Series 6 Prep
A FINRA member may not give concessions or discounts on the purchase of mutual fund shares to anyone other than: A high net worth clients B another member firm C institutional clients D officers, partners and directors of issuers
B
A client has made non-deductible contributions of $30,000 to an IRA over 11 years. The client is age 65 and has begun to take distributions from the IRA. Which statement about the income tax consequences of these distributions is TRUE? A The distributions are fully taxable as ordinary income B The distributions are partially taxable as ordinary income and partially exempt from tax C The distributions are partially taxable as ordinary income plus 10% penalty tax and partially exempt from tax D The distributions are entirely tax exempt
B
A corporation that has a market capitalization of $400,000,000 would be an appropriate investment for a: A Micro Cap Mutual Fund B Small Cap Mutual Fund C Mid Cap Mutual Fund D Large Cap Mutual Fund
B
A long term client, age 60, has a $100,000 lump sum to invest. The client plans on leaving the money to his son, who is currently 35. The father does not want the son to incur any tax liability from the inheritance. What would be the best recommendation? A A municipal bond fund B A global fund C A variable annuity D A fixed annuity
B
A new client, brings in a check issued by an insurer with proceeds from a partial surrender of a variable annuity. The client asks the registered representative to initiate a tax-free exchange into a new annuity funded by the check proceeds. What action should the registered representative take? A Complete the Section 1035 exchange paperwork and accept the insurance company check to fund the new annuity B Decline the transaction because a Section 1035 exchange may not be funded with a check from the previous annuity C Complete the Section 1035 exchange paperwork and ask the customer to deposit the insurance company check into his bank account and write a personal check to the registered representative's firm for the new annuity D Decline the transaction because the client must surrender all, not just part, of his original contract to qualify for a Section 1035 exchange
B
A registered representative in your firm has died and one of his customers with a $100,000 account has been turned over to you. You should: A complete a broker to broker account transfer form B update the new account (client information) form C verify all account trading during the preceding 3 months D obtain an inheritance tax waiver
B
All of the following actions require a vote of the common stockholders EXCEPT: A a stock split B a stock dividend C issuance of convertible bonds D acceptance of a buy-out offer for stock
B
All of the following are characteristics of Defined Benefit Plans EXCEPT: A annual contribution amounts may vary B if the corporation has an unprofitable year, the contribution may be omitted C the annual benefit amount is fixed at retirement D the adoption of this type of plan benefits key employees who are nearing retirement
B
All of the following contracts offer the holder investment options EXCEPT: A Variable Annuity B Universal Life C Variable Life D Variable Universal Life
B
All of the following statements concerning a whole life insurance policy are correct EXCEPT: A premiumpayments are level and fixed for the insured's lifetime B thecash valueincreases based on equity investments C thedeath benefitis fixed and guaranteed for the insured's entire life D policy loanswill reduce the amount paid at death
B
All of the following statements concerning the compensation received by the underwriter for a mutual fund are correct EXCEPT: A Upon receipt of a customer order, the underwriter buys the shares at NAV from the fund and then sells them to the customer at POP B The underwriter and selling group share in a brokerage commission for selling shares C The underwriter receives an underwriter's concession from the sales charge set forth in the fund prospectus D The underwriter shares the sales charges with the selling group
B
All of the following statements concerning the valuation of accumulation and annuity units are correct EXCEPT the: A value of the accumulation units will increase if the assets in the accumulation account yield only 1% B value of the annuity units will increase any year in which the market prices of securities in theseparate accountincrease C value of annuity units will increase only if the yield on the separate account assets exceeds theAIR D issuer determines the value of an accumulation unit independently of the value of an annuity unit
B
An "accumulation unit" of a variable annuity contract is a(n): A share of common stock representing an interest in the underlying portfolio B accounting measure of the owner's interest in the separate account C accounting measure of the annuity amount to be received by the owner D share of beneficial interest in a fixed portfolio
B
An unregistered hedge fund creates a website and uses it to promote itself to investors. Potential investors are invited to enter a password-protected area where they can get details about the fund's investment strategy and performance. Which statement is TRUE? A This is prohibited under SEC rules B This is permitted under SEC rules as long as the potential viewer completes and signs an accredited investor questionnaire before being given the password to enter C This is permitted under SEC rules as long as the potential viewer completes and signs an arbitration agreement before being given the password to enter D This is permitted without restriction
B
At the time of annuitization, what does the holder of the variable annuity contract receive? A A fixed number ofannuity unitsequal to the number ofaccumulation units B A fixed number of annuity units with the number based on the total value of all accumulation units C A varying number of annuity units with the number based on theAIR D A lump sum payment equal to the total value of the annuity units
B
Exchange Traded Funds (ETFs) are: A registered under the Investment Company Act of 1940 as closed-end management companies and regulated by the SEC and FINRA B registered under the Investment Company Act of 1940 as open-end management companies and regulated by the SEC and FINRA C registered under the Investment Company Act of 1940 as closed-end management companies and regulated by FDIC and the Department of Treasury D registered under the Investment Company Act of 1940 as open-end management companies and regulated by FDIC and the Department of Treasury
B
If a mutual fund sells appreciated securities from its portfolio, it will have: A increased investment income B acapital gain C ordinary income D passive income
B
If an investor buys mutual fund shares on the ex-dividend date, then the investor will: A receive the dividend and will be liable for tax on it B not receive the dividend and will not be liable for tax on it C receive the dividend through an increased net asset value per share D not receive the dividend but will be liable for tax on it
B
Mailings of customer account confirmations and statements: A can be suppressed at the request of both the customer and the representative B cannot be suppressed at the request of neither the customer nor the representative C can be suppressed at the request of the representative, but not the customer D can be suppressed at the request of the customer, but not the representative
B
Stock specific risk is the same as: A systematic risk B non-systematic risk C credit risk D market risk
B
