Series 63 Practice Questions and Answers

🧾 Series 63 Practice Questions and Answers
📘 Sharpen Your State Law Skills for the Uniform Securities Agent State Law Exam

The Series 63 exam (administered by NASAA) tests your understanding of state securities regulations, focusing on the Uniform Securities Act, registration procedures, and anti-fraud rules. Below are 10 high-yield practice questions with detailed answers to help you reinforce key Series 63 concepts.

✅ Practice Questions

1. Which of the following would be defined as a “broker-dealer” under the Uniform Securities Act?

A) A trust company offering investment advice
B) A person with no office in the state who deals exclusively with institutions
C) A person in the business of buying and selling securities for others and for their own account
D) An agent registered in the state

✅ Answer: C
Explanation: A broker-dealer is defined as a person engaged in the business of buying and selling securities for their own account and/or on behalf of others.

2. An agent may not lawfully engage in which of the following activities?

A) Recommending exempt securities
B) Sharing in profits and losses of a client account with written consent
C) Selling unregistered, non-exempt securities
D) Selling municipal bonds to retail investors

✅ Answer: C
Explanation: It is unlawful to sell unregistered, non-exempt securities in a state unless the transaction or security qualifies for an exemption.

3. Which of the following is NOT considered a security under the Uniform Securities Act?

A) Investment contract
B) Variable life insurance
C) Fixed annuity
D) Stock option

✅ Answer: C
Explanation: Fixed annuities are not considered securities; they are insurance products with fixed returns.

4. An agent who moves to another broker-dealer must:

A) Notify NASAA directly
B) Notify the SEC
C) Notify the state administrator and file a new Form U4
D) Do nothing if moving within the same state

✅ Answer: C
Explanation: The agent, the old firm, and the new firm must notify the state administrator. A new Form U4 is filed.

5. Under the USA, who has the authority to issue a cease and desist order?

A) FINRA
B) SEC
C) State Administrator
D) The U.S. Attorney General

✅ Answer: C
Explanation: Only the state securities administrator can issue a cease and desist order in their jurisdiction.

6. Which of the following is considered an exempt transaction under the Uniform Securities Act?

A) A sale of securities to an individual with over $1 million net worth
B) An unsolicited non-issuer transaction
C) An intrastate offering to 100 investors
D) A trade in a private REIT

✅ Answer: B
Explanation: Unsolicited non-issuer transactions (client initiates) are exempt under the USA.

7. What must happen for an agent to lawfully share in a client’s profits or losses?

A) The agent must be a family member
B) Verbal agreement is sufficient
C) Written consent from both client and the firm is required
D) The account must be a joint account

✅ Answer: C
Explanation: Written consent from both the client and the broker-dealer is required.

8. Which of the following would require registration in a state?

A) An agent with no office in the state who only works with mutual funds
B) A federal covered adviser
C) An agent selling to 6 retail clients in that state in a 12-month period
D) A BD transacting only with insurance companies in the state

✅ Answer: C
Explanation: The de minimis exemption allows up to 5 retail clients. At 6 or more, registration is required.

9. Which of the following best describes an “offer to sell” under the USA?

A) The publication of a tombstone ad
B) A communication solely for informational purposes
C) The solicitation of an offer to buy
D) The sale of a security in an unsolicited transaction

✅ Answer: A
Explanation: A tombstone ad qualifies as an offer to sell under the Uniform Securities Act.

10. How long must a state-registered agent maintain records of communications and transactions?

A) 3 years
B) 5 years
C) 6 years
D) Until retirement

✅ Answer: A
Explanation: State-registered broker-dealers must retain most required records (including communications) for 3 years.

📊 Scoring Guide

• 9–10 correct: Exam-ready
• 7–8 correct: Solid, but review key exemptions and registration rules
• 5–6 correct: Revisit definitions and transaction types
• Below 5: Focus on fundamentals and re-test

🎓 Need more Series 63 flashcards, practice tests, or a study guide?
👉 Visit https://finra-exam-mastery.com for full exam prep tools.

Prep smarter. Pass faster. Nail your Series 63.