series 6

An investor's portfolio includes an ABC 6% bond maturing in 2020 and 100 Shares of XYZ common stock. At market close, if the stock closed at $45.45 compared to yesterday's $44.95, and the bond moved from 95 to 95½ , the portfolio increased in value by:

$55. The gain would be $5 for the bonds, (½ point for one bond is $5), and $50 for the stock, ($.50 × 100 shares) for a total of $55 Reference: 1.3.1.8.1 in the License Exam Manual

Which of the following statements regarding Coverdell Education Savings Accounts are TRUE?

1. After-tax contributions of up to an indexed maximum per student per year are allowed. 2. Contributions may not be made for students past their 18th birthday. Coverdell Education Savings Accounts allow after-tax contributions of up to $2,000 per student, per year, for children until their 18th birthday. If the accumulated value in the account is not used by age 30, the funds must be distributed and subject to income tax and a 10% penalty, or rolled over into a different Coverdell ESA for another family member.

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?

1. 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. 2. The firm may hold mail for the customer while she is traveling, but only for specific periods of time. (3 months)

If an investor wants to buy $1,000 worth of Class B shares in an open-end investment company, she may buy shares through:

1. the sponsor of the fund. 2. a brokerage firm. The custodian does not sell the shares but provides safekeeping for fund assets. A bank may not be a member of FINRA and therefore may not act as a dealer (although subsidiaries independent of the bank may be set up as broker-dealers).

Your customer has invested in a mutual fund with a 12b-1 fee. You explain to him that a charge will be deducted from his account:

12b-1 fees are deducted from fund assets every quarter.

All of the following statements regarding a transfer on death (TOD) account are correct

A TOD account avoids probate, but not estate taxes. The owner of the account may change beneficiaries and their percentages as he wishes. The TOD account is an account at a specific broker-dealer and only relates to the assets in that account.

In reviewing investment companies, you notice one that has a net asset value (NAV) greater than its asking price. The investment company must be:

A closed-end management company's asking price is determined by supply and demand and may be above, at, or below the NAV of the company at any given time. A specialized fund could be either an open- or closed-end management company. An open-end management company's (mutual fund's) asking price is based on its NAV. If the NAV rises, the asking price will also rise; therefore, its NAV can never be greater than its asking price whether it is managed well or poorly.

A defensive investment strategy would be best described as one where the investor builds a portfolio consisting largely of:

A defensive strategy is one that concentrates investments into those industries that are less likely to suffer during an economic decline. Regardless of current economic conditions, people still eat, smoke and use their utilities.

The Conduct Rules permit FINRA member firms to do which of the following?

A registered representative may continue to be compensated for sales he made while working for the firm in accordance with a previous contract.

One of your customers will be traveling extensively throughout Europe and asks your broker dealer to hold his mail and not send statements to his home. Under the rules which of the following is TRUE?

A request must be written and must include the time period the request is being made for (up to 3 months). Requests for longer periods may be granted for an acceptable reason such as safety or security concerns, but not merely for the sake of convenience. The member firm must inform the customer of any alternate methods that the customer can use to receive or monitor account activity such as email or through the member firm's website, and the member must obtain a confirmation from the customer that this information regarding alternate methods of communication was received.

Which of the following types of mutual funds would be most likely to have capital appreciation as its stated objective?

A specialized fund invests at least 25% of its assets in one particular industry or region. Generally, its main objective is capital or price appreciation. Income funds are looking for income, municipal bond funds for tax-free income, and balanced funds for capital preservation.

ABC is engaged in a stock rights offering with the help of Alpha Securities as managing underwriter. If Alpha Securities agrees to purchase the unused rights for any stock that ABC cannot sell to current stockholders, and use them to purchase stock for resale to the public, what type of underwriting arrangement is this?

A standby underwriting allows a corporation to sell as much of a new issue to current stockholders as possible, backed by the underwriter's promise to purchase any unsold rights. Remember that a standby underwriting agreement is associated with a rights offering.

Which of the following statements regarding a unit investment trust is NOT true?

A unit investment trust has no board of directors; rather, it has a board of trustees. A UIT must follow a stated investment objective (as must any investment company) and does not charge a management fee because it is not a managed portfolio.

Which of the following provides the right to buy a corporation's stock at a stated price for the longest period of time?

A warrant provides an investor a long-term right to buy an issuer's stock at a fixed price. The expiration period of a warrant is generally 2 to 10 years. Calls have a 9-month maturity at issue, and rights have a 4 to 6 week lifetime.