The major tax advantage of non-qualified variable annuities is the: A tax deductibility of contributions B tax-deferral of the earnings build-up in the separate account C taxation of distributions at long term capital gains rates D tax exemption given to distributions from the separate account
B
The minimum asset size threshold for an investor to be considered an "institutional client" for purposes of the FINRA communications rules is: A $25 million B $50 million C $75 million D $100 million
B
Ultimate responsibility for the actions of the officers of the fund and the decisions of the investment adviser rests with the: A fund adviser B board of directors of the fund C Securities and Exchange Commission D investment manager
B
Under FINRA rules, an open-end management company that does not offer its shareholders breakpoints and rights of accumulation may charge a maximum sales charge of: A 6.25% B 7.25% C 8.00% D 8.50%
B
Under the Investment Company Act of 1940, a mutual fund may borrow: A no amount, but the fund can issue shares continuously B up to one-third of its net assets C up to two times its net assets D up to three times its net assets
B
When opening a custodial account under the Uniform Gifts to Minors Act, which Social Security number appears on the account? A The custodian's Social Security number B The minor's Social Security number C Both the custodian's and the minor's Social Security numbers D Neither the custodian's nor the minor's Social Security number
B
Which benefit must a mutual fund offer to its shareholders if it wants to charge the maximum sales charge? A Conversion privilege B Rights of accumulation C Dollar-cost averaging D Asset-based sales charge
B
Which of the following mutual funds is a blend fund? A Growth fund B Small-capindex fund C Large-capvalue fund D Ginnie Mae fund
B
Which of the following owners of the securities of ABC Corporation will be entitled to subscribe to stock rights for a new issue of common stock? The holders of ABC: A unsecured bonds B common stock C warrants D preferred stock
B
Which of the following statements concerning the payment of 12b-1 fees for promotional expenses is (are) correct? A The fees are paid by the custodian bank B The fees are paid from the assets of the fund C The fees are paid by the shareholders in the sales load D The fees are paid to the fund manager
B
Which of the following transactions CAN be tax-free? A Exchange a variable annuity for a mutual fund B Exchange a variable annuity for a fixed annuity C Exchange a variable annuity for a universal life insurance policy D Exchange a variable annuity for a variable life insurance policy
B
Which statement about money purchase retirement plans is FALSE? A The plan must be established by the employer B The plan can discriminate and be offered only to top management C The maximum deductible annual contribution is 25% of income up to a maximum dollar amount D The annual contribution must be made by the employer, regardless of whether the employer is profitable or not
B
Which statement about restricted securities is FALSE? A The issuer may not offer restricted securities to the general public B The issuer must register restricted securities with the SEC C Restricted securities are available to accredited investors D Restricted securities are usually purchased at a discount as compared to equivalent registered securities
B
Which statement best describes the expense ratio for a mutual fund? A It is the portion of operating costs the fund pays as a management fee B It is operating costs divided by average net assets C It is the adviser's fee added to the custodial fee divided by the public offering price D It is net investment income less operating costs divided by the number of outstanding shares
B
Which statement concerning industrial revenue bonds is TRUE? A These bonds are not really revenue bonds because they are backed by special taxes B The interest on these bonds is subject to federal income tax unlike other municipal bonds C These bonds are issued for development projects in the public interest so they are not private purpose bonds D These bonds are similar to general obligation bonds because they require voter approval before they can be issued
B
Which statement describes bankers' acceptances? A They are a means for financing transactions in ADRs B They are a means for financing transactions in foreign goods and services C They finance long-term needs of corporate issuers D Broker-dealers use them to obtain financing for margin accounts
B
Which statement is TRUE regarding a variable annuity offering a GMIB? A The contract guarantees a minimum death benefit if the contract holder dies before the separate account is depleted B The contract guarantees a minimum growth rate for the separate account at the time of annuitization C The contract guarantees a minimum number of annuity payments D The contract guarantees a maximum rate at which the contract expenses can grow
B
Which statement is TRUE regarding bond price volatility? A High coupon, long maturity bonds have the greatest price volatility B Low coupon, long maturity bonds have the greatest price volatility C High coupon, short maturity bonds have the greatest price volatility D Low coupon, short maturity bonds have the greatest price volatility
B
Which statement is TRUE regarding the income tax treatment for lump-sum surrenders of non-qualified variable annuities? A The entire amount is subject to tax and applicable penalties B Only the earnings are subject to tax and applicable penalties C Only the cost basis amount is subject to tax and applicable penalties D Capital gains are excluded from income tax; but dividend earnings and cost basis are subject to income tax and applicable penalties
B
Z Great Mutual Fund has a 12b-1 fee. Which of the following items can Z Great Fund charge to shareholders under this fee? A Operating expenses B Sales literature C Management fees D Sales loads
B
A client wants to settle a dispute with a representative, however the client does not want the decision to be binding if she disagrees with the outcome. In order to do this, the client should choose which procedure to settle the dispute? A Litigation B Arbitration C Mediation D Mitigation
C
A customer buys a variable annuity and elects a payout option of Life Contingent Payments. The insurance company's mortality tables show that this person's expected remaining life is 20 years. This means that payments will continue for: A the annuitant's life, not to exceed 20 years B the annuitant's life, but if he dies before 20 years elapse, payments continue to his heir(s) C the life of the annuitant and then cease D 20 years to the annuitant or beneficiary
C
A customer owns 3,250 accumulation units in a separate account, with a value of $7.70 each. She wishes to retire and begin taking a life annuity. The annuity units are currently valued at $2.28 each. Which statement is true? A She will receive a payment of $25,025, with which she can buy as many annuity units as she wishes B She will receive 3,250 annuity units in exchange for the accumulation units C She will receive 10,975 annuity units in exchange for the accumulation units D She will keep the 3,250 accumulation units and use them to fund the annuity
C
A customer paid premiums of $25,000 on a variable life policy. She surrendered the policy and the insurance company paid her $39,000. The gain in cash value during the last year was $2,000. What amount of gain will the customer report for federal income taxes in the year of surrender? A $0 B $2,000 C $14,000 D $39,000 Explanation The cost basis in the contract is the total amount of premiums paid of $25,000. The policy was surrendered for $39,000 paid by the insurance company. The taxable gain is $39,000 - $25,000 = $14,000.
