PN Domain 6: Physiological Adaptation (Quiz 2) Welcome to your Series 6 Practice Exam 3 This test is designed to prepare you mentally for the actual Series 6 Exam with the same number of (50 questions) and the same time allowed (90 minutes) as the actual exam. The Series 6 Exam is breakdown into four (4) Parts. Here are the Four (4) Domains of the Series 6 Exam with the weightage and number of questions in this practice exam: 1. Seeks Business for the Broker Dealer from Customers and Potential Customers [12 Questions] - 24% 2. Opens Accounts after Obtaining and Evaluating Customers' Financial Profile and Investment Objectives [08 Questions] - 16% 3. Provides Customers with Information about Investments, Makes Recommendations, Transfers Assets and Maintains Appropriate Records [25 Questions] - 50% 4. Obtains and Verifies Customers’ Purchase and Sales Instructions and Agreements; Processes, Completes, and Confirms Transactions [05 Questions] - 10% Please click NEXT to start your Free Series 6 PRACTICE EXAM right away. Best of Luck! 1. Ms. Garcia sold 500 shares of Small Corporation stock short at $25 a share. The stock rose to $28 and she covered 200 shares. The stock then dropped to $22 and she closed the remainder of the short position. What is the result of the transactions? A) $300 gain B) $1,500 loss C) $1,500 gain D) $300 loss None 2. Which of the following statements regarding Treasury bills is true? A) They mature in 10 years or more. B) They pay a fixed rate of interest semiannually. C) They are issued at a discount. D) They mature in less than 10 years. None 3. If the SEC has released a security for sale, then the SEC has A) decided the security is suitable for most persons. B) determined that the prospectus accurately discloses material facts. C) not approved the security but has cleared its sale to the public. D) verified that all information about the issuer included in the prospectus is accurate. None 4. The portion of the JOBS Act that eases the requirements for small and medium-sized companies to raise capital is known as A) Small Company Relief Act. B) Regulation A. C) Regulation D. D) Regulation BD. None 5. According to the Conduct Rules, a member firm may give certain selling concessions to A) member firms of other exchanges who are not FINRA members. B) nonmember broker-dealers. C) other FINRA member firms. D) the general public. None 6. When an agent explains mutual funds to a prospective investor, which of the following statements may be made? A) The redemption value of mutual fund shares fluctuates according to the fund's portfolio value. B) Mutual fund shares are liquid and may be switched from fund to fund without tax liability. C) Mutual funds must make payment within seven days of a redemption request and guarantee a return of the original investment. D) A fund always redeems shares at NAV, with little chance of a financial loss. None 7. The XYZ mutual fund company is introducing a new fund with an investment objective of appreciation in share price by means of capital gains. The portfolio will consist of a mix of both value stocks and growth stocks. This is most likely A) a blend/core fund. B) a balanced fund. C) a preferred equity income fund. D) a utility income fund. None 8. An investor will pay a sales charge in all of the following marketing methods except A) fund to underwriter to dealer to investor. B) fund to underwriter to investor. C) fund to investor. D) fund to underwriter to plan company to investor. None 9. A registered representative with a Series 6 registration can sell which of the following? A) A closed-end management investment company selling just above its NAV in the secondary market B) A REIT on its initial public offering C) An ETF trading on the Nasdaq D) A mutual fund that redeems its own shares None 10. If an investor starts to withdraw from a program that has $9,600 worth of funds, the first monthly payment of a 10-year self-liquidating program will be A) $48. B) $1,000. C) $50. D) $80. None 11. Your customer, 62 years old, has unexpectedly received a large inheritance. He would like to generate income from it now, with as little bother on his part as possible. Which of the following might you recommend to him? A) Purchase a lump-sum immediate annuity B) Purchase a lump-sum deferred annuity C) Purchase a periodic payment deferred annuity D) Invest in a diversified portfolio of corporate stocks None 12. The AIR on a variable annuity is 5%. In March, the separate account earned 5%, which resulted in an April payment of $300. In April, the separate account earned 9%, resulting in a May payment of $325. What must the separate account earn in May to generate a $325 June payment? A) 9% B) 5% C) 3.25% D) Between 5% and 9% None 13. When a customer wants income from an annuity and chooses the option of life with 20-year period certain, how will distributions be taxed? A) As ordinary income based on an exclusion ratio B) As capital gains based on an exclusion ratio C) As ordinary income based on LIFO accounting D) As capital gains based on LIFO accounting None 14. A widowed customer with no children has a portfolio invested in mutual funds valued at $250,000. The portfolio generates a monthly income of $1,600, an amount that exceeds her living expenses by $300. The investment portfolio is her sole source of income. Her agent recommends she sell $30,000 worth of her mutual funds and purchase a variable life insurance policy to take advantage of the tax deferral and death benefit features. This recommendation is A) unsuitable, because she has no need of the death benefit. B) suitable, because it offers a growth opportunity with a death benefit for a portion of her holdings. C) unsuitable, because a fixed annuity would better meet her needs. D) suitable, because it provides