A promotional brochure for a mutual fund must:

All retail communications used in connection with the solicitation of mutual fund shares must be accompanied or preceded by the prospectus.

Which of the following actions comes under the guidelines concerning communication with the public?

An internal memo is not a public communication. Under FINRA Rule 2210 communications with the public are defined as written, therefore the phone call is not a form of communication with the public.

A client invests $2,200 in an open-end investment company and signs a letter of intent for a $10,000 breakpoint. If he deposits $11,000 6 months later, which of the following statements is TRUE?

An investor signing a letter of intent has 13 months to contribute funds to reach the reduced load. The sales charge in this case, then, will be based on the total investment of $13,200. If at the end of the 13 months the investor had not invested up to the breakpoint, the fund would liquidate enough shares to pay the difference in sales load.

Which of the corporate bonds listed below have a nominal yield in excess of its current yield?

Any bond selling at a price in excess of the par value, usually called a premium, will have a current yield that is lower than the stated or nominal yield.

The investment policy of a mutual fund can be changed by a majority vote of:

Any changes in a mutual fund's investment policies or objectives must be made by a majority vote of the fund's outstanding shares, not a majority vote of shareholders.

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:

Any securities-related business performed away from the member firm, without prior notice to the firm, is a violation. If compensation had been earned, the activity would have required firm approval and the firm would have had to run the trades through its books.

Arbitration and mediation are two services provided by FINRA to settle disputes between members. Regarding these services, which of the following statements are true?

Arbitration is mandatory in disputes between members. If mediation takes place and is not successful, the dispute moves on to arbitration. The person who served as mediator may not be an arbitrator in the same dispute.

ABC Corporation has a 10% noncumulative preferred stock outstanding at $100 par value. Two years ago, ABC omitted its preferred dividend, and last year, it paid a dividend of $5 per share. To pay a dividend to common shareholders, each preferred share must be paid a dividend of:

Because this is noncumulative preferred stock, the company must pay only this year's full stated dividend of $10 per share before paying dividends to the common shares.

A customer would like to know which of the following mutual funds has the highest potential for capital growth. Which would you choose?

Bond funds and preferred stock funds offer income and little, if any, potential for growth. A blue-chip stock fund offers conservative growth potential. A technology fund invests in risky stocks and has the highest potential for growth. The customer should be aware that high growth potential also carries high risk.

Which of the following mutual fund share classes are specially suited to investors that have long-term objectives?

Class A shares have a front-end load with breakpoints and very small 12b-1 fees. The investor with a large amount to invest may end up paying very little or even no sales charge. Class B shares sell at NAV with a contingent deferred sales charge and a noticeable 12b-1 fee. The investor with a small amount to invest would pay no front-end load for B shares and only 12b-1 fees, which presently cease. In fact, both the CDSC and the 12b-1 fees typically diminish to nothing after 6 to 8 years, and the shares convert to A shares ((A 12b-1 fee is an annual marketing or distribution fee on a mutual fund.)

Which of the following transactions may be made on margin?

Closed-end company shares may be purchased on margin like other listed securities that trade in the secondary market. Open-end shares (mutual funds), are continuous primary offerings, and new issues of securities are not marginable. Option contracts, like mutual funds, may be purchased IN a margin account, but may not be purchased ON margin (they must be paid for in full). Margin trading is not allowed in a custodial account.

Mr. and Mrs. Smith, both nearing retirement, want to maximize their income. They want to reallocate $100,000 of their $400,000 portfolio of securities for this purpose. Of the possible investment choices below, which would be the LEAST suitable recommendation given their investment objective?

Convertible bonds offer a lower coupon in exchange for the conversion feature, therefore is not a good choice for maximizing income.

A registered representative is opening both cash and margin accounts for a corporation. Which of the following documents will he need?

Corporate accounts are generally those established by the officers of a corporation. Such accounts require a copy of the corporate resolution naming the authorized person(s) and account trading limits (if any). If it is to be a margin account, a copy of the corporate charter and a signed margin agreement are also required.

If your client wishes to invest $50,000 in a portfolio of mutual funds, payment may be made via each of the following EXCEPT

Credit may not be extended on the purchase of mutual fund shares.

Which of the following best defines credit risk?

Credit risk is associated with debt securities and is the risk that an issuer may suffer financial failure and default on its obligation to an investor.

Which of the following are characteristics of exchange-traded funds (ETFs)?

ETFs trade on an exchange and, like all securities traded there, are priced based upon supply and demand. Virtually all ETFs track a specified index.

