Finra Series-6 Exam Practice Test Instant Access

Question 1

Anna Vestor placed an order to sell 100 shares of Microsoft through the on-line site of her broker, GetErDone Broker-Dealers. GetErDone sold her shares for $24.59 a share and charged her a commission of $8.95. Among other things, the trade confirmation that Anna receives must stipulate:

i. the time and date of the transaction.

ii. that GetErDone served as a principal in the transaction.

iii. the number of shares sold and the price at which they were sold.

IV. the exchange or ECN on which the transaction was executed.

AI and III only

BI, II and III only

CI, III, and IV only

DI, II, III, and IV

Answer : A

Among other things, the trade confirmation that Anna receives must stipulate the items described in Selections I and III only. The trade confirmation that Anna receives from GetErDone must stipulate the time and date of the transaction, the number of shares sold, and the price at which they were sold. The exchange or ECN on which the transaction was executed is not provided on the confirmation statement. Whether GetErDone acted as a principal or a broker in the transaction does need to be stipulated, but in this instance GetErDone acted as a broker, not a principal. GetErDone did not itself buy the shares from Anna.

Question 2

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:

Athe current NAV of your holdings.

Bthe current public offering price (POP) of your holdings.

Cthe price you paid when you purchased the shares originally.

Dnone of the above.

Answer : D

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 is not required to use any specific one of the specified choices. It is allowed to choose from among them. Some funds even allow you to use the higher of either the current NAV or POP or the historical NAV or POP, since the historical value might be higher than the current value in a down market.

Question 3

Which of the following share classes do not have front-end loads?

AClass A

BClass B

CClass C

DNeither Class B nor Class C shares have front-end loads.

Answer : D

Neither Class B nor Class C shares have front-end loads. Class B and Class C shares typically have higher 12b -1 fees, however, with Class C having the highest 12b-1 fees of the three classes.

Question 4

Which of the following statements regarding the ''rights of accumulation'' is true?

AAll mutual funds that have front-end loads are required to allow their shareholders rights of accumulation.

BReinvested dividends and capital gain distributions count toward reaching a breakpoint under the rights of accumulation.

CA breakpoint must be reached within a 13-month period, at which point the accumulation period begins anew.

DA letter of intent must be signed to activate the rights of accumulation.

Answer : B

The true statement is that reinvested dividends and capital gain distributions count toward reaching a breakpoint under the rights of accumulation. The rights of accumulation are not something that all mutual funds with front-end loads must offer. There is no time limit on the accumulation period. The rights of accumulation and the letter of intent are two separate animals; neither has anything to do with the other.

Question 5

Which of the following statements regarding a letter of intent is true?

AAn investor has 12 months in which to invest the amount stipulated in the letter.

BReinvested dividends and capital gain distributions count toward the amount stipulated in the letter of intent.

CAn investor who signs a letter of intent and does not invest the amount stipulated must make up the difference between the sales charge he paid and what he should have paid, plus interest.

DA letter of intent may be backdated up to 90 days so that any purchases made during that prior time period will count toward making a breakpoint.

Answer : D

The true statement is that a letter of intent may be backdated up to 90 days so that any purchases made during that prior time period will count toward making a breakpoint. An investor has 13 months in which to invest the amount stipulated in the letter. The invested funds must consist of new money; reinvested dividends and capital gain distributions don't count. If the amount stipulated in the letter of intent is not invested during the 13 months, the investor must only make up the difference between the sales charge he paid and what he should have paid, given that he didn't qualify for the breakpoint. No interest is charged on the difference.

Question 6

A load mutual fund offers reduced load charges when an investor invests over $25,000 in the fund.

Which of the following can combine their funds in order to meet that breakpoint and get the reduced sales charge?

i. Mr. and Mrs. Smith

ii. Mrs. Smith and her 8-year-old daughter, Susie

iii. Mr. Smith and his brother, Darwin

IV. The Smithereen Investment Club, of which Mr. and Mrs. Smith are co-chairpersons

AI only

BI and II only

CI, II, and IV only

DI, II, and III only

Answer : B

Only Mr. and Mrs. Smith and Mrs. Smith and her 8-year-old daughter, Susie, can combine their funds in order to meet the breakpoint and get the reduced sales charge. Investments made by a husband and a wife and by a parent on their own account and on a custodial account for a minor child can be combined toward the total needed to reach the breakpoint. (The child cannot be an adult, however.) Investments made by siblings and investment clubs cannot be combined to meet a breakpoint.

Question 7

Which of the following must be true for a fund to be called a ''no load'' fund?

i. The fund can have no front-end load.

ii. The fund can have no contingent deferred sales charge.

iii. The fund can charge no 12b-1 fees.

IV. The fund cannot charge investors an exchange fee.

AOnly I and II must be true.

BI, II, and III must all be true.

COnly I must be true.

DI, II, III, and IV must all be true.

Answer : A

Only Statements I and II must be true for a fund to be called a ''no load'' fund. The fund can have no front-end load, and it can have no contingent deferred sales charge. It can, however, charge 12b-1 fees, as long as the 12b-1 fees do not exceed 0.25% of the fund's average net assets, and it can charge investors an exchange fee when they elect to switch their monies from one fund to another.

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