FINRA Series 63 Practice Test

Answer choices

1. A. Complete qualification because federal covered status changes only the state filing fee
2. B. Make no state submission and treat all state antifraud authority as preempted
3. C. Use any state notice filing and fee permitted within federal limits; state merit registration is preempted, but antifraud authority remains
4. D. Ask the administrator to approve the security's merits through the notice-filing process

Wrong-answer review

• A. Complete qualification because federal covered status changes only the state filing fee: Qualification is state merit registration and is not converted into a fee-only process here.
• B. Make no state submission and treat all state antifraud authority as preempted: Preemption of merit registration does not eliminate permitted notice filings or state antifraud enforcement.
• D. Ask the administrator to approve the security's merits through the notice-filing process: A notice filing is not a state review or endorsement of the security's investment merits.

Answer choices

1. A. Count the institutional clients and require registration because the total exceeds five
2. B. Require registration because even one noninstitutional client defeats the provision
3. C. The adviser remains within the de minimis limit, although antifraud rules still apply
4. D. The adviser is exempt only after opening a place of business in State X

Answer choices

1. A. Execute because the earlier purchase creates continuing authority
2. B. Execute because supervisory approval replaces customer authorization
3. C. Execute and seek ratification if the position later gains value
4. D. Wait for the customer's authorization before executing the new transaction

Answer choices

1. A. Cancel automatically because any federal review permanently removes state examination authority
2. B. Require no records because only annual financial reports may be examined
3. C. Permit the reasonable state examination while considering regulatory cooperation to reduce unnecessary duplication
4. D. Permit examination only if every customer first consents in writing

Answer choices

1. A. Effectiveness proves that the administrator verified the original document as complete
2. B. The amendment corrects the current record but does not make the intentional prior material omission lawful
3. C. The original omission becomes immaterial whenever it is disclosed before an investor complains
4. D. Only the latest version can be evaluated because filed statements are never judged when made

Answer choices

1. A. Use the required state notice-filing process for the federal covered adviser while separately analyzing the representative's registration and preserving state antifraud authority
2. B. Complete full state adviser registration because federal covered status has no effect on the firm's filing path
3. C. Make no state filing and disregard both state antifraud authority and representative registration
4. D. Convert the representative automatically into a federal covered adviser so neither party has state obligations

Answer choices

1. A. Wait for the sales to finish because relief is available only after a completed violation
2. B. Enter a final criminal judgment against the promoter without referral or court process
3. C. Issue a cease-and-desist order directing the promoter to stop, while retaining the option to seek court relief
4. D. Approve the offering temporarily and address the violation only through later restitution

Answer choices

1. A. Allow the permitted split only if the firm's books accurately reflect the compensation
2. B. Allow the hidden payment because both recipients are registered
3. C. Prohibit every commission split, including those within a permitted registered relationship
4. D. Allow the split if it is called a referral fee rather than transaction compensation

Answer choices

1. A. As correspondence because only existing clients count toward the threshold
2. B. As retail communication because the 35 retail investors include prospective customers
3. C. As institutional communication because the update discusses market conditions
4. D. As correspondence because each recipient receives an individually addressed copy

Answer choices

1. A. Take custody after increasing the firm's bond because bonding overrides the prohibition
2. B. Reject the arrangement because notice cannot authorize custody that an administrator rule prohibits
3. C. Take custody after notifying the administrator that the firm may hold client cash
4. D. Treat custody as ordinary discretionary authority and rely on the client's trading consent