When operating a Keogh plan, a self-employed individual must make contributions for:

Employees must be covered under a Keogh plan if they are at least 21 years old, have been employed a minimum of 1 year, and work full-time (at least 1,000 hours per year). Keogh plans do not include employees who are under 21 or have just started working with the employer.

Under FINRA rules dealing with communications with the public, a money market mutual fund with a portfolio composed primarily of U.S. government short-term obligations and an NAV that has never varied from $1 per share, may state which of the following?

Even when fully invested in U.S. government securities, money market mutual funds are specifically prohibited from implying a government guarantee or insurance on their portfolios. The principal value of these instruments is continually subject to market value fluctuation. Mutual funds may state their past performance history with the caveat that past performance is not an indicator of future results.

The rules concerning a person from a FINRA member firm opening an account with another member are applicable to which of the following?

Everyone associated with a member firm in any capacity is governed by the rules on opening accounts with other member firms. Every associated person must inform the transacting company of his affiliation and must expect that firm to inform the employer. Uncles and friends of associated persons do not come under the rule.

Which of the following are among the purposes and objectives of FINRA?

FINRA is the self-regulatory organization (SRO) for the over-the-counter markets and for NYSE members. It enforces the Conduct Rules, provides mediation and arbitration services, and promotes self-discipline among members, all with the end in view of protecting the investing public.

Investment Company Directed Brokerage Arrangements provisions refer to:

FINRA rules prohibit members from favoring the sale of shares of any investment company on the basis of brokerage commissions received or expected to be received.

Asset-based distribution fees, also known as 12(b)-1 fees:

Fees charged under Section 12(b)-1 are assessed against the fund's annual average daily net assets and must be reviewed at least quarterly by the investment company's board of directors.

If an investor wishes to open a cash account in her name only and allow her husband to make trading decisions as well as withdraw cash and securities, she must instruct her broker-dealer to open a:

For a person other than the account owner to be able to withdraw assets, a full power of attorney is required. A limited power of attorney allows someone other than the account owner to trade in the account, but not to withdraw assets.

The ex-dividend date of a stock is Thursday, January 15. What is the record date?

Friday, January 16 The record date is one business day after the ex-dividend date.

A generic ad for an investment company placed by a broker-dealer would contain:

Generic advertising of investment companies presents a nonspecific introduction to investment company shares. A specific fund or investment company is not mentioned in generic advertising, but the broker-dealer who is placing the ad must be named.

Which of the following securities is NOT exempt from the registration provisions of the Securities Act of 1933?

Government securities, debt offerings with a maturity not exceeding 270 days, and intrastate offerings are exempt from the registration provisions of the 1933 Act. A stock being offered in three states would have to register with the SEC and with those states unless qualifying for an exemption as a federal covered security.

All of the following statements are true of both a growth stock and a growth stock mutual fund

Growth stock values are determined by supply and demand on the open market, but the value of a mutual fund share is its net asset value, which is simply calculated.

Which is TRUE about hedge funds?

Hedge funds are not required to register with the SEC and are not covered under the Investment Company Act of 1940. Hedge funds are only available to accredited investors, therefore, not available to small investors. There is no exemption for making a suitable recommendation to any investor.

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.

Your customer would like to do a 1035 exchange of his variable annuity for a life insurance policy and wants to be sure there will be no adverse tax consequences. You tell him:

IRS Code Section 1035 permits exchanges between annuities and annuities and life insurance and annuities. It does not allow exchanges between annuities and life insurance.

Albert, an accredited investor, invested $100,000 into a hedge fund last year. His investment is now valued at $110,000. An unfortunate set of circumstances requires him to sell his shares immediately. Albert's need to turn his investment into cash quickly results in

If Albert needs money in a hurry, he will probably find that his hedge fund has restrictions on redemption and it will take time to turn his investment back into cash. This is marketability, or liquidity risk, not to be confused with market risk.

Under SEC rules, a mutual fund that receives a request to provide a statement of additional information (SAI) must respond within how many business days?

If a customer requests semi-annual or annual reports or a statement of additional information (SAI), the fund must comply within three business days of the request.

Which of the following statements regarding the IRA 20% withholding requirement is TRUE?

If a participant receives a distribution from a pension plan and rolls it into an IRA within 60 days, the 20% withholding applies. The IRA 20% withholding is imposed on pension plan withdrawals (not retirement payouts) made payable to a participant. It is avoided if it is paid directly to a trustee. It does not apply in IRA-to-IRA rollovers or transfers.

