Series 6 Security test
A registered representative with a FINRA member firm must complete the regulatory elements of CE within how many days of his registration anniversary date?
120 days.
Under the spread-load plan provision of the Investment Company Amendments Act of 1970, an investor may have no more than what percentage deducted from any one payment?
20%
short account
25%
long account
30%
The ex-dividend date for mutual fund shares is normally:
A mutual fund's board of directors sets the ex-dividend date, which is normally the business day following the record date. This is different from the ex-dividend date for corporate stocks in the secondary market, which is two business days before the record date.
If a mutual fund paid $.30 in dividends and $.75 in capital gains during the year, and the offering price at the end of the year is $6.00, the fund's current yield for the year is:
A mutual fund's current yield is annual dividend ($.30 in this case) divided by the public offering price ($6.00). Gains are not included in calculation of current yield; they are accounted for separately.=5%.
Class B shares for mutual fund
Back Load
Which of the following securities is commonly used to settle transactions involving imports and exports?
Bankers Acceptances
What are the three classifications used to identify investment companies?
Face-amount certificate companies, unit investment trusts, and management companies.
GNMA securities
Government National Mortgage Association (GNMA) securities are subject to both state and federal income tax and are backed by residential mortgages.
John owns a nonqualified, tax-deferred annuity. When he retires, what will be the tax consequences of his annuity payments?
His annuity payments are partly taxable and partly tax-free return of capital.
A change to which of the following items requires amending the Form U-4?
Home address.
A corporate bond with a nominal yield of 6% is currently trading at a yield to maturity (YTM) of 5.8%. It would be accurate to state that this bond is trading at
If YTM is less than the nominal or coupon yield, the bond is trading at a premium
To benefit the economy, business activity needs to increase. Which of the following monetary policy measures might an economist urge the FRB to do?
Lower the discount rate.
For individual investors, which of the following is an advantage of investing in mutual funds rather than individual securities?
Professional investment management.
Which of the following is NOT a basic responsibility of an investment banker?
Providing a secondary market for securities that have been issued.
Which of the following concerning Section 529 plans are TRUE?
Qualified withdrawals are exempt from federal income tax. and Withdrawals may be used for any expenses incurred by a student.
Business activity has been increasing lately. One of your customers has read that this increase is due in part to the government's implementation of fiscal policy measures. Which of the following might be one such measure?
Reducing taxes.
Which of the following securities may a Series 6 registered rep sell?
Series 6 RRs have a limited registration and are limited to selling investment company securities with a prospectus (only in the primary market).
Which of the following best describes book entry?
The transfer of ownership is entered on the books of the issuer or the issuer's transfer agent. For book-entry ownership, transfers of ownership are accounting functions in the records of the issuer or the issuer's transfer agent, since it is the issuer, not the SRO or the clearing agency, that must pay the interest and eventually the bond's principal.
The manager or adviser of an investment company may liquidate portions of the fund's portfolio:
at any time, provided it is within the policies and objectives stated in the fund's prospectus.
When a member firm opens an account for a registered representative of another member, the employer-member must be sent written notification:
before executing an order.
in situational communications
communications with insinuations worth 50 billion or more. has less strict rules than retail . for instutional investors. does not have to be approved by a principal
correspondance
could be a birthday or a thank you letter. 25 or fewer retail customers within a 30 day period. must be reviewed by a principal
Mutual fund 12b-1 fees are deducted from the:
fund's assets. Mutual fund 12b-1 fees are deducted quarterly from the assets of the fund.
One of the benefits of using arbitration to settle disputes between member firms is that it:
is relatively inexpensive.
An open-end investment company may do all of the following EXCEPT:
issue senior securities.
independeantly prepared reprint
made by a thrid party, e.g. morning star. can be altered for errors , but has to apply to regulatory standards. must be reviewed by principal
If a company starts a pension plan for an employee who already has an IRA, this employee:
may continue to contribute to his IRA, but the contributions may not be 100% deductible, depending on his level of compensation.
A customer wishes to open a new account but refuses to provide suitability information. Under FINRA rules, the member
may open the account but may not make any recommendations.
