Under which of the following scenarios can a client legitimately sue a purported professional in the
securities industry and expect an award for damages?
I. The securities were sold by an agent whose registration was not yet effective with the state, but who
had already applied for registration.
II. The security was a variable annuity, and the sales representative neglected to reveal the details of the
surrender clause to the client.
III. The security was the stock of a company, the stock had recently been registered with the state for sale,
had been granted registration, and the selling agent had told his client that the security had been
state-approved for sale.

• A. I, II, and III
• B. I and III only
• C. I only
• D. II and III only

Barring no irregularities (such as a license revocation by another state last year), after you have filed for
registration as an agent, your license will be granted within

• A. 10 business days.
• B. 30 days.
• C. 14 business days.
• D. 45 days.

Which of the following does not describe a prohibited practice for broker-dealers under the NASAA Model
Rules?
I. SecureMoney Broker-Dealers has received a request from a client who wants SecureMoney to "identify
a few solid firms in the Asian market and invest up to $20,000 in them." SecureMoney executes the
purchases and receives the requisite signed discretionary authorization from the client before the
settlement date.
II. CanDo Broker-Dealers executes a margin transaction for a client, promptly receiving a signed, written
margin agreement from the client after the transaction takes place.
III. GetErDone Broker-Dealers receives a call from a client who wants to purchase some securities on
margin. GetErDone has the client come into the office to sign a properly executed margin agreement prior
to effecting the transaction.

• A. III only
• B. None of the selections are prohibited practices.
• C. I and III only
• D. II and III only

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. tell Mr. I.M. Pulse that this would be an illegal insider trade and that you are unable to fulfill his request.
• D. advise Mr. Pulse that he may be jumping the gun, but place the order if he insists.

Rich Writewell wants to begin publishing an independent weekly financial newsletter that will provide
investment recommendations as well as other financial news items to the general public. Rich hopes that
his newsletter will achieve nationwide circulation within a few months. Which of the following statements
is true?

• A. Rich will have to register as an investment adviser only if he sells this newsletter to the public.If the
  publication is to be distributed free of charge, he will not have to register.
• B. Rich may be exempt from registering as an investment adviser if he is a lawyer,accountant, engineer,
  or teacher. Otherwise, he will have to register.
• C. Rich will not have to register as an investment adviser since he is publishing a legitimate financial
  newsletter for distribution to the general public.
• D. Rich will have to register as an investment adviser since his publication will include investment
  recommendations