Treadwater Bank and Trust is selling a portfolio of municipal bonds it owns to the SafeRisk Insurance
Corporation. Under the Uniform Securities Act (USA), in this transaction Treadwater is defined as a

• A.broker-dealer.
• B.agent.
• C.issuer.
• D.none of the above.

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Constance is an investment adviser representative. She told one of her clients that he should put at least
1 5% of his investment monies in a U.S. government bond mutual fund.
She explained that she believed that he required this percentage to meet his liquidity needs, and U.S.
government bond funds are risk-free. A few months later, the client needed to sell some of his fund shares
in order to pay some medical bills and was surprised to discover that he lost money on the sale because
the net asset value of the fund had dropped. Was Constance guilty of any securities violations?

• A.Yes. Constance is guilty of fraud. She misled the client into thinking he couldn't lose any money if he
  invested the money in a U.S. government bond mutual fund.
• B.Yes. Constance should never recommend that a client invest such a high percentage of his investment
  monies in a U.S. government bond mutual fund.
• C.No. U.S. government bonds are often referred to as risk-free investments, so Constance made no
  misstatement of fact in telling her client this.
• D.It depends. If Constance realized that the client could lose money in a U.S. government bond fund,
  then she is guilty of fraud, but if she did not herself realize that, then she is merely misinformed.

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Mina is a new agent with SecureMoney Broker-Dealers and is struggling to make ends meet. She gets a job as a receptionist at a fitness club on the weekends to generate more income.
Which of the following is true?

• A.Mina should have notified SecureMoney in writing before signing on to work at the fitness club.
• B.Because the job as a receptionist at a fitness club has nothing to do with the world of finance, Mina has done nothing inappropriate.
• C.Mina simply needs to tell her immediate supervisor at SecureMoney about her new job.
• D.Mina needs to send notice to the state Administrator informing him of her extracurricular activity.

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A variable annuity is:

• A.not a security and, therefore, does not have to be registered with the state.
• B.not a security, but is still required to be registered with the state before it can be offered for sale.
• C.a security and, therefore, has to be registered with the state before it can be offered for sale.
• D.a security, but is exempt from state registration.

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Broker-Dealer Wheeler has no offices in the state. Wheeler does, however, sell corporate bonds from his portfolio to banks and insurance companies located in the state that purchase the bonds for their investment portfolios. He executes about twelve of these transactions a year. Wheeler profits from the price appreciation of the bonds during the time he held them, but receives no other form of compensation. Based on these facts,

• A.Wheeler must register as a broker-dealer in the state, but the securities do not need to be registered.
• B.Wheeler need not register in the state, and the securities are also exempt from registration.
• C.Wheeler must register as a broker-dealer in the state, and the securities must also be registered before they can be sold to in-state investors.
• D.Wheeler need not register in the state, but the securities must be registered before they can be sold to in-state investors.

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