Series 6 Exam Prep
Which of the following statements about Regulation Crowdfunding is true? a)Companies can raise up to a maximum of $10 million b)Issuer is permitted to "test the waters" c)Issuer must provide disclosures to the SEC in Form D d)Investors cannot sell the securities for 6 months
b)Issuer is permitted to "test the waters"
With regulated investment companies, net investment income is a) Taxed on the excess capital gain before any deduction for distributed capital gain dividends b) Not taxable c) Inclusive of capital gains d) Exclusive of capital gains
d) Exclusive of capital gains
All are true regarding the Statement of Additional Information (SAI) of a fund EXCEPT a)It must be given out with the summary prospectus. b)It must be given out upon request. c)It includes the fund's financial statements. d)It is more detailed than the summary prospectus.
a)It must be given out with the summary prospectus.
If a mutual fund distributes capital gains or dividends to its shareholders, it is required to notify the investors of the a) Transactions that generated the distribution b) Tax treatment of the distribution c) Fund's reinvestment options d) All of the above
b) Tax treatment of the distribution
Which of the following is false regarding an international fund?a)They carry foreign legislative risk. b)They help diversify a domestic portfolio. c)They are good funds to start an investment portfolio. d)International funds expose the investor to currency risk.
c)They are good funds to start an investment portfolio.
Which measures a corporation's solvency? a)Profit margin b)Cash flow c)Debt/equity ratio d)Working capital
d)Working capital
Which of the following statements are accurate concerning zero-coupon bonds? I. Zero-coupon bonds pay no annual interest. II. Zero-coupon bonds are issued only by municipalities and the U.S. Government. III. Taxes on a zero-coupon bond are paid at maturity. IV. Zero-coupon bonds are redeemed at face value at maturity. a)I and IV only b)II and III only c)I, III and IV only d)I, II, III and IV
a)I and IV only
When is a variable annuity exempt from the requirement that mutual funds pay redemption proceeds to investors within 7 days?a)During annuitization period b)In the event of a partial surrender c)Never d)During the accumulation period
a)During annuitization period
When is a policyholder allowed to surrender a variable annuity contract? a)During the accumulation period b)During either the accumulation or annuity period c)During the grace period d)During the annuity period
a)During the accumulation period
Class B mutual fund shares are characterized by a a) Conversion into Class A shares when the CDSC reaches 0% b) Level load c) Sales charge that increases annually d) Front-end load
a) Conversion into Class A shares when the CDSC reaches 0%
Which of the following is not a characteristic of a deferred annuity? a) Dollars are invested in annuity units b) The dollars invested are generally after tax c) The growth is tax deferred d) Income payments begin after the contract is annuitized
a) Dollars are invested in annuity units
Main feature of an investor's letter of intent include I. Duration of the letter is for 12 months. II. May be backdated 90 days. III. Entitles investor to breakpoint sales charges during this period. IV. Is a binding contract between the investor and fund company. a) II and III only b) I, II, and III only c) I, III and IV d) II, III, and IV only
a) II and III only
Which of the following accounts would NOT be eligible for reduced sales charges? a) Joint tenants in common account owned by two friends b) Joint account owned by a married couple c) IRA d) Custodial account for a minor
a) Joint tenants in common account owned by two friends
Janelle invested $20,000 in AxleRod Corporation. Her investment is now worth $28,000. During this same period, the Consumer Price Index rose from 110 to 123. Which statement best describes the purchasing power of her invested dollars? a) Purchasing power is somewhere between $20,000 and $28,000 b) Purchasing power is $28,000 c) Purchasing power is more than $28,000 d) Purchasing power is less than $20,000
a) Purchasing power is somewhere between $20,000 and $28,000
The number of authorized shares can only be changed by which of the following? a) The majority approval of the shareholders b) The board of directors c) The principal underwriter d) The issuing broker/dealer
a) The majority approval of the shareholders
Mr. Tapper is in the 27% tax bracket and is earning 10% on his corporate bond. To consider a municipal bond, what yield would be comparable to its 10% corporate bond? a)7.3% b)9.1% c)12.0% d)14.5%
a)7.3%
Your client's name has changed and you are asked to make note of the change on a trade transaction to properly show the new name. How can this change be effected? a)A qualified registered principal of your firm must provide written approval of the name change on the trade ticket. b)As a registered representative, you can transact the trades and change the registration as long as the change request is done before the security trade settles. c)Simply notify the transfer agent of the trade and the name change will be completed without delay. Transactions can resume with the new name registration once confirmation is given by the transfer agent. d)With the assistance of the accounts department, you can have the name change completed within an hour.
a)A qualified registered principal of your firm must provide written approval of the name change on the trade ticket.