C
A municipal issue of a state backed by that state's income and sales taxes, is a: A Special tax bond B Special assessment bond C General obligation bond D Moral obligation bond
C
A registered representative takes a customer out to a dinner and a show, spending $180. This activity is: A a violation of FINRA rules B permitted because less than $100 was spent on a per-person basis C permitted if it complies with the firm's policies and procedures D permitted under all circumstances
C
A school teacher has a non-qualified variable annuity in which he has invested $8,000. The plan is currently worth $14,000. The teacher decides to surrender and take a partial withdrawal of $8,000. What is the tax treatment? A The withdrawal is considered to be areturn of capital, therefore it is not taxed B Since the cost basis in the account is "0," the entire withdrawal will be taxed as capital gain C $2,000 of the withdrawal will be considered to be a return of capital; the balance will be taxed as ordinary income D Since the cost basis in the account is "0," the entire distribution will be taxed as ordinary income
C
A younger potential new client comes into your office to discuss opening an account. She is single, with no children and has an important job. The clint is a high earner who already has a fully-paid condominium in which she lives and has substantial liquid assets. After discussing her investment objectives, investment time horizon, and risk tolerance, you both agree that a speculative growth mutual fund would be a suitable recommendation. Which of the following investments is appropriate? A Large capitalization fund B Income fund C Emerging technology fund D High yield fund
C
All of the following are permitted investments in Individual Retirement Accounts EXCEPT: A U.S. minted gold coins B U.S. issued securities C Commodity futures D Bankcertificates of deposit
C
All of the following statements about Simplified Employee Pension (SEP) IRAs are correct EXCEPT: A they permit higher annual contribution limits than Traditional IRAs B they are easier to administrate than ERISA qualified plans C they are only available to businesses with 100 or fewer employees D they permit the employer to change the annual contribution percentage
C
All of the following statements are TRUE when comparing mutual fund generic advertisements to tombstone advertisements EXCEPT: A generic advertisements may not identify a specific security while tombstones can identify a specific security B neither generic advertisements nor tombstones are an offer to sell a security C both generic advertisements and tombstones may include the name of the fund underwriter D generic advertisements do not include information on how to obtain a fund prospectus while tombstones must include this information
C
An individual holding a Series #6 license may sell all of the following investments EXCEPT: A Management companies B Unit investment trusts C Real estate investment trusts D Face amount certificates
C
An open-end investment company can invest in all of the following assets EXCEPT: A Options B Shares of otheropen-end companies C Real estate D Commodities
C
Assets in a customer account may be subject to a delay in transfer to another brokerage firm if they are held in: A the name of that customer B street name at DTCC (Depository Trust and Clearing Corporation) C proprietaryproducts at that broker-dealer D non-proprietary products at that broker-dealer
C
Exchange traded funds are NOT: A marginable B negotiable C redeemable D diversifiable
C
FINRA requires registered representatives to do all of the following EXCEPT: A notify the member firm in writing if he or she wishes to open an account at another broker-dealer B provide the employing firm with written notification prior to engaging in an outside business activity C obtain oral permission from his or her employer prior to effecting a private securities transaction D obtain written approval of each piece of correspondence about securities sent to customers
C
If a corporation pledges shares of a wholly-owned subsidiary as the backing for a bond issue, the bond is known as a(n): A Equipment trust bond B Mortgage bond C Collateral trust bond D Subsidiary trust bond
C
If a fund offers a reinstatement privilege, all of the following statements are true EXCEPT: A replacing withdrawn funds generally must occur within 30 days B the investor may replace the withdrawn funds with no sales charge C shareholders may exercise the privilege once every two years D investors will find the terms of the reinstatement privilege in the fund prospectus
C
If an individual joins a broker-dealer to sell wrap accounts, under uniform state law, this person: A must register in the state and pass the Series #63 examination B must register in the state and pass the Series #65 examination C must register in the state and pass both the Series #63 and Series #65 examinations D is not required to pass any state licensing examinations as long as the federal Series #6 or Series #7 examination is passed
C
In the financial media, a mutual fund shown with the symbol "p": A isno load B isfront end load C has a12b-1 plan D has noredemption fee
C
Interest income received from Treasury obligations is: A subject to federal, state and local income tax B exempt from federal, state and local income tax income tax C subject to federal tax and exempt from state and local tax D exempt from federal tax and subject to state and local tax
C
The ACME Construction Company has decided to provide a pension plan for its employees. ACME is debating whether to install a defined benefit or a defined contribution plan. ACME may decide to install a defined benefit plan because this plan: A excludes employees earning less than an amount defined by the company B must vest 100% of the contributions after 1 year of service C makes the largest contributions for high salaried employees close to retirement age D bases contributions solely on each employee's current earnings
C
The income received from municipal securities is generally: A exempt from state and local income taxes B exempt from local income taxes only C exempt from federal income taxation D fully taxable by federal, state, and local governments
C
The writer of a call option on securities has the: A right to deliver securities at a fixed price for a limited time B right to buy securities at a fixed price for a limited time C obligation to deliver securities at a fixed price for a limited time D obligation to buy securities at a fixed price for a limited time
