Series 63 – Uniform Securities Agent State Law Exam Communications with Clients and Ethical Practices 2

Question 1

Under the USA, what must an agent do before executing a transaction that was not solicited by the agent?

Accepted Answer

Determine that the transaction is not prohibited and that the client understands the nature of the investment

Answer

Obtain the broker-dealer's approval before execution

Answer

Deliver a prospectus to the client regardless of the security type

Answer

Obtain the Administrator's approval if the security is unregistered

Question 2

What is a 'hold in street name' arrangement in securities accounts?

Accepted Answer

Securities held by the broker-dealer in the firm's name on behalf of the client, rather than in the client's name

Answer

An instruction to hold a security without any trading activity

Answer

A requirement to disclose the client's name to the issuer

Answer

Holding shares in escrow pending settlement

Question 3

Under the USA, investment advisers are generally required to maintain books and records for a minimum of how many years?

Accepted Answer

Five years

Answer

Two years

Answer

Three years

Answer

Seven years

Question 4

Under the USA, what is the purpose of requiring broker-dealers to send trade confirmations to clients?

Accepted Answer

To provide clients with written notice of transaction details including price, quantity, and commission, allowing verification of trades

Answer

To allow the broker-dealer to bill the client for commissions

Answer

To comply with FINRA's annual audit requirement

Answer

To provide documentation for the broker-dealer's tax purposes

Question 5

Under the USA, which of the following must be included on a client account application to establish suitability?

Accepted Answer

Information about the client's financial situation, investment objectives, and risk tolerance

Answer

Only the client's social security number and date of birth

Answer

Only employment history and annual income

Answer

A signed waiver of liability for investment losses

Question 6

Under the USA, what is the 'cooling-off period' for a newly registered securities offering?

Accepted Answer

The period between the filing of the registration statement and its effective date, during which offers but not sales may be made

Answer

The period after which a registration cannot be withdrawn

Answer

The time investors have to change their minds after purchase

Answer

The period during which the Administrator reviews the registration statement