Series 63

Series 63 practice questions, page 3 of 10, with answer review and explanations.

Question 11

Which of the following would not fall under the classification of "institutional investor"?

  1. Prudential Insurance
  2. Chase Bank
  3. Neuring Investment Advisers
  4. Franklin Templeton Mutual Funds

Question 12

Which of the following is an example of a non-issuer transaction?

  1. IBM sells a new issue of bonds to an insurance company.
  2. Jose purchases a 10-year bond issued by Progress Energy when it has 6 years remaining to maturity.
  3. Google offers more shares of its stock for sale to the public.
  4. NewCorp, which has been a privately held company, is engaging in an initial public offering (IPO) of its stock.

Question 13

Which of the following is not considered to be a security, as defined by the Uniform Securities Act (USA)?

  1. a debenture
  2. a certificate of deposit (CD)
  3. a put option
  4. an annuity contract wherein an insurance company promises to pay a fixed sum, either in a lump amount or through periodic payments.

Question 14

Which of the following scenarios would not be considered a "sale," as defined by the Uniform Securities Act (USA)? I. Yoshito owned shares of Minnow Corporation and received shares of Whale Corporation from Whale when it merged with Minnow. II. Olivia's uncle, an agent with SecureMoney Brokers, sold Olivia ten call options on the stock of Microsoft. III. Hans purchased a bond of Indebted Corporation that had detachable warrants and subsequently sold the warrants. IV. Tom pledged some shares of stock he owned personally to secure a business loan for his company.

  1. Neither I nor II would be considered sales.
  2. Neither II nor III would be considered sales.
  3. Neither I nor IV would be considered sales.
  4. Neither III nor IV would be considered sales.

Question 15

Jeremy Sly considered himself somewhat of an inventor. The only problem was that his day job interfered with his opportunity to exercise his creativity. He came up with a plan to get outside investors to support his inventive activities. To this end, he produced and distributed a brochure advertising partnership interests with a guaranteed return on investment of at least 15% after the first 12 months, based on what he had allegedly generated from his other (non-existent) inventions. Given these facts, is Jeremy guilty of any security violations under the Uniform Securities Act (USA)?

  1. No. The facts don't indicate whether any partnership interests were actually sold, and there can be no violation unless there is a sale.
  2. No. An interest in a partnership is not considered a security.
  3. No. It is not against the law to believe in oneself and promote one's ideas.
  4. Yes. Even an "offer" to sell securities must not contain any untruths.