Uniform Securities Agent State Law (Series 63) Practice Exam

When is a gift of assessable stock considered an offer?

1. Only if it is made to accredited investors

2. Whenever it involves a potential profit

3. When it is paired with a purchase offer

4. Always, regardless of context

The correct answer is: Whenever it involves a potential profit

A gift of assessable stock is considered an offer whenever it involves a potential profit because the nature of the gift suggests the possibility of future returns for the recipient. Assessable stock requires shareholders to pay future assessments to maintain their ownership, thus creating a scenario where the recipient can potentially gain profit from the stock's appreciation or dividends after meeting those obligations. This profit potential turns the gift into something more than just a simple transfer; it implies that the recipient may have financial stakes in the outcome of the stock's performance. Understanding the financial implications of assessable stock is crucial in the context of securities regulation. Since the gift could entice the recipient to participate further in the market with the expectation of profit, it aligns with the definition of an offer under securities laws, which are designed to protect investors. Thus, the distinction lies in the transactional nature of the stock and the associated potential financial outcomes.