An accredited investor, age 39, would like to invest $10,000 and wants an investment that is liquid. You recommend a(an)
mutual fund that invests in both stocks and bonds
non elegible securites for margin
options, non nasdaq, new issues
Qualified retirement plans
pre taxed dollars. Money also grows taxed deferred
The primary purpose for creating ERISA was to:
protect employees from the mishandling of retirement funds by corporations and unions.
A variable annuity characteristic that contractually guarantees payments for life is:
the mortality guarantee.
Characteristics of money market mutual funds include all of the following EXCEPT:
their beta tends to mirror the overall market.
securities are not elgible if they have not been out in the market place for atleast
thirty days
An investor must be provided with a statement of additional information about a mutual fund:
upon request.
he liquidation order is as follows:
wages, taxes, secured debt holders, unsecured debt holders (including general creditors), holders of subordinated bonds, preferred stockholders, and common stockholders.
Which of the following mutual funds is likely to carry the greatest credit risk in its portfolio?
High-yield bonds are the riskiest of the debt securities given and carry the most credit risk. The small-cap growth fund, though risky, does not carry credit risk but business risk.
equity over long margin account equals margin
in the account
$2000-$4000 in margin account
you can buy the security at $2000
greater than $4000 in margin account
you can buy the security at 50%
ALFA Securities is the managing underwriter for an initial public offering of one million shares of ABC common. It has agreed to sell all of the stock being offered and to buy, as principal, any stock it cannot sell to the public. ABC will receive the proceeds from the sale of one million shares. This arrangement is known as what type of underwriting?
Firm commitment. A firm commitment underwriting requires the underwriters to purchase all of the securities being offered for resale to the public
Your customer, a self-employed, incorporated small-business woman, wishes to establish a Keogh plan for herself and her two employees. According to IRS rules, which of the following is TRUE?
She and her employees are not eligible for a Keogh plan.
Your client has asked about the automatic dividend reinvestment plan offered by the ABC Growth and Income Fund. In describing the differences between dividend reinvestment and receiving distributions in cash, which of the following statements are CORRECT?
The taxation of the dividend distribution is not affected by your choice to reinvest or receive the dividend in cash. and Reinvestment of dividends tends to have a compounding effect, while taking the distributions in cash inhibits the opportunity for growth of capital.
Which of the following choices lists Treasury bills, Treasury bonds, and Treasury notes in ascending order of maturity?
Treasury bills have a maturity of less than one year, Treasury notes mature in two to ten years, and Treasury bonds mature in ten years or more.
When a member bank of the Federal Reserve System borrows from the Federal Reserve, it would pay
he discount rate.
One of the ways in which closed-end investment companies differ from open-end investment companies is in their ability to:
issue debt securities. Closed-end investment companies may issue marketable common stock, preferred stock, and debt. Open-end companies may issue redeemable common stock only. Either may operate as a diversified or nondiversified management company.
A mutual fund's expense ratio is its average net assets for the year divided into:
its expenses for the year.
Class C Shares for mutual fund
level load
Under the 1940 Investment Company Act, an investment company may take all of the following forms EXCEPT a(n):
limited partnership with partners as passive investors.
Transactions in all of the following are effected in the money market, as opposed to the capital market, EXCEPT:
municipal revenue bonds.
According to the Investment Company Act of 1940, an open-end investment company must compute its NAV:
no less frequently than once per day.
The principal underwriter of an open-end investment company is also known as the:
sponsor.
U.S. government securities that are deposited with a trustee against which certificates are sold representing principal payments only on the securities are:
stripped bonds. and subject to annual taxation on the per year accreted amount.
All of the following statements about a bond selling above par value are true EXCEPT:
the nominal yield is lower than the current yield.
A broker/dealer acting as principal underwriter for a mutual fund may accept orders for the fund from another broker/dealer for all of the following reasons EXCEPT:
to place shares in its inventory for future sales.
less than $2000 in margin account
you have to buy the security at purchase price
To avoid the wash sale rules of the IRS, one may not replace a securities position for how many days before or after the sale of a security?
30 days.
Spread load
20%
What assets-to-debt ratio must an open-end investment company maintain?
3 to 1.
Front Load
50%
Open Ended Company
A Mutual Fund
An individual opens an account with your firm. She tells you that, upon her death, she wants any assets in the account to be divided equally among her three children. She also wants the ability to change the allocation in the event that conditions change and one of the children is in greater need than the others. Which of the following accounts will allow for her wishes?