tax-deferral features. None 15. Bob Smith, who is in his 40s, has just been placed into an extremely generous defined benefit plan at his company. He has decided that he no longer needs his variable annuity for retirement purposes and wants to use the money for a trip to Africa. Over the years, he has invested $60,000 in the annuity, and its total value is now $80,000. How much will Bob owe in taxes and penalties if he cashes it in? A) Capital gains tax on $60,000 and a $6,000 penalty B) Capital gains tax on $20,000 and a $2,000 penalty C) Income tax on $20,000 and a $2,000 penalty D) Income tax on $60,000 and a $6,000 penalty None 16. A regulated investment company A) is in court receivership. B) acts as a conduit for dividend distributions. C) offers only nonredeemable shares. D) is managed by the SEC. None 17. A mutual fund that qualifies as a conduit under subchapter M of the internal revenue code will pay taxes on which of these amounts? A) The amount of the net investment income B) The net amount of the net investment income after expenses C) The total of all dividends and interest received less any expenses D) The amount of any net investment income not distributed to shareholders as a dividend None 18. An open-end investment company that does not distribute at least 90% of its net income A) does not require a restricted type of management. B) continues to qualify as a registered investment company based on interpretations of the IRS. C) is unable to retain all or part of its realized capital gains. D) is liable for federal taxes on its net investment income. None 19. Which of the following describes a wash sale? A) Re-establishing a position in a security that has been sold for a loss within a period of 60 days of the date of the loss B) Re-establishing the position in a security that has been sold for a gain within a period of 30 days of the date of the loss C) Re-establishing a position in a security that has been sold for a loss within the same calendar year as the date of the loss D) Re-establishing a position in a security that has been sold for a loss within a period of 30 days of the date of the loss None 20. ACE, an open-end investment company, operates under the conduit, or pipeline, tax theory. Last year, it distributed 91% of all net investment income as a dividend to shareholders. Therefore, which of the following statements is true? A) ACE paid taxes on 91% of its net investment income last year. B) ACE paid taxes on 9% of its net investment income and capital gains last year. C) ACE paid no taxes last year because it qualified as a regulated investment company under IRC Subchapter M. D) ACE paid taxes on 9% of its net investment income last year. None 21. Cam and Casey own C&Cs Flowers, a small, unincorporated florist. They are looking to open an account to invest for the business. What sort of account should Cam and Casey open? A) Corporate account B) Joint tenants account C) Sole proprietor account in both names D) Partnership account None 22. Which of the following government-issued documents would not be considered acceptable proof of identity? A) A current U.S. passport B) A current military identification issued by the U.S. Department of Defense C) A current drivers license issued by the State of Ohio D) A current birth certificate issued by Los Angeles County, California None 23. Employer sponsored qualified retirement plans A) may be a trust. B) must be sponsored by a corporation. C) may not be a trust. D) must be a trust. None 24. ERISA regulations apply to which of the following? A) Public sector retirement plans B) Armed forces retirement plans C) Federal government employee retirement plans D) Private sector retirement plans None 25. All of the following addresses are acceptable to open an account for a partnership except A) any physical location. B) a Post Office Box. C) a principal place of business. D) a local office. None 26. Firms are required to institute a customer identification program (CIP) under the provisions of which of these? A) Securities Exchange Act B) The Uniting and Strengthening America by Providing Appropriate Tools to Intercept and Obstruct Terrorism Act (USA PATRIOT) C) Bank Secrecy Act (BSA) D) Anti-Money Laundering Act None 27. Assets may be transferred from one account to a different account within the same firm by use of which of these? A) Transmittal notation B) Transfer initiation form C) Journal letter D) Transfer notice None 28. A durable full power of attorney (FPOA) continues until A) the grantor becomes incapacitated. B) the grantor makes a verbal request to revoke the power. C) the grantor dies. D) five years later. None 29. Taylor is an active trader that believes they can achieve higher return by moving in and out of the market. Taylor is best described as which of the following? A) Taylor is a buy-and-hold investor. B) Taylor is a conservative investor. C) Taylor is likely a mutual fund investor. D) Taylor is an aggressive investor. None 30. Which of the following investments will require a specific disclosure regarding liquidation? A) Exchange traded fund B) Limited partnership C) Class A mutual fund D) Listed common stock None 31. The capital asset pricing model (CAPM) assumes A) that no type of risk can be diversified away. B) that prices are influenced by supply and demand only. C) investors are averse to risk and expect to be rewarded for taking risk. D) that those who participate in smaller transactions are generally wrong regarding timing purchases and sales. None 32. Which of the following is not a major asset class under asset allocation theory? A) Options B) Bonds C) Cash D) Stocks None 33. A security's actual performance versus expectations is known as which of these? A) Delta B) Gamma C) Beta D) Alpha None 34. A 78-year-old retiree