FINRA Uniform Securities Agent State Law Examination Sample Questions:

1. Which of the following would not be found in a tombstone advertisement?

A) the interest rate and time to maturity of a bond issue
B) the names of the underwriters
C) the name of the issuer
D) the price at which the security will be offered

2. You are an investment adviser representative. Your client, Mr. I. M. Pulse, calls you with what he thinks is
exciting news. He just passed a restaurant and saw Microsoft's Bill Gates having lunch with a local
entrepreneur who owns a small firm in the computer software industry that trades on the OTC pink sheets.
He is sure that this means Microsoft is negotiating a purchase of the smaller company and instructs you to
take the cash balance in his account and buy shares of the local company. You should

A) call your supervisor and alert him immediately of Mr. Pulse's attempt to have you place an illegal order
on his behalf in case Mr. Pulse decides to place the order elsewhere.
B) do both A and B.
C) advise Mr. Pulse that he may be jumping the gun, but place the order if he insists.
D) tell Mr. I.M. Pulse that this would be an illegal insider trade and that you are unable to fulfill his request.

3. Rich Quick is a broker-dealer registered in the state of Massachusetts. He occasionally trades on
abnormalities he observes in bond yield spreads for his own account, short selling a bond that appears to
be overpriced based on its yield and buying a bond that is identical in almost every respect except for the
price, which is less than that of the other bond. He has been able to earn arbitrage profits 95% of the time
when he does this. Rich Quick

A) is in violation of securities laws. Arbitrage is a prohibited activity.
B) engaged in a fraudulent activity.
C) is trading on insider information, which is a violation of securities laws.
D) is skilled if he is able to earn profits 95% of the time using this strategy.

4. 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?

A) If Ari is found guilty and has his license revoked, Small & Associates will have its license revoked as
well and must reapply for reinstatement by filling out an application and paying the requisite filing fees.
B) The Administrator of the state can assess Ari with both civil and criminal penalties.
C) If Ari is found guilty and has his license revoked, Small & Associates will be subject to a fine.
D) If Ari is found guilty and has his license revoked, he can appeal the decision in a court of law if he files
the appeal within sixty days.

5. The settlement date refers to

A) the date the order to purchase or sell the security is sent to the market.
B) the date the order to purchase or sell a security is actually executed. This may differ from the date that
the order is sent to the market in the cases of limit or stop orders.
C) the latest date on which broker-dealers can file their quarterly financial statements with the
Administrator of the state.
D) the date the buyer must pay for the securities purchased.

Solutions: