FINRA Series_63 Value Pack (Frequently Bought Together)

Ken Con is an agent with Blue Sky Broker-Dealers. He gets up early each morning so that he can study
any late-breaking news that may affect the markets and figure out ways to incorporate this news into
conversations with select clients in order to pressure them to restructure their portfolios by selling
holdings they have in one particular industry to invest the money in another particular industry. Ken has
been very successful with this strategy and executes more trades for his clients than any other agent with
the firm, but is he in danger of losing his license?

• A. Yes. Ken is guilty of the prohibited practice of "tailgating."
• B. No. Ken is just a successful sales person who is working harder than the other agents in the firm.
• C. Yes. Ken is engaging in churning, a prohibited practice and can have his license revoked or
  suspended.
• D. It depends. If his clients have lost money, Ken may lose his license; but if a review indicates that his
  clients' accounts earn profits, then his license is safe.

A "market not held" order is

• A. an order in which the client tells the broker to use his own discretion in timing a purchase or sale in an
  attempt to get a better price.
• B. an order to sell securities that the investor owns if the stock decreases by a certain amount from the
  current price.
• C. an order to buy or sell a stock at a specified price, which differs from the current market price.
• D. a prohibited activity in which an agent engages in the purchase or sale of securities that are not offered
  by his broker-dealer.

In its prospectus, the YourMoney Mutual Fund provides charts and tables of its average annual return
over the past year, three years, five years, and ten years. The fund's return has indeed been phenomenal
over this time period, beating the S&P 500 Index by at least 15%. The prospectus states that this is
because the fund invests in securities that are riskier and that, therefore, an investor can expect the fund
to continue earning a return higher than the S&P 500 Index. Is YourMoney guilty of any security
violations?

• A. Yes. There is no way the fund could have beaten the S&P 500 Index by at least 15% over the past ten
  years. The fund is obviously misstating its returns.
• B. No. Regulations require only that the mutual fund provide charts and tables of its average annual
  returns, with a statement comparing the fund performance with a relevant market index.YourMoney has
  done this and more.
• C. No. YourMoney properly revealed to prospective investors the fact that its higher than average returns
  are the result of its investment in riskier securities.
• D. Yes. YourMoney is guilty of fraud in claiming that "an investor can expect the fund to continue earning
  a return higher than the S&P 500 Index." Past performance is no indication of future performance.

Which of the following is not considered to be a person, as defined by the Uniform Securities Act?

• A. a corporation
• B. a school district
• C. a law firm that is organized as a partnership
• D. a 16-year old cheerleader

Under the Uniform Securities Act, which of the following does not need to be included when filing to
register a security issue with the state?

• A. a copy of the firm's articles of incorporation and bylaws, or the equivalent
• B. All of the above documents must be included when filing to register a security with the state.
• C. a copy of any indenture applying to the security being registered
• D. copies of the underwriter agreements