Finra Series-6 Exam Questions Instant Access

Question 1

The total of a mutual fund's front-end load, rear-end load, and 12b-1 fees may not exceed:

A10.0% of the fund's offer price.

B10.0% of the fund's net asset value.

C8.5% of the fund's offer price.

D8.5% of the average annual net assets of the fund.

Answer : C

The total of a mutual fund's front-end load, rear-end load, and 12b-1 fees may not exceed 8.5% of the fund's offer price.

Question 2

Marge is 57 and wants to retire early. Since she is not yet eligible for social security, she wants to begin tapping a variable annuity to which she has been contributing for the last 20 years.

Which of the following statements regarding her withdrawals is true?

AThere is no way that Marge can begin making withdrawals without facing a 10% penalty for early withdrawal unless she is disabled or needs the money for medical expenses.

BMarge can begin her withdrawals tax-free and without penalty under IRS rule 72(t) as long as she does so following the specific guidelines until she turns 59 , at which point she will no longer have to follow the specific guidelines.

CMarge can begin her withdrawals tax-free and without penalty under IRS rule 72(t) as long as she does so following the specific guidelines for a period of five years.

DMarge can begin her withdrawals without penalty under IRS rule 72(t) as long as she does so following the specific guidelines for a period of five years; however, the withdrawals will be subject to taxation.

Answer : D

Since Marge is only 57, she can begin her withdrawals without penalty under IRS rule 72(t) as long as she does so following the specific guidelines for a period of 5 years, but the withdrawals will be subject to taxation. Once she starts the program outlined in rule 72(t), she must remain on it for at least five years or until she turns 59 , whichever comes last. This means that although she's already 57 and will be turning 59 in 2 years, she will have to continue to follow the guidelines for a full five years, or until she turns 62, in this case.

Question 3

Tex Payor purchased his shares of Invest4U Mutual Fund 30 days prior to its ex-dividend date. In order for any dividends he receives from the fund to be qualified, Tex cannot sell his shares until:

Aone day after the fund's ex-dividend date.

Bthirty-one days after the fund's ex-dividend date.

Csix months after the settlement date of his purchase.

Dtwelve months after the settlement date of his purchase.

Answer : B

In order for any of the dividends Tex receives from the fund he purchased 30 days prior to its ex-dividend date to be considered qualified, Tex cannot sell his shares until thirty-one days after the fund's ex-dividend date. To treat any fund dividends as qualified, a shareholder has to have held the shares for more than 60 days during a 121-day time frame that begins 60 days before the ex-dividend date stipulated by the fund. So, if Tex bought the shares 30 days prior to Invest4U's ex-dividend date, he needs to hold the shares for at least another 31 days after the fund's ex-dividend date for any distributed dividends to be considered qualified dividends.

Question 4

The ''statement of additional information'' (SAI) that mutual funds and closed-end funds are required to produce:

Amust be provided to prospective investors whenever an offer to sell shares of these funds is made.

Bmust be sent to shareholders of the fund on at least a semiannual basis.

Cusually contains some biographical information on the officers and directors of the fund.

DBoth A and B are true statements.

Answer : C

The ''statement of additional information'' (SAI) that mutual funds and closed-end funds are required to produce usually contains some biographical information on the officers and directors of the fund. The SAI need only be provided to prospective investors upon request, and it is not sent to shareholders of the fund. Shareholders of the fund receive annual and semiannual reports from the fund, however.

Question 5

Which of the following is not considered to be a ''security'' as defined by the Securities Exchange Act of 1934?

Aan interest in an oil drilling lease

Ba collateral trust certificate with an initial maturity of 5 years

Ca straddle that expires in 3 months

Da bankers' acceptance, issued with a maturity of 4 months

Answer : D

A bankers' acceptance is specifically excluded from the definition of a security under the Securities Exchange Act of 1934 as long as its maturity at issue does not exceed 9 months. All the other choices are specifically named under the Act's definition of a security.

Question 6

The Securities Exchange Act of 1934:

i. regulates the market for new issues.

ii. delineates the registration requirements for investment advisers.

iii. regulates secondary market activities.

IV. requires that officers and some other employees of member firms submit their fingerprints to the U.S. attorney general's office.

AI and II only

BII and III only

CIII and IV only

DI, II, III, and IV

Answer : C

Only Selections III and IV accurately describe provisions of the Securities Exchange Act of 1934. The Securities Exchange Act of 1934 provides for the regulation of secondary market activities. One section of the Act (Rule 17f-2) requires that officers and some other employees of member firms submit their fingerprints to the U.S. attorney general's office. The Securities Act of 1933 regulates the market for new issues, and the Investment Advisers Act of 1940 delineates the registration requirements for investment advisers.

Question 7

Noah Mete is interested in selling his shares of the Lambchops Corporation, which trades over-the-counter. The market maker with the best bid price--$3.15--is Veggie Investments. The market maker with the best ask price--$3.27-is Carnivor Investments. Noah conducts trades in NYSE-listed stocks through his broker, Omnivor and Associates.

Given this scenario, which of the following statements is true?

ANoah can sell his shares of Lambchops Corporation at the bid price of $3.15 by contacting Veggie Investments directly.

BNoah can sell his shares of Lambchops Corporation at the ask price of $3.27 by contacting Carnivor Investments directly.

CNoah can sell his shares of Lambchops Corporation at the bid price of $3.15 by contacting Omnivor and Associates.

DNoah can sell his shares of Lambchops Corporation at the ask price of $3.27 by contacting Omnivor and Associates.

Answer : C

Noah can sell his shares of Lambchops Corporation for $3.15 from the market maker with the best bid price, Veggie, by contacting his broker, Omnivor and Associates, which will execute the transaction. The bid price is the price at which market makers in the over-the-counter market are willing to buy the stock, and over-the-counter transactions, like NYSE transactions, are executed by brokers.

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