Series 63 Exam Prep Practice Test Explicated

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1. C. When an agent terminates their registration and is not working for another B/D, the agent and the
B/D is required to notify the administrator.
2. C. When a B/D’s registration is canceled, the agents registration is automatically canceled
3. C An agent is defined as an individual who solicits takes or places orders for securities. Silent Partners
are not agents.
4. A. See the answer in #3. There are very few exceptions to this definition. It does not matter if the
securities are exempt or the transaction is exempt.
5. A. All registrations expire, unless properly renewed, on December 31 of every year.
6. D If you provide past performance, you must provide all past recommendations.
7. B. An IAR of a federally covered adviser needs to register only in the office of the IA’s home office or
any other office they may maintain. In this case it is only State A.
8. A. A state registered IA must meet net capital requirements only of their home state.
9. A. An IAR of a federally registered IA must be registered only in the home state of the IA
10. C. A Canadian B/D must be registered in any state in which it has an existing client even if they are
merely vacationing. (How many Canadian B/D’s do you think are registered in Florida or Arizona?)
11. D. A Federally Covered adviser is not under state authority.
12. A. The statute of limitation for an unlawful sale is 3 years from occurrence or 2 years from its
discovery, whichever occurs first.
13. C. providing stock as a bonus or placing an order to sell is an offer/sale of security, as is a gift of
assessable stock. These are the only ones you need to remember for the test
14. B. Deceased, legally incompetent and minors are the only ones NOT considered a “person”.
15. C. B/D’s need be registered in the state in which they maintain an office and in states in which they
have customers who are residents of the state. B/D’s, obviously, cannot control where their clients
forward their mail.
16. C. Under the U.S.A., all registrations expire on December 31 st unless they are properly renewed
17. A. IAR’s of Federally Covered Advisers must be registered in the state in which the home state of the
adviser or any state in which they maintain an office. If you have an office, they are required to be
registered. All other information in the answer is superfluous.
18. C. There is nothing exempt about this transaction. As a matter of fact, it is fairly routine for an IAR to
act as trustee in many different trust accounts.
19. B. If you engage in securities transaction or take or place orders, you must register. There are very
few exceptions for agents.
20. B. Financial requirements, or Net Capital, are set by the Securities Exchange Act 1934. The
Administrator can and does require financial requirements of B/D’s but never more than the SEC
requirement.
21. A. Unlike the answer above, the Administrator does set and require minimum Net Capital
requirements for state registered advisers.
22. D. This is a Federally Covered Adviser! The administrator has no authority!
23. D. Guaranteeing against loss and borrowing from customers that are not normal lending institutions
are prohibited.
24. D. Even though the security may be exempt, remember, there are very few exceptions for an agent.
If you engage in securities transactions, take or place orders for security transactions, you must register.
25. B. An IAR must register in the state of the home state and any state in which they have an office.
26. A. When changing from one B/D to another B/D, all three will notify the Administrator
27. D. Trustee’s are not an exempt transaction unless involving bankruptcies
28. A. An Administrator may inspect the records that are relevant to their state only.
29. B. Emails, like any other form of communication, must be retained by the B/D.
30. A. It is a violation of the U.S.A to sell unregistered, non-exempt securities. I don’t care who you sell
them to.
31. D. The Investment Adviser Brochure must be delivered 48 hours prior to the contract OR the client
receives a 5 day free look.
32. A. Whenever you solicit or take or place orders, you must register as an agent. In this case, since the
CEO is with a non-exempt issuer, they would register as an agent of an issuer.
33. D. This is the best of the 4 choices. You cannot use the information and you certainly wouldn’t report
it to the trading desk. If you would contact anyone it would be your supervisor or compliance officer.
However, those are not choices in this question.
34. A. Adviser contracts may not be “assigned” to a new IA unless the client gives consent.
35. C.
36. C.
37. B.
38. B.
39. D.
40. D.
41. D.
42. B.
43. A.
44. C.
45. C
46. C.
47. A.
48. B.
49. C.
50. D.
51. C.
52. A.
53. D.
54. C.
55. A
56. C.
57. B.
58. A.
59. C.
60. C.