HESI A2: Physich (Quiz 5) Welcome to your Series 6 Practice Quizzes. Note: We designed four (4) parts of practice quizzes for each Domain. Each part has 25 questions. Domain 3 (part 1): Provides Customers with Information About Investments, Makes Recommendations, Transfers Assets and Maintains Appropriate Records. (25 questions) Please click NEXT to start your Free Series 6 Practice Quizzes right away. Best of Luck! 1. Series 6, Provides Customers with Information About Investments, Makes Recommendations, Transfers Assets and Maintains Appropriate Records,Series 6 A contractual plan company is what type of investment company? A) Closed-end company B) Unit investment trust C) Face-amount certificate company D) Mutual fund None 2. Series 6, Provides Customers with Information About Investments, Makes Recommendations, Transfers Assets and Maintains Appropriate Records,Series 6 Open-end investment company shares normally go ex-dividend on what date? A) Two business days before the record date B) The settlement date C) The record date D) A date determined by the investment company board of directors None 3. Series 6, Provides Customers with Information About Investments, Makes Recommendations, Transfers Assets and Maintains Appropriate Records,Series 6 The KPF Growth Fund charges no redemption fee. An investor brings 200 shares to your firm for redemption. The next quote on the fund is NAV $9.15, POP $10.00. If liquidated by the firm without charge, what would he receive for his shares? A) $1,000 B) $2,000 C) $915 D) $1,830 None 4. Series 6, Provides Customers with Information About Investments, Makes Recommendations, Transfers Assets and Maintains Appropriate Records,Series 6 Your customer is interested in income that is as free of default risk as possible. Which of the following funds would you consider suitable to recommend to him? A) The Ellis Government Bond Fund B) A balanced fund that purchases only AA-rated bonds or higher C) A fund that specializes in municipal revenue bonds D) The Topley Investment-Grade Corporate Bond Fund None 5. Series 6, Provides Customers with Information About Investments, Makes Recommendations, Transfers Assets and Maintains Appropriate Records,Series 6 John is the annuitant in a variable plan, and Sue is the beneficiary. Upon John's death during the accumulation period, Sue takes a lump-sum payment. What is her total tax liability? A) The proceeds minus John's cost basis taxed as ordinary income at Sue's tax rate B) The ordinary income on the proceeds over the cost basis plus 10% of the net gain (if any) if Sue is younger than 59½ years old C) Entire amount taxed as ordinary income, because it is not life insurance D) None, because it is the proceeds from a life insurance company None 6. Series 6, Provides Customers with Information About Investments, Makes Recommendations, Transfers Assets and Maintains Appropriate Records,Series 6 Typically, no-load mutual funds are sold to the public in which of the following ways? A) The fund sells to investors through their custodian bank. B) The fund sells to a broker-dealer with which it has a selling agreement, which in turn sells to the investor. C) The fund sells directly to the investor. D) The fund sells to an annuity, which in turn sells to the investor. None 7. Series 6, Provides Customers with Information About Investments, Makes Recommendations, Transfers Assets and Maintains Appropriate Records,Series 6 A retired public school teacher, age 65, has deposited a total of $10,000 into a nonqualified variable annuity, and her account's current value is $16,000. If she wishes to take a lump-sum withdrawal of the full amount, how much of this withdrawal is taxed at the ordinary income tax rate? A) $6,000 B) $10,000 C) $0 D) $16,000 None 8. Series 6, Provides Customers with Information About Investments, Makes Recommendations, Transfers Assets and Maintains Appropriate Records,Series 6 If your customer, age 36, invested $1.2 million dollars with an insurance company to purchase an annuity that would begin payouts to him when he reached the age of 65, he would be purchasing A) a delayed payment annuity. B) a periodic payment, deferred annuity. C) a single payment, immediate annuity. D) a single payment, deferred annuity. None 9. Series 6, Provides Customers with Information About Investments, Makes Recommendations, Transfers Assets and Maintains Appropriate Records,Series 6 Which of the following is guaranteed by a variable life policy? A) No sales charge B) Minimum separate account performance C) Minimum death benefit D) Cash value None 10. Series 6, Provides Customers with Information About Investments, Makes Recommendations, Transfers Assets and Maintains Appropriate Records,Series 6 In the prior year, your customer realized an $8,000 short-term capital loss and a $6,000 long-term capital gain. What are the tax results of these transactions? A) No gains, and $2,000 in carry forward losses B) They may reduce their income by $2,000 C) $2,000 in short-term capital losses to use against next year's gains D) $2,000 long-term capital gain None 11. Series 6, Provides Customers with Information About Investments, Makes Recommendations, Transfers Assets and Maintains Appropriate Records,Series 6 In order for an investor to realize a capital gain or loss, A) a dividend must be distributed. B) the investor must hold the security for more than one year. C) a purchase must take place. D) a sale must take place. None 12. Series 6, Provides Customers with Information About Investments, Makes Recommendations, Transfers Assets and Maintains Appropriate Records,Series 6 Which of the following statements describing the federal taxation of municipal bond fund distributions is true? A) Dividend distributions are taxable; capital gains distributions are tax free. B) Both dividend distributions and capital gains distributions are taxable. C) Dividend distributions are tax free; capital gains distributions are taxable. D) Both dividend distributions and capital gains distributions are tax free. None 