Mutual fund shares are purchased ex-dividend on what date? a) The payable date b) The day declared by the board of directors (BOD) c) Two days after the declaration date d) The day before the record date
b) The day declared by the board of directors (BOD)
An investor's mutual fund account is currently worth $48,000. The sales charge was 8½%. If she withdraws 6% per year, her monthly payments will be a)$219.60. b)$240. c)Indeterminate; payment will fluctuate with market d)None of the above; withdrawal penalties may apply
b)$240.
An investment company earns $100,000 in investment income and has $10,000 in expenses. How much must the company pay out to investors to qualify as a regulated investment company? a)$50,000 b)$81,000 c)$90,000 d)$100,000
b)$81,000
According to FINRA rules, which of the following falls under the definition of an independently prepared reprint? a)A copy of an investment company ranking prepared by the research department of the broker/dealer b)A copy of a magazine article on retirement planning issued by a publisher that is not affiliated with the member c)An excerpt from a monthly market letter prepared by the broker/dealer and previously approved by FINRA d)A copy of a newspaper display ad listing the broker/dealer's services
b)A copy of a magazine article on retirement planning issued by a publisher that is not affiliated with the member
At age 50, an investor is considering the purchase of a variable annuity contract. What should be the registered representative's first suitability consideration? a)Benefit payments may increase or decrease. b)A penalty for early withdrawals c)Any front-end load d)Deposits may increase or decrease.
b)A penalty for early withdrawals
An investment company can perform certain activities only with the approval of a majority of the shareholders. Which of the following is the board of directors allowed to do without a shareholder vote? a)Change the fees b)Appoint officers of the investment company c)Change the fund's investment objectives d)Approve investment advisory agreements
b)Appoint officers of the investment company
With a variable annuity, which of the following factors is NOT involved in determining the amount of an annuitant's first annuity payment? a)An actuarial factor base on the annuitant's life expectancy b)The current interest rate c)The settlement option selected d)The value of the annuitant's interest in the separate account
b)The current interest rate
A registered representative sold a variable contract and received the completed application and initial payment from the customer. Generally speaking, payments are considered received a)When the contract application is accepted by the broker/dealer. b)When the registered representative who sold the annuity receives a payment from the customer. c)When the customer's payment is received by a member firm. d)When the contract application is accepted by the issuer.
d)When the contract application is accepted by the issuer.
If a fund is going to assess a 12b-1 fee, the fee must be first approved by the a)FINRA. b)SEC. c)Board of Directors. d)Investment Company.
c)Board of Directors.
An investment company may have a required minimum investment for a)Only the initial investment. b)Only the subsequent investment. c)Both the initial investment and the subsequent investments. d)Only the first 5 investments.
c)Both the initial investment and the subsequent investments.
Which of the following is the risk that an issuer may not be able to meet interest or principal payments on fixed income securities? a)Purchasing power risk b)Fixed income risk c)Business/credit risk d)Interest rate risk
c)Business/credit risk
FinCEN requires banks and broker/dealers to adhere to anti-money laundering rules, including a)Perpetrator forfeiture rules. b)Blue sky laws. c)SRO reporting procedures. d)A designated independent party to test the procedures.
d)A designated independent party to test the procedures.
Variable life policy premiums a)Are paid in fixed amounts at specified intervals. b)Increase with the insured's age. c)Are similar to whole life premiums for the same age and face amount. d)Increase or decrease, depending on the performance of the separate account.
a)Are paid in fixed amounts at specified intervals.
