NASAA Series 63 practice questions
200 free questions with answers and explanations.
- 1.A small state-registered broker-dealer is unable to meet the minimum net capital requirement set by the state Administrator. Under the Uniform Securities Act, the Administrator may permit the broker-dealer to satisfy its financial responsibility obligations by an alternative means, specifically by:Regulation of Broker-Dealers and Agents
- 2.An issuer plans to sell securities in a state at the same time it registers those securities with the SEC under the Securities Act of 1933. Which method of state registration would this issuer most likely use?Regulation of Securities and Issuers
- 3.A company has been in continuous operation for the past 5 years, has never defaulted on any obligation, and wants to use the simplest state registration method available under the Uniform Securities Act. Which method is most appropriate, assuming the company meets all financial and operational thresholds?Regulation of Securities and Issuers
- 4.A corporation's common stock is listed on the New York Stock Exchange. Under the Uniform Securities Act, this security is classified as:Regulation of Securities and Issuers
- 5.An investment adviser files a Form ADV-W to voluntarily withdraw its state registration on March 1. No proceeding is instituted against the adviser by the Administrator. When does the withdrawal become effective under the Uniform Securities Act?Regulation of Investment Advisers and IARs
- 6.Promoters of a corporation not yet formed solicit subscription agreements from 9 prospective investors in the state. No commission is paid to anyone for soliciting subscriptions, and no payment is accepted from any subscriber prior to incorporation. This offering of preorganization certificates is:Regulation of Securities and Issuers
- 7.The executor of a deceased client's estate sells securities held by the estate in order to distribute the proceeds to the heirs. Under the Uniform Securities Act, this sale is best characterized as:Regulation of Securities and Issuers
- 8.A back-office employee at a registered investment adviser firm reconciles custodial statements and processes trade confirmations. She never speaks with clients, makes no investment recommendations, and has no authority over any account. Under the Uniform Securities Act, is she an investment adviser representative (IAR)?Regulation of Investment Advisers and IARs
- 9.An agent employed by a broker-dealer commits fraud while selling securities to a client. Under the civil liability provisions of the Uniform Securities Act, the broker-dealer that employed the agent:Remedies and Administrative Provisions
- 10.An issuer wishes to register securities in a state but is not registering the offering with the SEC. Under the Uniform Securities Act, this registration would most likely be accomplished by:Regulation of Securities and Issuers
- 11.A single-family office provides investment advice exclusively to members of one wealthy family, their family trusts, and family-owned entities. The office is wholly owned and controlled by family members, does not hold itself out to the public as an investment adviser, and charges no outside clients. Under the Uniform Securities Act, how is the family office treated?Regulation of Investment Advisers and IARs
- 12.An individual serves as a director and minority owner of Broker-Dealer XYZ. This individual performs only administrative and back-office management functions and does not sell securities, solicit clients, or supervise sales personnel. Under the Uniform Securities Act, is this individual considered an 'agent' of the broker-dealer?Regulation of Broker-Dealers and Agents
- 13.A federal covered adviser has no place of business in State Y but has 20 retail clients there. Under the Uniform Securities Act, what may State Y require of this adviser?Regulation of Investment Advisers and IARs
- 14.A federal covered investment adviser conducts business with clients in State M. The Administrator of State M wishes to require the adviser to maintain additional books and records beyond those mandated under the Investment Advisers Act of 1940. Under the Uniform Securities Act, the Administrator's authority to impose such a requirement is:Regulation of Investment Advisers and IARs
- 15.A state-chartered trust company operates a trust department that accepts customer orders to buy and sell securities on behalf of trust beneficiaries, receiving compensation for these services. Under the Uniform Securities Act, must the trust company register as a broker-dealer in the state?Regulation of Broker-Dealers and Agents
- 16.An agent's client, without any solicitation from the agent, calls and requests that the agent purchase shares of a nonreporting company that is not registered in the state. This is most likely an example of:Regulation of Securities and Issuers
- 17.An investment adviser wishes to charge a registered investment company client a performance-based fee that increases or decreases proportionately with the fund's performance relative to a specified index, applied symmetrically for both gains and losses. Under the Uniform Securities Act, this fee arrangement:Regulation of Investment Advisers and IARs
