Exam Series 63 topic 1 question 14 discussion

Actual exam question from FINRA's Series 63

Question #: 14
Topic #: 1

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

Show Suggested Answer

Suggested Answer: C 🗳️
Neither Scenario I nor Scenario IV describes sales as defined by the USA. When an investor receives securities from Company X when Company X merges with a company in which the investor owns stock, Company X is not considered to have sold those securities to the investor. Likewise, when a person uses securities he owns as collateral for a loan, the USA does not consider this to be a sale of the securities.

by lolojepu at April 6, 2025, 1:35 a.m.

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