If a company were liquidated, what is the residual value left for the common stockholders? a)Book value b)Cash flow c)Current assets d)Net working capital
a)Book value
A variable life insurance policyowner took a loan against his policy several years ago. Because of poor investment performance, his policy's cash value has dropped to a negative value of $500. What are the policyowner's options? a)He has 31 days to pay back enough of the loan to bring the cash value positive. b)He can reduce his death benefit to make up for the short fall in his cash value. c)Do nothing and hope the performance improves in the near future. d)He has defaulted on his loan and must pay back the loan in full or surrender his policy immediately.
a)He has 31 days to pay back enough of the loan to bring the cash value positive.
A man is 52 years old. He is terminating his employment at a state university. He is fully vested in a 457(b) plan. If he withdraws the money from his 457(b) plan, a)He must pay income tax b)He must roll it into another retirement plan. c)He must pay capital gains tax and a 10% penalty. d)He must pay income tax and a 10% penalty.
a)He must pay income tax
Traditional IRAs and the rules and regulations for an IRA with a spousal option differ in that the spousal IRA rules: I. Are applicable only to married persons with a nonworking or low-earning spouse. II. Allow for rollovers not more frequently than once every 18 months versus the 3-year requirements for regular IRAs. III. Allow for a higher aggregate contribution limit. IV. Require equal amounts be beneficially contributed for each spouse. a)I & III b)II & IV c)I, II & III d)I, II, III & IV
a)I & III
A signature guarantee is usually required for which of the following types of transactions? I. Wire transfers; II. Redemptions to addresses different than the address of record on the account; III. Redemptions on a two-party account; IV. For dollar amounts below certain limits a)I and II b)I and III c)II and IV d)III and IV
a)I and II
Dollar cost averaging plans have which of the following features? I. They are voluntary plans. II. They generally have a minimum periodic investment. III. Investors are penalized for missing subsequent investment periods. IV. Over time, the investor's person profit exceeds the average cost per share. a)I and II b)I and IV c)II and III d)II and IV
a)I and II
Which of the following statements are true of municipal securities transactions in a discretionary account? I. They require the customer's prior written authorization and a written acceptance by a broker/dealer principal. II. They are subject to different suitability requirements than nondiscretionary account municipal securities transactions. III. Transactions that are not suitable are prohibited unless initiated by the customer. IV. Transactions that are not suitable are always prohibited. a)I and III b)I, II and IV c)I and IV d)I and II
a)I and III
Which of the following disclosures must appear on investment analysis tools, reports generated by investment analysis tools, and retail communication related to investment analysis tools? I. A description of the criteria and methodology including its limitations and underlying assumptions; II. A statement that results can vary with each use and over time; III. A statement that FINRA has approved the investment analysis tool; IV. A statement that projections are hypothetical and do not reflect actual investment results. a)I, II and IV b)III and IV c)I, II, III, and IV d)I and II
a)I, II and IV
Which annuity provision guarantees payments as long as the annuitant lives? a)Mortality guarantee b)Death benefit c)Permanent period d)Lifetime guarantee
a)Mortality guarantee
An investor seeks a fund that will provide regular income. His best choice is a a)Mortgage-backed security fund. b)Government bond fund. c)Money market fund. d)Income fund.
a)Mortgage-backed security fund.
The payment to mutual fund investors who redeem their shares will be based on the a)Next computed bid price as of the day the shares are received. b)Next computed ask price as of the day the shares are received. c)Current offering price. d)Previous bid price as of the day the shares are received.
a)Next computed bid price as of the day the shares are received.
With a variable annuity, which of the following factors is NOT involved in determining the amount of an annuitant's first annuity payment? a)The current interest rate b)The settlement option selected c)The value of the annuitant's interest in the separate account d)An actuarial factor base on the annuitant's life expectancy
a)The current interest rate
Growth is tax-deferred on which of the following? a)Universal life insurance b)Common stock held in a custodian account c)U.S. Government bonds d)Mutual funds
a)Universal life insurance
An underwriter of the securities of an investment company is allowed to sell securities to a member firm at a price other than the public offering price under what circumstances? a)When a selling agreement is in effect b)Under no circumstances c)At any time at the member firm's discretion d)When a special agreement with FINRA is in effect
a)When a selling agreement is in effect
A husband and wife want to make a contribution to their IRAs. The husband earns $35,000 a year. The wife is currently not working. What is the maximum they can currently contribute into their IRAs? a)$11,000 into one account b)Up to $6,000 for the husband and $6,000 for the wife c)$12,000, with any combination of contributions by the two of them d)$6,000 only for Mr. Hardy
b)Up to $6,000 for the husband and $6,000 for the wife
Which of the following investment companies must normally invest at least 80% of its assets in stocks? a)ABC International Securities Fund b)ABC Growth Fund c)ABC Stock Fund d)ABC Value Fund
c)ABC Stock Fund
G is in his 70s and is interested in investing. His registered representative could legitimately recommend all of the following EXCEPT a)A balanced fund. b)A bonus annuity in which G would receive extra interest credits in the first year. c)A mutual fund that invests in U.S. Treasury securities. d)An asset allocation fund where 80% of the assets are invested conservatively in debt instruments.
