Series 6 Top Off
A 50-year-old widow uses the proceeds of her late spouse's life insurance policy to purchase a single premium variable annuity in the amount of $100,000. Five years later, when the account is valued at $130,000, she withdraws $50,000. If she is in the 25% tax bracket, what will she pay the IRS for this withdrawal?
$10,500
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
$6,785.00.
A corporate bond went up from 98 points to 98.80. How much is the 80 basis points increase worth?
$8 0.8%
A customer bought 100 shares of ABC at $90 plus commission of $100. The payment due was $9,100. If the customer sold the shares six months later at $96, less commission of $100, what were the customer's cost basis and gain or loss?
$91 and a $400 short-term gain
To avoid tax and penalty, an IRA may be rolled over once every
12 months.
Upon submitting an S-1 registration statement for the initial offer of the corporation's common stock, the offer enters a cooling-off period of at least how many days?
20
A shareholder has $800 to invest in the ABC Technology Fund. If the shares are currently priced at $21.15 each, he can purchase how many shares?
37.825 shares
Jack Hart Equipment Corporation pays a $0.50 quarterly dividend and is currently trading at $50.00 a share. What is the company's current yield?
4%
Which of the following is a financial consideration?
A customer's monthly debt service
Which of the following communications must be reviewed and approved by a principal before it can be used?
A letter to be sent this week to 30 existing customers recommending a new service being offered by the firm
A registered representative of a FINRA member firm decides to use email to communicate sales ideas to clients and prospects. Which of the following statements correctly describes the treatment of email?
A thank you email sent to 25 existing customers is considered correspondence.
Which of the following would be most suitable for a couple who needs no current income and wishes to have $100,000 available in a college education fund in 15 years?
A zero-coupon bond
Which of the following corporations is most likely a growth company?
ABC
An investor is in the annuity period of a variable annuity he purchased 15 years ago. During the current month, the annuitant receives a check for an amount less than the previous month's payment. Which of the following events caused the annuitant to receive the smaller check?
Account performance was less than the assumed interest rate.
The variable portion of the death benefit in a variable life insurance policy is adjusted based upon the performance of the separate account. How often is this adjustment made?
Annually
Under the intrastate offering rule (Rule 147), when may a resident purchaser of securities resell them to a nonresident?
At least six months after the date of purchase
Last year, the bond market was profitable and ABC Fund had 70% of its assets in bonds. Next year, the fund's managers expect the stock market to do well and will adjust the fund's portfolio so that 60% of its assets will be invested in stock. ABC is probably what type of fund?
Balanced
Which of the following securities are exempt from registration under the Securities Act of 1933?
Banker's acceptance for use in import/export trading Commercial paper issued by a listed corporation Short term notes with maturities of less than 270 days All of these
Which of the following statements for both variable life and variable annuity contracts are true?
Both are insurance company products. Both have a separate account containing securities investments.
A customer believes that ABC's price will go up but does not have the money to buy 100 shares right now. How could the customer use options to profit from an increase in the stock's price?
Buy calls Write puts
Your customer, in his 30s, is extremely optimistic about business, not just in the United States but worldwide. He has received a $50,000 legacy and would like to invest it for long-term growth. Which of the following funds would make the most suitable recommendation?
Clements Global Equity Fund
An investor reviewing the annual report for the GHI Investment Company notices that the net asset value per share increased by $1.21, yet the asking price of the shares dropped during that period. What type of investment company must GHI be?
Closed-end fund
Sally, a registered representative, is going to prospect by making cold calls and has written a script to keep her on track and remind her to ask all the right questions. Which of the following is true?
Cold calling scripts must be approved by a principal before use.
Seabird Airlines owes JetA Fuel Corporation $250,000 for fuel delivered at the Seattle-Tacoma airport. Where would this figure be included on JetA's balance sheet?
Current assets
Withdrawals from a 401(k) plan without penalty are permitted for which of the following?
Disability Attainment of age 59½
Which of the following statements regarding a Section 529 plan is true?
Donors may either invest a lump sum or make periodic payments.
Your client has $50,000 to invest. His objective is monthly income that he can receive after he retires. Part of his customer profile stresses that he has had uncomfortable experiences in the past with the stock market and is not inclined to invest in anything that is based on stock market performance and would opt for principal protection instead. Based on the client's profile, which of the following would be the best recommendation?
Fixed annuity
Which of the following must be filed with the SEC to raise capital in a private placement?
Form D-Private placements are exempt transactions under Regulation D of the 1933 Act. The regulation requires an issuer to file Form D for the exemption. An S-1 registration statement is required for non-exempt offerings. Letters of intent are between an issuer and an underwriter. Form 1-A is filed for Regulation A offerings.
A record of a written complaint must be kept for how many years?
