Q101. Which of the following are examples of the prohibited practice of manipulation in the securities markets?
I. Broker-Dealer Joker is unhappy with its investment in the stock of a speculative firm and engages another broker-dealer to purchase a large number of shares from it, with the unofficial agreement to buy back those shares, offer more shares which the second broker-dealer will purchase, and so on.
II. Broker-Dealer Joker has a large short position in the stock of a certain corporation. Joker offers a bonus to its agents who effect sale transactions in the stock.
III. A client calls Broker-Dealer Joker with a request to purchase 20 bonds issued by Massachusetts Institute of Technology (MIT.) The bonds are currently selling for their par value of $1,000. Knowing this, Joker offers to sells the client the bonds for $120 per $100 of par, or $1,200 per $1,000 bond.

Q102. Which of the following would not be a prohibited activity for a broker-dealer?
I. A broker-dealer tells a client that a municipal revenue bond offered by the city of Boston, Massachusetts is almost risk-free because it is backed by the taxes paid to the city, and the city generates a lot of tax dollars.
II. A broker-dealer sells a client some bonds that the broker-dealer has in its portfolio, after informing the client that it is acting as a seller in the transaction.
III. A broker-dealer purchases some stock that a client is selling for its own portfolio, after informing the client that it is acting as a buyer in the transaction.
IV. A broker-dealer purchases 1,000 shares of Southwest Airlines for a client who calls and asks the broker-dealer to buy some shares of a domestic airline stock at a good price for him and receives written discretionary authority from the client two days later, prior to the settlement date.

Q103. Ari Gaunt is a registered agent employed by Small &Associates Broker-Dealers. He has been notified of a
hearing regarding the revocation of his license for making unauthorized trades on some of his clients’
accounts. Which of the following statements is necessarily true?

Q104. Which of the following would be considered an “issuer” transaction?

Q105. Which of the following describes a prohibited practice in the sale of shares of investment companies?
I. Sandy Slacker hands her client the fund’s prospectus and tells him that the prospectus will provide him all that he needs to know about loads and fees associated with the fund.
II. Elliot Eager tells a client who has an investment objective that includes current income that a certain bond fund has a current yield of 8% and provides the client with a prospectus so that the client can peruse the average annual returns that the fund has generated in past years when the client has the time.
III. After explaining all the fees and loads involved in two different bond funds as well as the difference between current yield and total return, Patty shows the client the data on the average annual returns that the two bond funds provided. She explains to the client that the municipal bond fund has a lower yield than the similar-risk corporate bond fund because the interest income the client will receive from the municipal bond fund will be free from federal taxation, while the interest income on the corporate bond fund is fully taxable.

Q106. Finn Nance has recently passed his CFP exam and is now a certified financial planner. He has new business cards printed that have the words “Certified Financial Planner” printed under his picture. In doing so,

Q107. Which of the following is a security as defined by the Uniform Securities Act (USA)?

Q108. Under NASAA Model Rules, it is permissible for the registered representative of a broker-dealer to split his or her commission with
I. a client.
II. the broker-dealer with which the registered representative is affiliated.
III. another registered representative working for the same broker-dealer.
IV. the administrative assistant who directs calls to the registered representative and provides other services for the agent.

Q109. To say a security is “exempt,” means that
I. it is exempt from the state’s anti-fraud laws.
II. it is exempt from state registration requirements.
III. any transaction involving it is considered to be an exempt transaction.

Q110. Although an Administrator has broad powers, he or she cannot:

Q111. Jack Bean is employed by Giant Investment Advisers, LLC. His job duties include advising clients on the
asset allocations of their portfolios. Jack Bean is

Q112. Sam Shyster had his day in court-and lost. His license to do business as an investment adviser in the state has been revoked. What legitimate options does Sam have available to him now?

Q113. The Administrator may require a firm to supply it with any prospectus, pamphlet, advertisement, or other
sales literature intended for prospective investors unless the security
I. will be sold only through an investment advisory firm.
II. is a federal covered security.
III. is issued by a state credit union.

Q114. When selling shares in a closed-end investment company, an agent must inform the client of any
I. commissions
II. underwriting fees
III. miscellaneous offering expenses

Q115. Fly-By-Night Investment Advisers has closed its doors. Which of the following statements is true?

Q116. Which of the following would fall under the definition of “agent,” as defined by the Uniform Securities Act
(USA)?

Q117. When a client has purchased securities on margin, the broker-dealer

Q118. Once a broker-dealer has applied for and been granted state registration, the registration remains valid

Q119. Mr. Noah Scruples is a registered representative with CanDo Broker-Dealers. A client calls and wants
Noah to purchase shares of a mutual fund the client has read about. CanDo is not authorized by this
particular fund to effect purchases or sales of the fund shares. Can Noah execute the order anyway?