FINRA Series-6 - Investment Company and Variable Contracts Products Representative Qualification Examination (IR) Exam

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Total 325 questions

Which of the following investment companies will always be passively managed?

  • A. a face-amount certificate company
  • B. a unit investment trust
  • C. a mutual fund
  • D. a closed-end investment company


Answer : B

Explanation:
A unit investment trust is always passively managed. Some mutual funds, such as index funds, may also be passively managed, but not all mutual funds are passively managed.

Which of the following is exempt from registering as an investment company under the
Investment Company Act of 1940?

  • A. a unit investment trust
  • B. a non-diversified mutual fund
  • C. a company that sells its securities only to accredited investors
  • D. a company that has no sales charges or management fees


Answer : C

Explanation:
A company that sells its securities only to accredited investors is exempt from registering as an investment company under the Investment Company Act of 1940. All the other choices describe investment companies that are required to file a registration statement with the SEC.

Ms. Newbie is a registered representative with Savvy Investments and has recently gotten married. (Her new name is Mrs. Newbie-Oldman.)Her husband has been a client of hers, and the couple now wants to put her name on the account. In this case:

  • A. Mrs. Newbie-Oldman may only share in the account to the extent that she deposits funds in the account.
  • B. Mrs. Newbie-Oldman must obtain written authorization from Savvy Investments to put her name on the account.
  • C. Mrs. Newbie-Oldmans husband must provide written authorization to Savvy Investments for his new bride to be included on the account.
  • D. Both B and C are true statements.


Answer : D

Explanation:
If Mrs. Newbie-Oldman and her new husband want her name on what was previously his account, she must obtain written authorization from her employer, Savvy Investments, and her new husband must provide his written authorization to Savvy. She is exempted from the proportional investment requirement as Mr. Oldmans spouse, but not from the written authorization requirements under FINRA Rule 2150.

Any compensation earned by a broker-dealer and its registered representative on the sale of mutual fund shares must be returned to the funds underwriter if the purchaser decides to redeem his shares within:

  • A. 30 days.
  • B. 1 week.
  • C. 7 business days.
  • D. 5 business days.


Answer : C

Explanation:
Any compensation earned by a broker-dealer and its registered representative on the sale of mutual fund shares must be returned to the funds underwriter if the purchaser decides to redeem his shares within 7 business days.

A general decrease in price levels in the economy is referred to as:

  • A. disinflation.
  • B. stagflation.
  • C. recession.
  • D. deflation.


Answer : D

Explanation:
A general decrease in price levels in the economy is referred to as deflation. Disinflation refers to a decrease in the rate of inflation, but price levels in general are still rising.
Stagflation refers to an economic condition characterized by high levels of inflation and high unemployment levels. A recession is a prolonged decline in the general economy, typically measured by a decline in the nations gross domestic product (GDP).

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Total 325 questions