As a result of a complaint brought by the Department of Enforcement, FINRA does not have the authority to:

If a respondent is found guilty at a hearing (or is the subject of an AWC or offer of settlement), FINRA may censure, suspend, or expel a FINRA member firm or a person associated with a member firm. It has no jurisdiction over other SROs, such as the regional exchanges, and may not prohibit any person from associating with them.

In a period of deflation, corporate bond prices are:

In a period of deflation, interest rates are falling. When interest rates drop, bond prices increase.

A client purchasing a single premium deferred variable annuity would expect to see that the contract called for

In almost all cases, single premium deferred variable annuities are sold with a contingent deferred sales load (CDSL). There is no maximum sales charge for variable annuities; the rule only states that the sales charge must be reasonable.

Which of the following is allowed in a mutual fund sales presentation?

It is appropriate for a representative to identify the tax status of dividend distributions in a mutual fund sales presentation. It is prohibited to make unfair comparisons, mark on the prospectus, or create new charts or graphs and use them without approval.

Which of the following retirement plans would allow insurance to be purchased within the plan?

Keogh plans, among others, do not allow insurance to be deposited in the plan, but once money has been contributed, it may be used, within the plan, to purchase insurance.Keogh plans, among others, do not allow insurance to be deposited in the plan, but once money has been contributed, it may be used, within the plan, to purchase insurance.

Which of the following statements regarding interest rates and price fluctuations of debt securities are TRUE?

Long-term bond prices move more in response to interest rate changes than short-term bond prices because of the compounding effect of interest on bonds with longer maturities. Short-term interest rates fluctuate significantly in response to Federal Reserve Board actions and other changes in interest rates. Although long-term rates also respond and move in the same direction, their movements are not as large.

The manager or adviser of an investment company may liquidate portions of the fund's portfolio:

Managers or advisers of investment companies buy and sell securities in accordance with the policies and objectives of the fund as stated in the prospectus.

Which of the following would be appropriate recommendations for a customer looking for income?

Many securities are purchased for income; these include stocks, bonds and mutual funds that pay consistent dividends such as a utility fund. The other answer choices are not purchased for income purposes: A long call option gives the right to buy stock at a designated price. An income bond is issued by a company coming out of bankruptcy and pays interest only if the corporation has enough income. A warrant is a certificate granting its owner the right to buy securities from the issuer at a specified price, normally higher than the market price when issued.

When an agent explains mutual funds to a prospective investor, which of the following statements may be made?

Mutual fund redemption values fluctuate according to the value of the securities in the portfolio. The tax liabilities associated with mutual fund switching may not be glossed over. While the redemption rules of the Investment Company Act of 1940 do make mutual funds easily redeemable, investors are not guaranteed to receive an amount equal to the original investment.

During a fact-finding interview with a potential client, your client information sheet is used to list detailed financial information. Which of the following items would be relevant in determining a prospect's net worth?

Net worth is computed by subtracting liabilities from assets. The IRA balance and the home entertainment center are assets. The credit card debt was a liability, but since it has been paid, it no longer appears on the financial statement. Income is important, but it does not figure into net worth until it is deposited into a bank or invested in something.

Which of the following securities is issued at par?

Of the securities shown, only treasury notes issue at par and pay semiannual interest. The others issue at a discount, pay no interim interest, and are redeemed at par.

In a contractual plan with completion insurance, upon the death of the plan participant, the plan custodian will:

Plan completion insurance provides for funds payable to the plan custodian, who, in turn, completes the plan and turns the shares over to the plan's beneficiary.

Stockholders can use what type of rights to maintain a proportionate ownership of a corporation when additional shares are issued?

Preemptive rights give stockholders the right to maintain their proportionate ownership in a corporation.

A corporation with a single outstanding bond issue chooses to refund this debt. This means that the corporation:

Refunding is synonymous with refinancing. When we refinance, we take out a new debt and use the proceeds of that debt to pay off the old one. Refunding is associated with callable bonds, callable at a premium.

If a customer does not pay for securities purchased in a cash account within the stated time limit, and owes the firm more than $1,000, Regulation T requires that the firm

Regulation T requires the customer to make payment 2 business days after the settlement date (regular way would be 2 business days plus 2 additional days). If payment is not made as required, the firm must liquidate unpaid positions and freeze the account for 90 days.

Which of the following is the least suitable mutual fund transaction?

Switching funds, unless there is a pressing reason for it, is rarely in the client's best interest. Better management is subjective and not a valid reason to switch.