13. Series 6, Provides Customers with Information About Investments, Makes Recommendations, Transfers Assets and Maintains Appropriate Records,Series 6 BuyStuff, Inc., is a NYSE listed big box retailer. BuyStuff stock has a beta coefficient of 1.2. If the S&P 500 goes up 5% the expected return for BuyStuff stock is which of these? A) 5% B) 6% C) 7% D) 4% None 14. Series 6, Provides Customers with Information About Investments, Makes Recommendations, Transfers Assets and Maintains Appropriate Records,Series 6 Which of the following statements regarding the suitability of investment recommendations are true? A) Only the client is responsible for learning about the investments that are purchased. B) Growth and income mutual funds are suitable for all investors. C) A client's investment objectives, prior investment experience, financial profile, and risk tolerance aid in determining suitability. D) Suitability will tend to be the same within a given demographic. None 15. Series 6, Provides Customers with Information About Investments, Makes Recommendations, Transfers Assets and Maintains Appropriate Records,Series 6 Which of the following is considered to be the order of the stages in a business cycle? A) Trough, contraction, expansion, peak B) Prosperity, expansion, contraction, trough C) Expansion, peak, contraction, trough D) Contraction, trough, peak, expansion None 16. Series 6, Provides Customers with Information About Investments, Makes Recommendations, Transfers Assets and Maintains Appropriate Records,Series 6 Loss of purchasing power has the greatest impact on which of the following investor profiles? A) An investor in his 20s who spends all of his paycheck on video games B) A young married couple who have a comfortable income and have just purchased their dream home C) A 35-year-old investor who owns a portfolio of high-yield corporate bonds D) An elderly person living on a fixed retirement income with little savings None 17. Series 6, Provides Customers with Information About Investments, Makes Recommendations, Transfers Assets and Maintains Appropriate Records,Series 6 When recommending an investment to a customer, one of the most important items to consider is A) market capitalization. B) commission generated. C) name of the investment. D) investment performance. None 18. Series 6, Provides Customers with Information About Investments, Makes Recommendations, Transfers Assets and Maintains Appropriate Records,Series 6 Beta coefficient is the measure of which of the following? A) A security's expected performance in percentage terms B) A stock's performance in relation to expectations C) A security's volatility in relation to its historical values D) A stock or portfolio's volatility in relation to the overall market (systematic risk) None 19. Series 6, Provides Customers with Information About Investments, Makes Recommendations, Transfers Assets and Maintains Appropriate Records,Series 6 During a fact-finding interview with a potential client, your client information sheet is used to list detailed financial information. Which of the following items would be relevant in determining a prospect's net worth? A) $78,000 current IRA balance B) $225,000 annual income C) Recently paid off $3,000 credit card balance D) A potential inheritance None 20. Series 6, Provides Customers with Information About Investments, Makes Recommendations, Transfers Assets and Maintains Appropriate Records,Series 6 In a fiduciary account with stated investment objectives of preserving capital and generating income, which of the following investment trading strategies is the most suitable? A) Margin buying in a rising market B) Buying Treasury bonds C) Short-term trading in a volatile market D) Buying into a large-cap index fund None 21. Series 6, Provides Customers with Information About Investments, Makes Recommendations, Transfers Assets and Maintains Appropriate Records,Series 6 Your customer, age 60, is retired and living at home with a fully paid-off mortgage. Her portfolio contains growth stocks and high-quality bonds, and she is a longtime investor and comfortable with moderate risk. Her objective is a moderate level of current income to supplement her corporate pension plan distributions and the earnings from her IRA. Which of the following mutual funds is the most suitable for this customer? A) QRS Capital Appreciation Fund B) ABC Equity Income Fund C) XYZ Biotechnology Fund D) LMN Stock Index Fund None 22. Series 6, Provides Customers with Information About Investments, Makes Recommendations, Transfers Assets and Maintains Appropriate Records,Series 6 Which of the following would be found on a customer's income statement? A) The customer's risk tolerance B) The customer's income C) The customer's 401(k) balance D) The value of the customer's primary residence None 23. Series 6, Provides Customers with Information About Investments, Makes Recommendations, Transfers Assets and Maintains Appropriate Records,Series 6 Which of the following is a key advantage of purchasing a variable annuity? A) Tax deferral B) Protection against market risk C) Tax-free withdrawals D) Minimal penalty for early withdrawal None 24. Series 6, Provides Customers with Information About Investments, Makes Recommendations, Transfers Assets and Maintains Appropriate Records,Series 6 A non-qualified dividend will be taxed at what rate? A) The investor's capital gains tax rate B) The investor's ordinary income tax rate C) Qualified dividends are not taxable D) The same rate as interest payments None 25. Series 6, Provides Customers with Information About Investments, Makes Recommendations, Transfers Assets and Maintains Appropriate Records,Series 6 Jim's Tech Fund receives $22 million in dividends and pays $2 million in expenses. At the end of the year the fund distributes $18.5 million as dividends to the fund's shareholders. The fund will pay taxes on how much of the net investment income? A) $1.5 million B) $22 million C) $20.5 million D) $20 million None 1 out of 25 Time is Up! Time's up
