Question 1

The Turnover Corporation, a firm with 25,000 employees, has recently hired 50 new employees, many of whom have been hired to replace middle-level managers who have retired. Turnover has omitted this fact from its prospectus. Turnover is guilty of

Accepted Answer

A) fraud. 
B) misrepresentation. 
C) misusing insider information. 
D) nothing. The hiring of 50 new employees by a firm with 25,000 employees is not a material fact.

Question 2

A margin transaction refers to a transaction

Accepted Answer

A) that is illegal under the guidelines of the Uniform Securities Act. 
B) in which the client borrows some of the money that he is investing. 
C) in which a registered agent makes trades on a customer's account without that customer's knowledge. 
D) Both A and C are true statements.

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,

Accepted Answer

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.

Question 4

A bond issue has recently been registered with the state Administrator. Which of the following statements are true?

Accepted Answer

A) An investor can feel secure in buying the bond because it has recently been registered, which means that the state Administrator finds it to be of sound quality at this point in time. 
B) The bond may now be offered for sale in the state. 
C) The issuer may now offer this bond for sale, and any other bonds that the issuer may want to offer for sale in the future will be able be sold after the issuer executes a notice filing. 
D) Both A and B are true statements.

Question 5

Which of the following statements regarding an open-end investment company is not true?

Accepted Answer

A) Its shares are bought and sold through the company. 
B) Its securities are federal covered. 
C) Its shares may sell for either net asset value or greater than net asset value, but not below 
D) Its shares are bought and sold on exchange floors.

Question 6

Which of the following is not a security, as defined by the Uniform Securities Act?
I. an option contract
II. a futures contract on gold
III. a 401K plan
IV. a variable annuity

Accepted Answer

A) None of the selections listed are securities. 
B) Only Selection III is not a security. 
C) Only Selections II and III are not securities. 
D) Selections II, III and IV are not securities.

Question 7

Once a broker-dealer has applied for and been granted state registration, the registration remains valid

Accepted Answer

A) until December 31st. 
B) for twelve months. 
C) for three years. 
D) for five years.

Question 8

Which of the following securities would not necessarily be exempt from state registration?

Accepted Answer

A) a stock listed on the Tokyo Stock Exchange 
B) a bond guaranteed by the Canadian government 
C) a bond issued by another state's employees' credit union 
D) a stock listed as a NASDAQ National Market Issue.

Question 9

Which of the following is not considered to be a person, as defined by the Uniform Securities Act?

Accepted Answer

A) a 16-year old cheerleader 
B) a law firm that is organized as a partnership 
C) a corporation 
D) a school district

Question 10

In order to maintain its registration with a state, a broker-dealer may be required to
I. take a written or oral exam.
II. pay an annual filing fee.
III. maintain a minimum net capital.
IV. file all advertising material with the Administrator.

Accepted Answer

A) I and II only 
B) II and III only 
C) II, III, and IV only 
D) I, II, III, and IV

Question 11

Which of the following statements regarding the registration of broker-dealers and investment advisers is true?

Accepted Answer

A) Investment advisers are required to register with both the state and the SEC, while broker-dealers may be registered with only one or the other. 
B) Investment advisers must always be registered with the SEC to conduct business; broker-dealers may be registered with either an individual state or the SEC or both. 
C) Investment advisers are required either to be registered with a state or with the SEC, while broker-dealers must be registered both with the SEC and the state. 
D) Both investment advisers and broker-dealers must be registered with the SEC and with the states in which they have offices.

Question 12

The trade confirmation must be received by the customer no later than

Accepted Answer

A) one week after the settlement date. 
B) the settlement date. 
C) the day after the trade takes place. 
D) five business days after the settlement date.

Question 13

Treadwater Bank and Trust is selling a portfolio of municipal bonds it owns to the SafeRisk Insurance Corporation. Under the Uniform Securities Act (USA), in this transaction Treadwater is defined as a

Accepted Answer

A) broker-dealer. 
B) agent. 
C) issuer. 
D) none of the above.

Question 14

Which of the following laws deals with identity theft protection?

Accepted Answer

A) the Bank Secrecy Act (BS
A)  
B) the USA Patriot Act 
C) ERISA 
D) Regulation S-P

Question 15

Which of the following orders can an Administrator issue without providing prior notice?

Accepted Answer

A) license suspension 
B) license revocation 
C) cease and desist 
D) license denial

Question 16

Jack Bean is employed by Giant Investment Advisers, LLC. His job duties include advising clients on the asset allocations of their portfolios. Jack Bean is

Accepted Answer

A) an investment adviser representative. 
B) an investment adviser. 
C) an administrative assistant. 
D) an agent.

Question 17

A broker-dealer is required to keep his records for how long?

Accepted Answer

A) at least three years 
B) at least five years 
C) at least seven years 
D) A broker-dealer is required to keep his records for as long as he is registered in the state.

Question 18

Which of the following is not a prohibited practice for broker-dealers under the NASAA Model Rules?

Accepted Answer

A) lending money to clients for them to invest 
B) borrowing money from a client 
C) charging commissions that are significantly higher than those charged by other broker-dealers 
D) providing a client with a copy of their most recent balance sheet upon request

Question 19

Which of the following would not appear on an order ticket?

Accepted Answer

A) the stock symbol 
B) the account number of the client buying or selling the security 
C) the settlement date 
D) the agent's commission

Question 20

Broker-dealer Nebulous opted to withdraw its registration with the state. Six months later, the Administrator finds that Nebulous had been engaged in fraudulent securities transactions. Which of the following statements is true?

Accepted Answer

A) The Administrator is unable to take disciplinary action against Nebulous because the self-initiated withdrawal became effective 30 days after the application was filed. 
B) The Administrator is only able to take disciplinary action if the misdeeds are discovered within three months of the effective date of the withdrawal, so Nebulous slipped by this time. 
C) The Administrator has five years from the discovery of the misdeed to take disciplinary action, so Nebulous will have to be on the lookout for a long time to come. 
D) The Administrator can take disciplinary action against Nebulous for up to one year, so Nebulous is in trouble.

Exam 4: Uniform Securities Act USA and State Registration Requirements