C
This year ZZZ Corporation is facing a shortage of cash, and the board of directors has decided not to declare dividends on its preferred or common stock. The board: A may avoid default by also not paying interest on its bonds B must pay only part of the interest due on its bonds C must pay the full interest due on its bonds or face default D must pay additional interest on its bonds this year
C
Under the Investment Company Act of 1940, an investment adviser's contract is initially set for: A 1 year; and is subject to renewal every year thereafter B 1 year; and is subject to renewal every 2 years thereafter C 2 years; and is subject to renewal every year thereafter D 2 years; and is subject to renewal every 2 years thereafter
C
When a corporation borrows funds, which of the following is most likely to occur? A There is a decrease incredit risk B There is a decrease inpurchasing power risk C There is an increase in credit risk D There is an increase in purchasing power risk
C
When a corporation issues debentures, the collateral is: A the corporation's land and buildings B all corporate assets C the corporation's promise to pay D all tangible corporate assets
C
When taken at retirement, withdrawals from a 401(k) plan are: A taxable at capital gains rates B taxable at ordinary income tax rates only on amounts attributable to employee contributions and build-up on those contributions C taxable at ordinary income tax rates on amounts attributable to both employer and employee contributions and build-up on those contributions D tax exempt
C
Which mutual fund is likely to be invested at least in part in tangible assets such as gold and precious metals in addition to securities? A Value fund B Growth fund C Asset allocation fund D Balanced fund
C
Which of the following can open a joint account without restriction? A Parent and minor B Guardian and custodian C Three business partners D Registered representative and client
C
Which of the following is NOT a money market instrument? A T-Bill B T-Notewith 8 months remaining to maturity C T-Note with 18 months remaining to maturity D T-Bondwith 11 months remaining to maturity
C
Which of the following is NOT required to be retained on file by a broker-dealer? A Customer complaints B Trade confirmations C IPO prospectuses D Correspondence
C
Which of the following is a charge against annual net assets in a variable annuity contract? A Premium Taxes B Sales charges C Mortality risk charge D Surrender charges
C
Which of the following securities must be registered in a state in order to be sold in that state? A Mutual fund shares B Initial public offering of a closed-end fund C Initial public offering of a penny stock D Variable annuity accumulation units
C
Which one of the following customer actions could be an indicator of money laundering? A Depositing $50,000 of registered stock into the account and directing that it be transferred into street name B Buying a security in advance of the ex date and selling after the record date in order to receive a cash dividend C Buying and selling the same security over a short period of time, incurring significant commission costs D Buying a security and selling short an equivalent convertible security to lock in a price difference
C
Which statement about a customer account with a limited power of attorney is TRUE? A A third party can withdraw money from the account without restriction B A third party can enter buy orders only C A third party can enter buy and sell orders only D A third party can withdraw money from the account as long as the check is made out to the account name
C
Which statement about closed-end investment companies is TRUE? A They redeem shares from investors continually B They can pledge assets in their investment portfolios for loans C They can issue preferred stock and bonds D They have a capital structure that changes as common shares are sold
C
Which statement about the "kiddie tax" rules is TRUE? The kiddie tax rules apply to all income earned by a child age 21 or under B The kiddie tax rules apply to earned income received by a child age 18 or under C The kiddie tax rules apply to unearned income received by a child age 18 or under D The kiddie tax rules apply to passive income received by a child age 21or under
C
Which statement concerning the advantages of a mutual fund investment is TRUE? A Investors generally buy round lots of shares as with other investments B Fractional shares are avoided for investors who make minimum purchases C Investors' purchases are recorded electronically and shares are held in safekeeping D Investors avoid receiving share certificates and statements of account
C
Which statement concerning the board of directors of a mutual fund is TRUE? A The board manages the day-to-day operations of the fund B The board manages the investment portfolio of the fund C The board approves spending associated with the fund's 12b-1 plan D The board is responsible for safekeeping the assets of the fund
C
Which statement is TRUE about the use of the FINRA name on a member firm's or associated person's website? A B The FINRA name must be shown C If the FINRA name is shown, it must be hyperlinked to the FINRA website D If the FINRA name is shown, it must be stated that FINRA does not sponsor the website
C
Which statement is TRUE regarding the ex-date for a mutual fund? A The ex-date is set by the board of directors of the fund and is set at two business days prior to therecord date B The ex-date is set by FINRA and is set at two business days prior to the record date C The ex-date is set by the board of directors of the fund and is set on the business day following the record date D The ex-date is set by FINRAand is set on the business day following the record date
C
Which statement is TRUE? A Abrokeris anagentand aprincipal B Adealeris an agent aprincipal C A broker is an agent and a dealer is a principal D A dealer is an agent and a broker is a principal
C
"Blue Sky" laws generally require registration in the state for all of the following EXCEPT: A Agents who are resident in that state B Non-resident agents who direct offers into the state . C Broker-dealers that are resident in the state D Non-resident broker-dealers who direct offers into their own state
D
