Q56. Which of the following is not one of the criteria for a security to be eligible for registration by notification?

Q57. Ms. Muffet is employed by Spyder Broker-Dealers. Her job duties include providing price quotes and
executing purchases and sales for the firm’s clients. She is paid a salary plus commission. Ms. Muffet is

Q58. Mr. Sailor is cruising through the Bahamas when he learns that a healthcare company in which he owns stock is being sued by former patients, doctors, nurses, and even the federal government. He doesn’t have his broker’s number handy, and he doesn’t have internet access, so he calls his son and tells him to call the broker and instruct the broker to sell his shares. As a registered agent for his broker, you take the call.
Should you execute this transaction?

Q59. You had the misfortune of working as a registered agent for an unscrupulous broker-dealer. You weren’t privy to any of it, but apparently, your broker-dealer was guilty of some fraudulent activities and has had his license revoked. In this instance,

Q60. An investment adviser suggests that his client, Arnold, a 74-year old gentleman, should consider a
reallocation of the assets in his portfolio. The adviser tells Arnold that he has far too much invested in
bonds, which don’t earn as much as stocks. He advises Arnold to take 80% of the money he has in bonds
and invest it in an aggressive growth mutual fund that has provided an average annual return of 40% over
the past three years. Arnold is impressed and follows this advice. Shortly thereafter, there is a steep drop
in the market in general, and the net asset value of the aggressive growth mutual fund falls 85%. Does
Arnold have any remedies available to him?

Q61. Which of the following is a security as defined by the Uniform Securities Act (USA)?

Q62. Mr. Bigwig, CEO of HiGrowth Corporation, meets with the president of BigFee Investment Bankers and
arranges for BigFee to underwrite an Initial Public Offering (IPO) for the firm. When the IPO comes to
market, GetErDone Broker-Dealers is part of the selling group, which handles the sale of the stock to the
public. In this scenario, which party is acting as a dealer?

Q63. Which of the following trades is illegal?

Q64. Which of the following is an example of commingling?

Q65. Ms. Ding is an administrative assistant to the manager of a mutual fund. Most of her day is spent entering data onto a spreadsheet for her boss and answering phone calls. Some of the calls require her to provide information about the some of the fund’s financial aspects, such as its closing net asset value on the previous day.
What type of registration does Ms. Ding require in order to perform her duties?

Q66. Which of the following may be given to prospective investors during the “cooling off period?”

Q67. Which of the following practices would be prohibited in connection with the sale of investment company shares?
I. selling a client shares of a load stock fund when a no load stock fund with the same investment objective exists II. selling the client shares of five S&P 500 Index mutual funds, offered by different fund families III. encouraging a client to swap his money between two funds in the same family without informing him that this creates a taxable event

Q68. Which of the following may an investment adviser not use in an attempt to solicit new clients?

Q69. Which of the following statements about agents is (are) false?

Q70. Ari Gaunt is a registered agent employed by Small &Associates Broker-Dealers. He has been notified of a hearing regarding the revocation of his license for making unauthorized trades on some of his clients’ accounts.
Which of the following statements is necessarily true?

Q71. A broker-dealer is required to keep his records for how long?

Q72. Which of the following persons is required to maintain its records in accordance with state dictates and
meet the minimum net capital requirement imposed by the state?
I. federal covered adviser
II. state-registered investment adviser
III. investment adviser representative

Q73. Rich Quick is a broker-dealer registered in the state of Massachusetts. He occasionally trades on
abnormalities he observes in bond yield spreads for his own account, short selling a bond that appears to
be overpriced based on its yield and buying a bond that is identical in almost every respect except for the
price, which is less than that of the other bond. He has been able to earn arbitrage profits 95% of the time
when he does this. Rich Quick

Q74. A bond issue has recently been registered with the state Administrator.
Which of the following statements are true?

Q75. Erin is a registered agent who works for SecureMoney Brokers-dealers. One of her clients, Mrs. McTurk, is a recently-widowed woman who relies on Erin for advice about her investment portfolio. Mrs. McTurk reminds Erin of her own grandmother, and she is happy to provide guidance within the sphere of her own knowledge.
Based on these facts, which of the following statements is true?

Q76. A-2-Z Associates is a full service brokerage and is also in the investment advisory industry, charging its
clients for investment advice for additional remuneration. Which of the following statements is true?

Q77. Elizabeth is the owner of Lizbeth Investment Advisers, a small, state-registered investment advisory firm. She has decided that her firm needs a niche and has learned that a consulting group is coming to the area and offering a 3-day seminar on asset allocation for senior citizens offered by Advantage for Retirement Persons (ARP). The seminar will cost $1,000 per individual, but after attending the seminar, each attendee will receive a certificate verifying their involvement in the program. Elizabeth decides this is the niche she has been looking for and signs up herself and her three investment adviser representatives for the program. After attending the seminar and receiving their certificates, Elizabeth and her team can

Q78. An investment adviser
I. provides investment advice to clients.
II. sells securities to clients.
III. buys and sells securities in their clients’ accounts for the clients.

Q79. Your client calls you with a market order to purchase 500 shares of the stock of Oracle and asks when
payment will be due. If today is Wednesday, September 15th, you inform the client that payment is due on

Q80. Which of the following may be given to prospective investors during the “cooling off period?”