Four years
A record of all written complaints received by a broker-dealer must be preserved for how long?
Four years after resolution
Which of the following investments is most suitable for an investor seeking monthly income?
GNMA mutual fund
A broker-dealer participating in a sale of a new offering may do which of the following?
Gather indications of interest
If a customer has converted his convertible bond into stock, how has his relationship to the corporation changed?
He is now an owner of the corporation.
A 45-year-old woman wants the greatest possible monthly income with the preservation and stability of capital as secondary objectives. Which of the following investments would you recommend?
High-grade bond fund
Assuming that expense ratios for the funds listed are identical, rank the funds below in order, from lowest to potentially highest yield.
I. Municipal bond fund II. Government bond fund III. Investment-grade corporate bond fund IV. Speculative income fund I, II, III, and IV
A conservative customer is invested in a large-cap, value-managed equity fund. The stock market drops 10% due to a poor economic forecast for the country. Your customer is upset that his conservative mutual fund lost almost as much as the stock market. What risks does your customer need to understand? Financial risk Market risk Systematic risk Nonsystematic risk
II and III
Is it permissible, and if so, under which of the following conditions is it permissible for a registered representative to share in the profits of a customer's account?
It is permissible as long as it is an approved joint account and the profits are shared to the extent of the representative's financial contribution.
If an investor has purchased an immediate variable annuity, which of the following statements best describe the investment?
It was a lump-sum purchase. Distributions to the annuitant will fluctuate during the payout period.
Your married customers are both 42 years old, have two children ages 14 and 12, and they have spent the last 10 years accumulating money to provide for their children's education. Their oldest child will enter college in four years, and the customers are very cautious investors. If they need a safe investment that provides regular income to help them meet tuition payments, which of the following mutual funds is the most suitable for these customers?
LMN Investment-Grade Bond Fund
Your customer, age 37, makes $60,000 per year and wants to invest $10,000. He wants a conservative investment with annual returns in the 10%-20% range. Which of the following should you suggest?
Managing and lowering your customer's expectations
Which of the following securities has a duration shorter than maturity?
NewCorp, Inc., 8% 10-year bond maturing in 5 years Zero-coupon bonds, because 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 NewCorp bond is interest-bearing.
Which of the following would a customer examine to evaluate the credit quality of a new municipal security?
Official statement
Employee Retirement Income Security Act (ERISA) regulations apply to which of the following?
Private sector retirement plans Corporate retirement plan vesting requirements
For individual investors, which of the following is an advantage of investing in mutual funds rather than individual securities?
Professional investment management
A representative that has reasonable grounds to believe that options are a suitable investment for a client should take which of these next steps?
Provide the customer an option disclosure document
Which of the following represent rights of an investor who has purchased a variable annuity?
Right to vote on proposed changes in investment policy Right to vote for the investment adviser
Specific disclosures regarding surrender fees or deferred sales charges should be made for all of the following investments except
S&P 500 index exchange-traded fund (ETF)
Sarah, a registered representative, would need to file an updated Form U4 for which of the following occurrences?
Sarah, after landing several great new clients, moves to a larger home in the suburbs.
When investors trade securities, the activity happens primarily in which of the following markets?
Secondary markets
Which of the following new issues would require registration with the SEC under the Securities Act of 1933?
Sticky Glue, Inc., $100 million subordinated debentures of 2050
Which of the following regarding T-bills is true?
T-bills trade at a discount to par.
A client invested in the XYZ bond mutual fund five years ago. The client took dividend distributions in cash and reinvested capital gains distributions into more shares. Interest rates have declined over the past five years. Which of the following statements is most likely to be true?
The NAV per share of the XYZ bond mutual fund increased.
If a registered representative is suspended as a result of a hearing on a complaint issued by FINRA's Department of Enforcement, his first appeal would be to
The National Adjudicatory Council
Which of the following is not an advantage in buying listed call options, compared with buying the underlying stock?
The call has a time value beyond an intrinsic value that gradually dissipates.
If an investor buys a put option with a strike price of 25, which of the following is true?
The investor has a right to sell the underlying stock at the strike price and is bearish.
If a customer wishes to open a new account but declines to provide all of the financial information the member firm requests, which of the following statements are true?
The member firm may open the account if it is determined (by other means) that the customer has the financial resources to carry the account and that trading is suitable. The member firm may not recommend any transactions unless the representative is able, through the information available, to make a suitability determination.
How many times may a person fail the Series 6 exam before they are permanently prohibited from sitting for the exam?
There is no limit to how many times the exam may be attempted
How are complaints that are subsequently withdrawn reported to FINRA?
They are included in the quarterly reports to FINRA
Which of the following statements regarding qualified pension plans are true?
They must not discriminate. They must have a vesting schedule.