A customer has decided to invest a portion of his assets in a variable annuity to provide a lifetime income. The customer, age 65, has received a lump sum payment from his employer for his retirement that was last month. The customer is willing to take moderate risk. What kind of annuity should be recommended to the customer? A Single payment, deferred annuity B Periodic payment,deferred annuity C Periodic payment,immediate annuity D Single payment, immediate annuity
D
A customer's account profile must be sent to the customer for review and approval within: A 10 days of account opening and every 12 months thereafter B 30 days of account opening and every 12 months C 10 days of account opening and every 36 months thereafter D 30 days of account opening and every 36 months thereafter
D
A registered representative is meeting with an elderly client and believes that this individual is evidencing diminished mental capacity. The father has an adult son, to whom he has given a durable power of attorney over the account. Later that day, the son contacts the representative and tells him to cash out the account and send him the money. What should the representative do? A Follow the son's instructions because he has a valid power of attorney over the account B Contact the client and get his permission to liquidate the account C Schedule a meeting with the client and son to discuss the situation D Go to the principal with the request and have the principal handle the situation
D
A registered representative with a Series #6 license may offer and sell all of the following products EXCEPT: A Open-end investment companyshares B Initial public offeringsofclosed-end investment companyshares C Face amount certificates D Equipment trust certificates
D
A regulated investment company distributes 90% of its net income. Which statement about the tax liability for net income for that year is TRUE? A The company pays tax on 90% of net income, and investors pay tax on 10% of net income B The company pays tax on 100% of net income, and investors pay no tax on net income C The company pays no tax on net income, and investors pay tax on 100% of net income D The company pays tax on 10% of net income, and investors pay tax on 90% of net income
D
A variable annuity owner who shifts money from one sub-account of the separate account to another. Which statement is TRUE? A If done at a loss the exchange will trigger the wash sale rule B The exchange will increase the owners cost basis C The exchange will reduce the owners cost basis D The exchange is tax-free
D
After its initial offering of common shares, a closed-end fund: A cannot issue additional securities B can borrow from banks C can only issue preferred stock D can issue both preferred stock and bonds
D
All of the following are money market instruments EXCEPT: A Banker's acceptance B Commercial paper C Treasury bond maturing in 6 months D Warrants expiring in 6 months
D
All of the following are violations of FINRA mutual fund rules EXCEPT: A Breakpoint sales B Trading of mutual fund shares C Selling dividends D Redemption charges
D
All of the following insurance company products are defined as securities EXCEPT: A Variable life insurance B Variable universal life insurance C Variable annuity D Fixed annuity
D
All of the following statements concerning a bonus annuity are correct EXCEPT: A the insurance company contributes additional amounts to supplement the owner's premiums B the period of deferred sales charges typically is extended C withdrawal of some premiums or earnings may be permitted without penalty D income taxes on withdrawals of earnings are reduced afterannuitization
D
All of the following statements concerning discretionary accounts are correct EXCEPT: A the discretionary power can be revoked at any time B each trade must be approved by a principal by the end of the day C each order ticket for a discretionary trade must be marked as discretionary D the customer must select the security to be traded in each discretionary trade
D
Form CRS must be provided to customers at the earlier of: A making a recommendation B account opening C implementing an investment strategy D any of the above
D
If a mutual fund advertises performance data and discloses its sales load, the advertisement must disclose the fund's: A minimum sales load B sales load on an initial purchase C schedule of breakpoints D maximum sales load
D
In 2022, what is the maximum amount that parents can contribute to a 529 Plan for a child without incurring gift tax liability? A $10,000 B $16,000 C $80,000 D $160,000
D
In order for a mutual fund to materially increase its 12b-1 fees, approval is required from all of the following EXCEPT the: A shareholders B board of directors C disinterested members of the board of directors D Securities and Exchange Commission
D
Revenue bonds can be backed by: A income taxes and property taxes B toll collections and property taxes C income taxes and rental fees D toll collections and rental fees
D
The "AIR" of a variable annuity contract is set when the: A prospectus is delivered to the client B purchase contract is completed C surrender period of the contract has been completed D contract is annuitized
D
The FINRA suitability rule requires all of the following EXCEPT: A Reasonable Basis Suitability B Customer-Specific Suitability C Quantitative Suitability D Qualitative Suitability
D
The city of Des Moines has proposed a bond issue to build a football stadium in which a new football team will be the primary tenant. This bond issue is a(n): A industrial revenue bond, and interest is free of federal income tax B general obligation bond, and interest is free of federal income tax C revenue bond, and interest is free of federal income tax D private purpose bond, and interest is subject to federal income tax
D
The latest that a deductible contribution to a Keogh Plans can be made is: A December 31st of the calendar year in which the contribution may be claimed on that person's tax return B December 31st of the calendar year after which the contribution may be claimed on that person's tax return C April 15th tax filing date of the calendar year after which the contribution may be claimed on that person's tax return D The latest filing date permitted under an extension for the calendar year after which the contribution may be claimed on that person's tax return
D
The writer of a put option on securities has the: A right to deliver securities at a fixed price for a limited time B right to buy securities at a fixed price for a limited time C obligation to deliver securities at a fixed price for a limited time D obligation to buy securities at a fixed price for a limited time
