FINRA-SERIES-6 Online Practice Questions and Answers

Which of the following is not a function performed by an investment banker as part of a full commitment underwriting?

A. provides advice to the issuing firm on the projects in which it should invest the money raised

B. provides advice to the issuing firm on what type of security should be issued in order to raise the funds

C. purchases the securities from the issuing firm

D. provides short-term price support for the security after it begins trading in the secondary market

When the U.S. dollar appreciates relative to other world currencies,

I. the prices of all domestic stocks and bonds can be expected to increase.

II. the prices of securities offered by manufacturers that import a lot of their parts can be expected to increase.

III.

an increase in the purchase of U.S. securities by foreign investors can be expected.

A.

I, II, and III

B.

I and II only

C.

II only

D.

III only

The Securities Exchange Commission consists of:

A. 6 members, elected by member firms.

B. 5 members, appointed by the President of the U.S., with Senate approval

C. 7 members, appointed by FINRA.

D. 5 members, appointed by the Secretary of Treasury of the U.S.

Which of the following is a characteristic of a mutual fund?

A. shares may sell below net asset value

B. shares are bought and sold through the fund

C. shares are sold on exchange floors

D. the fund has a fixed number of shares that can be sold

Ralph has a traditional IRA from which he has yet to make any withdrawals. Ralph will be turning 70 ½ in June, 2011.According to the required minimum distribution rule associated with traditional IRAs, Ralph is required to start withdrawing funds from this account:

A. no later than the day after he turns 70 ½.

B. on April 15, 2011.

C. on April 1, 2012.

D. on April 15, 2012.

After a registration statement has been filed with the SEC, no offers to sell the security to the public can be made for:

A. a minimum of 30 days unless the SEC grants an exception.

B. a maximum of 20 days.

C. a maximum of 30 days.

D. a minimum of 20 days unless the SEC grants an exception.

Sarah Bean is a registered representative with NewWave Investments, a family of mutual funds. She has recommended one of NewWave's funds to a client and given him a prospectus. The prospectus provides information about the fund's breakpoints and indicates that an investment of $25,000 or more will lead to a reduced front-end load. The prospectus also clearly explains the details of a letter of intent. Sarah's client invests $23,000 in the fund then and there without even opening the prospectus.

Has Sarah violated any of FINRA's rules of conduct?

A. No. Sarah properly provided her client with a prospectus prior to selling him shares of the fund.

B. Yes. Sarah is required to explain the concepts of breakpoints and letters of intent to her client.

C. Yes. Sarah needed to tell her client that he would have to read through the prospect us to ensure he understood all aspects of the investment before she could take any money from him.

D. Yes. Sarah is not permitted to accept funds from a client without the presence of her immediate supervisor.

Ms. Newbie has recently become licensed as a registered representative and is disappointed to discover no clients standing in line at the door to her office at Savvy Investments. She decides she simply must take on a second job in order to pay the rent. The fitness club to which she belongs is advertising for a weekend receptionist, and the club manager has told her the job is hers if she wants it. Given this scenario, Ms. Newbie:

A. can accept the job since it only entails weekend work, which does not conflict with the hours she works as a registered representative.

B. can accept the job only if she tells her supervisor at Savvy that she will be working weekends.

C. must provide a written notice to Savvy Investments and await the firm's approval before accepting the job.

D. can accept the job without any restrictions. She is not tied to Savvy by ball and chain, and her work as a receptionist at a fitness club does not have anything to do with the financial industry.

The American Funds family of funds offers numerous funds to investors. Among these are a U.S. government bond fund, a high-yield corporate bond fund, a diversified emerging markets fund, and a large stock growth fund. Of these four, the one that would expose the investor to the most social and political risk is its:

A. U.S. government bond fund.

B. diversified emerging markets fund.

C. large stock growth fund.

D. high-yield corporate bond fund.

Matt is a registered representative with Fine, Howard, Fine and Associates. Tom, an old fraternity brother, is one of his clients. Business has been bad, and Matt is going to have difficulties making this month's mortgage payment. Tom was commiserating with him when the two hooked up to have a couple of beers together and offered to lend Matt some money to see him through the rough times. Based on these facts:

A. Matt must refuse Tom's offer since Tom is one of his clients.

B. Matt can accept Tom's offer, but only after obtaining pre-approval from Fine, Howard, Fine.

C. Matt can accept the offer without having to obtain pre-approval from his employer since he and Tom are former fraternity brothers and their friendship pre-dates their agent/client relationship.

D. Matt can accept the offer as long as Tom will not need to sell any investments to lend Matt the money. This would constitute a conflict of interest.