- 18.A buyer accepts a written, bona fide rescission offer from an issuer and receives the full amount calculated under the Uniform Securities Act. Which statement best describes the legal effect of this acceptance?Remedies and Administrative Provisions
- 19.An agent registered with Broker-Dealer Alpha wants to also register concurrently with Broker-Dealer Beta, an unrelated firm, to sell a broader range of securities products. Alpha and Beta are not affiliated with each other in any way. Under the Uniform Securities Act, may this dual registration occur?Regulation of Broker-Dealers and Agents
- 20.Under registration by coordination, a registration statement filed with the Administrator generally must have been on file for how many days before it can become effective, absent a shorter period ordered by the Administrator?Regulation of Securities and Issuers
- 21.An investment adviser undergoes a change in legal structure, converting from a partnership to a corporation, with no material change in management or clientele. Under the Uniform Securities Act, the surviving corporation as a successor adviser:Regulation of Investment Advisers and IARs
- 22.An investor believes she was defrauded by an investment adviser representative and wants to recover monetary damages for her losses. Which statement correctly distinguishes the roles of the Administrator and the courts in this situation?Remedies and Administrative Provisions
- 23.A supervised person of a federal covered investment adviser maintains a place of business in State Q and, over the preceding 12 months, has provided investment advice to 8 retail clients who are natural persons residing in State Q. Under the Uniform Securities Act, this supervised person:Regulation of Investment Advisers and IARs
- 24.A state-registered investment adviser maintains physical possession of client stock certificates in a safe at its office and periodically sends clients its own hand-prepared account statements. Which change would bring this adviser into compliance with custody safekeeping requirements under the Uniform Securities Act?Regulation of Investment Advisers and IARs
- 25.An investment adviser sponsors a program in which clients pay a single, bundled fee covering both investment advisory services and trade execution costs, regardless of the number of transactions executed in the account. This type of arrangement is known as a:Regulation of Investment Advisers and IARs
- 26.A shareholder pledges shares of stock as collateral for a personal loan from a bank. The bank later sells the pledged shares after the borrower defaults on the loan. Under the Uniform Securities Act, this sale by the bank is:Regulation of Securities and Issuers
- 27.A licensed CPA prepares tax returns for clients and, as part of year-end tax planning, occasionally suggests that clients consider municipal bond funds to reduce taxable income. She charges only her standard hourly accounting fee and does not hold herself out as offering investment advice. Under the Uniform Securities Act, this CPA is:Regulation of Investment Advisers and IARs
- 28.An agent registered with a broker-dealer in State X has five existing retail clients who relocate to State Y, where the agent is not registered. Over the following 12 months, the agent executes trades for these five clients but solicits no new business in State Y. Under the de minimis exemption, is the agent required to register in State Y?Regulation of Broker-Dealers and Agents
- 29.A state-chartered trust company, as part of its normal trust and fiduciary business, manages investment portfolios for trust accounts and charges a fee for this service. Must the trust company register as an investment adviser under the Uniform Securities Act?Regulation of Investment Advisers and IARs
- 30.During an investigation, the Administrator issues a subpoena to a witness requiring production of records. The witness refuses to comply without justification. What is the Administrator's proper recourse?Remedies and Administrative Provisions
- 31.An investor purchased stock in a non-exempt, unregistered offering for $10,000 and later received $500 in dividends. Two years after the purchase, the issuer wants to make a valid rescission offer under the Uniform Securities Act, using the legal rate of interest of 6% simple annual interest. How much must the issuer offer the investor to properly rescind the transaction?Remedies and Administrative Provisions
- 32.A broker-dealer has no office or employees within State Q and directs all of its transaction activity there exclusively to other registered broker-dealers. Under the Uniform Securities Act, how is this firm treated with respect to registration in State Q?Regulation of Broker-Dealers and Agents
- 33.A broker-dealer sells a block of securities directly to another registered broker-dealer, acting as principal in the trade. Under the Uniform Securities Act, this transaction is:Regulation of Securities and Issuers
