Series 6 AD Banker
Tax-sheltered annuities refer to which type of plan?
403(b) plans
All the following are true, except:
All changes in account name or designation must be initiated, reviewed, and approved by a registered representative
A 31-year old dentist is a renowned risk taker who does not plan to marry and wants to maximize the growth in their portfolio so that they can retire as early as possible. Which of the following funds should be the focal point of their mutual fund portfolio?
An aggressive growth fund
Which of the following bonds will have the highest duration?
Bond with 10-year maturity and 5% coupon
If an investor foresees a period of rising inflation, they might readjust their portfolio to include:
Common stock
All of the following are true about Roth IRAs, except:
Contributions can be made even if the individual has no earned income
Which of the following mutual funds would be subject to the greatest amount of business risk?
Corporate bond fund
Which of the following pieces of information is not required on the new account form?
Customer occupation and employer
When will member firms reach out to an account's designated trusted contact person?
If they suspect the customer is experiencing diminished mental capacity
A customer wishes to increase the current cash flow on their investments. Which of the following objectives will best meet this goal?
Income
Which of the following is not considered financial information?
Investment objectives
All the following are types of advisory accounts, except:
Margin account
In measuring the volatility of a large-cap stock, what is beta likely being compared to?
S&P 500
An investor will experience default risk in which of the following situations?
SDM, Inc. has recently declared bankruptcy and announced that it will miss only one semiannual interest payment to bondholders
All the following are types of joint account registration, except:
TOD
Why would a customer use a prime brokerage account?
To consolidate account paperwork
FINRA requires all the following on new account forms, except:
customers maiden name
Which of the following securities would typically have the longest duration at the time of issuance?
t bonds
The frequency and size of fluctuations in a security's value compared to changes in the overall market is the measure of:
volatility
A registered representative is considering recommending a municipal bond to a prospect. Before making the recommendation, the RR must attempt to obtain all the following information from the prospect, except:
work history
Broker-dealers and investment companies must provide their customers with an initial notice of its privacy policies and practices at the time the relationship is established, and every:
year after
An account is registered to 5 individuals as tenants in common. How many Social Security numbers will receive tax reporting information?
1
If a rollover occurs due to moving assets from a qualified employer-sponsored plan into an IRA in a lump sum, the same 60-day rollover rule applies, but the employer is required to withhold what % of the distribution and send this amount to the IRS?
20
If interest rates go from 8% to 9%, which would be most adversely affected?
20-year zero-coupon Treasury bond
Which of the following securities will have the lowest interest-rate risk?
26-week T-bill
A student, age 16, earns $3,000 per year working a few weeks over the summer. What is the maximum contribution this individual can make to an IRA?
3000
Which type of retirement plan permits employees of a small printing company to take a reduction in their present wages and defer that amount into a retirement account?
401k
What is the name of the plan that was created for eligible employees of public school systems and qualified 501(c)(3) nonprofit organizations, including religious organizations, colleges, universities, hospitals, and museums?
403(b)
A registered representative is meeting with a new client and is completing the client profile. The representative learns this individual has a total income of $100,000 and is in the 24% tax bracket. The total expenses for the household, which cover rent, car payment, food, clothing, and insurance total $30,000. What is the amount of discretionary income for this individual?
46000
Your customer has a vested interest in a pension plan. When their employment is terminated, they receive a lump-sum distribution from the plan. To avoid tax liability for this distribution, your customer would be able to rollover the distribution into an IRA without paying tax if the rollover is done within:
60 days of receipt
The account holder of a qualified plan must take required minimum distributions (RMDs) no later than April 1st of the year after the account owner turns age:
72
Before an investor considers making long-term investments, what should they have in place?
A cash reserve fund
Which of the following must sign a new account form?
A principal of the member firm
Which of the following statements is false regarding JTWROS registration?
A specific percentage of ownership is assigned to each account owner
Which of the following regarding tenants in common (TIC) registrations is correct?
A trade may be authorized by any account owner
Firms are required to establish written procedures to maintain a system of supervising the activities of:
Associated persons
A client, age 66, is living on Social Security payments in addition to pension income. The client recently inherited $300,000 and is seeking an investment that will provide growth and income. The client is willing to accept some risk to achieve this objective. Which of the following is the most suitable for this client?
Balanced fund
When a customer holds multiple brokerage accounts within the same firm, how can they transfer securities between the accounts?
