Series 6

Question 1

What disclosure document would sales literature and a record of past performance be found in?

Answer 1

The final prospectus

Question 2

Can sales literature be distributed during the cooling off period?

Answer 2

No

Question 3

What is the proper disclosure document for muni bonds?

Answer 3

Official statement

Question 4

What kind of annuity includes augmentation of the premium payments by the insurance company?

Answer 4

Bonus annuity

Question 5

What is the proper disclosure document for Regulation A exempt offerings?

Answer 5

Offering circular

Question 6

Who is the issuer of STRIPS?

Answer 6

The US government

They are stripped by BDs but still considered issues of the government and are backed by the government

Question 7

What tax is paid on capital gains from mutual funds?

Answer 7

Capital gains tax

Question 8

What tax is paid on dividends from mutual funds?

Answer 8

Ordinary income tax

Question 9

Which act created the SEC?

Answer 9

Securities Act of 1934

Question 10

In what type of joint account does each person own a specific percentage that goes through their estate upon death?

Answer 10

Tenants in common

Question 11

How often are 12b-1 fees charged to accounts?

Answer 11

Quarterly

Question 12

What minimum debt ratio must an investment company have in order to register with the SEC?

Answer 12

3:1

Question 13

What % of the outstanding shares need to vote in favor for an open-end company to become a closed-end company?

Answer 13

50%

Question 14

What % of the outstanding shares need to vote in favor to change the objective of a fund?

Answer 14

50%

Question 15

What is the term for a fund whose objective is both income and growth by investing in both equity and debt?

Answer 15

A balanced fund

Question 16

What is the term for a fund whose objective is both income and growth by investing solely in equity?

Answer 16

Combination fund

Question 17

What 1035 exchange is not allowed?

Answer 17

Annuity to life insurance

Question 18

Are partial withdrawals from nonqualified variable annuity plans taxed on a FIFO or LIFO basis?

Answer 18

LIFO

Question 19

What is the penalty for annuity withdrawals before age 59.5?

Answer 19

10%

Question 20

What products can a Series 6 rep sell?

Answer 20

Anything with a prospectus in a primary offering

Question 21

Where do mutual funds pay dividends from?

Answer 21

The fund’s net investment income

Question 22

How often can open-end investment companies distribute long-term capital gains to investors?

Answer 22

Annually

Question 23

What is the conversion ratio of a convertible bond purchased at par and convertible at $50?

Answer 23

20:1

Question 24

Are index annuities considered securities?

Answer 24

No

Question 25

Are variable annuities considered securities?

Answer 25

Yes

Question 26

What type of annuity tends to have a longer surrender period than other types and has a guaranteed minimum?

Answer 26

Index annuities

Question 27

Which fluctuates more: long term or short term prices of debt securities?

Answer 27

Long term

Question 28

Which fluctuates more: long term or short term interesy rates of debt securities?

Answer 28

Short term

Question 29

How often are 12b-1 fees deducted from a mutual fund investor's account?

Answer 29

Quarterly

Question 30

How are early annuity withdrawals taxed?

Answer 30

Ordinary income on the gains plus a 10% penalty tax

Question 31

What is the maximum sales charge on variable annuities?

Answer 31

There isn't a maximum, but they must be fair and reasonable

Question 32

What is the maximum sales charge on variable life insurance?

Answer 32

9% over the life of the contract, but not to exceed 20 years

Question 33

What kind of life insurance policy has guaranteed cash value?

Answer 33

Whole life

Question 34

Under what circumstances may an open-end investment company act as its own distributor?

Answer 34

If the fund is established under Section 12b-1

Question 35

Are dividends and gains distributions from mutual funds reinvested at the POP or NAV?

Answer 35

NAV

Question 36

What does it means for GNMA certificates to be pass-through?

Answer 36

The investor receives principal and interest after the homeowner has made their monthly mortgage payment

Question 37

Are mutual bond fund dividend distributions taxed?

Answer 37

No

Question 38

Are mutual find fund capital gains taxed?

Answer 38

Yes

Question 39

A short term or long term bonds the most susceptible to fluctuating interest rates?

Answer 39

Long term

Question 40

How often must a client receive a disclosure of the firm's policies after the initial account opening?

Answer 40

Annually

Question 41

What is the main criteria for trust account addresses?

Answer 41

They must be physical

Question 42

Can a trust account's address be a PO box?

Answer 42

No, it must be physical

Question 43

Under the SEC's Name Rule, how much of a mutual fund's assets must be located in the type of security referenced in their name?

Answer 43

80%

Question 44

A customer has invested a total of $10,000 in a nonqualified deferred annuity through a payroll deduction plan offered by the school system where he works. The annuity contract is currently valued at $16,000, and he plans to retire. On what amount will the customer be taxed if he chooses a lump-sum withdrawal?

Answer 44

$6,000 Payments into a nonqualified deferred annuity are made with after-tax money; taxes must only be paid on the earnings of $6,000.

Question 45

What type of risk can not be eliminated through diversification?

Answer 45

Market risk

Question 46

What is the investment theory that attempts to derive the expected return on an asset on the basis of the asset's systematic risk?

Answer 46

The capital asset pricing model (CAPM)

Question 47

What is implied by a portfolio generating excess returns?

Answer 47

Positive alpha

Question 48

What is the risk associated with default of a debt security?

Answer 48

Credit risk

Question 49

What share classes typically have a higher expense ratio than Class A shares?

Answer 49

Class B and Class C

Question 50

What kind of bond has a duration equal to its maturity?

Answer 50

Zero coupon

Question 51

What is the contribution limit for nonqualified plans?

Answer 51

There is none

Question 52

Are deferred compensation plans qualified?

Answer 52

No

Question 53

What asset to debt ratio is required for open end companies to borrow money from financial institutions?

Answer 53

3:1

Question 54

Who enacts fiscal policy?

Answer 54

Congress and the President

Question 55

Who enacts monetary policy?

Answer 55

The Federal Reserve

Question 56

What is the interest rate charged by banks to creditworthy borrowers?

Answer 56

Prime rate

Question 57

What is the interest rate charged by banks for margin call loans?

Answer 57

Broker call loan rate

Question 58

What is the interest rate charged by banks to each other for overnight loans?

Answer 58

Federal funds rateWha

Question 59

What is the interest rate charged by the Federal Reserve to banks for short-term loans to meet the reserve requirement?

Answer 59

Discount rate

Question 60

What measures the rate of gain or loss in the dollar's buying power?

Answer 60

CPI

Question 61

Assets may be transferred from one account to a different account within the same firm by use of what form?

Answer 61

Journal letter

Question 62

How much of the BOD must be non-interested parties if a fund has no 12b-1 fee?

Answer 62

40%

Question 63

How much of the BOD must be non-interested parties if the fund has a 12b-1 fee?

Answer 63

50%

Question 64

Can a closed-end company charge a 12b-1 fee?

Answer 64

No, they only trade on the secondary market