D
Under FINRA rules, in order to adequately assess the suitability of a recommendation to a senior citizen, the member should make reasonable efforts to obtain information about all of the following EXCEPT the customer's: A Age B Life stage C Liquidity needs D Life insurance needs
D
Under Regulation T, the maximum time period to collect monies owed by a customer prior to an extension request is: A trade date +1 B trade date + 2 C settlement date +1 D settlement date +2
D
Under the FINRA Code of Procedure, the first level of hearings in any dispute or complaint proceeding is held at the: A National Adjudicatory Council B Securities and Exchange Commission C Federal Court D District Hearing Panel
D
VIn connection with a variable life insurance policy, which of the following exchanges is(are) tax-free? A Separate account for separate account B Variable life policy for whole life policy C Variable life policy for variable annuity D All of the above
D
What rate of potential growth can an insurance company use when illustrating the concept of the assumed interest rate (AIR) to a potential customer? A Up to 5% B Up to 8.5% C Up to 10% D Up to 12%
D
When a broker-dealer holds a security in inventory, this is called: A hypothecation B underwriting C backing away D taking a position
D
When a mutual fund receives a redemption request from one of its shareholders, payment for the shares redeemed must be made in what time period? A 3 business days B 3 calendar days C 7 business days D 7 calendar days
D
When must a principal review a customer's application for a deferred variable annuity? A At, or prior to, the time of delivery of the prospectus B Within 48 hours of delivery of the prospectus C Within 2 business days after the application is signed by the customer D Within 7 business days after the application is signed by the customer
D
Which of the following annuity payment options will pay the estate of the annuitant if the full value of the account was not paid out to the annuitant? A Life Annuity B Life Annuity with Period Certain C Joint and Last Survivor Annuity D Unit Refund Annuity
D
Which of the following investments are permitted for 403(b) plans? A Corporate common stocks B Certificates of deposit C Corporate bonds D Variable annuities
D
Which of the following is NOT a person qualifying for reduced sales charges from quantity purchases of investment company shares? A A corporation purchasing shares in a corporate account B A married couple purchasing shares in a joint account C A father purchasing shares for a minor son in a custodial account D A father and adult son purchasing shares in a joint account
D
Which statement about a Uniform Gifts to Minors Act account is FALSE? A The account uses the minor's Social Security number B The custodian directs transactions in the account C Earnings of the account are taxable to the minor, but taxation may be at the parent's bracket D The account requires ahypothecationagreement
D
Which statement about qualified and non-qualified retirement plans is TRUE? A A corporation can only adopt a qualified retirement plan for its employees and must include all employees in its non-qualified plan B A corporation can adopt both a qualified and a non-qualified retirement plan for its employees and must include all employees in its non-qualified plan C A corporation can only adopt a qualified retirement plan for its employees and can include only high-earning employees in its non-qualified plan D A corporation can adopt both a qualified and a non-qualified retirement plan for its employees and can include only high-earning employees in its non-qualified plan
D
Which statement about the federal income tax treatment of a non-qualified variable annuity is TRUE? A The full amount of a lump sum payment following asurrenderis subject to tax B During the payout period, the owner must include the entire periodic payment in gross income C During theaccumulation period, the owner must report investment earnings for tax purposes, even though they are reinvested D The annuity owner may not deductpremiumpayments
D
Which statement describes corporate commercial paper? A It is sold to finance long-term capital needs and is secured by the corporation's trade payables B It is sold to finance short-term capital needs and is secured by the corporation's trade payables C It is sold to finance long-term capital needs and is an unsecured debt of the issuing corporation D It is sold for finance short-term capital needs and is an unsecured debt of the issuing corporation
D
Which statement is TRUE about management fees? A The typical management fee for an index fund and a growth fund is .10% of annual net assets B The typical management fee for an index fund and a growth fund is .50% of annual net assets C The typical management fee for a growth fund is .10% of annual net assets while the typical management fee for an index fund is .50% D The typical management fee for an index fund is .10% of annual net assets while the typical management fee for a growth fund is .50%
D
Which statement is TRUE about the investment advisory contract for a mutual fund? A The maximum term for the initial contract is 1 year B The maximum term for renewal of the contract is 3 years C The initial contract must be approved byFINRA D The renewal of the contract may be approved by the independent members of the board of directors or the fund shareholders
D
Which statement is TRUE about transfers of Individual Retirement Accounts? A A maximum of 1 transfer is permitted each year B A maximum of 2 transfers are permitted each year C A maximum of 3 transfers are permitted each year D There is no limit on transfers
D
Which statement is TRUE about variable life contracts? A A salesperson does not need an SIE/Series 6 registration to sell this product B A variable life contract is a general account product C The investment riskis borne by the issuer of the contract D Buyers must receive a prospectus at or prior to time of sale
D
Which statement is TRUE regarding the 529 college savings plan established by State A? A Contributors must be residents of State A and the beneficiary must use the funds only to attend college in State A B Contributors may be residents of any State and the beneficiary must use the funds only to attend college in State A C Contributors must be residents of State A but the beneficiary may use the funds to attend college in any State D Contributors may be residents of any State and the beneficiary may use the funds to attend college in any State