By using a firm specific internal transfer form or a signed letter of instruction
A 74-year-old retired teacher asked their registered representative for alternative investment ideas for money they have in a modest savings account. The client has been disappointed with the low rate of interest paid by the bank but doesn't want to take any risks. Which of the following investment objectives should the registered representative check on the new account paperwork?
Capital preservation
A registered representative with ABC Brokerage met with a new customer and immediately told them that they need to purchase $20,000 worth of XYZ stock right away. Which of the suitability standards did the RR violate?
Customer-specific suitability
For purposes of the FINRA Know Your Customer Rule, facts essential to knowing the customer are those required to do all the following, except:
Determine if the client is familiar with FINRA & SEC rules
What type of retirement plan does ERISA require employers to establish for employees?
ERISA does not require an employer to establish any type of retirement plan for their employees
Which of the following statements is correct regarding a SIMPLE plan?
Employers with 100 or fewer employees may establish a SIMPLE plan
A married couple in their early 30s wants to save $25,000 as a down payment on a home, which they hope to purchase in the next year. Their total household income is $200,000, and they are both new to investing. All the following are suitable recommendations, except:
Equity Fund
A registered representative meets with a retired customer, age 62, to discuss supplementing their retirement income. The customer has no outstanding debts and a moderate portfolio that contains growth stocks and investment grade bonds in addition to an IRA and corporate pension plan. The customer has a moderate risk tolerance and states they are seeking an investment that can provide a moderate level of income. Which of the following funds should the representative suggest to this customer?
Equity income funds
When evaluating your client's investment limitations, you must do all the following, except:
Evaluate the benefits of diversification and dollar-cost averaging
An American citizen who likes to dabble in overseas investment markets is concerned that the income they receive from their shares of the Japanese Motor Company, trading on the Tokyo Stock Exchange, will lose value even though the company is paying the same dividend as last year. What is this investor concerned about?
Exchange-rate risk
How long must broker-dealer customer account records be maintained?
For as long as the customer remains at the firm, and then retained for another 6 years after the account is closed
What type of risk is primarily associated with fixed-income securities, creating an inverse relationship between interest rates and security pricing?
Interest-rate risk
Which of the following statements about market risk is true?
It is inherent when investing in the market since the entire market is affected
Two individuals wish to establish a joint account that will provide an equal undivided interest in the account. What type of account registration is most suitable?
JTWROS
2 individuals wish to open a joint account to purchase securities, with a provision that should 1 of them die, their interest would automatically be transferred to the other. What is this account known as?
Joint tenants with right of survivorship
A recently married couple with no investment experience wishes to invest the $3,327 in cash they received in wedding gifts. Considering the couple has no additional liquid assets, what investment option is the best recommendation?
Keep the funds liquid (in the bank) to meet emergencies that may arise in the future
IRA funds can be invested in all of the following, except:
Life insurance
A customer purchases a security in a cash account and does not pay for the purchase within the required time. What will the broker-dealer likely do?
Liquidate the position and freeze the account under Regulation T
An investor who owns a thinly traded stock in the secondary market has exposed their portfolio to:
Liquidity risk
The possibility that the value of an investment will fall due to a decline in the market as a whole and is unrelated to any adverse conditions of an issuer is known as what type of risk?
Market
What type of risk cannot be addressed by diversification?
Market risk
All the following information is included on an order ticket, except:
Markup or commission charged
What does limited discretion allow a registered representative to do?
May only enter buy or sell orders in the account
A customer of MNT Brokerage places approximately 4 trades in their account per month. How often must MNT send this customer an account statement?
Monthly
Regarding a tenants in common account, which statement is false?
Neither co-tenant can devise or gift their interest
Proper diversification could eliminate or significantly reduce which of the following types of risk?
Nonsystematic risk
What is liquidity risk?
Not being able to sell or redeem the investment quickly
In a broker-dealer, where are new accounts and retail communications approved?
OSJs
All the following statements regarding wrap accounts are true, except:
Only a broker-dealer is permitted to sell wrap accounts
All the following are contained in a confirmation statement, except:
Profit or loss on the security position traded
Which type of qualified plan does not specify a predetermined fixed contribution, but is still classified as a defined contribution plan?
Profit-sharing plan
What is the wrong way to deal with nonsystematic risk?
Purchase call options on existing equity positions in a particular industry
Which of the following is an example of how to deal with nonsystematic risk?
