Finra Series-6 Exam Practice Test Instant Access

Question 1

Which of the following is not one of the purposes of FINRA as stated in its articles of incorporation?

Amaintain a fair and orderly securities market

Bencourage members to uphold high ethical standards

Cdevelop lines of communication between the securities industry and governmental agencies

Dpolice members and assist with dispute settlements

Answer : A

FINRA's articles of incorporation does not state that one of FINRA's purposes is to maintain a fair and orderly securities market. All the other selections are stated purposes. The articles of incorporation also state that FINRA has the power to write and enforce rules for its members to promote fair practices.

Question 2

Which of the following is exempt from registering as an investment company under the Investment Company Act of 1940?

Aa unit investment trust

Ba non-diversified mutual fund

Ca company that sells its securities only to accredited investors

Da company that has no sales charges or management fees

Answer : C

A company that sells its securities only to accredited investors is exempt from registering as an investment company under the Investment Company Act of 1940. All the other choices describe investment companies that are required to file a registration statement with the SEC .

Question 3

Mr. Fast Lane met an early death at the age of 42. Mr. Lane had been making contributions to a variable annuity contract for several years, and at the time of his death, his contributions totaled $25,000. Although the value of the contract had at one time reached $40,000, earnings included, a downturn in the market has resulted in a contract value of only $23,000.

How much will Mr. Lane's beneficiaries receive as the death benefit associated with this contract under these circumstances?

Anothing, since the contract now has a value that is less than Mr. Lane's total contributions

Bthe average of what its value once was and what it is today: $31,500

C$25,000

D$23,000

Answer : C

Since Mr. Lane died while he was still making contributions, his beneficiaries will receive $25,000. If the annuitant dies during the accumulation period, the death benefit is equal to the value of the contract or the total of the contributions, whichever is greater.

Question 4

NASDAQ is:

Aan acronym for Norway's major stock exchange.

Bthe government organization that insures accounts at U.S. brokerage firms.

Ca computerized system that links together the U.S. regional exchanges.

Da computerized quotation system used in the over-the-counter market.

Answer : D

NASDAQ is a computerized quotation system that is used in the over-the-counter market. It allows NASDAQ market makers to enter bid and ask quotes and allows subscribers at lower levels to view the bid and ask quotes available.

Question 5

Which of the following statements regarding the ''rights of accumulation'' is true?

AAll mutual funds that have front-end loads are required to allow their shareholders rights of accumulation.

BReinvested dividends and capital gain distributions count toward reaching a breakpoint under the rights of accumulation.

CA breakpoint must be reached within a 13-month period, at which point the accumulation period begins anew.

DA letter of intent must be signed to activate the rights of accumulation.

Answer : B

The true statement is that reinvested dividends and capital gain distributions count toward reaching a breakpoint under the rights of accumulation. The rights of accumulation are not something that all mutual funds with front-end loads must offer. There is no time limit on the accumulation period. The rights of accumulation and the letter of intent are two separate animals; neither has anything to do with the other.

Question 6

Giant Investments mass mails a single-page, glossy flyer that lists the types of mutual funds it offers, along with a general explanation of what the investment objective of each type of fund is. The flyer also prominently provides Giant's contact information. Given these facts:

AGiant Investments must submit a copy of this brochure within 10 days of its initial distribution date to FINRA.

Ba principal of Giant Investments must sign (or initial) and date the brochure, giving it his official approval.

Cthe brochure will be subject to spot checks by FINRA and will need to be kept on file.

DNone of the above statements is true.

Answer : D

Given the facts about the content of the flyer, none of the statements is true. If Giant Investments mass mails a flyer that only lists the types of mutual funds it offers along with a general explanation of what the investment objective of each type of fund is and Giant's contact information, it has issued only a generic advertisement as defined by Rule 135A of the Securities Act of 1933. As such, it is not considered an offer to sell and does not have to meet the requirements to which more specific advertising material is subject.

Question 7

Private placements are exempt from the registration requirements of the Securities Act of 1933 under the rules contained in:

ARegulation A

BRegulation D

CRegulation E

Dthe Securities Exchange Act of 1934.

Answer : B

Private placements are exempt from the registration requirements of the Securities Act of 1933 under the rules contained in Regulation D. Regulation D dictates the qualifications that must be met for the security to be exempted, such as the maximum number of unaccredited investors and the investors to whom the security may be sold. Regulation A dictates the rules to qualify an issue for a small issue exemption. The Securities Exchange Act of 1934 deals with the secondary market, not the new issue market.

Finra Investment Company and Variable Contracts Products Representative Series-6 Exam Practice Test