Free Series 63 Practice Questions
Test your Series 63 exam readiness with our free practice questions. Each question includes detailed explanations and study tips to help you master state securities laws.
8
Questions
8
Free practice questions covering all major Series 63 topics including state law, ethics, and agent registration requirements.
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Explained
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Every answer includes comprehensive explanations based on the Uniform Securities Act, helping you understand why each choice is correct or incorrect.
1-2
Min Each
1-2
Quick practice session - each question takes 1-2 minutes to complete, perfect for study breaks and reviewing state law concepts.
Series 63 Practice Questions
These practice questions mirror the format and difficulty of the actual Series 63 exam. Take your time to read each question carefully and select the best answer based on the Uniform Securities Act.
Under the Uniform Securities Act, an individual who represents a broker-dealer in effecting securities transactions is defined as:
A) An investment adviser representative
B) An agent
C) An issuer
D) A principal
Answer: B) An agent
Explanation: The Uniform Securities Act (USA) defines an “agent” as any individual who represents a broker-dealer or issuer in effecting or attempting to effect purchases or sales of securities. This is the core definition tested on the Series 63.
Why other answers are incorrect:
• A) An IAR represents an investment adviser
• C) An issuer is the entity selling the security
• D) A principal is a firm acting for its own account
Study Tip: Agent = Represents Broker-Dealer. IAR = Represents Investment Adviser.
An agent’s registration under the Uniform Securities Act becomes effective:
A) Immediately upon filing the application
B) 10 days after filing
C) At noon on the 30th day after filing
D) When the Administrator so orders
Answer: C) At noon on the 30th day after filing
Explanation: Unless otherwise specified by the Administrator, registration becomes effective at noon on the 30th day after the application is filed. This is a specific rule you must memorize for the Series 63 exam.
Why other answers are incorrect:
• These timings are not specified by the USA. The 30-day rule is standard unless the Administrator expedites or delays the process.
Study Tip: Memorize key numbers and dates: 30 days for registration effectiveness is a common test question.
Which of the following is a prohibited practice for an agent under the USA?
A) Informing a client of a stock’s recent price increase
B) Sharing commissions with another agent registered at the same firm
C) Stating that a security’s registration implies approval by the Administrator
D) Executing an unsolicited trade for a client
Answer: C) Stating that a security's registration implies approval by the Administrator
Explanation: It is a specifically prohibited practice to state or imply that a security’s registration means the Administrator has approved of the security itself. Registration only means the issuer has filed the required paperwork; it is not an endorsement of the investment’s merits.
Why other answers are incorrect:
• A) Providing factual information is allowed
• B) Sharing commissions with a registered agent at the same firm is permitted
• D) Executing unsolicited trades is a normal part of the business
Study Tip: Remember the phrase: “Registration is not approval.” This is a key ethical concept.
Which of the following is NOT an exempt security under the Uniform Securities Act?
A) U.S. government securities
B) Securities issued by a Canadian municipality
C) Stock sold in an initial public offering (IPO)
D) Securities issued by a state-chartered bank
Answer: C) Stock sold in an initial public offering (IPO)
Explanation: Common stock sold in an IPO is a non-exempt security and must be registered with the state Administrator (unless the transaction itself is exempt). The other securities listed are specifically exempt from state registration requirements under the USA.
Why other answers are correct exemptions:
• A) U.S. government securities are always exempt
• B) Canadian government and municipal securities are exempt
• D) Securities issued by banks are exempt
Study Tip: Focus on what is NOT exempt. Corporate securities (stocks and bonds) are the main category of non-exempt securities.
Under the USA, which of the following is considered a security?
A) A fixed annuity contract
B) A life insurance policy
C) An interest in a limited partnership
D) A retirement plan like a 401(k)
Answer: C) An interest in a limited partnership
Explanation: An interest in a limited partnership is explicitly defined as a security under the USA because it involves an investment of money in a common enterprise with the expectation of profits, primarily from the efforts of others.
Why other answers are not securities:
• A) Fixed annuities and B) life insurance policies are insurance products, not securities
• D) A retirement plan itself is not a security, though it may hold securities
Study Tip: Review the full list of what is and is not a security under the USA. This is a foundational concept.
The state Administrator may deny an agent’s registration for all of the following reasons EXCEPT:
A) The agent was convicted of a misdemeanor involving securities 5 years ago
B) The agent is insolvent
C) The agent has been accused of unethical business practices
D) The agent was convicted of a felony 12 years ago
Answer: D) The agent was convicted of a felony 12 years ago
Explanation: The Administrator can only consider convictions (any felony or investment-related misdemeanor) that have occurred within the last 10 years. A 12-year-old felony is outside this statutory time limit.
Why other answers are valid reasons for denial:
• A) An investment-related misdemeanor within 10 years is grounds for denial
• B) Insolvency is grounds for denial
• C) Accusations alone are not enough, but findings of unethical practices are grounds for denial
Study Tip: Remember the 10-year lookback period for criminal convictions.
An agent recommends a high-risk technology stock to a 75-year-old retired client with a stated investment objective of capital preservation. This is an example of:
A) Market manipulation
B) Churning
C) An unsuitable recommendation
D) Front-running
Answer: C) An unsuitable recommendation
Explanation: Making an unsuitable recommendation is a major ethical violation. The agent must have a reasonable basis for believing a recommendation is suitable for the client based on their financial situation, needs, and investment objectives. A high-risk stock is unsuitable for a client focused on capital preservation.
Why other answers are incorrect:
• A) Market manipulation involves artificial price movements
• B) Churning is excessive trading to generate commissions
• D) Front-running is trading ahead of a large client order
Study Tip: Suitability is about matching the investment to the client’s specific profile.
Under the USA, how long must broker-dealers preserve records such as customer correspondence and trade blotters?
A) 1 year
B) 3 years
C) 5 years
D) Indefinitely
Answer: B) 3 years
Explanation: Broker-dealers are generally required to preserve records for a period of 3 years, with the most recent 2 years in a readily accessible location. This is a key record-keeping rule under the Uniform Securities Act.
Why other answers are incorrect:
• Different record types have different retention periods, but 3 years is the standard for most correspondence and trade records. Investment advisers often have a 5-year requirement, a key distinction.
Study Tip: Broker-Dealer = 3 years. Investment Adviser = 5 years. Know the difference!
Ready for More Practice?
These 8 questions are just the beginning. Top Series 63 prep courses offer over 1,000 practice questions with detailed explanations, simulated exams, and materials focused on memorizing state law.
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