- 34.An agent employed by a broker-dealer offers a client a bond issued by the government of Canada. Under the Uniform Securities Act, this bond is:Regulation of Securities and Issuers
- 35.An individual is employed by a registered investment adviser and is paid a referral fee for introducing new clients to the firm, but does not provide any investment advice or manage any accounts herself. Under the Uniform Securities Act, this individual is most accurately classified as:Regulation of Investment Advisers and IARs
- 36.A corporation issues short-term promissory notes with a maturity of 8 months, rated in one of the three highest categories by a nationally recognized rating agency, and sold in denominations of $50,000. Under the Uniform Securities Act, these notes are:Regulation of Securities and Issuers
- 37.A state-registered broker-dealer's compliance officer is reviewing recordkeeping obligations. Under NASAA model rules incorporating the Uniform Securities Act, for how long must most required books and records generally be preserved, and how must the most recent portion be maintained?Regulation of Broker-Dealers and Agents
- 38.An officer of a corporation who is not a broker-dealer or agent sells his personally held shares of the company to a single acquaintance in a transaction that is not part of a series of similar sales. This transaction is most likely exempt under which provision?Regulation of Securities and Issuers
- 39.A state securities examiner discovers that an agent at Broker-Dealer ABC engaged in extensive unauthorized trading in client accounts over several months. The examiner also finds that ABC had no system in place to review trade blotters, order tickets, or account activity that would have revealed the pattern. Under the Uniform Securities Act, ABC is most likely to be found:Regulation of Broker-Dealers and Agents
- 40.Believing immediate action is necessary to protect the public, the Administrator issues an order summarily suspending a broker-dealer's registration without first holding a hearing. Which statement correctly describes this order under the Uniform Securities Act?Remedies and Administrative Provisions
- 41.An open-end investment company registered under the Investment Company Act of 1940 offers its shares for sale in a state. Under the Uniform Securities Act, the Administrator may require the investment company to:Regulation of Securities and Issuers
- 42.A broker-dealer files a complete application for registration in a state on March 1. The Administrator takes no action on the application. Absent any denial, suspension, or request for additional information, when does the registration become effective under the Uniform Securities Act?Regulation of Broker-Dealers and Agents
- 43.A state-registered investment adviser has custody of client funds and securities. The adviser's most recent balance sheet shows net worth of $20,000. NASAA's model rule requires a minimum net worth of $35,000 for advisers with custody. To comply, what must the adviser do?Regulation of Investment Advisers and IARs
- 44.An agent is found civilly liable for fraud under the Uniform Securities Act and the case proceeds to trial. Under the Act, the agent is entitled to:Remedies and Administrative Provisions
- 45.A state-registered broker-dealer's net capital falls below the minimum required by the state. Under the Uniform Securities Act's post-registration provisions, what is the firm's obligation upon discovering this deficiency?Regulation of Broker-Dealers and Agents
- 46.An investment adviser representative receives a client's check made payable to a qualified custodian for deposit into the client's account, and forwards the check to the custodian within two business days of receipt without depositing it into any account controlled by the adviser. Under the Uniform Securities Act's custody rules, this activity:Regulation of Investment Advisers and IARs
- 47.A private company sells its securities in a transaction involving offers to 8 persons within a 12-month period, with no advertising and no commissions paid to sales agents. This transaction most likely qualifies for which exemption under the Uniform Securities Act?Regulation of Securities and Issuers
- 48.A prosecutor wants to bring criminal charges against an agent for a securities fraud violation that occurred six years ago. Under the Uniform Securities Act, this prosecution is most likely:Remedies and Administrative Provisions
- 49.An investment adviser enters into a merger whereby its advisory contracts will be transferred to the surviving entity. Under the Uniform Securities Act, this assignment of advisory contracts to the new entity is permissible only if:Regulation of Investment Advisers and IARs
- 50.The Administrator receives no formal written complaint from any investor but suspects that a firm is engaging in fraudulent sales practices. Under the Uniform Securities Act, the Administrator may:Remedies and Administrative Provisions