Series 63 practice questioneasyInvestment contract test
All of the following are necessary elements of an investment contract under the Uniform Securities Act, EXCEPT:
- AAn investment of money
- BA common enterprise
- CEfforts of the investor generate the profit✓ Correct answer
- DExpectation of profit
Explanation
Why C — Efforts of the investor generate the profit
The defining element is that profits come from the efforts of others, not the investor themselves. Option C reverses the test; Options A, B, and D are required under the Howey test, which is used by the USA. See USA Sec. 401(13); SEC v. W.J. Howey Co.
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