FINRA Series63 Dumps Questions [2024] Pass for Series63 Exam
Updated FINRA Study Guide Series63 Dumps Questions
NEW QUESTION # 64
Jack and Jill are a newly married couple in their mid-20s. They are determined to retire by the time they
are 50 and have arranged a meeting with a representative of Professional Investment Advisers to
structure a financial plan that will allow them to achieve this goal.
The representative, Mr. Hill, advises them to invest at least 60% of their money in bond funds to minimize
the risk of loss on the way to their goal. Mr. Hill has
- A. advised Jack and Jill well with a conservative allocation of their money to preserve principal.
- B. made an unsuitable recommendation for these clients and is subject to license suspension or
revocation. - C. has committed fraud in promoting their delusion that they can possibly expect to retire by the time they
turn 50, regardless of their investment strategy. - D. committed fraud in indicating that bonds are less risky than stocks.
Answer: B
Explanation:
Mr. Hill has made an unsuitable recommendation in recommending a 60% investment in
bonds to clients in their mid-20s with an investment goal of early retirement, and his license can be
suspended or revoked because of this. Bonds do not generate the returns that stocks do, and Jack and
Jill are unlikely to be able to retire by the time they are 50 with such a high percentage invested in bonds.
Given their investment time horizon, they can invest in growth and aggressive growth stocks, which offer
significantly higher returns and will advance them toward their goal, since they can ride the waves of the
up and down markets. This, of course, assumes that they are risk-tolerant enough to do so. There has
been no fraud since a couple in their mid-20s can retire by the time they turn 50 if they have reasonably
well-paying jobs, are frugal, and invest wisely.
NEW QUESTION # 65
In accordance with the Telephone Consumer Protection Act of 1991 (TCPA), if a prospective client requests to be put on your firm's Do-Not-Call (DNC) list, the client must be kept on that list for
- A. 5 years.
- B. 2 years.
- C. 1 year.
- D. 10 years.
Answer: D
Explanation:
Explanation
If a prospective client requests being put on your firm's DNC list, you must keep that name on your list for 10 years, according to the TCPA.
NEW QUESTION # 66
Ms. Muffet is employed by Spyder Broker-Dealers. Her job duties include providing price quotes and
executing purchases and sales for the firm's clients. She is paid a salary plus commission. Ms. Muffet is
- A. a broker-dealer.
- B. an agent.
- C. an investment adviser.
- D. an investment adviser representative.
Answer: B
Explanation:
As an employee of Spyder Broker-Dealers who executes trades for clients, Ms. Muffet is an
agent who works for the broker-dealer Spyder. She does not provide investment advice for a fee, so she
is neither an investment adviser nor an investment adviser representative.
NEW QUESTION # 67
Which of the following securities would not necessarily be exempt from state registration?
- A. a bond issued by another state's employees' credit union
- B. a stock listed on the Tokyo Stock Exchange
- C. a bond guaranteed by the Canadian government
- D. a stock listed as a NASDAQ National Market Issue.
Answer: B
Explanation:
Stocks listed on the Tokyo Stock Exchange would not necessarily be exempt from state
registration. Stocks that are registered with the SEC, such as NASDAQ National Market Issue stocks,
securities issued or guaranteed by the Canadian government, and securities issued or guaranteed by
banks or credit unions are all exempt.
NEW QUESTION # 68
Once a person has filed an application with the Administrator, and in doing so has truthfully disclosed every material fact, how long does the Administrator have after the effective date of the registration to commence a proceeding to deny, suspend, or revoke that person's license based on those facts?
- A. 90 days.
- B. 30 days.
- C. one year.
- D. 60 days.
Answer: A
Explanation:
Explanation
If a person has appropriately and truthfully disclosed every material fact on its application for registration, the Administrator has 90 days after the registration becomes effective to commence a proceeding to deny, suspend, or revoke the license. If the Administrator has known about the fact for longer than this, he may not begin a proceeding against that person according to the Uniform Securities Act.
