Finra Series-6 Exam Practice Test Instant Access

Question 1

Joan is a customer of GetErDone Broker-Dealers. Her twin sister, Jean, has accompanied her to GetErDone's office and has gathered some information regarding opening an account with the firm, giving it her contact information at the same time.

Under Regulation S-P, which of the following statements regarding GetErDone's handling of Joan's and Jean's personal information is true?

AGetErDone must provide Joan with a notification of its privacy policies annually and provide her with information on how to mandate that it not share her nonpublic personal information with nonaffiliated third parties.

BGetErDone can disclose any information that Jean provided them to nonaffiliated third parties since Jean is not a customer of the broker-dealer.

CGetErDone is required to have provided Jean with a copy of its privacy policy when she inquired about opening an account with the broker-dealer.

DAll of the above are true statements.

Answer : A

Since Joan is a customer of GetErDone, GetErDone must provide her with a notification of its privacy policies annually and provide her with information on how to mandate that it not share her nonpublic personal information with nonaffiliated third parties. GetErDone may not disclose any information about Jean, who is not yet a customer of the firm, unless the broker -dealer has provided Jean with its privacy policy and given her the opportunity to opt out of its ability to share her information with nonaffiliated third parties. GetErDone is not required to have provided Jean with a copy of its privacy policy when she inquired about opening an account, but it will need to provide her with one when/if she becomes a customer.

Question 2

A broker-dealer is required to file a Currency Transaction Report with the Treasury Department for:

Aany transaction exceeding $10,000 in value.

Bany cash transaction exceeding $10,000.

Cany cash transaction exceeding $3,000.

Dany transaction exceeding $5,000.

Answer : B

A broker dealer is required to file a Currency Transaction Report with the Treasury Department for any cash transaction exceeding $10,000. The report does not need to be filed if the transaction simply has a market value of $10,000, but does not involve cash (aka, currency.)

Question 3

The Bank Secrecy Act (BSA) requires any financial institution to:

i. file a suspicious activity report (SAR) when a possible violation of a law is suspected.

ii. inform its customer that it is filing the SAR.

iii. provide any customer that is suspected of engaging in an illegal transaction the opportunity to explain himself prior to filing an SAR.

IV. obtain specified information on any party sending or receiving a wire transfer of $3,000 or more.

AI and II only

BI, II, and IV only

CI and IV only

DI, II, III and IV

Answer : C

Only Selections I and IV are accurate statements. The BSA requires any financial institution to file a suspicious activity report when a possible violation of the law is suspected, and it also requires that specified information on any party sending or receiving a wire transfer of $3,000 or more be obtained and kept. The customer remains uninformed.

Question 4

Which of the following persons is not permitted to open an investment account?

i. a general partnership

ii. a corporation

iii. the executor of an estate

IV. a 16-year-old entrepreneur

AI and II only

BI, II, and III only

CI, II, and IV only

DIV only

Answer : D

Only the 16-year-old entrepreneur is not permitted to open an investment account. As a minor, he is not a legal person. All the other selections are legal persons and can establish investment accounts.

Question 5

Which of the following payout options would provide an annuity owner with the biggest monthly check?

Ajoint and last survivor

Bstraight life

Clife with period certain

Dunit refund life

Answer : B

The straight life payout option would provide an annuity owner with the biggest monthly check. Under this option, the annuity payments stop upon the death of the owner. All of the other options would require that the insurance company stand ready to continue payments beyond the owner's death.

This means more risk to the insurance company and, ergo, lower payments to the owner.

Question 6

Which of the following statements regarding the separate account of an insurance company is true?

AThe monies in the separate account are used to make payments to all the policyholders of the company when a payment is triggered.

BThe separate account contains the monies from which the company pays its operating expenses, e.g., salaries, etc.

CFunds from the separate account are used to make payments to fixed annuity investors.

DThe separate account must register as an investment company under the Investment Company Act of 1940.

Answer : D

The true statement is that the separate account must register as an investment company under the Investment Company Act of 1940. The premiums paid by investors for variable life insurance (less numerous charges) are invested in subaccounts within the separate account, and the earnings of the subaccounts are used, in turn, to make payments to the owners of variable life insurance policies, but not to any of the other policyholders of the company, such as the fixed annuity investors. The insurance company pays its operating expenses out of its general account.

Question 7

Which of the following are included in the expense ratio of a fund?

i. 12b-1 fees

ii. brokerage costs incurred by the fund when it buys and sells securities

iii. redemption fees

IV. management fees

AI and IV only

BI, II, and IV only

CI, III, and IV only

DI, II, III, and IV

Answer : A

Of the selections, only 12b-1 fees and management fees are included in the expense ratio of the fund. Brokerage costs that the fund incurs when it buys and sells securities are not included (which is why a fund's turnover ratio is important to consider.) Redemption fees are paid by the shareholder to the fund, so it would not be included in a fund's expense ratio since it is not an expense of the fund.

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