b)A bonus annuity in which G would receive extra interest credits in the first year.
Which of the following statements is true regarding SIMPLE plans?a)The employee cannot contribute to the plan. b)Contributions and earnings are tax-deferred until funds are withdrawn. c)The employer cannot contribute to the plan. d)The employer can contribute up to 5% of the employee's annual compensation.
b)Contributions and earnings are tax-deferred until funds are withdrawn.
A wealthy customer with a significant account balance repeatedly takes large positions in various mutual funds and attempts to time the market by trading his positions. This type of customer a)May trade the mutual funds as frequently as he likes. b)Creates a disruption and may have his account restricted. c)Has no impact on the mutual funds. d)Is a desirable customer.
b)Creates a disruption and may have his account restricted.
Which statement is true concerning dollar cost averaging (DCA)? a)DCA protects the investor from a loss in a steadily declining market. b)DCA is a way to reduce risk. c)DCA allows the investor to buy the same number of shares per installment. d)All of the above are true statements.
b)DCA is a way to reduce risk.
An American corporation receiving which of the following is entitled to a 50% corporate tax exclusion? a)Dividends of preferred stock, but not common stock, of a domestic corporation b)Dividends from common and preferred stock of another domestic corporation c)Dividends from common stock only of a domestic corporation d)Dividends and interest from a domestic corporation
b)Dividends from common and preferred stock of another domestic corporation
An investor fears a coming inflation trend, and wants to protect his portfolio. He would probably choose a a)High yield bond fund b)Gold fund c)Blue chip fund d)Money market fund
b)Gold fund
Mutual fund investment income and capital gains distributions I. May be taken in cash. II. Can be reinvested into the fund at the POP. III. Are taxable whether taken in cash or reinvested. IV. May be tax deferred upon election. a)I and II b)I and III c)II and III d)III and IV
b)I and III
Which of the following are characteristics of a SEP-IRA? I. A vesting schedule applies. II. A SEP-IRA is a qualified plan. III. Contributions are made by the employee. IV. The maximum allowable deductible contribution is greater than a personal IRA account. a)II and III b)II and IV c)I and II d)I and III
b)II and IV
The Investment Company Act of 1940 allows the 12b-1 fee to cover normal operating expenses of a mutual fund, which includes all of the following EXCEPT a)Sales material. b)Management fees. c)Sales commissions. d)Fees for printing prospectuses.
b)Management fees.
Which statement concerning a Unit Investment Trust is TRUE? a)Portfolio is actively managed b)May be liquidated upon order of the SEC c)Units are negotiable and traded in the secondary market d)No substitutions of securities are allowed
b)May be liquidated upon order of the SEC
All are true about FINRA Code of Arbitration Procedure EXCEPT a)Customers may be required to sign a pre-dispute arbitration agreement. b)Members may choose whether or not to arbitrate. c)Arbitration is binding. d)Registered representatives must arbitrate.
b)Members may choose whether or not to arbitrate.
All of the following are agency issues backed by government-guaranteed or insured mortgages EXCEPT a)Federal Home Loan. b)SLMA. c)FNMA. d)GNMA.
b)SLMA.
T invests into his variable annuity on a periodic payment plan. If T wishes to annuitize the contract and start receiving monthly payments, which of the following is TRUE? a)T is not allowed to annuitize a contract until the end of the specified time. b)T must stop investing before he can annuitize the contract and start receiving monthly payments. c)T may not start taking payments out of the contract until he reaches age 59 ½. d)T may continue investing periodic payments, even though he is annuitizing and taking monthly payments from the annuity.
b)T must stop investing before he can annuitize the contract and start receiving monthly payments.