D
Which type of insurance policy allows the premium payment to be changed? A Term life B Whole life C Variable life D Universal life
D
Your client is interested in purchasing Class B shares of Acme Growth Fund. You should make the client aware of all of the following EXCEPT: A Class B shares assess a contingent deferred sales charge (CDSC) B Class B shares generally carry higher 12b-1 fees than Class A shares C Class B shares convert to Class A shares when the CDSC period expires D Class B shares are held in a separate fund portfolio
D
A customer sends a written complaint directly to a representative.Which statement is TRUE? A The complaint must be resolved with the client B The complaint must be submitted to a principal within 3 days C The complaint must be submitted to a principal within 10 days D A hold must be placed on commissions paid to the representativeuntil the complaint is resolved
A
A mutual fund may not invest in a security if an associated person owns more than what percentage of that company's stock? A 1/2% B 1% C 2% D 5%
A
A mutual fund's management fee is set at 1/2% of its net asset value. The actual funds to pay the fee come from: A fund income received on portfolio securities B sales charges on fund shares C underwriting concession D unrealized capital gains
A
A registered representative is notified verbally by an immediate family member of one of her customers that the customer has passed away. Which statement is TRUE regarding freezing the assets in the account? A The assets in the account can be frozen based on this verbal information B The family member must give a notarized written statement in order to freeze the assets in the account C The family member must provide a certified copy of the customer's death certificate before the assets in the account can be frozen D The assets in the account cannot be frozen under any circumstances
A
A registered representative must obtain signed resolution authorizing the opening of a: A corporate account B trust account C partnership account D guardian account
A
A variable life policy has a conversion feature. This means that, for a limited time, the policy owner can convert to a: A whole life policy B mutual fundinvestment C universal lifepolicy D fixed annuity
A
All of the following statements are true regarding Treasury STRIPS EXCEPT: A interest earned is subject to reinvestment risk B interest income isaccretedand taxed annually C the bonds are issued at a discount D the bonds are zero coupon obligations
A
An investment strategy where a higher price is paid for a stock based upon expected returns is: A growth investing B value investing C Conservative investing D passive investing
A
Before a management company can register with the SEC, it must meet which requirement? A Minimum net assets of $100,000 B Listing on a stock exchange C Minimum of 500 shareholders D Minimum 90% invested in securities
A
Bigg Inc. is a large broker-dealer registered with FINRA. When Bigg brings buyers and sellers together, the firm is acting as a: A broker B dealer C principal D market maker
A
Capital gains realized in a non-qualified variable annuity separate account during the accumulation period are: A not subject to tax B subject to a maximum tax rate of 10% C subject to a maximum tax rate of 15% or 20% D subject to a maximum tax rate of 37%
A
Compensation for which of the following is NOT paid from the fund's income or assets? A Sponsor/Distributor B Investment Adviser C Custodian Bank D Transfer Agent
A
Custodial accounts can be opened as a: A cash accountonly B margin accountonly C either a cash or margin account D either a joint cash or margin account
A
Fund operating expenses that are deducted from Gross Investment Income include all of the following EXCEPT: A redemption fees B management fees C overhead D custodial fees
A
If a corporation has an unfunded pension liability, this means that: A the expected future value of fund assets is less than projected benefit claims B the expected future value of fund assets is more than projected benefit claims C inflation has eroded the value of the portfolio funding the plan D existing retirees' benefit claims are not being met
A
Lump sum distributions from non-qualified variable annuities taken prior to annuitization are: A subject to LIFO accounting and 100% taxable on the earlier distributions and non-taxable on the later distributions B subject to FIFO accounting and 100% taxable on the earlier distributions and non-taxable on the later distributions C subject to LIFO accounting and non-taxable on the earlier distributions and 100% taxable on the later distributions D subject to FIFO accounting and non-taxable on the earlier distributions and 100% taxable on the later distributions
A
On their federal income tax returns, investors must report interest annually on all of the following securities EXCEPT: A Series EE bonds B STRIPS C TIPS D Treasury Bonds
A
Order ticket information must be recorded by the member firm prior to order: A entry B execution C cancellation D confirmation
A
Section 529 Plans are established by the: A state B donor C recipient D custodian
A
Text:Which statement is TRUE? A With adefined benefit plan, the employees know how much benefit they will receive at retirement B With adefined contribution plan, the employer selects the level of benefits that will be paid to employees C With a defined benefit plan, the employees know how much the employer is contributing each year for them D With a defined contribution plan, the employer must use anactuaryto determine the amount of contributions required
A
The Investment Advisers Act of 1940 EXEMPTS from registration: A persons who give advice solely to insurance companies B persons who give advice solely to investment companies C persons who give advice solely to depository institutions D All of the above
A
The intent of the Investment Advisers Act of 1940 was to: A register managers of mutual funds with the SEC B prohibit fraud and manipulation in the trading of securities C register new securities offerings with the SEC D register and regulate investment company securities offerings
A
Typically, accumulation units of variable annuities represent an investment interest in underlying: A Mutual fund shares B Life insurance policies C Direct participation programs D Pension fund investments
