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Series 6 > Wrong Answers > Flashcards

Wrong Answers Flashcards

1
Q

The ABC Corporation would like to raise capital via a Regulation D private placement. In order to qualify for an exemption from registering with the SEC under rule 506, which of the following is true?2

A

Advertising is allowed if only accredited investors may purchase the securities

If selling to non accredited investors, general solicitation is not allowed

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2
Q

TCB wants to offer $57 million worth of common stock in its home state and in three other states. To clear the offer for sale, TCB must file a

A

Registration statement

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3
Q

The Securities and Exchange Commission regulates all of the following Except

A

Intrastate securities offerings

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4
Q

If two customers are tenants in common in a joint account, which of the following statements are true of this arrangement?2

A

They need not make equal investments in the account

They need not have equal interests in the property in the account

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5
Q

SEC regulations for securities issued by investment companies prohibit which of the following?2

A

Open end funds from issuing preferred stock

Open end funds from issuing bonds

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6
Q

An investor has unexpectedly received $30,000 from an old debt he had written off. This money will come in handy for a business venture planned for three years from now. Meanwhile, he would like to generate some income on the money with as little risk and as little expense as possible. Which of the following recommendations is likely to be the most suitable for this customer?

A

Class C shares of the ABC Investment Grade Bond Fund

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7
Q

As written in the Investment Company Act of 1940, Investment companies must do all of the following Except

A

Maintain adequate debt/equity diversification in the fund’s investments

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8
Q

All of the following must be sold with a prospectus except

A

Closed end funds in the secondary market

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9
Q

If a customer does not pay for a trade regular way, how much additional time does Regulation T give the broker dealer to deal with the problem?

A

Two business days

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10
Q

According to the conduct rules, a Finra member must do which of the following?

A

Authorize a registered representative to share in a client’s profits or losses only in writing

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11
Q

Institutional communication is defined as

A

Sales material sent only to an institutional investor

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12
Q

If still employed beyond age 70 1/2, which of the following is True?

A

Contributions to the company 401 k are permitted, and the required beginning date for distributions from the 401 k is delayed

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13
Q

Under he Employee Retirement Income Security Act of 1974 (ERISA), all of the following guidelines for the regulation of retirement plans are true except

A

A corporation in business for three years is required to establish a retirement plan for employees

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14
Q

A prospectus must accompany or proceed which of the following?

A

A sales presentation held in person at the representative’s office

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15
Q

During the time an S-1 filing was being reviewed, an omission was found which could affect the amount of listed debt obligations of the issuer. In determining the course of action, which of the following would most likely be responsible to correct the omission?

A

The issuer

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16
Q

Which of the following have no liability in an underwriting for unsold shares in a firm commitment?

A

The Selling Group member

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17
Q

If RMDs do not begin by April 1 of the year after the individual turns 70 1/2, which of the following is applicable?

A

Both a 50% insufficient distribution penalty will be assessed to the amount that should have been withdrawn and ordinary income taxes will be applied to the full amount

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18
Q

When the registration statement for corporate securities becomes effective, which of the following are true?2

A

The issuer amends the preliminary prospectus

The final offering price is added to the red herring

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19
Q

Under FINRA filing requirements and review procedures, which of the following statements are true?2

A

A new member firm must file advertising with FINRA at least 10 days before use for the first year

Retail communications must be kept on file for 3 years

20
Q

Under the intrastate offering rule (Rule 147), when may a resident purchaser of these securities resell them to a nonresident?

A

Six months after the investor’s purchase date

21
Q

While cold calling, a registered representative encounters an individual interested in buying open ended investment company shares. The representative and the client meet to discuss alternative investment choices. The individual then writes a check for the purchase of open ended investment company shares without receiving a prospectus. The registered representative is in violation of which federal act?

A

Securities Act of 1933

22
Q

Institutional communication is defined as sales material

A

Sent only to an institutional investor

23
Q

Which of the following requires that the communication was issued by an independent publisher and not materially altered by the member?

A

IPR

24
Q

A registered representative wants to send out an indecently prepared reprint to a prospective client. What guideline must be followed before sending the IPR to the prospect?

A

Any inaccurate content of the article may be changed prior to delivery to retail customers

25
Q

A registered representative would like to speak at a conference next month. The conference is delivered in the firm of a webinar and there are over 500 people enrolled to attend. Which of the following accurately defines responsibilities regarding this speaking engagement?

A

The registered representative must complete a training program prior to this type of activity

26
Q

Under FINRA filing requirements and review procedures, which of the following statements are true?2

A

An established firm must file investment company communications that include a ranking not independently prepared with FINRA within 10 days of first use

Retail communications must be kept on file for 3 years

27
Q

Communications related to variable life and variable annuities must meet specific standards. Which of the following standards is not required?

A

If added as a feature of the product, there may be an implied guarantee within the communication of the principal value of the separate account

28
Q

The firm commitment is the most commonly used yep of underwriting contract. Which of the following can be said of this type of underwriting?

A

A firm commitment underwriting can be either a negotiated underwriting contract or a competitive bid arrangement

29
Q

All of the following statements about a red herring are true except

A

Registered representatives may send a copy of the company’s research report with it

30
Q

As part of the requirement to verify the identity of the person opening an account, all of the following are true except

A

Until the customer identification is verified, no transactions are allowed in the account

31
Q

When opening an account for a registered representative of another broker dealer, which of the following is necessary?

A

The registered representative must obtain the consent of the employing broker dealer prior to opening the account

32
Q

A deferred compensation plan

A

May not protect the employee from losing the deferred compensation should the employee leave the company prior to retirement

33
Q

How often can an IRA be rolled over to another IRA?

A

Once every 12 months

34
Q

If a preferred stock pays a stated dividend of 6% and the issuer calls the stock, which of the following is not related to the call?

A

If a preferred stock is going to be called, it must happen on the first available call date

35
Q

Your customer, age 29, makes $42,000 annually and has $10,000 to invest. Although he has never invested before, he wants to invest in something exciting. Which of the following should you suggest?

A

Your customer should provide more information before you can make a suitable recommendation

36
Q

Distributions from net investment income paid to shareholders by an investment company meeting the requirements to be a regulated investment company are

A

Non taxable to the fund but taxable to the shareholder as dividend income

37
Q

For a fund to charge the maximum sales load permitted under FINRA rules, which of the following features must be among those made available to shareholders?

A

Quantity discounts

38
Q

Which of the following would be directly involved in ending the collection of 12b-1 fees by a mutual fund?

A

The non interested members of the board of directors

39
Q

For which of the following investors are Class B shares generally best suited?

A

Small amount to invest with a long term view

40
Q

Which of the following statements regarding dollar cost averaging is True?

A

When the market fluctuates, it will result in a lower average cost per share

41
Q

A 60 year old male customer is interested in investing in a variable annuity. Which of the following would you consider the least important in the investment decision?

A

The customer’s sex

42
Q

A customer is considering the purchase of either a variable annuity or variable life insurance. In discussing the merits of the respective contracts, a registered representative may state that all of the following characteristics are common to both contracts except

A

Death benefits are received income tax free

43
Q

A 529 college savings plan offers all of the following to participants except

A

Before tax contributions to the plan

44
Q

Rules require that in any transaction for a customer, a member firm must

A

Use reasonable care to get the best price

45
Q

No public arbiters meet which of the following criteria?

A

Any person who worked in the financial industry for any duration

Series 6 (1 decks)

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