FINRA Uniform Securities Agent State Law Examination Sample Questions:

1. Price pegging refers to

A) the illegal activity of a group of investors who buy and sell a security among themselves to create an
artificially high volume of trading in hopes of luring investors to buy the security.
B) the practice of buying large amounts of a security to drive its price up artificially.
C) the unethical practice of investment advisers who issue "buy" recommendations for stocks that they
own themselves without disclosing the fact.
D) the prohibited practice of excessively trading on a client's account that is used by some broker-dealers
and/or their agents to generate more commissions for themselves.

2. Bootstraps, Inc. is a family-owned business that has experienced enormous growth in the last couple of
years. The business needs more cash to support this growth and has decided to issue some promissory
notes, each with a face value of $5,000, for sale to the general public. The firm plans to hire three
individuals to help them sell these notes. These individuals will earn a commission based on the notes
they sell. Given these facts, which of the following is true?

A) Either the firm must register the notes with the state, or the individuals that are hired to sell the notes
must be registered as agents with the state, but not both.
B) The notes must be registered with the state, and the three individuals hired to sell the notes must be
registered as agents with the state.
C) The notes must be registered with the state, but the individuals hired to sell them are not required to be
registered.
D) Neither the notes nor the individuals selling the notes need to be registered with the state.

3. Which of the following is not a method that can be used to register securities with the state?

A) registration by coordination
B) registration by exception
C) registration by qualification
D) registration by notification

4. Mr. L. Ranger is an agent for a broker-dealer and has overheard "talk" that a merger between two
well-known high-tech companies is about to take place. Mr. Ranger knows that, on average, in these
instances the target firm's price spikes. He calls his client and good friend, Mr. Tonto, and tells him of the
rumor, suggesting that Tonto might want to buy shares in the target firm. He tells Mr. Tonto that if the
rumor isn't true, the target firm's price may not spike at all and may, in fact, decline, and suggests that Mr.
Tonto not invest any money he isn't willing to lose. Mr. Ranger knows that his friend likes to gamble, and
decided he wouldn't be much of a friend if he didn't inform Tonto of this potential opportunity. Has Mr. L.
Ranger violated any laws or engaged in any prohibited practices?

A) Yes. Mr. Ranger is privy to knowledge that is not available to the general public and both he and Mr.
Tonto will be guilty of illegal insider trading if Mr. Tonto trades on Mr. Ranger's information.
B) No. Mr. Ranger and Mr. Tonto are friends, so there can be no violations of any laws or practices
because of their non-business relationship.
C) Yes. Mr. Ranger has engaged in fraud in telling Mr. Tonto about the rumor, given that the merger hasn't
been officially announced by the two companies.
D) No. Mr. Ranger has informed Mr. Tonto that the merger is just a rumor and has informed him of the risk
involved. Mr. Ranger is knowledgeable about his friend's risk tolerance level as well and recognizes this
investment as one his good friend might want to take.

5. Registered agent Ina Scent has had her license suspended by the state Administrator prior to an
administrative hearing on the order. Which of the following statements is true regarding Ina's situation?

A) Ina can immediately file an appeal of the suspension in a court of law.
B) Ina can make a written request that a hearing on the issue be scheduled within ten business days of
her request and may continue working with clients while waiting for her day in court.
C) Ina can sue the Administrator because she was not afforded a hearing before the suspension took
place.
D) Ina can make a written request that a hearing on the issue be scheduled within fifteen business days of
her request and may not continue working with clients unless the Administrator vacates the order until
final determination.

Solutions: