Series 6 Practice Exam

A retired man has $100,000 to invest for growth. He also owes a $10,000 note due in 6 months, a $20,000 note due in one year and a $25,000 note due in two years. How much of the $100,000 should he allocate to growth investments?

$45,000.

ABC stock is quoted at 67.75 bid 67.85 ask. If an investor wishes to purchase one round lot from the broker-dealer, excluding commissions, the investor would pay:

$6,785.

A registered representative elected to terminate her registration while raising her child. She would be able to re-affiliate with a FINRA member in the same license capacity without re-examination if she filed a Form U-4 within:

2 years of the effective date of her Form U-5 filing.

If a customer is concerned about interest rate risk, which of the following securities is least appropriate?

25-year municipal bonds.

In a fiduciary account with stated investment objectives of preserving capital and generating income, which of the following investment trading strategies is the most suitable?

Buying Treasury bonds.

In which of the following equity securities do stockholders have preemptive rights?

Common stock.

If an investor is in a low tax bracket and wishes to invest a moderate sum to gain some protection from inflation, which of the following would you recommend?

Growth mutual fund.

When the annual report of a mutual fund is used as sales literature, which of the following statements are TRUE? The principal of the firm must approve its use for that purpose. A prospectus need not accompany the report, provided it includes instructions for obtaining a prospectus. The figures contained in the report must be as of a specific date. The report must contain a list of the industries in which the fund invests.

I and III.

Which of the following describe premiums for a variable life insurance policy? Fixed as to the premium amount. Variable as to the premium amount, depending on the cash value in the account. Fixed as to time of payment. Variable as to time of payment.

I and III.

When comparing mutual funds and ETFs, the disadvantages of investing in ETFs include which of the following? Commissions both when purchasing and liquidating shares. A price not set by supply and demand. The ability to avoid tax consequences. The spread between the NAV and POP can be greater than 8.5%

I and IV

Your customer has received insider information about a company. He has asked you what he may do with it. After cautioning him not to disclose it to anyone or use it in trades, you tell him which of the following? He may use the information as soon as you disclose it to a principal of your broker-dealer. As long as it is not known to the public, he may not use the information. He may use the information when it becomes available for evaluation by the general public. The information may never be used in trades even after it is made public.

II and III.

FINRA may take which of the following actions against members who violate the Conduct Rules? Indictment. Censure. A prison sentence commensurate with the violation. Suspension.

II and IV.

For individual investors, which of the following is an advantage of investing in mutual funds rather than individual securities?

Professional investment management.

Under the Code of Arbitration Procedure, how much time does a client have to submit a claim against a registered representative or member firm?

Six years.

An investor is in the annuity stage of a variable annuity purchased 15 years ago. During the present month, if the annuitant receives a check for an amount that is less than the previous month's payment, which scenario likely occurred?

The account's performance was less than the assumed interest rate.

Three 3% bonds are listed in the newspaper. One bond will mature in one year, another bond will mature in ten years, and the third bond will mature in 20 years. If interest rates are going up, which bond will have the greatest decrease in value?

The bond with the 20-year maturity.

An investor owns $10,000 of shares in ABC bond fund. Due to a change in his financial situation, he wishes to exchange the bond fund shares for shares in ABC's aggressive growth fund. Which of the statements below correctly describes the tax consequences of this action?

The exchange is considered a taxable event that must be recognized in the current year.

A registered representative making a sales presentation based on performance statements and charts is permitted to make which of the following observations?

The fund has had a positive performance in the last few years.

An employee involved in the management of a member firm's business, particularly in the supervision of business solicitation or in training, would have to be registered as

a principal

All of the following would be subject to the Conduct Rules regarding public appearances EXCEPT:

a radio spot saying that your offices have moved.

A hedge fund and a traditional mutual fund are similar in that:

both can have noticeable effects on day-to-day trading.

The AIR (Assumed Interest Rate) for your customer's variable annuity contract is 5%. In February, the separate account earned 7%. In March, the separate account earns 5%. The April annuity payment will be:

equal to the March payment.

A registered representative assists his old college roommate in raising $250,000 for a business venture by distributing offering circulars to people he knows who might be interested but says nothing about this to his employer firm. The representative receives a thank-you note from his friend, but no compensation. Under the Conduct Rules, the representative:

has violated the rule dealing with selling away.

All of the following statements about a bond selling above par value are true EXCEPT:

the nominal yield always stays the same.

A broker-dealer with a sales agreement with a mutual fund must return all concessions to the underwriter if a customer redeems his shares:

within seven business days of the initial purchase.