Series 63 quiz 2 51-60

9 Questions

51 An agent sells her customer $10,000 of 15-year U.S. Treasury bonds. If the agent tells the customer this is the best investment due to the absolute safety of Treasury securities, the agent has acted

unlawfully, because the term "absolute safety" implies that the customer cannot lose money

Over which of the following would the investment adviser representative have discretionary authority?

An account in which the investment advise representative chooses portfolio securities on behalf of the client

A broker-dealer with no place of business in the state would not be required to register with the Administrator unless one of its clients was

an employee benefit plan with assets of less than $1 million

54 An individual who has passed the Uniform State Law examination and filed an application with a state may

not perform any duties that require registration until notified that registration as an agent is effective

A fiduciary is a

person entrusted with the duty of acting for the benefit of another party

Under the NASAA Statement of Policy on Dishonest or Unethical Business Practices of Broker-Dealers and Agents, it would be considered a prohibited practice for a broker-dealer to

have a history of repeatedly delaying the delivery of securities to its customers

All of the following actives would probably be considered a prohibited business practice EXCEpt

recommending the purchase of a securty on the basis of an excellent investment rating, but not disclosing a change in the number of shares outstanding as a result of a stock split three years ago

Bill Anderson is a longtime customer of Billy Bob Baird, an agent of Gibraltar Securities. Anderson mentioned that if the common stock of IBM drops 10 points, he might consider buying it. Anderson has a long history of trading high-quality large-cap stocks with Baird in his nondiscretionary account. If IBM stock falls by 10 points but Anderson cannot be reached and Baird purchases the stock in Anderson's account, Baird has

engaged in the prohibited practice of unauthorized trading

Assuming there is prior or concurrent delivery of the ABC Mutual Fund prospectus, if a customer asks an agent for advice in choosing a balanced mutual fund for an IRA, the agent may make which of the following statements?

Last year, ABC Mutual Fund was up 40%. However, over the last ten years, ABC has moved both up and down. The potential for gain does exist; however, there is no guarantee as to how much gain or loss will take place.

Study Notes

Securities Regulations

An agent who sells U.S. Treasury bonds to a customer and emphasizes their absolute safety has acted unethically, as Treasury securities do carry some risk.
A broker-dealer with no physical presence in a state is exempt from registration unless they have a client in that state.
An individual who has passed the Uniform State Law examination and filed an application with a state may register as an investment adviser representative.
A fiduciary is an individual or entity with a moral and legal obligation to act in the best interests of another party.
Under the NASAA Statement of Policy, it is a prohibited practice for a broker-dealer to engage in dishonest or unethical business practices.
The prohibited practices include fraudulent activities, manipulation, and deceitful business practices, but not recommending a balanced mutual fund to a customer seeking advice for an IRA.
A broker-dealer who purchases stock in a customer's account without prior authorization, despite having a history of trading with the customer, has exceeded their authority.
An agent who advises a customer on a balanced mutual fund for an IRA, provided they have delivered the prospectus, may make recommendations.