In which of the following scenarios would the Administrator of a state not have jurisdiction?
I. A monthly newspaper published by a resident of the state who is not a registered investment adviser
has a column in which the publisher makes specific investment recommendations for clients who write in
for advice. About 80% of the circulation of the publication is to out-of-state residents.
II. An internet blog posted by an out-of-state resident makes investment recommendations.
III. An out-of-state firm solicits buyers for its promissory notes within the state.

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

Which of the following scenarios would not be considered a "sale," as defined by the Uniform Securities
Act (USA)?
I. Yoshito owned shares of Minnow Corporation and received shares of Whale Corporation from Whale
when it merged with Minnow.
II. Olivia's uncle, an agent with SecureMoney Brokers, sold Olivia ten call options on the stock of
Microsoft.
III. Hans purchased a bond of Indebted Corporation that had detachable warrants and subsequently sold
the warrants.
IV. Tom pledged some shares of stock he owned personally to secure a business loan for his company.

• A. Neither II nor III would be considered sales.
• B. Neither III nor IV would be considered sales.
• C. Neither I nor II would be considered sales.
• D. Neither I nor IV would be considered sales.

John Ketchum is an investment adviser representative with Load Investment Advisers, which has a family
of load funds that it encourages its representatives to promote. Representatives of the firm that sell
shares in these funds to their clients receive a greater share of the load than they do if they sell load funds
offered by other firms. Based on these facts, which of the following statements is true?

• A. If, after reviewing the information form a client has filled out, John believes that one of Load's funds is
  an appropriate investment, John can recommend that the client invest in that fund. There is no disclosure
  requirement necessary if the recommendation is a sound one that can be proved to be based on the
  client's specific situation.
• B. Both A and B are true.
• C. John must provide his clients with a written disclosure that he will receive a greater remuneration for
  selling shares in the Load family of funds than if he sells them shares in other funds before he provides his
  clients with any investment advice.
• D. John is obligated to try to sell his clients the funds offered by Load first since he is affiliated with them
  and has a fiduciary responsibility to them.

Which of the following statements best explains the difference between an agent and a broker-dealer?

• A. Agents are engaged exclusively in the purchase and sale of stocks whereas broker-dealers also buy
  and sell bonds and option contracts.
• B. Agents conduct their business exclusively in the secondary market, while broker-dealers also operate
  in the primary market.
• C. A broker-dealer must be licensed in the state in which he conducts business, but there are no separate
  licensing requirements for agents.
• D. An agent is an individual who represents a broker-dealer or an issuer and buys and sells securities he
  does not own in return for a commission on the transactions he executes. A broker-dealer may also buy
  and sell securities for his own portfolio, in which case the broker-dealer enjoys any price appreciation on
  those securities.

Joe Treader is the owner of a small, state-registered investment advisory firm that is on the verge of
becoming insolvent. One of his clients who has become like a mother to him is aware of his financial
difficulties and has offered to sell off some of the assets that he manages for her and loan him the money
to get him through this period of economic
uncertainty until he is able to get on his feet again. Can Joe take her up on her offer?

• A. Both A and B are true.
• B. Yes, but only if Joe draws up a formal loan agreement with a fair interest rate, based on the going
  market rates, stated in the agreement as well as a firm date for principal repayment.
• C. Yes. Based on the facts presented, it is an unsolicited offer and, as such, Joe can (and should) accept
  it.
• D. No. As the client's investment adviser, he has a fiduciary relationship with the client. Entering a loan
  agreement with this client could lead to conflicts of interest.