[Q77-Q94] Real FINRA Series63 Exam Questions [Updated 2024]

QUESTION 77
Jack Bean is employed by Giant Investment Advisers, LLC. His job duties include advising clients on the
asset allocations of their portfolios. Jack Bean is

QUESTION 78
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?

QUESTION 79
An agent working for a broker-dealer mistakenly sends an investment adviser some bonds that the adviser purchased on behalf of his client instead of directing the bonds to the financial institution that is serving as the qualified custodian of the client’s funds.
If the investment adviser wants to avoid being considered custodian of this client’s account, what must the adviser do?

QUESTION 80
Which of the following is not a prohibited practice for a broker-dealer?

QUESTION 81
Registration by coordination is provided for by which of the following federal securities acts?

QUESTION 82
The 2003 NASAA Model Rule requires that investment advisers that are not federal covered maintain
their records for at least

QUESTION 83
You are employed as an agent with CanDo Broker-Dealers. Your brother is software engineer with VideoMagic. When you were talking to him on the phone the other day, he told you that he overheard a conversation by some of the firm’s executives that indicated that VideoMagic was about to take over another software company.
Which of the following would violate insider trading rules?
I. The next day, you get an unsolicited call from a client requesting that you sell his shares in Video Magic, and you execute the trade.
II. You buy stock in Video Magic’s target firm in anticipation that its stock price will rise when the information becomes public.
III. You recommend the stock of Video Magic’s target firm to investors based on the fact that, on average, the stock price of target firms increases.

QUESTION 84
Iggy recently started his own company. He soon discovered it required more cash to keep it going than he
had anticipated. He ran an ad in the local paper for investors and got a response. He found a template for
a promissory note on the internet, filled in the requisite information specific to the agreement he and the
investor had worked out, and printed it out. On it, he promised to make monthly interest payments of 2%
on the loan and to repay the principal amount at the end of 18 months. A few months after the
arrangement, Iggy read an article in a small business publication that indicated that promissory notes had
to be registered with the state unless they were sold in an exempt transaction, such as one enacted with a
financial institution, prior to being offered for sale. The article indicated that a seller who had sold an
unregistered note in error could remedy the situation by sending the buyer a formal offer to buy the
security back, with interest. Iggy turned to the computer once again, found a form that could be used for a
formal offer of rescission, filled it out, and sent it to the investor. Having done this,

QUESTION 85
Noah Aull is an investment adviser representative with Canto Investment Advisers. A client has called and told Noah that he heard about a firm that had recently completed an IPO at a party he had attended that weekend and instructed Noah to purchase shares of the company, which was now trading on the OTC Bulletin Board. Noah did some research and felt the company was far too risky an investment for this client, so he did not execute the trade. This turned out to be fortunate for his client since the firm became insolvent within six months of its IPO.
Has Noah done anything wrong?

QUESTION 86
Which of the following compensation arrangements between an investment adviser and an individual
client with a net worth of $600,000 would be disallowed?

QUESTION 87
Newbie Corporation is considering the possibility of an interstate initial public offering (IPO) of its stock. In the initial meetings with BigFee Investment Bankers, Newbie has learned that the underwriting spread will be
15%. Although the actual offering price won’t be set until Newbie’s registration statement is approved by the SEC, BigFee has indicated that the offer price will probably be between $3 and $4 a share and that the stock will initially be listed on the OTC Bulletin Board.
What methods for state registration does Newbie have available?
I. registration by coordination
II. registration by notification
III. registration by qualification

QUESTION 88
You are an investment adviser representative. Your client, Mr. I. M. Pulse, calls you with what he thinks is exciting news. He just passed a restaurant and saw Microsoft’s Bill Gates having lunch with a local entrepreneur who owns a small firm in the computer software industry that trades on the OTC pink sheets. He is sure that this means Microsoft is negotiating a purchase of the smaller company and instructs you to take the cash balance in his account and buy shares of the local company. You should

QUESTION 89
Stable Corporation registered a bond issue that it plans to offer for sale in the state with the Administrator.
The bond has a par value of $1,000 and will pay interest of 7% a year, with the principal to be repaid in 5 years. The registration became effective on September 8th. The registration is effective

QUESTION 90
Which of the following scenarios would not be considered a “sale,” as defined by the Uniform Securities Act (USA)?
I. Yoshito owned shares of Minnow Corporation and received shares of Whale Corporation from Whale when it merged with Minnow.
II. Olivia’s uncle, an agent with SecureMoney Brokers, sold Olivia ten call options on the stock of Microsoft.
III. Hans purchased a bond of Indebted Corporation that had detachable warrants and subsequently sold the warrants.
IV. Tom pledged some shares of stock he owned personally to secure a business loan for his company.

QUESTION 91
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

QUESTION 92
Mr. L. Ranger is an agent for a broker-dealer and has overheard “talk” that a merger between two
well-known high-tech companies is about to take place. Mr. Ranger knows that, on average, in these
instances the target firm’s price spikes. He calls his client and good friend, Mr. Tonto, and tells him of the
rumor, suggesting that Tonto might want to buy shares in the target firm. He tells Mr. Tonto that if the
rumor isn’t true, the target firm’s price may not spike at all and may, in fact, decline, and suggests that Mr.
Tonto not invest any money he isn’t willing to lose. Mr. Ranger knows that his friend likes to gamble, and
decided he wouldn’t be much of a friend if he didn’t inform Tonto of this potential opportunity. Has Mr. L.
Ranger violated any laws or engaged in any prohibited practices?

QUESTION 93
Which of the following describes a prohibited practice in the sale of shares of investment companies?
I. Sandy Slacker hands her client the fund’s prospectus and tells him that the prospectus will provide him all that he needs to know about loads and fees associated with the fund.
II. Elliot Eager tells a client who has an investment objective that includes current income that a certain bond fund has a current yield of 8% and provides the client with a prospectus so that the client can peruse the average annual returns that the fund has generated in past years when the client has the time.
III. After explaining all the fees and loads involved in two different bond funds as well as the difference between current yield and total return, Patty shows the client the data on the average annual returns that the two bond funds provided. She explains to the client that the municipal bond fund has a lower yield than the similar-risk corporate bond fund because the interest income the client will receive from the municipal bond fund will be free from federal taxation, while the interest income on the corporate bond fund is fully taxable.

QUESTION 94
Which of the following does not describe a prohibited practice for investment advisers?
I. The adviser sells its non-institutional clients securities that it has issued.
II. The adviser makes a discretionary trade for a client after receiving verbal authorization only and does not receive written authorization from the client within 10 business days of doing so.
III. The investment adviser requires an advisory fee of $300 to be paid in advance at the beginning of each quarter.