PN Domain 7: Psychosocial Integrity (Quiz 1) Welcome to your Series 6 Practice Exam 4 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. Tocoma Coffee 5% preferred stock trades at $95 a share. What is the current yield? A) 5.25% B) 8.00% C) 22.00% D) 6.25% None 2. A customer bought a bond that yields 6.5% with a 5% coupon. When the bond matures, the customer will receive A) $1,000 plus a call premium. B) $1,025. C) $1,065. D) $1,050. None 3. After an issuer files an S-1 statement with the SEC, a cooling-off period begins that lasts for how many days minimum? A) 20 days B) 10 days C) 30 days D) As long as FINRA desires None 4. Which of the following is not an acceptable reason to amend a Form D filing? A) Removal of non-complimentary material information B) Correct a factual error C) Correct a typographical error D) To reflect a change in the material facts None 5. The first date on which the buyer would not be entitled to receive a declared dividend being paid by a corporation is A) the payment date. B) the record date. C) the declaration date. D) the ex-date. None 6. Your client has a solid financial foundation, has additional discretionary income to invest, is bullish, and is willing to accept the higher risks that come with the potential for higher rewards. Which of the following might you recommend? A) Sector funds B) Value funds C) Long put options D) Asset allocation funds None 7. Investors should consider all of the following when investing in a mutual fund except A) the expense ratio. B) the investment adviser. C) the time horizon. D) the underwriter. None 8. The primary objective of a particular mutual fund is the payment of dividends, regardless of the market's current state. Capital growth is a secondary objective. Which of the following industry groups would be appropriate for the fund's portfolio? A) Aerospace B) Public utilities C) Consumer appliances D) Computer technology None 9. From which of the following is the 12b-1 fee deducted? A) Public offering price of a share B) Assets of the fund C) Investment advisory fee D) Difference in POP and NAV None 10. An investment company portfolio manager who switches among investment classes based on anticipated market changes is using a technique known as A) dollar cost averaging. B) value investing. C) asset allocation. D) indexing. None 11. When evaluating the purchase of an immediate variable annuity for a retiree, the most important factor in determining suitability is A) marital status of the annuitant. B) the uncertainty of the amount of the monthly check. C) tax status of the annuitant. D) the guaranteed minimum check amount None 12. An investor purchased a variable annuity some years ago and has been making regular payments into it. He has encountered financial difficulties and asks his registered representative if he can arrange to delay his next few payments. The registered representative explains that A) the customer may pay in as much or as little, as frequently or as infrequently, as he pleases, with no penalty. B) the customer should exchange his annuity for a variable life insurance contract under Section 1035 to avoid tax consequences. C) if he starts missing payments, there will be penalties. D) if he cannot meet his commitments, he should not have invested in the first place. None 13. The value of a variable annuity separate account fluctuates in relationship to A) the general account maintained by the insurance company. B) the value of the separate account portfolio. C) the Consumer Price Index. D) the S&P 500 market index. None 14. An important basic characteristic of common stocks that makes them a suitable type of investment for the separate account of variable annuities is A) the yield is always higher than mortgage yields. B) the safety of the principal invested. C) changes in common stock prices tend to be more closely related to changes in the cost of living than changes in bond prices. D) the yield is always higher than bond yields. None 15. In a variable annuity contract, the assumed interest rate (AIR) refers to A) the rate used in the prospectus to show the potential growth of the contract. B) the amount of payments required by the investor to maintain the contract. C) the rate of return needed to maintain the annuity payments at a constant level. D) the rate at which purchases are required in the separate account to qualify for special tax treatment. None 16. Your open-end investment company customer has decided to take automatic reinvestment of dividends and capital gains distributions. This choice will A) increase the taxes on these distributions. B) lower the taxes on these distributions. C) defer the taxes on these distributions. D) not alter the tax due on the distributions. None 17. Which of the following statements describe the conduit theory of taxation? A) Dividends and interest are passed through to the investor after the fund pays taxed. B) Dividends and interest accumulate tax free to the shareholder. C) Earnings distributed by a regulated investment company are taxed three times. D) A fund is not taxed on earnings it distributes provided distributions equal 90% or more of net investment income. None 18. An investor sells EGH common stock that she has owned for six months at a loss of $2,500 on February 16. Two weeks later, she purchases preemptive rights to EGH common stock at a price of $1.50, exercisable at a price of $35. Which of the following best describes the tax treatment of this transaction? A) By purchasing the rights, the investor reduces the cost basis of the shares sold at a loss by the full purchase price of the rights. The losses incurred are, therefore, reduced by the purchase price of the rights. B) The purchase of the rights, according to IRS rules, increases the cost basis of the shares sold at a loss and allows for a greater write-off on the current year's taxes. The maximum, however, is $3,000 in net losses. C) The purchase of the rights, according to IRS rules, represents the reestablishment of the investor's position in substantially identical securities, and any potential losses will be disallowed under wash sale rules. D) The purchase of the rights reduces the cost basis in the stock acquired. The investor may write off the full $2,500 loss on the current year's tax return. None 19. Which of the following statements describes the pipeline theory of taxation? A) Dividends and interest are passed through to the investor without the fund being taxed. B) Earnings