, III, and IV

Which of the following is not a security, as defined by the Uniform Securities Act?

• . an option contract
• . a futures contract on gold
• . a 401K plan
• . a variable annuity
• None of the selections listed are securities.
• Only Selection III is not a security.
• Only Selections II and III are not securities.
• Selections II, III and IV are not securities.

You are an investment adviser to Mr. Crochety, an elderly man who lives solely on his social security income although he managed to accumulate an investment portfolio worth about $100,000 over the years. Mr. Crochety recently got his hands on a business publication and read about the tax-free interest paid by municipal bonds. He calls you and instructs you to sell his other investments and invest all his money in a municipal bond portfolio, so that “the government doesn’t get any more of my hard-earned money.” You tell Mr. Crochety that you don’t believe this is a wise move because he’s in such a low tax bracket that municipal bonds are not a good investment for him, but he is insistent. Based on these facts, you should

• ignore Mr. Crochety’s instruction since it is not in his best interest.
• require Mr. Crochety to sign an affidavit of liability waiver, indicating that you will not be held responsible for any adverse consequences of this decision.
• have Mr. Crochety sign a statement of investment policy that indicates that this transaction is being executed on the client’s instructions and that you have advised the client against it.
• call Mr. Crochety’s relatives and suggest they have him examined for mental instability.

Which of the following would be considered an “issuer” transaction?

• Jacob calls his broker and places an order to purchase 100 shares of Hasbro, Inc. on the open market.
• Maria purchases 500 shares of Dodge and Cox’s International Fund, a mutual fund investing in foreign securities.
• Kim sells an AT&T bond she holds that still has three years remaining to maturity.
• None of the above is an “issuer” transaction.

Shady Corporation’s executives are concerned over the firm’s steadily declining stock price and decide to do something about it. They each decide to make significantly large purchases of their firm’s stock in order to stabilize and hopefully even to drive up its price, reasoning that they can sell the stock for the higher price down the road and profit from the transaction. You are a broker-dealerfor the firm’s executives.Are Shady’s executives planning to do anything illegal?

• No. It’s a win-win. They are using their own money to buy stock of their firm, and this can help drive the stock price up and put profits in their pockets.
• Yes. To purchase shares of their own company is considered to be illegal insider trading.
• No. As long as they follow the rules and report their purchases to the SEC, it is not illegal for them to purchase shares of their firm’s stock.
• Yes. Although it is not illegal for them to purchase shares of their firm’s stock, they cannot do so in order to try to manipulate the price of the stock.

Although an Administrator has broad powers, he or she cannot:

• issue subpoenas involving compulsory attendance.
• gather evidence.
• deliver a judicial injunction.
• formulate rules and orders.

Until yesterday Maddie was a registered agent employed by the broker-dealer, QuikDeals. Yesterday afternoon, issues that had been brewing between her and another employee of the firm came to a head, and Maddie impulsively quit her job.At this point,

• Maddie has thirty days to find a job with another broker-dealer, or she will need to file a new registration application.
• Maddie has sixty days to find a job with another broker-dealer, or she will need to file a new registration application.
• Maddie will have to file a new application for registration with the Administrator upon finding employment with another broker-dealer since she is no longer considered to be a registered agent by the state.
• Maddie is required to call all of her clients at QuikDeals to inform them she is no longer employed there.