Question 1

Mina is a new agent with SecureMoney Broker-Dealers and is struggling to make ends meet. She gets a job as a receptionist at a fitness club on the weekends to generate more income. Which of the following is true?

Options :

A : Mina should have notified SecureMoney in writing before signing on to work at the fitness club.

B :

Because the job as a receptionist at a fitness club has nothing to do with the world of finance, Mina has done nothing inappropriate.

C : Mina simply needs to tell her immediate supervisor at SecureMoney about her new job.

D : Mina needs to send notice to the state Administrator informing him of her extracurricular activity.

Answer: A

Question 2

MoeMoney Investment Advisers, LLC is registered in the state of Texas, and its three offices are all located in the greater Dallas-Fort Worth area. Five of its clients-all individuals-have relocated to Colorado and all have indicated a desire to retain the services of MoeMoney. In order for this to be possible,

Options :

A : MoeMoney will need to apply for and be granted registration as an investment adviser in the state of Colorado.

B : each client will have to write a letter to the Administrator of the state of Colorado on MoeMoney’s behalf.

C :

MoeMoney will need to apply for and be granted registration as an investment adviser representative in the state of Colorado.

D : Neither MoeMoney nor its clients need do anything.

Answer: D

Question 3

Once you have passed the Series 63 examination, which entity must then approve your application to sell securities?

Options :

A : FINRA

B : NASAA

C : SEC

D : the state administrator

Answer: D

Question 4

A hypothecation agreement refers to

Options :

A :

an agreement wherein a client gives his broker-dealer discretion to purchase securities that the broker-dealer deems appropriate in whatever quantity the broker-dealer feels appropriate and at a time and price the broker-dealer believes is a good deal.

B : an agreement that a client must sign prior to executing any short sales with the broker-dealer.

C :

an agreement signed by a client who is executing a margin transaction that allows the broker to hold the margined securities in street name as collateral for the loan.

D :

a document signed by a client indicating that he or she understands that some of the charts and examples presented in a broker-dealer’s advertising literature are based on hypothetical trades.

Answer: C

Question 5

Ken Con is an agent with Blue Sky Broker-Dealers. He gets up early each morning so that he can study any late-breaking news that may affect the markets and figure out ways to incorporate this news into conversations with select clients in order to pressure them to restructure their portfolios by selling holdings they have in one particular industry to invest the money in another particular industry. Ken has been very successful with this strategy and executes more trades for his clients than any other agent with the firm, but is he in danger of losing his license?

Options :

A : Yes. Ken is engaging in churning, a prohibited practice and can have his license revoked or suspended.

B :

It depends. If his clients have lost money, Ken may lose his license; but if a review indicates that his clients’ accounts earn profits, then his license is safe.

C : Yes. Ken is guilty of the prohibited practice of “tailgating.”

D : No. Ken is just a successful sales person who is working harder than the other agents in the firm.

Answer: A

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