A client of a SIPC member firm has recently liquidated his entire holdings of $425,000 of stock and has had the proceeds swept into a money market fund sponsored by that broker-dealer. If the firm were to go bankrupt, the insurance payout for this client would be

The $425,000 in a money market mutual fund is a security. All mutual funds are securities. Therefore, coverage is for the full $425,000. Had the investor just left the proceeds as a cash balance, SIPC coverage would have been limited to $250,000 and the investor would be a general creditor for the balance.

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 IRS considers this exchange to be a sale and repurchase. Any gain or loss on the bond fund shares must be recognized in the current year. Any share appreciation is classified as a capital gain and subject to taxation at capital gains rates. Because the exchange is made within the same family of funds, no new sales charge is applicable.

A registered representative with a Series 6 registration can sell which of the following:

The Series 6 is a limited license only allowing the sale of investment companies and variable products where a prospectus is required. This would exclude any secondary trading such as in ETFs and closed-end funds. The REIT is not an investment company so the Series 6 would not suffice.

A qualified profit-sharing plan offered by a corporation to its employees has all of the following features EXCEPT:

The amount of the contribution to the plan is deductible to the employer, not the employee. A major difference between a profit-sharing plan and a pension plan is that contributions to the former are not mandatory.

The contribution in a defined benefit plan will:

The contribution in a defined benefit plan will vary with the actual requirements to fund the specified benefit. These requirements are determined actuarially based upon a number of factors. Older, highly compensated employees benefit most from this type of plan.

The death benefit of a variable life policy must be calculated at least:

The death benefit must be calculated annually.

Which of the following interest rates is determined by the Federal government rather than market forces?

The discount rate is set by vote of the Federal Reserve Board. The other three rates are set directly or indirectly in response to market forces. the minimum interest rate set by the Federal Reserve for lending to other banks.

Which of the following will NOT be found in a final prospectus?

The final prospectus will include information that is material to investors in order for them to make an informed decision. The agreement among underwriters is a separate document that is between the members of the underwriting syndicate. Investors do not require knowledge of what is contained in this agreement.

Your client has a salaried, full-time position, but his employer does not offer a company retirement plan. He also has his own clock repair business, organized as a sole proprietorship, that earns less than his salaried position. If he wants to invest for his retirement, which of the following investments is an option for him?

The investor may start an IRA, assuming that he is younger than age 70½. He is also eligible to invest in a Keogh plan because he is self-employed.

A subscriber to a front-end load contractual plan is investing $100 a month for 10 years. What is the maximum sales charge that she will pay?

The maximum sales charge for any contractual plan is 9% over the life of the contract. $100 × 120 months = $12,000 × 9% = $1,080

To register new securities, an investment company must

The registration statement and prospectus filed with the SEC must disclose all material facts of the issuer and the security being issued. The SEC does not approve new issues, nor does any SRO.

A registered representative with a FINRA member firm must complete the regulatory elements of CE within how many days of his registration anniversary date?

The regulatory elements must be completed within 120 days of a person's second registration anniversary date and every three years thereafter.

An investor would like to make a long-term investment in a debt security whose duration is equal to its maturity. Which of the following AAA rated bonds should his registered representative recommend?

The simplest definition of duration is that it is the time it takes for a bond's cash flow (interest payments) to equal the maturity value. Since there is no cash flow from a zero coupon bond, its duration is equal to its maturity. Since the question says, "long-term", we're not going to choose an 8 month maturity over a 15 year one.

Written recommendations prepared by a research department for dissemination to the public need prior approval of:

This would be classified as a type of retail communication and as such, prior principal approval is required before use.

The Investment Company Act of 1940 contains a large number of definitions. One of those is of a diversified management investment company. To comply with the definition for a diversified management investment company, an investment company must diversify how much of its assets in a prescribed way?

To meet the definition of a diversified management investment company, at least 75% of the company's assets must be diversified so that no more than 5% of total assets are invested in the securities of one issuer and no single holding represents more than 10% of the voting securities of an issuer. There is no restriction on the remaining 25% of the assets.

Rank the following from least to most capital risk:

Treasury Bill, GNMA, Zero-coupon bond, Adjustable preferred stock Capital or principal risk is the potential for an investor to lose all his/her money (invested capital) under circumstances either related or unrelated to an issuer's financial strength. Preferred stock has less capital risk than common stock but more capital risk than debt securities.

If two customers are tenants in common in a joint account, which of the following statements are TRUE of this arrangement?

