FINRA Series 63 Exam Questions

Question 6 of 251

Blue Sky Laws are designed to:

protect investors from fraud in their securities market transactions.

protect agents, broker-dealers, and investment advisers and their representatives from spurious allegations of fraudulent activity.

enhance the tourism industry within a state.

favor investment in companies that engage in environmentally friendly practices.

Correct Answer: A

Question 7 of 251

An individual who represents a broker-dealer in the buying and selling of securities is called a(n):

underwriter

issuer

agent

administrator

Correct Answer: C

Question 8 of 251

Which of the following statements best explains the difference between an agent and a broker-dealer?

An agent is an individual who represents a broker-dealer or an issuer and buys and sells securities he does not own in return for a commission on the transactions he executes. A broker-dealer may also buy and sell securities for his own portfolio, in which case the broker-dealer enjoys any price appreciation on those securities.

A broker-dealer must be licensed in the state in which he conducts business, but there are no separate licensing requirements for agents.

Agents are engaged exclusively in the purchase and sale of stocks whereas broker-dealers also buy and sell bonds and option contracts.

Agents conduct their business exclusively in the secondary market, while broker-dealers also operate in the primary market.

Correct Answer: A

Question 9 of 251

Rich Writewell wants to begin publishing an independent weekly financial newsletter that will provide investment recommendations as well as other financial news items to the general public. Rich hopes that his newsletter will achieve nationwide circulation within a few months.
Which of the following statements is true?

Rich will have to register as an investment adviser since his publication will include investment recommendations.

Rich will have to register as an investment adviser only if he sells this newsletter to the public. If the publication is to be distributed free of charge, he will not have to register.

Rich may be exempt from registering as an investment adviser if he is a lawyer, accountant, engineer, or teacher. Otherwise, he will have to register.

Rich will not have to register as an investment adviser since he is publishing a legitimate financial newsletter for distribution to the general public.

Correct Answer: D

Question 10 of 251

Erin is a registered agent who works for SecureMoney Brokers-dealers. One of her clients, Mrs. McTurk, is a recently-widowed woman who relies on Erin for advice about her investment portfolio. Mrs. McTurk reminds Erin of her own grandmother, and she is happy to provide guidance within the sphere of her own knowledge.
Based on these facts, which of the following statements is true?

SecureMoney Broker-dealers must register as an investment adviser since one of its employees is providing investment advice.

Erin must register as an investment adviser since she is providing investment advice.

SecureMoney Broker-dealers must register as an investment adviser since one of its employees is providing investment advice, and Erin must register as an investment adviser representative as the firm's employee.

Neither SecureMoney Broker-dealers nor Erin must register as an investment adviser based on the facts provided.

Correct Answer: D