Finra Series-6 Exam Practice Test Instant Access

Question 1

You have just become a licensed registered representative with Fine, Howard, Fine and Associates, a broker-dealer. (Congratulations!) You have had a brokerage account with Anon Brokerage for the past ten years. In this instance, you are required to:

Atransfer the assets in your account with Anon to a Fine, Howard, Fine account and close your account with Anon.

Bprovide Fine, Howard, Fine with written notification of this fact.

Cprovide Anon Brokerage with written notification of your association with Fine, Howard, Fine.

DThe actions described in both B and C are requirements.

Answer : D

If you have an account with another member firm upon becoming associated with a member firm, you are required to provide both the firm with which you have your account and your new employer in writing of the fact.

Question 2

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:

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

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

CMatt 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.

DMatt 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.

Answer : B

Since Tom and Matt are old fraternity brothers, Matt may accept Tom's offer, but only after obtaining pre-approval from Fine, Howard, Fine. FINRA's Rule 3240 allows for borrowing and lending between a registered representative and a client if ''the lending arrangement is based on a personal relationship with the customer, such that the loan would not have been solicited, offered, or given had the customer and the associated person not maintained a relationship outside of the broker/customer relationship.''

Question 3

Which of the following statements regarding both a Uniform Gifts to Minors account (UGMA) and a Uniform Transfers to Minors account (UTMA) is false?

AThere can be only one custodian named on the account.

BThe account must be established in the name of one minor child only.

COnce established, the account is irrevocable.

DThe assets must be re-registered in the minor child's name when the child turns 18.

Answer : D

The false statement regarding both a UGMA and a UTMA is that the assets must be re-registered in the minor child's name when the child turns 18. The rule differs between the two types of accounts. The UGMA requires that the assets must be re-registered when the child reaches the ''age of majority,'' as defined by the state, and the definition differs among states. Under the UTMA, the transfer of the account can be delayed until the minor child has reached the age of 25.

Question 4

The subaccounts into which Mr. Sumrisk directed his variable life premiums have earned a 6% return. If the assumed interest rate was 7%:

i. the cash value of his policy increased.

ii. the death benefit associated with his policy decreased.

iii. the cash value of his policy decreased.

IV. the death benefit associated with his policy increased.

Aboth I and II

Bboth I and IV

Cboth II and III

Dboth III and IV

Answer : A

If Mr. Sumrisk's subaccounts earned a 6% return and the assumed interest rate was 7%, then the cash value of his policy increased, but the death benefit associated with his policy decreased. The cash value of the policy increases when the separate account earns a positive return, regardless of the size of that return. The death benefit, however, depends on both the return earned on the separate account and the assumed interest rate. Since the separate account returned less, in this case, than the assumed interest rate, the death benefit decreased.

Question 5

The premiums paid on which of the following are paid into the general account of an insurance company?

i. whole life

ii. universal life

iii. term life

IV. variable life

AI only

BI and III only

CI, II, and III only

DI, II, III, and IV

Answer : C

Only the premiums paid on whole life, universal life and term life are paid into the general account of an insurance company. Variable life premiums go into the separate account.

Question 6

Which of the following securities laws regulates the organizational structure and day-to-day operations of investment companies?

AThe Securities Act of 1933

BThe Securities Exchange Act of 1934

CThe Investment Company Act of 1940

DThe Investment Advisers Act of 1940

Answer : C

The Investment Company Act of 1940 regulates the organizational structure and day-to-day operations of investment companies. The Act includes requirements regarding a fund's capital structure, the custody of its assets, its investment activities, and the duties of a fund's board of directors, among other things. The Securities Act of 1933 regulates the offering of a fund's shares and requires that prospective investors be provided with a prospectus. The Securities Exchange Act of 1934 regulates secondary market activities in investment company shares and includes laws governing the principal underwriters and brokers and dealers who sell investment company shares. The Investment Advisers Act of 1940 regulates investment advisers and includes laws pertaining to their registration and recordkeeping, custodial, and reporting responsibilities.

Question 7

A table providing detailed information on the various fees and expenses charged by a mutual fund can be found in the fund's:

AStatement of Additional Information (SAI).

Bprospectus.

Cfinancial statements.

Dannual report.

Answer : B

A table providing detailed information on the various fees and expenses charged by a mutual fund can be found in the fund's prospectus. The other choices provide a wealth of information regarding such items as investment strategies, fund holdings, and financial statements, however.

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