The ex-dividend date for a mutual fund is a)The same date as the ex-dividend date for a stock. b)The day after the record date. c)Set by the SRO. d)The date before the record date.
b)The day after the record date.
All of the following types of stocks would be eligible for dividends EXCEPT a)Outstanding stock. b)Treasury stock. c)Preferred stock. d)Common stock.
b)Treasury stock.
Under what circumstances would it be permissible to demand commissions as a condition to a sale? a)Only when dealing with restricted stock b)Under no circumstances c)Under all circumstances d)Only during quick sales
b)Under no circumstances
In which of the following qualified plans are the benefits linked to the employee's number of years of service and/or the amount of compensation earned? a) Defined contribution plan b) Tax-sheltered Account c) Defined benefit plan d) Keough plan
c) Defined benefit plan
According to FINRA rules, which of the following is a retail communication? a)A registered representative's email correspondence with a customer regarding adding an additional beneficiary to her account b)A communication sent to 25 investors within 30 calendar days that makes no investment recommendation or offer of services c)An online investment analysis tool available to the public d)A form letter sent exclusively to 100 insurance companies
c)An online investment analysis tool available to the public
A married couple in their thirties is planning to purchase a downtown loft in the next year. They are looking for a safe investment for their down payment sum for about 6 months. Which of the following mutual funds is the most suitable for these clients? a) Overseas opportunities fund b) Capital appreciation fund c) Money market fund d) Investment-grade bond fund
c) Money market fund
In a defined benefit plan, a) The contribution and the benefit are known b) The contribution is known and the benefit is unknown c) The benefit is known and the contribution is unknown d) The contribution and the benefit are unknown
c) The benefit is known and the contribution is unknown
A registered representative's neighbor gives her the phone number of a friend who is interested in opening an IRA. The representative sees the friend's phone number on the National Do-Not-Call registry. What is required for the representative to call this prospect without violating telemarketing rules? a) The rep must receive permission from a supervisor b) The prospect must have his name removed from the National Do-Not-Call registry c) The rep must receive written permission from the prospect d) Nothing
c) The rep must receive written permission from the prospect
Which of the following is true regarding income funds? a) They invest in companies that pay low dividends in relation to their market value b) They invest in companies that pay average dividends in relation to their market value. c) They have below-average growth potential d) They have higher-than-average growth potential
c) They have below-average growth potential
What is the maximum allowable annual contribution into a non-corporate Keogh Plan (HR-10) for a self-employed individual?a)$6,000 or 20% of pre-tax earnings, whichever is less b)25% of pre-tax earnings c)20% of pre-tax earnings up to a specified limit d)$6,000 or 20% of pre-tax earnings, whichever is greater
c)20% of pre-tax earnings up to a specified limit
The statute of limitations for fraudulent tactics to induce the purchase or sale of securities is a)2 years from the violation. b)5 years from the violation. c)5 years from the violation or within 2 years of discovery. d)2 years from the violation or within 5 years of discovery.
c)5 years from the violation or within 2 years of discovery.
After the first annuity payment is calculated in a variable annuity, future payments are calculated a)By liquidating a certain number of annuity units based on the performance of the separate account. b)By multiplying the total value of the account by the Assumed Interest Rate. c)By multiplying the number of annuity units by the current redemption value of a unit. d)By multiplying the current value of an accumulation unit by the total number of units.
c)By multiplying the number of annuity units by the current redemption value of a unit.
All of the following statements about the Form U4 predispute arbitration clause are correct EXCEPT a)Member firms are required by FINRA to disclose to applicants that Form U4 contains a predispute arbitration clause. b)The Form U4 predispute arbitration clause appears on U4 amendments. c)By signing a Form U4, applicants are agreeing to settle discrimination cases against their employer through arbitration. d)By signing a Form U4, applicants are consenting to settle customer disputes through arbitration.
c)By signing a Form U4, applicants are agreeing to settle discrimination cases against their employer through arbitration.