A
Typically, accumulation units of variable annuities represent an investment interest in underlying: A mutual fundshares B life insurance policies C direct participation programs D pension fund investments
A
Which deduction is taken from the premium payment prior to investment in the separate account? A Premium taxes B Mortality risk charge C Administrative expense fee D Investmentmanagement fee
A
Which information must a representative obtain when opening a new cash account for a customer? A Customer's occupation and employer B Written verification from the customer that he or she is at least 21 years of age C Copy of the customer's birth certificate D Written signature of the customer
A
Which investment company communication falls under FINRA filing rules? A Internet advertisement B Employment advertisement C Prospectus delivered with sales literature D Correspondence
A
Which of the following can be charged by a pure no-load fund? A management fee B front-end sales charge C 12b-1 fee D contingent deferred sales charge
A
Which of the following is an acceptable method for opening an investment adviser account? A Each individual client of the adviser opens an account under the client's name B Each individual client of the adviser opens an account under the C The adviser opens a Second Party account holding all of his clients' funds and securities D The adviser opens a Third Party account for each client
A
Which of the following mutual funds is appropriate for an investor with a short investment time horizon? A Money market fund B Growth fund C U.S. Treasury Securities fund D Balanced fund
A
Which of the following retirement plans permit loans to participants? A 401(k) B IRA C SEP IRA D SIMPLE IRA
A
Which of the following securities is non-exempt under the Securities Act of 1933? A Mayflower Water and Gas Public Utility shares, listed on NYSE B Rhode Island Industrial Development Authority bonds C City of Boston General Obligation bonds D U.S. Treasury bonds
A
Which statement about a rollover from a qualified plan to an IRA is TRUE? A Income tax withholding of 20% of the amount distributed is required B Reinvestment in the IRA can occur any time before the end of the year C Withholding is required both for a rollover and for a direct transfer D Lump sum distributions are not subject to withholding
A
Which statement about features of a non-qualified variable annuity contracts is TRUE? A Premiumsare not deductible for federal income tax purposes B Investment earnings are taxable during theaccumulation period C Benefits paid to an annuitant are taxed as long term capital gains D Investment earnings are not taxable during theannuity payout period
A
Which statement about funds that offer "withdrawal plans" is TRUE? A The fund distributes the specified withdrawal amount whether or not this would cause a decrease in principal B The fund distributes the specified withdrawal amount only if there are sufficient earnings for that period C The fund distributes the specified withdrawal amount only if there is sufficient asset appreciation for that period D The fund distributes the specified withdrawal amount only upon written authorization of the customer
A
Which statement about qualified and non-qualified retirement plans is FALSE? A Qualified plans are not required to meetERISAnon-discrimination standards B Contributions to qualified plans are made with before-tax dollars C Non-qualified plans are not required to meet ERISA non-discrimination standards D Contributions to non-qualified plans are made with after-tax dollars
A
Which statement about the valuation of accumulation units is TRUE? A The value of the accumulation units will increase if the assets in theseparate accountincrease in value B Investment income and capital gains are used to buy additional accumulation units in the separate account C Accumulation units are the accounting measure of a person's ownership interest in animmediate annuity D The value of the accumulation units will decrease if the assets in the separate account increase in value
A
Which statement best describes the advantages of the combination annuity? A It offers guaranteed income and inflation hedge B It invests in both growth and value stocks . C It permits investment in hedge funds, index funds, and bond funds D It offers the opportunity to shift investment strategies
A
Which statement concerning equipment trust certificates is TRUE? A Equipment Trust Certificates are secured and pledge a company's rolling stock as collateral B Equipment Trust Certificates are unsecured and pledge a company's rolling stock as collateral C Equipment Trust Certificates are secured and pledge the shares of a company's wholly owned subsidiary as collateral D Equipment Trust Certificates are unsecured and pledge the shares of a company's wholly owned subsidiary as collateral
A
Which statement concerning the financial reports sent to shareholders of mutual funds is FALSE? A A prospectus must accompany the reports B The annual report must be certified by an independent public accountant C Financial reports must include a list of the amounts and values of securities held by the fund D The fund must file with the SEC all financial reports sent to shareholders
A
Which statement is TRUE about fixed annuity contracts? A A representative does not need a Series 6 registration to sell this product B A fixed annuity contract is defined as asecurity C Investment risk is borne by the purchaser of the contract D Annuity payments will likely increase if the inflation rate increases
A
Which statement is TRUE when comparing Traditional 401(k)s and Roth 401(k)s? A The annual contribution limit is the same as a Traditional 401(k) and distributions must commence after the participant reaches ages 72 B The annual contribution limit is lower than that for a Traditional 401(k) and distributions must commence after the participant reaches ages 72 C The annual contribution limit is the same as a Traditional 401(k) but distributions are not required to commence after the participant reaches age 72 D The annual contribution limit is lower than that for a Traditional 401(k) but distributions are not required to commence after the participant reaches age 72
A
Which type of insurance policy is considered to be "pure insurance"? A term life B universal life C whole life D variable universal life
A
