Series 6 questions
With regulation T, if payment is not given two business days after settlement date, broker dealer need not close out the position if the owed doesn't exceed
1,000
a mutual fund calling themselves a diviersified fund is limited to owning no more than __% of any one company
10%
Mutual fund prospectus should be updated every __ months, but is required to every __ months. Must be disposed of after __ months
12, 13, 16
Which of the following statements regarding variable annuities are true? 1 Number of accumulation units is fixed. 2 Number of accumulation units varies. 3 Number of annuity units is fixed at annuitization. 4 Number of annuity units varies throughout the distribution phase.
2 and 3
If a member firm is notified by FINRA that it must begin tape-recording the phone calls of its assistant representatives and registered representatives to existing and potential customers, it must do so within how many days of notification?
30 days
TSA synonymous with
403b
the maximum amount for a sales charge that an open-end fund can charge is
8.5% of POP
FINRA says member firm has to starter tape recording, how long do they have to begin
A firm has 30 days to secure the equipment and begin recording.
A customer bought a bond that yields 6.5% with a 5% coupon. When the bond matures, the customer will receive A) $1,025. B) $1,050. C) $1,065. D) $1,000 plus a call premium.
A) $1,025 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.
All of the following statements regarding Government National Mortgage Association (GNMA) pass-through securities are true except A) GNMAs are considered to be the riskiest of the agency issues. B) interest is taxed at all levels—federal, state, and local. C) investors receive a monthly check representing both interest and a return of principal. D) investors own an undivided interest in a pool of mortgages.
A) GNMAs are considered to be the riskiest of the agency issues
The KPF Corporate Bond Fund received $10 million in interest last year and no dividends from the securities that make up its portfolio. It had $500,000 in expenses and distributed $9 million of income directly to shareholders. Which of the following words applies to this fund? A) Regulated B) Equity C) Index D) Growth
A) Regulated Under Subchapter M
A mutual fund with a stated objective of growth and income from a portfolio of stocks and bonds in a particular ratio is known as A) a hedge fund. B) a balanced fund. C) a capital appreciation fund. D) a dual purpose fund.
A) balanced fund
At age 65, your customer purchased an immediate variable annuity contract. He made a lump-sum $100,000 initial payment and selected a life income with 10-year period certain payment option. The customer lived until age 88. The insurance company made payments to him A) for 23 years. B) until his initial payment of $100,000 was exhausted. C) for 10 years. D) at a fixed rate for 10 years and at a variable rate up until his death.
A) for 23 years. annuity with life will pay greater than fixed year certain or the life of the annuint
Your customer, age 45, is single and in search of maximum capital appreciation. She inherited a substantial amount of money a few years ago and has taken an active interest in managing her investments. Currently, her portfolio is diversified among common stocks, tax-exempt bonds, international investments, and limited partnerships. She has a long-term time frame and is not risk averse. Which of the following mutual funds is the most suitable for this customer? A) ATF Biotechnology Fund B) LMN Asset Allocation Fund C) ABC Balanced Fund D) NavCo Cash Reserves Money Market Fund
ATF Biotech Fund Because she is capable of assuming the higher risk and return potential of a speculative investment
Contribution limits for qualified plans A) are established by the employer and may not change after the plan is established. B) are established by the government and adjusted periodically. C) are established by the employer and are adjusted periodically. D) are not set; there are no such limits.
B) are established by the government and adjusted periodically. !!!!!!!!!!!!
John owns a nonqualified, tax-deferred annuity. When he retires, what will be the tax consequences of his annuity payments? A) His annuity payments are tax free. B) His annuity payments are partly taxable and partly tax-free return of capital. C) His annuity payments are partly taxable as capital gain and partly taxable as ordinary income. D) His annuity payments are all taxable as ordinary income.
B) His annuity payments are partly taxable and partly tax-free return of capital
Which of the following would be a reasonable comparison when choosing between two investments? A) Emerging markets fund and an international bond fund B) Small company fund and a small company index fund C) Certificate of deposit and a small company fund D) Money market fund and a large company stock fund
B) small company fund and small company index fund
In a variable life contract, which of the following has a guaranteed minimum? A) A minimum of four subaccounts from which to choose B) The death benefit C) No guarantees D) The cash value at age 65
B) the death benefit
Changes in payments on a variable annuity correspond most closely to fluctuations in A) the cost of living. B) the value of underlying securities held in the separate account. C) the assumed interest rate. D) the Dow Jones Industrial Average
B) the value of the underlying securities held in the separate account
All of the following persons are typically found operating in the secondary markets except A) OTC market makers. B) underwriting syndicates. C) exchanges. D) third market dealers.
B) underwriting syndicates
In promoting a variable life insurance contract to a customer, which of the following statements would be permissible? A) Variable life insurance gets you a higher death benefit for less money. B) If you already have a variable annuity, you can exchange it for this type of insurance with no adverse tax consequences. C) This product gives you the possibility of a greater death benefit in exchange for accepting investment risk. D) This product is a good investment for anyone wishing to provide for retirement.
C) This product gives you the possibility of a greater death benefit in exchange for accepting investment risk.
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 with yesterday's $44.95, and the bond moved from 95 to 95½, the portfolio increased in value by A) $100. B) $50. C) $55. D) $110.
