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Exam Name HP Certified Network Associate (HP Certification)

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NEW QUESTION: 1
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 need not register in the state, but the securities must be registered before they can be sold to
in-state investors.
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 must register as a broker-dealer in the state, but the securities do not need to be registered.
Answer: B
Explanation:
Since Wheeler has no offices in the state and is selling bonds from his portfolio to
institutional investors, Wheeler need not register in the state, and the securities are exempt from
registration. Broker-dealers with no physical location in a state that are doing business with other
broker-dealers or with institutional investors such as banks and insurance companies that do have offices
in that state are exempted from registering in the state. Securities sales to institutional investors are
exempt transactions, and securities sold in exempt transactions are themselves exempt from state
registration requirements.

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