Series 63 Practice Test – 20 Realistic Questions

📝 Series 63 Practice Test – 20 Realistic Questions

Prepare for the Series 63 Exam with this set of 20 realistic practice questions. These questions cover core topics including state registration, prohibited practices, fiduciary duties, and the Uniform Securities Act—just like what you’ll face on exam day.

🔒 Questions 1–5: State Law & Registration

1. An agent begins working for a new broker-dealer. When must their new registration be filed with the Administrator?
A. Within 30 days of employment
B. Before the agent begins conducting securities business
C. After the first transaction is executed
D. Upon receiving their license certificate
✅ Correct Answer: B

2. A broker-dealer with no office in a state and only five retail clients there in a 12-month period:
A. Must register in that state
B. Is exempt under the de minimis rule
C. Must register with the SEC
D. Needs to file Form ADV
✅ Correct Answer: B

3. Which of the following is NOT a security under the Uniform Securities Act?
A. Stock options
B. Keogh participation interests
C. Whole life insurance
D. Variable annuity
✅ Correct Answer: C

4. Under the USA, an investment adviser must renew registration:
A. Every 3 years
B. Only if clients are added
C. Annually by December 31
D. Every time assets under management increase
✅ Correct Answer: C

5. A Canadian broker-dealer with existing U.S. snowbird clients may operate in a state if:
A. They register with FINRA
B. They are exempt under the snowbird exemption
C. They register in all 50 states
D. They file Form U5
✅ Correct Answer: B

⚖️ Questions 6–10: Ethical Practices

6. An agent guarantees a client will not lose money. This is:
A. Acceptable if written
B. A violation of NASAA rules
C. Permitted under federal law
D. Ethical if verbally stated only
✅ Correct Answer: B

7. Selling away involves:
A. Recommending penny stocks
B. Making trades outside of firm supervision
C. Selling unsuitable investments
D. Discounting commissions
✅ Correct Answer: B

8. Front-running occurs when:
A. An agent buys stock after receiving a client’s order
B. A client buys on insider information
C. A firm delays execution intentionally
D. An IAR uses margin without approval
✅ Correct Answer: A

9. An agent lends money to a client who is also a family member. Under USA:
A. This is always prohibited
B. This is allowed if permitted by firm policy
C. Only allowed with Administrator’s consent
D. Always acceptable if the client is a relative
✅ Correct Answer: B

10. An IAR must update Form U4:
A. Every 6 months
B. Upon any material change
C. Only during annual renewals
D. When the firm requests
✅ Correct Answer: B

📄 Questions 11–15: Securities & Transactions

11. A security issued by a U.S. municipality is:
A. Exempt under the USA
B. Required to be registered in all states
C. Considered a federal security
D. Not considered a security
✅ Correct Answer: A

12. A tombstone ad:
A. Is a prospectus
B. Is considered a full advertisement
C. Is an exempt offering document
D. Is not considered an offer under the USA
✅ Correct Answer: D

13. Which of the following is a non-exempt transaction?
A. Unsolicited trades
B. Trades with institutional investors
C. Private placements to 12 individuals
D. A retail trade on the NYSE
✅ Correct Answer: D

14. Under the USA, securities issued by insurance companies:
A. Are exempt only if federally regulated
B. Are never exempt
C. Are exempt only in the state of incorporation
D. Are automatically exempt
✅ Correct Answer: A

15. A client makes an unsolicited trade. The agent must:
A. File a Form ADV
B. Disclose the offering price
C. Mark the order ticket as unsolicited
D. Obtain prior written consent
✅ Correct Answer: C

🧠 Questions 16–20: Fiduciary Duty & Suitability

16. Suitability is MOST important when:
A. Disclosing fees
B. Explaining account types
C. Recommending an investment
D. Renewing client contracts
✅ Correct Answer: C

17. A firm fails to supervise its agents. Who may be held liable?
A. The agent only
B. The state Administrator
C. The firm and supervisor
D. No one if no losses occurred
✅ Correct Answer: C

18. An agent hears of a takeover before it’s public and trades the stock. This is:
A. Acceptable if the client benefits
B. Front-running
C. Insider trading
D. Arbitrage
✅ Correct Answer: C

19. The fiduciary duty of an IAR includes:
A. Maximizing commission revenue
B. Acting in the client’s best interest
C. Choosing the product with the highest return
D. Avoiding all investment risk
✅ Correct Answer: B

20. An IAR uses a third-party performance chart without disclosure. This is:
A. Permitted under the USA
B. A potential ethical violation
C. Encouraged for sales success
D. Not subject to regulation
✅ Correct Answer: B

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