FINRA-SERIES-6 Online Practice Questions and Answers
Mr. A. D. Venturer owns 10,000 shares of Risky Corporation, which is currently selling for $8 a share. He is leaving shortly for an extended trip to Antarctica and will be out of communication for that time. He doesn't want to liquidate his investment in Risky before he goes, but he doesn't want to return to find that his $80,000 investment is worth little to nothing.
Which of the following options would make sense for Mr. Venturer?
A. buy a call option on Risky stock with an $8 strike price and an expiration date that occurs after his return
B. place a stop sell order at a price less than $8 a share-perhaps $6 or $7 a share
C. place a limit order to sell Risky at either $8 a share or a price slightly less than $8 a share
D. enter a good 'til cancelled (GTC) market order to sell Risky
Which of the following statements regarding zero-coupon bonds is true?
A. An advantage of investing in zero -coupon bonds is that the bondholder does not receive interest income that he must pay taxes on each year and instead receives profits from the bond investment in the form of tax-preferred capital gain income when the bond matures.
B. Only governments at the federal, state, or local levels, or government agencies are permitted to issue zero-coupon bonds.
C. All else equal, zero-coupon bonds will have less price fluctuation when interest rates change.
D. Although the bondholder receives no interim interest payments from his investment in zero -coupon bonds, the difference between the purchase price and the maturity value of the bond is considered to be interest income, and the bondholder must pay taxes on a percentage of this amount each year.
A face-amount certificate company:
A. is a company that invests primarily in bonds that sell at either par value or a premium.
B. is an investment company that has management fees.
C. sells its debt, which is backed by the assets owned by the company, to its investors.
D. is all of the above.
Jill worked as a registered representative with GoForBroke Broker-Dealers for 8 years. She is married to Jack, whose job made it necessary for them to relocate to Thailand for 3 years. They have now returned, and Jill would like to begin working as a registered representative with GoForBroke again after her 3 -year hiatus. Given this scenario:
A. Jill can begin working in her previous position with GoForBroke immediately, but GoForBroke will have to register her as one of its representatives with FINRA within 30 days of her hire date, and Jill will have to pay the applicable filing fees within that same period of time.
B. Jill will have to retake the qualifying FINRA exams for her position, and after she has done so successfully, GoForBroke must register her with FINRA as one of its representatives.
C. As long as GoForBroke maintained Jill as a registered representative for its firm during her hiatus, Jill can begin working in her previous position immediately. There is no need to file additional paperwork or pay any fees to FINRA.
D. Both A and C are true statements.
GoForBroke Broker-Dealers has distributed a list of ten mutual funds that it suggests are top-notch funds worthy of recommendation by GoForBroke's agents. Coincidentally, all the funds on this list also happen to be those that execute the majority of their trades through GoForBroke.
Is GoForBroke in violation of any FINRA rules?
A. No. GoForBroke only distributed a list of fund names; it did not offer its agents any form of additional compensation for selling the funds on that list.
B. No. As long as the list consists of more than five funds, GoForBroke has not violated any FINRA rules.
C. Yes. By distributing a list naming specific funds that coincidentally all happen to execute a lot of trades through GoForBroke, the broker-dealer is violating FINRA's anti-reciprocal rule.
D. Yes. GoForBroke is prohibited from selling shares of mutual funds that execute their trades through the broker-dealer. This rule is in place to avoid conflicts of interest.
Under current tax laws, which of the following distributions received from a mutual fund qualify for preferential tax treatment?
I. short-term capital gains
II. long-term capital gains
III. qualifying dividends
IV.
non-qualifying dividends
A.
III only
B.
II and III only
C.
I, II, and III only
D.
I, II, III, and IV
Mr. and Mrs. R. Retired are planning on traveling extensively throughout the U.S. in their new motor home now that they have reached their golden years. Under FINRA rules, upon written instructions from Mr. and Mrs. R. Retired, their broker is required to hold their mail for a maximum of:
A. 1 month.
B. 2 months.
C. 3 months.
D. none of the above. It is Mr. and Mrs. Retired's responsibility to establish a mail-hold through the post office.
An advertisement that provides performance data for which of the following mutual funds would not need to include a statement warning that the principal value of the investment will fluctuate such that the investor's shares may be worth either more or less when redeemed than what the investor originally paid for them?
A. a U.S. government bond fund
B. a money market fund
C. a municipal bond fund
D. Neither choices A nor B would need to include the stated warning.
Which of the following do not fall under the category of “advertisement,” as defined by FINRA?
I. scripts used in telemarketing the products of the member firm
II. a website maintained by the member firm
III. research reports that the member firm distributes to both its existing clients and its prospective clients
IV.
sales material that a member firm distributes only to its institutional clients
A.
I only
B.
IV only
C.
I, III, and IV only
D.
III and IV only
When a mutual fund is valuing your pre-existing holdings to see if you qualify for a reduced sales charge under its rights of accumulation program, it must use:
A. the current NAV of your holdings.
B. the current public offering price (POP) of your holdings.
C. the price you paid when you purchased the shares originally.
D. none of the above.