A TOD (transfer on death) account will meet this client's needs. With a discretionary account, the registered representative's power of attorney would end with the client's death.
Your customer wishes to invest $25,000 using investment company securities as a means of diversification, but she states that she is not comfortable with stock market risk. Which of the following fund types would be the least appropriate recommendation?
Blend/core fund.
Which of the following interest rates is charged by banks to securities dealers for margin loans?
Broker call loan rate.
Which of the following describe how prices are arrived at in the securities markets?
By auction in the exchanges. and By negotiation in the OTC markets.
Corporations issue commercial paper with maturities ranging from as little as one day to as long as how many days?
Commercial paper has a maximum maturity of 270 days.
Which of the following statements is NOT true of Regulation S-P?
Customers must be given annual privacy disclosures on a separate piece of paper.
Close Ended company
Exactly like owning stock in a corporation
Parity price of a bond
If a bond is convertible at $25, each $1,000 bond will convert to 40 shares. 40 shares × $30 =$1,200 parity of the bond.
If a registered representative involved in a complaint action with FINRA's Department of Enforcement makes an offer of settlement, which of the following statements is TRUE?
If the offer is accepted, the representative waives all rights of appeal.
Under what circumstances must an employee be given an opportunity to participate in a deferred compensation plan?
It is solely up to the company who may participate in this type of plan.
Stockholders can use what type of rights to maintain a proportionate ownership of a corporation?
Preemptive rights give stockholders the right to maintain their proportionate ownership in a corporation.
In the sale of open-end investment company shares, the prospectus:
The sale of mutual fund shares requires that the client receive the prospectus before, or during, a sales solicitation.
All of the following statements about variable annuities are true EXCEPT:
a minimum rate of return is guarenteed
eligible securities for margin
are on nasdaq, exchanged listed, frb approved, after 30 days
A nonqualified deferred compensation plan:
does not guarantee that the employer will fulfill the obligation.
Class A shares for mutual fund
front load
When operating a Keogh plan, a self-employed individual must make contributions for:
full-time employees who are at least 21 years old and have worked for the company for one or more years.
The definition of retail communication includes
research reports
All of the following pay dividends EXCEPT:
rights. and warrants.
The investment policy of a mutual fund can be changed by a majority vote of:
the outstanding shares.
margin account purchases
money in the account
testimonials
must not be over 100 dollars
a corporate bond quoted as QRS Zr 20
QRS Zr 20 represents a zero-coupon bond issued by the QRS Company maturing in 2020. Zero-coupon bonds are bought at a discount and mature at face value. If a bond is held to maturity, the difference between the purchase price and the maturity price is considered interest, though it is taxed on a yearly basis.
retail communications
any person other than an institutional customer is retail. retail communication is any communicaition physical or electronic made to 25 or more retail customers within a 30 day period . for retail investors. must be approved by a principal
Under the Uniform Gifts to Minors Act, an adult may
give an unlimited amount of cash. and give securities.
A customer has $250,000 in securities and $200,000 in cash with his brokerage firm. If the brokerage firm were forced to liquidate, how much of the account would SIPC cover?
All of the securities and all of the cash. SIPC covers cash and securities up to $500,000 total, with cash losses not to exceed $250,000. SIPC protects investors when broker/dealers become insolvant.
Under the Code of Procedure, if an associated person is suspended from a FINRA member firm, he:
During a suspension period, a registered representative may not remain on a member firm's premises.
When may a variable annuity account be surrendered?
During the accumulation period.
What is the latest date that an IRA participant may make an IRA deposit for the current year?
April 15 of the following year.
A straight life annuity will give the annuitant monthly payments for which of the following?
As long as the annuitant lives.
A busy customer has just opened a new account at your firm. She has given her lawyer limited power of attorney over the account to pursue a trading strategy for her while she makes an extended business trip. Which of the following statements regarding this customer's communications are TRUE?
Confirmations of trades may be sent to the lawyer with power of attorney over the account only if the customer requests it in writing and if duplicates are also sent to the customer. and The firm may hold mail for the customer while she is traveling, but only for specific periods of time.
