Study with FINRA : Series_63 Exam Torrent as your best preparation materials

An investment adviser representative with Capital Investment Advisors, Inc. advised his client to invest
$ 5,000 in bonds of a firm that the adviser claimed was an investment "almost as risk-free as investing in
U.S. government bonds; maybe even more so, given the magnitude of the government deficit these
days." The client paid a total of $200 for this advice. The bonds paid interest at the rate of 6%, with
semiannual payments, and the client received $300 in interest payments before the firm went belly-up at
the end of a year, and its bonds were deemed worthless. The client has filed suit, and its attorneys' fees
and court costs are expected to be $1,000. When the investment is a bond, the state has recently been
assessing an interest rate equal to the interest rate paid by the security as an equitable interest payment
guideline in civil penalties. The maximum the client can expect in civil penalties is

• A. $6,200.
• B. $6,000.
• C. $5,200.
• D. $5,900.

To say a security is "exempt," means that
I. it is exempt from the state's anti-fraud laws.
II. it is exempt from state registration requirements.
III. any transaction involving it is considered to be an exempt transaction.

• A. I, II, and III
• B. II and III only
• C. I and II only
• D. II only

Jeremy Sly considered himself somewhat of an inventor. The only problem was that his day job interfered
with his opportunity to exercise his creativity. He came up with a plan to get outside investors to support
his inventive activities. To this end, he produced and distributed a brochure advertising partnership
interests with a guaranteed return on investment of at least 15% after the first 12 months, based on what
he had allegedly generated from his other (non-existent) inventions. Given these facts, is Jeremy guilty of
any security violations under the Uniform Securities Act (USA)?

• A. Yes. Even an "offer" to sell securities must not contain any untruths.
• B. No. It is not against the law to believe in oneself and promote one's ideas.
• C. No. An interest in a partnership is not considered a security.
• D. No. The facts don't indicate whether any partnership interests were actually sold, and there can be no
  violation unless there is a sale.

Ari Gaunt is employed by a small state-registered broker-dealer and has recently received notification that
his application to be a registered agent of the state has been accepted. Now that he is licensed to execute
transactions for the firm's clients, Ari has a batch of business cards printed up, with a picture of himself on
the right-hand side of the card. Underneath the picture is the caption, "State-Approved Agent." Will Ari be
violating any securities laws if he distributes these business cards?

• A. No. His registration with the Administrator of the state has been accepted, so he is entitled to call
  himself a "State-Approved Agent."
• B. No. However, he may be violating company policy of the broker-dealer he works for by designing his
  own cards.
• C. Yes. It is a violation of a securities law to suggest that he has been approved by the state
  Administrator.
• D. Yes. Agents are not permitted to include a picture of themselves on their business cards.

A "market not held" order is

• A. an order to sell securities that the investor owns if the stock decreases by a certain amount from the
  current price.
• B. an order to buy or sell a stock at a specified price, which differs from the current market price.
• C. a prohibited activity in which an agent engages in the purchase or sale of securities that are not offered
  by his broker-dealer.
• D. an order in which the client tells the broker to use his own discretion in timing a purchase or sale in an
  attempt to get a better price.