Purchase investments in different companies and industries
All the following components make up the requirements for FINRA's suitability obligation rule, except:
Qualitative suitability
A registered representative with DEO Securities has a discretionary account with a customer that owns shares of the ABC Growth Fund but is seeking more stable growth. The RR agrees that a more conservative investment would be in the client's best interest. For the next 10 months, the RR moves the client's money, a month at a time, into a new blue-chip fund at a different fund family to see which investment product is a "good fit." Which of the following suitability standards did the RR violate?
Quantitative suitability
While a single recommendation may be suitable for a customer, many similar recommendations might not be, depending on the customer's objectives, needs, and ability to pay for the recommended transactions. This is known as:
Quantitative suitability
Under FINRA Rule 2111, which suitability obligation requires that member firms review the features, returns, costs, and risks of recommended products and strategies, and that representatives must have a full understanding of the products/strategies prior to making a recommendation?
Reasonable-basis suitability
What would be considered appropriate conduct for a FINRA member?
Recommending new financial products to a customer
Retirement plans can be funded by all of the following, except:
Spousal contributions
A registered representative has a client that is preparing to buy their first home in about 2 years. According to the client profile, their main investment goal is aggressive growth. Which of the following investments would be suitable for the majority of the client's savings?
T-bills
What is a unique feature of a Roth IRA compared to a traditional IRA?
Tax-free distributions may be postponed beyond reaching the age of 72
What happens if a customer refuses to provide all requested information at the time of account opening?
The account may still be opened at the firm's discretion
A client made $10,000 of nondeductible contributions to their traditional IRA over the last 30 years. Now, at age 54, they need to begin withdrawing from this IRA that is currently valued at $30,000. If they withdraw the entire $30,000, which of the following is true?
The client will be responsible for a $2,000 IRS penalty and taxable income of $20,000
No broker-dealer or registered representative may receive or deliver a check or other withdrawal draft from a customer's checking or savings account without:
The customer's written authorization
Which of the following statements is true regarding account closure procedures upon the death of a customer?
The firm must cancel all open orders and freeze the account
Which of the following statements about a joint tenants with rights of survivorship account is false?
The joint tenants must to be related to one another
Which of the following statements is true regarding interest-rate risk?
The longer the bond's maturity, the greater the interest-rate risk
Deductibility of contributions to a traditional IRA may be limited depending on all the following factors, except:
The state in which the taxpayer lives
A married couple owns mutual fund shares as joint tenants with right of survivorship. If 1 spouse dies, what will happen to their shares?
The surviving spouse will own the shares
A DK notice is issued under which of the following circumstances?
There is a discrepancy in confirmations between dealers
Which statement about market risk is not true?
This risk can be totally avoided by proper portfolio management
The major risk a client faces when giving a registered representative discretionary authority is:
Transactions that are excessive in size or frequency
In which securities can the greatest interest-rate risk be found?
Treasury Bonds
An investor is seeking the highest current income possible with the lowest default risk on the portfolio. This investor has specifically expressed concern regarding loss of capital. Which of the following recommendations is suitable for this specific investor?
U.S. government bond fund
An individual, age 45, is meeting with a registered representative to discuss retirement planning. This individual has been participating in a 401(k) plan for the past 20 years and is contributing the maximum allowed. Recently the client received an inheritance of $100,000. Part of the money was used to pay off a credit card, and now the client wishes to invest the remaining $90,000 for retirement. The individual has a moderate risk tolerance and the only concern that was expressed was having a sufficient income stream at retirement that is inflation protected. What is the most suitable recommendation for this individual?
Variable annuity
Continuous investments of new money combined with reinvestment of dividends and capital gains is a method for accomplishing an investment objective of:
growth
Order tickets must include all the following information, except:
investment objective
All the following must be obtained by a registered representative when opening a new account for a customer, except:
mailing address
To protect the account assets of seniors, firms need to be on alert for all the following, except:
market risk
A firm may require all the following documentation upon death of an account holder, except:
obituary
A business typically experiences periods of high profits followed by periods of little or no profit. What may the business want to consider as a qualified plan to offer to employees?
profit-sharing plan
It has been over 6 months since the last activity in a customer's account. How often must the broker-dealer send account statements to this customer?
quarterly
Whenever an individual receives monies from a qualified plan, the IRS allows the individual to place the monies into an IRA without having to pay income tax on the amounts placed into the IRA. What is this procedure?
rollover