Your client retired from her job three years ago and placed all of the proceeds of her 401(k) distribution into a rollover IRA at her local bank. She is unhappy with her return and wishes to transfer the funds to an IRA at your broker-dealer. Which of the following statements regarding this situation is true?
Trustee-to-trustee transfers do not incur any tax consequences.
If the newspaper indicates that T-bill yields have gone down, this means that T-bill prices are
UP-If the yields have gone down, the discount has been reduced. Therefore, the dollar cost of T-bills has gone up.
Which of the following must ABC broker-dealer file with FINRA?
Website Radio advertisement
Information received from a customer upon opening a new account must be confirmed with the customer when?
Within 30 days of account opening
In constructing a profile for your customer, you wish to assemble information on both financial and nonfinancial investment considerations that affect your customer. Which of the following qualify as financial investment considerations?
Your customer's liquid net worth Your customer's monthly credit card payments
If a customer wishes to open a cash account in his name only and allow a third party to make trading decisions, but not withdraw cash and securities, he must instruct his broker-dealer to open
a cash account with limited power of attorney.
A limited registered representative (Series 6) may enter an order to purchase for their customers all of the following investments except
a closed-end management company that trades on an exchange
As a registered representative you know that red herring is another term for
a preliminary prospectus.
A mutual fund that takes special steps to shield its investors from loss of capital is
a principal-protected fund
All of the following terms are associated with a broker-dealer acting as a principal except
agency basis.
All of the following fall outside the definition of a research report except
an analyst's recommendation to divest all assets from a particular industry.
All of the following statements regarding municipal bond official statements are true except
an official statement must be delivered only upon customer request.
Disclosure of a firm's policies and procedures regarding customer privacy must be made no later than when the customer relationship is established and at least
annually.
Correspondence—one of the three categories of communication with the public—is defined as
any written or electronic communication that is distributed or made available to 25 or fewer retail investors within any 30-calendar-day period.
During a period of suspension, a member must
be treated as a nonmember by other members
The measure of a security's or portfolio's volatility, as compared to its market risk, is called
beta
All of the following disputes may be resolved using arbitration under the Code of Arbitration except
class action suits against a member.
All of the following securities are exempt from the registration provisions of the Securities Act of 1933 except
commercial bank holding company securities
All of the following statements about SEP IRAs are true except
contributions to SEPs are made with after-tax dollars.
In order to open an account a broker-dealer must collect all of the following information except
customer's job history.
All of the following information must be obtained from new individual customers except
educational background
Two spouses open a new account as tenants in common. All of the following statements regarding this account are true except
in the event of death, the decedent's interest in the account goes to the surviving party.
One of the benefits of using arbitration to settle disputes between member firms is that it
is relatively inexpensive.
The record date
is set by the issuing corporation to determine which stockholders will receive a declared dividend.
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
liquidity risk.
The preliminary prospectus for a new offering
must carry a legend—printed in red—that declares that a registration statement has been filed with the SEC but has not yet become effective
A couple wishes to start a withdrawal plan from a mutual fund they have owned for 12 years. As a registered representative, you must
never use charts or tables unless the SEC specifically clears their use
Distributions from net investment income paid to shareholders by an investment company, which meets the requirements to be a regulated investment company, are A)
nontaxable to the fund but taxable to the shareholder as dividend income.
A majority vote of the outstanding shares of an open-end investment company is needed in order to approve a change
of objective from diversified to nondiversified.
12b-1 fees may be used to cover all of the following charges except
portfolio management fee
A customer buys 100 shares of RFTQ at $10 per share. Several months later, the stock is trading at 4.60-5, at which time, the registered representative offers to buy back the stock from the customer for her own account at $9 per share. This action is
prohibited because FINRA does not allow registered representatives to guarantee customers against loss.
An investor who commits a sizable portion of her portfolio to long-term AAA-rated bonds would be exposing herself to
purchasing power risk.
Your customer has invested in a mutual fund with a 12b-1 fee. You explain to her that a charge will be deducted from his account
quarterly.
Funds that comply with Subchapter M are known as
regulated investment companies.
A mutual fund has a high turnover ratio. This is an indication that
securities are bought and sold frequently
A company filed a registration statement for an initial public offering of its common stock with the SEC. As a registered representative, you can
send a preliminary prospectus to each of your customers.
When comparing investment alternatives, all of the following must be considered except
state of incorporation of the companies.
The first date on which the buyer would not be entitled to receive a declared dividend being paid by a corporation is
the ex-date.
When a person dies and leaves securities to heirs, the cost basis to the recipient is
the fair market value on the date of the owner's death.
A fundamental analyst is concerned with all of the following except
trading volumes.
Regulation D mandates all of the following except
under no circumstances can more than 20 nonaccredited investors participate in the purchase of shares.