had a $100,000 CD maturing and was dissatisfied with current yields on new CDs. Aside from Social Security and a small monthly pension, the $100,000 is his total potential source of income. The registered representative recommended investing the funds in a single premium immediate variable annuity, allocating funds to the separate account as follows: $10,000 Medical Technology, $40,000 High-Yield Corporate Bond, and $50,000 Growth & Income. The registered representative's recommendation is A) unsuitable because of the aggressive nature of the portfolio choices. B) unsuitable because of the lack of diversification of the portfolio choices. C) suitable because the portfolio mix seems likely to offer increased income to the customer. D) suitable provided the customer agrees with the recommendation. None 35. An investor has a portfolio diversified among many different asset classes. If there was an immediate need for cash, which of the following would probably be the most liquid? A) CDL Common Stock Mutual Fund B) QRS Money Market Mutual Fund C) XYZ International Stock Mutual Fund D) Cash value from a variable life insurance policy None 36. If ZB Invest Fund seeks capital appreciation, has a low dividend yield, and invests chiefly in the stock of large, well-performing companies that have earnings momentum, it is probably A) a value fund. B) a sector fund. C) a special situation fund. D) a growth fund. None 37. All of the following are financial considerations except A) the size of a customer's mortgage. B) the value of a customer's home. C) the size of a customer's home. D) a customer's debt service. None 38. Which of the following would be found on a customer's balance sheet? A) The value of the customer's primary residence B) The customer's monthly debt service C) The customer's risk tolerance D) The customer's income None 39. Correspondence—one of the three categories of communication with the public—is defined as A) communication that is targeted only at individuals who currently maintain accounts with the broker-dealer. B) written communications only that has been made available to 25 or fewer retail investors within the past six months. C) any written or electronic communication that is distributed or made available to 25 or fewer retail investors within any 30-calendar-day period. D) electronic communication only that has been made available to 25 or fewer retail investors within the past six months. None 40. If a registered representative wishes to distribute a copy of a national magazine article about the GAON Mutual Fund, which of the following statements is correct? A) The article may be used without prior approval of a principal of the member firm. B) This material meets the definition of an independently prepared reprint. C) The article may be sent without prior or concurrent delivery of the GAON Fund prospectus. D) Because this material is already in the public domain, it is excluded from the rules on communication with the public. None 41. There are retention requirements for certain records of a broker-dealer. One of those is the firm's retail communications files. Under FINRA rules, copies of retail communications must be retained for A) 3 years after last use. B) 6 years after last use. C) 3 years after first use. D) 6 years after first use. None 42. A registered representative has been doing some research on his own. He would like to share the information with some of his clients and sends an email to 15 of them. He also has some prospects he's been working on and sends the email to 12 of them during the same week. Under the FINRA rule on communications with the public, this would be considered A) an electronic communication. B) correspondence. C) retail communication. D) exempt from the principal approval requirements. None 43. Under the Code of Procedure, if an associated person is suspended from a FINRA member firm, he A) may immediately continue in a clerical position. B) may still keep an office but may not sell for the firm. C) may not remain on the member firm's premises. D) may continue to sell, but only informally. None 44. When must a FINRA member firm make a copy of the FINRA rules available to customers? A) Annually B) Every three years C) Upon the customer's request D) In response to a complaint None 45. Per FINRA, a customer could include all of the following except A) an individual. B) a trust. C) a corporation. D) a broker-dealer. None 46. If mediation fails, the dispute proceeds to arbitration. Under what circumstances may a mediator then serve on the arbitration panel? A) None B) If the panel consists of a minimum of three arbitrators C) With SEC permission D) If the panel consists of a minimum of six arbitrators None 47. How long does a person have, after the filing of a full termination Form U5, to associate with a member firm before they must requalify by taking an appropriate exam? A) Ten years B) Two years C) Three years D) One year None 48. Which of the following does not automatically disqualify an applicant for registration? A) A misdemeanor conviction involving securities or money within the past 10 years B) Court injunctions prohibiting the individual from acting as an investment adviser C) Misstatements unwittingly made in an application for membership or registration as an associated person D) A felony conviction, either domestic or foreign, within the past 10 years None 49. If a person unsuccessfully attempts the Series 6 exam three times in a row, how long must they wait after the third attempt before attempting the exam again? A) 120 days B) 60 days C) 90 days D) 180 days None 50. How long does FINRA retain jurisdiction after the filing of a Form U5 full termination? A) 180 days B) Five years C) One year D) Two years None 1 out of 50 Time is Up! Time's upTime is Up!
