Free FINRA Series-63 Exam Questions

Question 1

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

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 2

Under the NASAA Model Rules, which of the following must an investment adviser provide its clients with at least once a year?

A : the total number of agency cross transactions completed for the client during the period

B : the total amount of commissions or other compensation that the investment adviser received or expects to receive in connection with agency cross transactions performed for the client during the period

C : the number of any complaints that each of its investment adviser representatives has received during the period

D : both A and B

Answer: D

Question 3

The maximum monetary civil liability that a person who has violated a securities law can be expected to pay is

A : the original investment + a state-deemed appropriate interest rate + court costs and reasonable attorneys’ fees + any state-determined “pain and suffering” award.

B : the original investment + a state-deemed appropriate interest rate + court costs and reasonable attorneys’ fees + any state-determined “pain and suffering” award - any income the victim has received on the investment.

C : the original investment + a state-deemed appropriate interest rate + court costs and reasonable attorneys’ fees - any income the victim has received on the investment.

D : the original investment + a state-deemed appropriate interest rate + court costs and reasonable attorneys’ fees + any income the victim has received on the investment.

Answer: C

Question 4

While on vacation in Colorado, Mr. Moneybags became interested in the stock of a company called SafeAway, which designs and installs customized high-tech security systems in the multimillion dollar mansions located in Colorado’s pricier ski resort areas, such as Vail and Aspen. Upon returning to his home in Boston, he calls his broker-dealer with an order to purchase 10,000 shares of the stock, which he learned trades in the over-the-counter market. Fast Eddie, a registered agent with his broker-dealer, discovers that SafeAway’s stock is registered only in the states of Colorado and Wyoming. Neither Fast Eddie nor his broker-dealer are registered to do business in either of those states. Under these circumstances,

A : Fast Eddie cannot effect Mr. Moneybags purchase of SafeAway stock since neither he nor his broker are registered to do business in Colorado or Wyoming, and SafeAway stock is not registered for sale in the state of Massachusetts.

B : Fast Eddie can execute the trade for Mr. Moneybags since this would be considered an exempt transaction because it is a private placement.

C : Fast Eddie should contact a broker-dealer that is registered in either Colorado or Wyoming and negotiate a finder’s fee for referring Mr. Moneybags to them.

D : Fast Eddie can execute the trade for Mr. Moneybags since this would be considered an exempt transaction because it is an unsolicited transaction.

Answer: D

Question 5

An investment adviser or its representative may

A : only exercise any discretionary power in the purchase or sale of securities for a client’s account after receiving written authority prior to the execution of the transactions.

B : exercise discretionary power in the purchase or sale of securities for a client’s account as long as it receives written discretionary authority over the account within 10 business days of the first discretionary transaction placed, assuming oral authority has already been given.

C : exercise discretionary power in the purchase or sale of securities for a client’s account as long as.

D : exercise discretionary power in the purchase or sale of securities for a client’s account only after.

Answer: B