NEW QUESTION # 69
Bob Gogetter is an agent with CanDo Broker-Dealers. One of Bob's clients is out of the country and cannot be contacted. The client holds some stock in a company that just released some information that should make its stock price soar. Bob knows that this client would probably want to increase his holdings, so Bob opens a margin account for his client and borrows the money to buy shares. As it happened, the stock price did soar, and Bob's client earned a sizeable profit.
Is Bob in violation of any securities acts?
- A. No. Bob has a fiduciary responsibility to his client to act in his best interest, and Bob knew this.
- B. No, but only because Bob's client profited from Bob's intervention. If the stock had declined in.
- C. Yes. It is against the law for an agent to open a margin account for a client without the client's.
- D. Yes. Bob is guilty of prohibited practice of churning.
Answer: C
Explanation:
Explanation
Yes. When he opened a margin account for a client without the client's written authorization, Bob committed a securities violation. This is strictly prohibited regardless of whether the client profited or not.
NEW QUESTION # 70
Which of the following may be given to prospective investors during the "cooling off period?"
- A. a tombstone advertisement
- B. a final prospectus
- C. all of the above
- D. a copy of the registration statement
Answer: A
Explanation:
Explanation
During the "cooling off period" prospective investors may be given only a tombstone advertisement for the security.
NEW QUESTION # 71
Penny Swyne, an agent employed by Bear Broker-Dealers, has received a written complaint via e-mail
from Mr. Wolf regarding her performance as his agent. What are Ms. Swyne's legitimate options?
- A. As illegal as it may sound, since the complaint was via e-mail, Ms. Swyne can hit the delete button and
make it all go away. - B. Ms. Swyne can call Mr. Wolf and offer to meet him for a romantic dinner and try to convince him to
revoke the complaint. - C. Ms. Swyne must forward the complaint to the state Administrator.
- D. Ms. Swyne must provide Bear Broker-Dealers with a copy of the complaint.
Answer: D
Explanation:
Ms. Swyne must provide Bear Broker-Dealers with a copy of the complaint sent by Mr. Wolf.
Bear Broker-Dealers is required to respond to this complaint in writing and keep a record of it. E-mails are
treated the same as snail-mails.
NEW QUESTION # 72
Which of the following persons is required to maintain its records in accordance with state dictates and
meet the minimum net capital requirement imposed by the state?
I. federal covered adviser
II. state-registered investment adviser
III. investment adviser representative
- A. I, II, and III
- B. II and III only
- C. I and II only
- D. II only
Answer: D
Explanation:
Only the investment adviser that is required to register with the state must maintain its
records in accordance with state dictates and meet the minimum net capital requirement imposed by the
state. A federal covered adviser is registered with the SEC and need only execute a notice filing with the
state. Its record-keeping rules and net capital requirement are dictated by the SEC. An investment adviser
representative must register with the state, but there are no record-keeping or minimum net capital
requirement dictates for representatives.
NEW QUESTION # 73
A-2-Z Associates is a full service brokerage and is also in the investment advisory industry, charging its clients for investment advice for additional remuneration.
Which of the following statements is true?
- A. A-2-Z can charge the client both an advisory fee for its advice and a commission on any trade the client makes based on the advice. This is all laid out in the advertising brochures full service brokerage firms like A-2-Z provide their prospective clients.
- B. A-2-Z can charge the client only an advisory fee when it is serving as an investment adviser; no commissions may be collected.
- C. A-2-Z can charge an individual client an advisory fee for its advice or a commission when it executes a trade that the client makes based on that advice, but not both.
- D. A-2-Z can charge the client both an advisory fee for its advice and a commission for the execution of a trade based on that advice, but it must inform the client of its potential conflict of interest in doing so and get the client's written consent.