Continuing commissions from securities sales would be permissible if paid to I. A retired registered representative on transactions generated in a new customer account, referred to the member firm by the retired registered representative; II. A retired registered representative on customer accounts that are stipulated in a bona fide written contract; III. A registered representative who is under suspension; IV. The widow of a deceased registered representative on customer accounts where such payments are stipulated in a bona fide written contract. a)I and IV b)II and III c)II and IV d)I and II
c)II and IV
When a healthy person sells his variable life insurance policy to a third party for less than its net death benefit, but for more than its cash surrender value, this transaction is known as a a)Death settlement. b)Viatical settlement. c)Life settlement. d)Cash settlement.
c)Life settlement.
Which annuity provision guarantees payments as long as the annuitant lives? a)Permanent period b)Lifetime guarantee c)Mortality guarantee d)Death benefit
c)Mortality guarantee
An investor wants to set up a systematic withdrawal plan on her mutual fund account. What is the most important consideration? a)The fund offers an exchange privilege. b)The fund offers rights of accumulation. c)The fund has the potential of exhausting the principal. d)The fund family offers many investment choices.
c)The fund has the potential of exhausting the principal.
A bond's call premium is defined as the amount a)Added to the initial price of the bond to cover the call privilege. b)The issuer adds to the interest payments to offset the call feature. c)The issuer pays the bondholder to exercise the call. d)The investor pays to purchase a callable bond.
c)The issuer pays the bondholder to exercise the call.
An investor purchasing a mutual fund will pay what price? a)The public offering price quoted at previous day's close b)The next calculated net asset value after purchase c)The next calculated public offering price after purchase d)The net asset value quoted at previous day's close
c)The next calculated public offering price after purchase
The following statements are true concerning 12b-1 fees EXCEPT a)They have the effect of reducing the investor's total return. b)They cover costs such as printing of prospectus and sales materials. c)They are limited to a maximum of 0.25% of assets. d)They may be used to pay sales commissions.
c)They are limited to a maximum of 0.25% of assets.
Which of the following types of investment companies has no management fee? a)Closed end mutual fund b)12b-1 mutual fund c)Unit investment trust d)Open end mutual fund
c)Unit investment trust
Maximum allowable sales charges for variable life contracts are I. 50% for the first year. II. 20% for the first year. III. 16% over a 20-year period. IV. 9% over a 20-year period. a) II and III b) II and IV c) I and III d) I and IV
d) I and IV
Which of the following statements is NOT true regarding IRAs? a) A nonworking spouse is eligible to contribute to separate IRA account b) Anyone with earned income may open a traditional IRA c) Accumulated contributions grow tax deferred d) Married couples are required to purchase a jointly owned IRA
d) Married couples are required to purchase a jointly owned IRA
A FINRA member that is required to join SIPC is also required to a) Supply the SEC with proof of business insurance on an annual basis b) Report the aggregate value of all customer accounts to the Comptroller of Currency at the end of each quarter c) Join FDIC d) Purchase a blanket fidelity bond
d) Purchase a blanket fidelity bond
Trade ticket (orders) must include all of the following information EXCEPT a) Whether the trade was solicited or unsolicited b) Account numbers c) Symbols that identify the security d) Settlement dates
d) Settlement dates
An investment advisor representative (IAR) has a client who has decided to terminate her advisory contract prematurely due to an unexpected job relocation. The IAR has complied with all the necessary contract provisions in setting up this contract, but did not include any expressed provision for early termination of the contract. Which of the following is true regarding this situation? a) The client will be refunded any unearned portion of the advisory fees that have been prepaid. b) Any fee that was disclosed as part of the contract must be prorated based on the time remaining in the original contract. c) There is no adequate information to determine what actions will be required d) The IAR may retain all fees and commissions paid for services to date and the annual contract fee that was prepaid.
d) The IAR may retain all fees and commissions paid for services to date and the annual contract fee that was prepaid.