Under tenants in common, the tenants may make unequal investments in the account and may own a disproportionate interest in the property in the account. If one of the tenants dies, their assets are passed to their estate, not to the surviving joint tenant. The account must be frozen until this is carried out.

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

Under the Code of Arbitration Procedure, a dispute or claim is eligible for submission to arbitration up to 6 years after the date of the dispute's occurrence.

Under the Uniform Practice Code, regular way transactions for common stock settle on the

Under the Uniform Practice Code, regular way trades settle two business days after the trade date (T+2). Cash settlement for a trade occurs on the same day as the trade date.

Which of the following statements is TRUE concerning variable life separate account valuation?

Unit values are computed each day. Policy cash values are a monthly computation.

The GEM Growth Fund has announced that it will pay a dividend of $0.73 per share to all holders of record as of Monday, October 4. The ex-dividend date:

Unlike that of individual stock in the secondary market, the ex-dividend date for a mutual fund is set by the fund's board of directors (or the fund's principal underwriter). It commonly falls on the first business day after the record date.

A customer bought a bond that yields 6.5% with a 5% coupon. If the bond matures at this point, the customer will receive:

Upon redemption of a bond, whatever current interest rates may be, the investor receives par ($1,000) plus the final semiannual interest payment ($25 in this case), for a total of $1,025.

When a client's cash account is frozen, the client:

When an account is frozen, the client may still purchase, but must deposit the full purchase price before any order may be entered.

When interest rates are declining, which of the following funds is most directly affected?

When interest rates fall, bond prices rise. The other funds listed hold common stock in their portfolios, and common stock is not as directly affected by changes in interest rates as are debt instruments.

When an option is trading, all of the following are fixed EXCEPT

While the option is trading, the premium is variable - determined by supply and demand in the market. The other choices are characteristics of the option when issued.

A retiree, widowed and in his early 70's has adequate savings to meet large unexpected expenses. However, he has no pension or IRA, and in some months social security payments leave him short requiring him to dip into his savings and investments for recurring expenses such as his mortgage payment and utilities. With an already diversified portfolio he wishes there could be a way to add to his monthly income on a regular basis. He's willing to liquidate and allocate up to $100,000 of his current portfolio or cash out a life insurance policy if need be to meet this objective. Which of the following recommendations would be better?

With monthly income being the objective, GNMAs (Ginnie mae pass through security) would be deemed more suitable and should become a part of his existing portfolio. Each month GNMA certificates pass through a portion of ones principal and interest lending themselves to monthly income. While an annuity also makes monthly payments to annuitants, they are generally not deemed suitable unless all other retirement vehicle investments have been utilized first. Additionally, liquidating assets to purchase a VA or cashing out life insurance policies to do so, is almost always deemed unsuitable.

All of the following statements concerning IRA contributions are true EXCEPT:

You may contribute to an IRA only until the first tax filing deadline (April 15) even if you filed an extension.

An investor would like to make a long-term investment in a debt security whose duration is shorter than its maturity. Which of the following AAA rated bonds should his registered representative recommend?

Zero coupon bonds, since they make no interim payments, have duration equal to maturity. A bond that makes interim payments has a duration that is shorter than its maturity. Only the ABC bond is both long term and interest bearing.

Regarding the sale of a new issue, a customer becomes a restricted person under FINRA Rule 5130 if he is:

a salesperson who works for a supplier of the issuing corporation. Restricted persons under FINRA Rule 5130 include FINRA member firms and their associated persons, plus immediate family members.

Individuals licensed as Series 6 representatives:

deal in closed-end funds in the primary market only.

Your client is interested in purchasing the Class A shares of the BACH Investment Company, whose maximum sales charge is 5%. Which of the following choices best describes the sales load she would probably be charged on her purchase of the BACH?

front end load no deferred sales load

The Code of Procedure contains requirements for:

handling violations of the Conduct Rules.

An investor purchasing a convertible debenture would most likely NOT be seeking to:

maximize current income. Convertible bonds are more marketable to the public and as such, the issuer is able to offer a lower coupon. Therefore, if looking to maximize income, investors should purchase a nonconvertible bond (with a higher coupon/interest yeild).

FINRA fees paid by a member firm are based on which of the following

number of registered reps employed number of branch offices registered with finra

An investment adviser of a mutual fund may liquidate shares held in the fund's portfolio:

provided the liquidation is within the guidelines set forth by the fund's objective. A mutual fund investment adviser is given authority to select and make investments in the fund portfolio.

A registered representative must register as an investment adviser representative if he is:

providing investment advice and charging a fee for the advice.