Answer: D
Explanation:
Explanation
A-2-Z can charge a client it advises an advisory fee for its advice and a commission for the execution of a trade based on that advice, but it must inform the client of the potential conflict of interest and get the client's written consent. It must also provide an itemized statement of all such agency cross transactions performed for the client at least annually.
NEW QUESTION # 74
It has come to the attention of the Administrator of the state that Samuel Shyster provided false
information on his application to become a registered investment adviser with the state. Prior to revoking
Samuel's license, the Administrator will provide Samuel with which of the following?
I. prior notice
II. an opportunity to fill out a new registration statement
III. an opportunity for a hearing
IV. a written statement regarding the facts and the legal consequences
- A. I, III, and IV
- B. I, II, III, and IV
- C. I, II, and IV
- D. I, II, and III
Answer: A
Explanation:
Prior to revoking Samuel's license, the Administrator will provide Samuel with prior notice (I),
an opportunity for a hearing (III), and a written statement regarding the facts and the legal consequences
(IV).
NEW QUESTION # 75
Which of the following actions is the Administrator of a state empowered to take?
- A. impose civil penalties in cases of fraud
- B. The Administrator of a state has the authority to take all of the above actions.
- C. require restitution for the victims of a scam
- D. gather evidence
Answer: D
Explanation:
The Administrator of a state can gather evidence, but it cannot impose any civil penalties,
including the requirement of restitution to victims. These actions can only be performed by a court of law.
NEW QUESTION # 76
What criminal penalties are specified for "willful violations" of the Uniform Securities Act?
- A. up to 3 years in prison or a $5,000 fine, or both.
- B. up to 5 years in prison or a $10,000 fine, or both.
- C. license suspension.
Answer: B
Explanation:
Explanation
The criminal penalties specified by the Uniform Securities Act for "willful violations" of the act are up to 3 years in prison or a $5,000 fine, or both, for each violation.
NEW QUESTION # 77
Which of the following does not need to be included in an investment advisory contract?
- A. the term of the contract
- B. a statement that the contract cannot be assigned to another party without the client's consent
- C. the advisory fees and the formula used to compute them
- D. the total amount of money that the investment adviser currently has under management
Answer: D
Explanation:
The amount of money that the investment adviser currently has under management need
not be included in an investment advisory contract. The contract does have to include the term of the
contract, the advisory fees and the formula used to compute them, and a statement that the contract
cannot be assigned to another party without the client's consent, along with other information.
NEW QUESTION # 78
As an agent, which of the following statements about the Securities Investor Protection Corporation (SIPC) can you legitimately make to your client?
- A. "The SIPC is a government agency created by an Act of Congress to combat fraud."
- B. "The SIPC is a government agency that was created by an Act of Congress to protect investors against losses in the stock and bond market."
- C. "The SIPC was established to restore funds to investors when the brokerage firm they have been using is bankrupt or in financial distress."
- D. The SIPC is the FDIC of the stock and bond markets."
Answer: C
Explanation:
Explanation
The statement that you can legitimately make about the SIPC to your client is that it was established to restore funds to investors when the brokerage firm they have been using is bankrupt or in financial distress. The SIPC does not insure investors against losses in the stock and bond markets like the FDIC does bank deposits, and it does not combat fraud.
NEW QUESTION # 79
Which of the following would be an unsuitable recommendation for your 68-year-old client?
- A. a high quality corporate bond fund
- B. a deferred annuity
- C. a Treasury Inflation Protected Security (TIPS)
- D. an S&P 500 Index mutual fund
Answer: B
Explanation:
Explanation
A deferred annuity would be an unsuitable recommendation for your 68-year-old client. These annuities charge significant penalties for early withdrawals-and "early" can mean before 10 years, or even longer. A
68-year-old client may have the need to withdraw his money early to make medical payments.
NEW QUESTION # 80
If an issuer registers securities with the state, how long can the documentation supplied in the registration statement for those securities be incorporated by reference only into a registration statement for future securities the issuer wants to offer for sale?