C) $55 The gain would be $5 for the bonds (½ point for one bond is $5) and $50 for the stock ($0.50 × 100 shares) for a total of $55.
A customer has filed a serious complaint against your firm and is threatening to take the firm to court. When informed that he has signed a predispute arbitration agreement, he demands to see a copy of it. How many days does your firm have to supply the customer with a copy of the signed agreement upon receipt of his request? A) 3 business days B) 5 business days C) 10 business days D) 7 business days
C) 10 business days
A resident of a state who acquires stock pursuant to Rule 147 (intrastate offerings) is prohibited from selling the stock to a nonresident of that state for how many months? A) 9 B) 12 C) 6 D) 18
C) 6
Which of the following describes findings under the Code of Arbitration? A) Binding on members, but not on customers B) May be appealed to the SEC C) Binding on all parties involved in a dispute D) May be appealed to the National Adjudicatory Council
C) Binding on all parties involved in a dispute
When pension plan proceeds (employer contributions only) are rolled into a Roth IRA, what portion is taxable? A) Employee contributions B) Anything in excess of $5,000 C) Employer contributions D) 20% of the tota
C) Employer contributions
Strategic asset allocation is considered what style of portfolio management? A) Post-modern management B) Aggressive management C) Passive management D) Active managemen
C) Passive management
Industries that tend to be highly sensitive to inflation, deflation, and the ups and downs of business trends would best be described as A) Keynesian. B) growth. C) cyclical. D) defensive.
C) cyclical
Your customer, 62 years old, has unexpectedly received a large inheritance. He would like to generate income from it now, with as little bother on his part as possible. Which of the following might you recommend to him? A) Purchase a lump-sum deferred annuity B) Invest in a diversified portfolio of corporate stocks C) Purchase a lump-sum immediate annuity D) Purchase a periodic payment deferred annuity
C) purchase a lump-sum immediate annuity
Under what circumstances must an employee be given an opportunity to participate in a nonqualified deferred compensation plan
Completely up to the employer
Some mutual funds that are in a family of funds managed by the same company offer an exchange privilege. This privilege gives a shareholder the right to A) reinvest dividends and capital gains without a sales charge. B) switch shares to an investment company within the family of funds and defer the taxes on any capital gains due to the exchange. C) convert mutual fund shares to securities listed on the New York Stock Exchange. D) convert shares to a different mutual fund within the family of funds on a dollar-for-dollar basis
D) convert shares to a different mutual fund within the family of funds on a dollar-for-dollar basis
A widowed customer with no children has a portfolio invested in mutual funds valued at $250,000. The portfolio generates a monthly income of $1,600, an amount that exceeds her living expenses by $300. The investment portfolio is her sole source of income. Her agent recommends she sell $30,000 worth of her mutual funds and purchase a variable life insurance policy to take advantage of the tax deferral and death benefit features. This recommendation is A) suitable, because it offers a growth opportunity with a death benefit for a portion of her holdings. B) unsuitable, because a fixed annuity would better meet her needs. C) suitable, because it provides tax-deferral features. D) unsuitable, because she has no need of the death benefit.
D) unsuitable, because she has no need of the death benefit.
Which of the following is not an exempt issuer? A) The State of California issuing revenue bonds B) First National Bank of Washington, Utah, issuing certificates of deposit C) The U.S. Treasury issuing T-notes D) ABC Corporation issuing 180-day commercial paper
D) ABC Corp issuing 180-day commercial paper
Your customer is interested in investing in bonds or bond funds to generate more income. They have $250,000 to invest, proceeds from a reverse mortgage. This is A) a good example of a place to use an annuity. B) an acceptable and common practice. C) probably a good sale. D) probably an unsuitable use for this money.
D) Probably an unsuitable use for this money. Taking money out of your house is not suitable
The main benefit that variable life insurance has over whole life insurance is A) an adjustable premium. B) the availability of policy loans. C) a lower sales charge. D) the potential for a higher cash value and death benefit.
D) the potential for a higher cash value and death benefit
no load mutual fund does not charge a sales charge and accordingly can then sell shares at
NAV without the aid of an underwriter
An investment company's full notice of registration to the SEC must include
Officers and directors biographies Investment concentration Known plans for borrowing
a mutual fund must inform its shareholders of the right to reinvest dividends at the net asset value
annually
type of investment company securities is the most likely to have a NAV 90% of its offer price
closed-end company share
NII =
dividend income + interest income - expenses
balanced fund invest in both
equity and debt issues but not necessarily in equal amounts
asset allocation funds make investment decisions based on the fund manager's
expectations for movements in the market
investment company described as investing in either a fixed or nonfixed portfolio of securities, not actively managed and offering shares to investors that provide for an undivided interest in those securities
facts
money market funds must carry one of the top two ratings from the rating agencies and may not have maturities exceeding 13 months. assets must not exceed 5% of a single issuers securities
facts
securities being purchased and sold within the portfolio will not
have a changing impact on the mutual fund's NAV
The size of his fee will be affected by the aggressiveness of the fund's investment objectives and then also the success with which they are met
investment advisor
conversion privilege exchange requirements dictate that the redemption and purchase must be at the NAV
moving investments from fund to fund
The disclaimer stating that the SEC does not approve or disapprove of a securities issue must appear
on the cover of the prospectus
Equity income funds have as their main focus investments that
pay a constant dividend
exchange is part of what market
secondary market
