Series 63 State Securities Law Basics

1. Which of the following would NOT be considered a prohibited practice by an agent?

Churning a client's account for commissions

Providing a prospectus to a prospective buyer

Guaranteeing investment returns

Engaging in unsuitable recommendations

2. True or False: State securities laws apply only to securities traded on national exchanges.

True

False

3. Which of the following best describes the net capital requirement for broker-dealers?

A minimum amount of funds to cover potential losses

The total value of securities held

The number of registered agents

The annual revenue requirement

Submit

5. What is the primary purpose of requiring broker-dealers to maintain detailed books and records?

To increase operational costs

To ensure transparency and enable regulatory oversight

To provide entertainment for auditors

To eliminate the need for compliance staff

6. True or False: An agent may lend money to a client for investment purposes without special authorization.

True

False

7. Which of the following transactions would require state registration?

Sale of Treasury bonds

Sale of common stock in a domestic corporation

Sale of municipal securities

Sale of securities by an estate executor

Submit

9. Which document must be delivered to a client before or during the purchase of a security?

The broker-dealer's annual report

A prospectus

The agent's personal financial statement

The state Administrator's approval letter

10. True or False: A non-resident agent may conduct business in a state without registering with that state.

True

False

11. Which of the following best describes the primary purpose of the Uniform Securities Act?

To establish federal securities regulations only

To provide a model for state securities laws

To eliminate all state-level securities oversight

To create a single national securities exchange

Submit

13. A client complaint must be reported to the state Administrator within how many days?

10 days

15 days

30 days

60 days

14. Which of the following is a requirement for broker-dealer registration at the state level?

Having at least 500 employees

Maintaining net capital requirements set by the Administrator

Operating in all 50 states

Being publicly traded

15. True or False: A broker-dealer may hold client funds in any account at its bank.

True

False

Submit

17. Which of the following securities is typically exempt from state registration requirements?

Common stock of a small startup

Municipal bonds issued by a state

Penny stocks

Options on unregistered securities

18. What is the primary function of a state securities Administrator?

To enforce federal securities laws exclusively

To administer and enforce state securities laws

To operate the stock exchange

To set interest rates for banks

19. Under the Uniform Securities Act, which activity constitutes fraud in the offer or sale of securities?

Providing accurate information in a prospectus

Omitting material facts or making untrue statements

Following all SEC guidelines

Registering securities with the state

20. A securities agent must register with which of the following?

The SEC only

The state Administrator and their broker-dealer

FINRA only

The Federal Reserve

FINRA Series 63 State Securities Law Basics Quiz

1. Which of the following would NOT be considered a prohibited practice by an agent?

2.

What first name or nickname would you like us to use?

2. True or False: State securities laws apply only to securities traded on national exchanges.

3. Which of the following best describes the net capital requirement for broker-dealers?

4. An agent must disclose material conflicts of interest to clients. This is an example of a ____ obligation.

5. What is the primary purpose of requiring broker-dealers to maintain detailed books and records?

6. True or False: An agent may lend money to a client for investment purposes without special authorization.

7. Which of the following transactions would require state registration?

8. An agent who engages in sales practices that are deceptive or unfair has committed a violation of ____.

9. Which document must be delivered to a client before or during the purchase of a security?

10. True or False: A non-resident agent may conduct business in a state without registering with that state.

11. Which of the following best describes the primary purpose of the Uniform Securities Act?

12. Under state securities laws, an agent recommending a security must have a reasonable basis for believing the recommendation is ____ for the client.

13. A client complaint must be reported to the state Administrator within how many days?

14. Which of the following is a requirement for broker-dealer registration at the state level?

15. True or False: A broker-dealer may hold client funds in any account at its bank.

16. An agent receives a tip about a company and buys stock before announcing positive news. This behavior is an example of ____.

17. Which of the following securities is typically exempt from state registration requirements?

18. What is the primary function of a state securities Administrator?

19. Under the Uniform Securities Act, which activity constitutes fraud in the offer or sale of securities?

20. A securities agent must register with which of the following?