- A. one year
- B. two years
- C. seven years
- D. five years
Answer: D
Explanation:
Explanation
Once an issuer has registered securities with the state, the documentation supplied in that registration statement can be incorporated into the registration statement for future securities the issuer wants to offer for sale by reference only for a period of five years.
NEW QUESTION # 81
In an arrangement between MoeMoney Investment Advisers and one of the firm's clients, the YourMoney
mutual fund, part of MoeMoney's compensation is based how the fund performs compared to the S&P
5 00 Index. If the return on the fund exceeds the return on the index, MoeMoney gets a bonus. The S&P
5 00 had a return of negative 8% this year, and the fund returned a negative 2%, so MoeMoney invoiced
the client for the bonus. Has MoeMoney violated any securities laws?
- A. Yes. It is a violation of the Uniform Securities Act for an investment adviser to earn a bonus if a portfolio
it manages loses money. - B. Yes. Under no circumstances can a bonus be part of an investment adviser's compensation package
according to the Uniform Securities Act. - C. No. The fund beat the return on the S&P 500 Index, so MoeMoney is entitled to the bonus, based on its
agreement with YourMoney. - D. Yes. An investment adviser's compensation cannot be based on the capital appreciation of the
portfolio.
Answer: C
Explanation:
No. MoeMoney has not violated any securities laws. Even though the fund's return was
negative, it still beat the return on the S&P 500 Index, and MoeMoney is entitled to the bonus. The
Uniform Securities Act does not prohibit compensation agreements like this one as long as the client is a
sophisticated investor, such as a mutual fund. This would not be permitted if the client were your average
individual investor.
NEW QUESTION # 82
What criminal penalties are specified for "willful violations" of the Uniform Securities Act?
- A. up to 5 years in prison or a $10,000 fine, or both.
- B. up to 3 years in prison or a $5,000 fine, or both.
- C. license cancellation.
- D. license suspension.
Answer: B
Explanation:
The criminal penalties specified by the Uniform Securities Act for "willful violations" of the act
are up to 3 years in prison or a $5,000 fine, or both, for each violation.
NEW QUESTION # 83
In which of the following scenarios is an investment adviser representative required to disclose the fact
that someone other than the representative performed the research on which his advice to the client is
based?
I. The investment adviser representative recommends the same asset allocation for his client that a buddy
of his did after his buddy had done some research for a client with similar characteristics.
II. The investment adviser representative provides a recommendation for his client based on research
provided by a broker-dealer that provides the investment adviser with its analysts' recommendations in
return for trades that the investment adviser executes using the services of the broker-dealer, as well as a
couple of other research sources he finds on the internet.
III. The investment adviser representative submitted his client's information to a data base that provided a
recommendation for the asset allocation of the client's investment monies that the adviser deemed was
sound and, therefore, recommended it to his client.
- A. I and III only
- B. III only
- C. II only
- D. I only
Answer: A
Explanation:
An investment adviser representative is required to disclose the fact that someone else
performed the research on which advice to the client is based in scenarios described in I and III only. If the
representative provides a recommendation to the client based solely on the recommendations provided
by others to whom he provided the data, he must disclose this. However, if the adviser representative has
based his recommendations on his own assessment of analysts' reports and recommendations, as is
suggested in Selection II, then there is no disclosure requirement.
NEW QUESTION # 84
Harry Lange manages the investment portfolio for the Fidelity Magellan Mutual Fund. Mr. Lange is a(n)
- A. investment adviser.
- B. agent.
- C. investment company.
- D. broker-dealer.
Answer: A
Explanation:
Explanation
If Harry Lange is managing the investment portfolio of Fidelity Magellan Mutual Fund, he is an investment adviser. He is making the investment decisions and receives a percentage of the assets under management as his compensation. He is not selling the mutual fund or the fund's investors anything, which is the job of a broker-dealer or an agent. Fidelity Magellan is the investment company.
NEW QUESTION # 85
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