Question 1

According to the NASAA Model Rules, a broker-dealer is not permitted to allow a customer to engage in margin transactions unless

Options :

A : the broker-dealer already has a margin agreement signed by the client in hand.

B : the broker-dealer receives a margin agreement signed by the client promptly after the client’s first margin transaction.

C : the client has a net worth of at least $500,000.

D : the client has been a customer of the firm for at least 6 months.

Answer: B

Question 2

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 3

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 4

Which of the following may an investment adviser not use in an attempt to solicit new clients?

Options :

A : testimonials of satisfied clients

B :

a complete list of the stocks they have recommended in the past year, even if a statement is included that states that past performance is no guarantee of future performance

C : a free initial consultation, with no obligation on the part of the potential client

D : a free financial planning kit, with no obligation on the part of the potential client

Answer: A

Question 5

Mr. Noah Scruples is a registered representative with CanDo Broker-Dealers. A client calls and wants Noah to purchase shares of a mutual fund the client has read about. CanDo is not authorized by this particular fund to effect purchases or sales of the fund shares. Can Noah execute the order anyway?

Options :

A : No. This would be considered money laundering, which is highly illegal.

B : No. This is a prohibited practice known as selling away.

C : No. This is a prohibited practice known as front running.

D : Yes. Since this is an unsolicited trade, Noah can execute the transaction on behalf of his client.

Answer: B

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