Once a person becomes an insider, he/she is required to notify the SEC a) Immediately b) Within 6 months c) Within 30 days d) Within 10 days
d) Within 10 days
In order for a corporation to qualify for the 50% corporate dividend exclusion when they own stock of another corporation, they must own less than what percentage of that corporation's outstanding stock? a)5% b)10% c)15% d)20%
d)20%
Under Reg S-P, a broker/dealer's procedures to safeguard its customers' personally identifiable information (PII) must provide for each of the following EXCEPT a)The customer must be given the opportunity to opt out of any disclosure of PII to nonaffiliated parties. b)The broker/dealer is not required to give the customer an opt-out option regarding sharing of PII with its affiliates. c)The broker/dealer's responsibility to protect customers' PII extends to the personal equipment (such as laptops and cell phones) of its associated persons. d)A notice to the customer describing the firm's privacy procedures must be sent with the first statement of activity in the account.
d)A notice to the customer describing the firm's privacy procedures must be sent with the first statement of activity in the account.
If a complaint is deemed to be of a minor nature by the District Business Conduct Committee, it may offer the respondent which of the following? a)A simplified arbitration b)A fine not to exceed $500 c)A fine not to exceed $500 and/or letter of reprimand d)A summary complaint procedure
d)A summary complaint procedure
Which of the following statements correctly summarizes the tax advantages of qualified retirement plans? a)Employer contributions are tax-deferred to the employee. b)Employer contributions are taxed to the employee at the employee's tax rate at time of withdrawal. c)Employer contributions are tax-deductible. d)All of the above are correct.
d)All of the above are correct.
Which type of stock would a person own for the best assurance of receiving dividend income? a)Participating preferred b)Callable preferred c)Convertible preferred d)Cumulative preferred
d)Cumulative preferred
Which of the following best describes an annuity's expense guarantee? a)The annuity company is required to project the annuitant's retirement expenses and guarantee a minimum coverage. b)It is indexed to inflation. c)The annuity company promises to pay a specified level of the annuitant's expenses for life. d)It establishes the maximum the annuity company may charge the contract.
d)It establishes the maximum the annuity company may charge the contract.
Which of the following is the major difference between an open-end and a closed-end fund? a)Investment objectives b)Management fees c)Suitability d)Marketability
d)Marketability
Which of the following statements is NOT correct concerning an IRA? a)Married individuals can contribute into two separate accounts, up to a specified amount for each person. b)Anyone with earned income can have an IRA. c)An individual can contribute 100% of earned income up to a specified limit. d)Married individuals must contribute into one account for both spouses, up to a specified amount for each person.
d)Married individuals must contribute into one account for both spouses, up to a specified amount for each person.
Upon termination of employment, an employee's funds from a 457(b) plan a)May be transferred to an IRA and still retain the exemption from the 10% penalty for early withdrawal b)Cannot be transferred to a qualified plan. c)Can only be transferred to another 457(b) plan. d)May be transferred into an IRA. Once transferred, the funds become subject to a 10% penalty for early withdrawal.
d)May be transferred into an IRA. Once transferred, the funds become subject to a 10% penalty for early withdrawal.
FINRA rules require that, in the conduct of business, members a)Never recommend a speculative security to a customer. b)Always act in the best interest of customers. c)Always treat their competitors with the utmost respect. d)Observe high standards of commercial honor and just and equitable principles of trade.
d)Observe high standards of commercial honor and just and equitable principles of trade.
What is one of the primary differences between a revenue bond and an industrial revenue bond? a)Revenue bonds are issued by corporations and industrial revenue bonds are issued by municipalities. b)Industrial revenue bonds are backed by municipal facilities, such as water treatment plants, and revenue bonds are backed property taxes. c)There is no difference between an industrial revenue bond and a revenue bond. d)Revenue bonds are backed by user fees and industrial revenue bonds are backed by corporate leases.
d)Revenue bonds are backed by user fees and industrial revenue bonds are backed by corporate leases.
Whose approval is required for an investment company to change its investment objective? a)The board of directors may make such change, but must report the change in the annual report to shareholders. b)Approval must be granted by the SEC, FINRA, and the board of directors of the investment company. c)The SEC and the majority of shareholders d)The majority of the shareholders of the investment company
d)The majority of the shareholders of the investment company
Under what circumstances is it legal for members who sell shares of an investment company to execute its portfolio transactions? a)Only under special permission from FINRA. b)Only if the members are exempt from Rule 144. c)This is not allowed. d)This is perfectly legal.
d)This is perfectly legal.
