Series 63 practice questionhardInvestment Contracts — Economic Reality
When analyzing whether a digital token is an investment contract, which fact is MOST important?
- AWhether purchasers invest value in a common enterprise with a reasonable expectation of profits derived from the essential efforts of others✓ Correct answer
- BWhether the token has a fixed maximum supply
- CWhether the token's name includes the word governance
- DWhether transactions are recorded on a public blockchain
Explanation
Why A — Whether purchasers invest value in a common enterprise with a reasonable expectation of profits derived from the essential efforts of others
Investment-contract analysis focuses on economic reality: an investment of value in a common enterprise with a reasonable expectation of profits derived from the essential managerial or entrepreneurial efforts of others. Labels, token supply, and blockchain architecture are not dispositive.
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