Series 6

Under the conduit theory of taxation, which of the following statements are TRUE?

A fund is not taxed on earnings it distributes if it distributes at least 90% of its net investment income. Investors are taxed on earnings they receive in cash.

All of the following are exempt securities :

T-bills. bankers' acceptances. commercial paper.

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:

cash account with full power of attorney.

Each of the following is a characteristic of money market funds

A NAV of $1.00 per share. Offered without a sales load. Portfolio of short-term debt instruments.

If an investment representative hosts an investment seminar and intends to discuss general investment concepts and a specific mutual fund for which he has performance charts, which of the following are TRUE?

He may discuss the investment returns of the mutual fund using a specific time frame. He must disclose all material facts regarding the mutual fund to the audience.

A customer who seeks to supplement his retirement income and has a high risk tolerance would find which of the following securities most suitable?

High-yield bond funds

The ABC Corporation would like to raise capital via a Regulation D private placement. In order to qualify for an exemption from registering with the SEC under Rule 506, which of the following is true?

1. Advertising is allowed if only accredited investors may purchase the securities. 2. If selling to nonaccredited investors, general solicitation is not allowed.

Corporate debt securities (such as commercial paper) are exempt from registration under the Securities Act of 1933 if their maturities do not exceed how many days?

270 days.

You are reviewing an investor's balance sheet. Which of the following items would be found on a balance sheet and help you determine the client's net worth?

401(k) balance Credit card balance

Your client wishes to invest $50,000 into shares of the ACE Mutual Fund. This morning's financial news indicated that the POP for ACE was $10.86 while the NAV was $10 per share. The client's order is placed at 2:00 pm ET. On the basis of this information, you could confirm to the client a purchase of:

nothing yet, as you must wait for the POP to be computed based on the day's close.

The firm commitment is the most commonly used type

of underwriting contract. acts as dealer capacity

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. The firm may hold mail for the customer while she is traveling, but only for specific periods of time.

A customer of yours wants to buy 1000 shares of a little known oil company based in Texas but drilling for oil in Israel. The shares trade on NASDAQ but instead of securing them in that market from several different firms, your trading department contacts a different firm they know have the stock as a market maker for the oil company. The price to your customer is slightly more than the NASDAQ system but all 1000 shares are purchased in one lot. In this case, which of the following is true?

This is a violation called interpositioning

All of the following actions are potential violations

avoiding mention of recent negative publicity regarding an investment being offered to customers. assuring customers that an investment will outperform a market index over the next year. comparing a bond fund to an equity fund, for a customer whose objective is growth.

A brokerage order ticket must contain all the following

Account name and number C) Discretionary authority exercised D) Price and time limits if any

Sending a copy of a newspaper article with supervisory approval is .

permissible

TCB wants to offer $57 million worth of common stock in its home state and in three other states. To clear the offer for sale, TCB must file a(n):

registration statement.

When a customer, who is at least 59½, withdraws money from a traditional IRA that has been funded totally with deductible contributions:

the entire amount withdrawn is subject to taxation at ordinary income tax rates.

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

the name of the broker-dealer placing the ad, but not the name of the investment company.

An investor who has purchased a variable annuity has the right to:

vote on proposed changes in investment policy. vote for the investment adviser.

Which of the following is NOT a money market instrument?

Federal Farm Credit Bank note maturing in one year. Commercial paper issued by a finance corporation of a major automobile manufacturer. Municipal Construction Loan Note (CLN).

SEC regulations for securities issued by investment companies prohibit which of the following?

Open-end funds from issuing preferred stock. Open-end funds from issuing bonds.

Which of the following statements describing Section 529 plans is TRUE?

The maximum annual contribution varies from state to state.

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

They need not make equal investments in the account. They need not have equal interests in the property in the account.

A copy of trade confirmations must be maintained by the firm for:

Three years.

If a customer does not pay for a trade regular way, how much additional time does Regulation T give the broker-dealer to deal with the problem?

Two business days

Under which of the following terms does the underwriter act in a dealer capacity?

Firm Commitment

A unit investment trust has 90% of its portfolio invested in high-grade bonds with an average maturity of almost 25 years. If the industry consensus were that long-term interest rates were about to increase sharply, which of the following actions would most likely be taken by the UIT?

No action would be taken.

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 always results in a binding decision; mediation may not. A mediator in a dispute may not serve as an arbitrator in the same dispute.

According to the Conduct Rules, a FINRA member must do which of the following?

Authorize a registered representative to share in a client's profits or losses only in writing.