Series 63 Securities & Issuers Practice Questions
Securities & Issuers makes up 5 of every 60 questions on a Tigertest Series 63 practice test. Here are 10 of the 18 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. Under the Howey test, an investment contract exists when money is invested in a common enterprise with an expectation of:
- A.A guaranteed minimum rate of return
- B.Profits from the efforts of others
- C.A paper certificate of ownership
- D.Prior registration with the SEC
Answer: B. SEC v. W.J. Howey (1946) defines an investment contract as an investment of money in a common enterprise with an expectation of profits from the efforts of others. No certificate, registration or guarantee is needed.
2. Under the Uniform Securities Act, which of these is a security?
- A.A term life insurance policy
- B.A bank checking account
- C.A fixed annuity contract
- D.An oil drilling program interest
Answer: D. The USA's definition expressly includes certificates of interest in oil, gas or mining titles and leases. Fixed annuities and insurance policies issued by insurers are excluded.
3. A customer buys a gold futures contract on a commodities exchange. Under the USA it is:
- A.Not a security
- B.A federal covered security
- C.A security
- D.An exempt security
Answer: A. Commodity futures contracts are regulated by the CFTC and are not securities under the USA. Options on securities, by contrast, are securities.
4. A company registering its IPO with the SEC also registers by coordination in the state. With its state filing it must include:
- A.Its last ten years of tax returns
- B.Its Form BD
- C.Copies of its federal prospectus
- D.A state-only offering circular
Answer: C. A coordination filing contains copies of the latest federal prospectus and other information the Administrator requires, so the state reviews the same document the SEC does.
5. Registration by coordination generally becomes effective in the state:
- A.When the Administrator signs an order
- B.At noon on the next business day
- C.When the SEC registration does
- D.Thirty days after filing
Answer: C. A coordination filing becomes effective at the same moment as the federal registration, provided no stop order is in effect, it has been on file for the required period and the final price amendment has been filed.
6. Registration by qualification becomes effective:
- A.When the Administrator orders it
- B.On the second business day
- C.Thirty days after the offering
- D.When the SEC declares it effective
Answer: A. Qualification is the full state registration used when neither coordination nor filing is available. It takes effect only when the Administrator so orders.
7. Under the USA as amended by NASAA, registration by filing is open to an issuer that is also registering the offering with the SEC and:
- A.Has no federal registration
- B.Is offering its first securities
- C.Sells only within one state
- D.Meets seasoning and size tests
Answer: D. Registration by filing replaced the original act's registration by notification. It is for established issuers registering with the SEC: 36 months in business, a class of equity held by 500 or more holders, minimum net worth, at least $5 a share for equity, among other tests, plus previously qualified mutual funds and UITs.
8. Shares listed on the New York Stock Exchange are, under NSMIA:
- A.Subject to state merit review
- B.Federal covered securities
- C.Registered by qualification
- D.Exempt only if sold unsolicited
Answer: B. NSMIA made securities listed on major national exchanges federal covered securities. States may not require them to be registered or reviewed on the merits, though antifraud authority remains.
9. A registered open-end mutual fund sells shares in the state. The state may require:
- A.A stop order before sale
- B.A notice filing and a fee
- C.Registration by qualification
- D.Merit review of the fund
Answer: B. Shares of registered investment companies are federal covered securities. A state may require a notice filing, a fee and consent to service of process, but not registration.
10. Which is an exempt security under the USA?
- A.An unlisted REIT
- B.A limited partnership unit
- C.Shares of a startup
- D.A bond issued by a city
Answer: D. Securities issued by the United States, states and their political subdivisions, such as a city, are exempt from registration. Startup shares, unlisted REITs and partnership units generally must be registered or qualify for a transaction exemption.
Practice all 18 securities & issuers 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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