Series 6

Which of the following investments is most susceptible to interest rate risk? A) Preferred stock B) Federal funds rate C) A balanced fund D) 30-year Treasury bond

30-year Treasury bond

Which of the following must be reviewed and approved by a principal before it may be sent out? A communication sent to 36 prospective customers this week, recommending a new mutual fund A communication sent to 36 of the firm's existing customers this week, introducing a new service offered by the firm A communication sent to 36 of the firm's registered representatives, recommending a new sales approach A communication sent only to 36 institutional customers, recommending a security in which the firm makes a market

A) I and II Retail communication is defined as "any written (including electronic) communication that is distributed or made available to more than 25 retail investors within any 30 calendar-day period." An appropriately qualified registered principal of the member must approve each retail communication before the earlier of its use or filing with FINRA. Institutional sales literature may be reviewed after being sent out.

For which of the following would you have to open a cash account? IRA. Woman opening a trading account and naming her brother as the beneficiary via a TOD designation. UGMA. Trust account.

A) I and III Corporate and personal retirement accounts and custodial accounts must be opened as cash accounts. A trust account will usually be opened as a cash account but may allow margin if specifically provided for in the trust agreement.

Customer A and Customer B each have an open account in a mutual fund that charges a front-end load. Customer A has decided to receive all distributions in cash, while Customer B automatically reinvests all distributions. How do their decisions affect their investments? Receiving cash distributions may reduce Customer A's proportional interest in the fund. Customer A may use the cash distributions to purchase shares later at NAV. Customer B's reinvestments purchase additional shares at NAV rather than at the offering price. Due to compounding, Customer B's principal will be at greater risk.

A) I and III.

Which of the following terms apply to options? Annual income. Strike price. Premium. Interest rate risk.

A) II and III. The premium is the cost of an option contract, expressed in dollars per share of the underlying stock. The strike price is the price at which the stock will be bought or sold if the contract is exercised, also expressed in dollars per share.

Which of the following does NOT issue commercial paper?

A) Sole proprietorship

Which of the following statements regarding variable annuities and index annuities are NOT true? Both index and variable annuities are securities products. Index annuities provide a guaranteed minimum return, whereas variable annuities do not. Index annuities typically have longer surrender periods than variable annuities do. Variable annuities typically have longer surrender periods than index annuities do.

B) I and IV Variable annuities are classified as securities; index annuities are not. Index annuities have a guaranteed minimum return and longer surrender periods.

Which of the following statements about 401(k) plans is NOT true?

C) Employer contributions are determined by the company's profits.

A FINRA member firm is found guilty of some but not all of the charges brought against it by the Department of Enforcement. An appeal: must be made within 25 days of the decision. must be made within 30 days of the decision. is filed with FINRA. stays the effective date of any sanction other than a bar or expulsion.

C) I and IV An appeal must be filled with the National Adjudicatory Council within 25 days of the decision or the decision is final.

Which of the following terms are associated with over-the-counter trading? Market maker. Floor broker. Auction market. Negotiated market.

C) I and IV. The over-the-counter market is a negotiated market. Within it, market makers are broker-dealer firms that provide a source for stock that customers wish to buy and a repository for stock that customers wish to sell.

A mutual fund shareholder purchases no-load shares at the beginning of an investment period and, at the end of the investment period, sells the shares for a gain. Which of the following statements is TRUE?

C) The NAV per share was lower at the beginning.

When securities are inherited, what will be the recipient's cost basis?

C) The market value of the securities at the time of death.

The disclaimer stating that the SEC does not approve or disapprove of a securities issue must appear

C) on the cover of the prospectus The SEC disclaimer which states that the SEC does not approve or disapprove an issue of securities must appear on the cover of a prospectus in bold print. This disclaimer is not required on public communications.

Your customer, who owns a small business, would like to make provision for his retirement. You might suggest to him any of the following EXCEPT:

B) a Section 457 plan. The only choice that is firmly eliminated is the Section 457 plan. That type of retirement plan is open only to state and local governments and tax-exempt employers.

In past years, XYZ Securities has focused primarily on high-net-worth individuals acquired through word of mouth and has never advertised. Their target market has expanded, and they have decided to begin advertising to the public. Under the rules on communications with the public, filing of advertisements

B) may be done within 10 business days after first use

If interest rates increase, the interest payable on outstanding corporate bonds will:

D) remain unchanged.

In general, the Conduct Rules permit selling concessions and discounts:

D) to FINRA member firms engaged in the investment banking or securities business.

Your client, working for a local municipality, tells you that he has the opportunity to participate in a Section 457 plan. Explaining some of the characteristics and features of this type of plan, you could tell him all of the following EXCEPT:

earnings on plan assets are taxable on an annual basis. Even though technically 457 plans are nonqualified, all earnings within the plan are tax-deferred like any other retirement plan.