Series 63 Communication with Customers Practice Questions
Communication with Customers makes up 12 of every 60 questions on a Tigertest Series 63 practice test. Here are 10 of the 40 questions on it, each with the answer and the reason.
Updated by the Tigertest team. Based on NASAA's Series 63 test specifications. Original questions; 60 per test in the real exam's proportions, 43 of 60 to pass. Not affiliated with NASAA or FINRA.
1. An agent tells a prospect, "The state approved me, so you can trust my picks." This is:
- A.A required disclosure
- B.An unlawful representation
- C.Allowed since she is registered
- D.Allowed only in writing
Answer: B. The USA makes it unlawful to represent that registration means the Administrator has passed on the merits or qualifications of a registrant. Registration is not an endorsement.
2. Which of these may an agent lawfully tell a customer?
- A.The Administrator vouches for the fund
- B.Registration makes the stock safe
- C.The state approved her skill
- D.She is registered in the state
Answer: D. Stating the fact of registration is allowed. Saying or implying that registration means approval of the agent's ability or of a security's merits is a prohibited representation.
3. A brochure states that a fund is "registered with the state, so it is a sound investment." This is:
- A.Misleading and prohibited
- B.Required wording
- C.Accurate under the USA
- D.Allowed with a disclaimer
Answer: A. Neither the filing of a registration statement nor its effectiveness means the Administrator found it true or passed on the merits of the security, and representing otherwise is unlawful.
4. An agent promises a customer she will make up any loss if a stock falls. This is:
- A.Allowed for small trades
- B.A form of insurance
- C.A prohibited guarantee
- D.Allowed if put in writing
Answer: C. Guaranteeing a customer against loss is a prohibited practice under NASAA's ethics policy and FINRA rules. Only a third-party guarantee built into a security, such as a guaranteed bond, may be described.
5. Which statement may an agent lawfully make about a bond?
- A.Its price will rise by next year
- B.The state itself stands behind it
- C.A parent guarantees its interest
- D.It cannot lose value
Answer: C. Describing a real third-party guarantee of payment is accurate disclosure. Promising that a security cannot lose value or that its price will rise misrepresents risk.
6. An agent tells a customer a fund has no sales charge when it carries a front-end load. This is:
- A.A material misstatement
- B.Allowed if a prospectus follows
- C.Puffery, not fraud
- D.A minor sales tactic
Answer: A. Sales charges are material to a fund purchase. Misstating them violates the antifraud provisions, and later delivery of a prospectus does not cure the misstatement.
7. Under FINRA Rule 4512, a new account record must include:
- A.The customer's tax returns
- B.The customer's personal credit score
- C.The customer's political party
- D.Whether the customer is of legal age
Answer: D. Rule 4512 requires the customer's name and residence, whether of legal age, the associated person responsible, the principal's acceptance and, for individual accounts, a reasonable effort to get a trusted contact.
8. A firm must make a reasonable effort to obtain a trusted contact person for:
- A.Institutional accounts only
- B.Non-institutional accounts
- C.Only clients over age 65
- D.Only margin accounts
Answer: B. Rule 4512 requires a reasonable effort to obtain a trusted contact for each non-institutional customer account, of any age, when it is opened or updated.
9. SEC Rule 17a-3 requires a firm to send each customer the account record for review at least every:
- A.60 months
- B.36 months
- C.12 months
- D.24 months
Answer: B. Rule 17a-3 requires the firm to furnish the account record to the customer within 30 days of opening and at least every 36 months after that, and to send updates when information changes.
10. Under SEC Rule 17a-4, a broker-dealer must keep its blotters and general ledgers for:
- A.Two years
- B.Ten years
- C.Three years
- D.Six years
Answer: D. Blotters, general ledgers and customer account ledgers are kept six years. Most other records, including order tickets and business communications, are kept three years.
Practice all 40 communication with customers questions, and the rest of the 200-question bank, in the free Series 63 training sets. Questions you miss come back until you have mastered them.
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