distributed by a regulated investment company are taxed three times. C) Dividends and interest accumulate tax free to the shareholder. D) A fund is not taxed on earnings it distributes provided distributions equal 80% or more of net investment income. None 20. If your customer sells, for a profit, a stock they have held for three years they will have A) a short-term gain. B) a long-term loss. C) a long-term gain. D) a short-term loss. None 21. An agent of a broker-dealer must obtain all of the following when opening a customer account except A) investment objectives. B) date of birth. C) marital status. D) occupational history. None 22. A transfer on death (TOD) designation may be made for all of the following account except A) joint tenants with rights of survivorship (JTWROS). B) tenants in common (TIC). C) individual. D) tenants in the entirety. None 23. To avoid tax and penalty, an IRA may be rolled over once every A) quarter. B) 3 years. C) 12 months. D) calendar year. None 24. All of the following statements concerning IRA contributions are true except A) if you file your taxes on January 15, you may deduct your IRA contribution even if it is not made until April 15. B) between January 1 and April 15, you may make contributions for the current year, the past year, or both. C) you may make contributions for the past year after April 15, provided you have filed an extension on a timely basis. D) you may contribute to this year's IRA from January 1 of this year until April 15 of next year. None 25. For a non-U.S. person, all of the following are acceptable documents for a customer identification program except A) an alien ID. B) a local school ID. C) a foreign passport. D) another current, government issued, photo ID. None 26. All of the following would be acceptable methods for the customer to opt out of allowing the broker-dealer to share his nonpublic personal information except A) opting out electronically. B) checking a box. C) writing a letter. D) calling a toll free number. None 27. Dale would like for his daughter, DeAnna, to manage his brokerage account. He would like her to be able to place trades and request funds be transferred to other accounts or have checks sent to him. Which of the following would be best for Dale? A) Appoint DeAnna as LPOA for the account. B) Appoint DeAnna as FPOA for the account. C) Add DeAnna as a TOD beneficiary to the account. D) Add DeAnna as a joint tenant to the account. None 28. Which of the following is an example of a discretionary trade? A) The customer requests a representative purchase 100 shares of MNO Corp. common stock when they think best. B) The customer requests a representative buy 300 shares of a good tech company. C) The customer requests a representative buy 300 shares of BuyStuff, Inc., stock. D) The customer requests a representative sell 300 shares of BuyStuff, Inc., from their account. None 29. Your married customers, ages 48 and 50, have a combined annual income of more than $200,000. They are concerned about the effects of rising inflation, and because they are heavily invested in bonds, they seek to invest a portion of their portfolio in a fund that will provide additional diversification. Which of the following mutual funds is the most suitable for these customers? A) ABC Investment-Grade Bond Fund B) ATF Overseas Opportunities Fund C) NavCo Tax-Free Municipal Bond Fund D) XYZ Government Income Fund None 30. One of the most important functions of a registered representative is to do which of the following? A) Recommend proprietary investments of the broker-dealer B) Suggest investments with the highest overall payout to the broker-dealer C) Select investments to meet the customer's needs D) Recommend only investments that do not decline in value None 31. Which of the following is the founder of modern portfolio theory? A) Harry Markowitz B) John Keynes C) Adam Smith D) Milton Friedman None 32. Those industries that are least affected by normal business cycles are A) defensive industries. B) special situation. C) cyclical industries. D) growth industries. None 33. A debt fund manager, extremely sensitive to interest rate risk, has taken the opinion that interest rates will begin to come down and perhaps stay at low rates for the foreseeable future. With that opinion in mind, and wanting to take a conservative approach, which of the following would be a suitable recommendation for the portfolio? A) Below-investment-grade corporate bonds B) Adjustment bonds C) Noncallable corporate bonds D) Callable corporate bonds None 34. A couple in their early 30s has been married for four years, their disposable income is relatively high, and they are planning to buy a condominium. If they need a safe place to invest their down payment for about six months, which of the following mutual funds is the most suitable for these customers? A) ATF Capital Appreciation Fund B) LMN Cash Reserves Money Market Fund C) ABC Growth & Income Fund D) XYZ Investment-Grade Bond Fund None 35. If an investor has $20,000 to invest, but requires $500 per month to pay for her mother's nursing home care, which of the following funds should you recommend? A) Foreign stock B) Money market C) Biotechnology D) Aggressive growth None 36. A customer wishes to open a new account but refuses to provide suitability information. Under FINRA rules, the member A) must not open the account. B) may open the account but must limit recommendations to U.S. government securities. C) may open the account but may not make any recommendations. D) may open the account but must limit recommendations to investment-grade securities. None 37. Which of the following is a customer probably referring to when he speaks of safety in investments? A) Steady current income B) Preservation of capital C) Long-term capital growth D) Reducing inflation risk None 38. All of the following information would be helpful to have in a customer profile except A) mortgage balance. B) previous investment experience. C) educational achievement of a bachelor's degree from an accredited college. D) amount of life insurance owned. None 39. A broker dealer's website is which type of communication? A) Institutional communication B) Research report C) Retail communication. D) Correspondence None 40. If a registered representative is comparing two mutual funds for a customer, which of the following comparisons would not be permissible? A) Comparing two equity funds with slightly different investment objectives, even if the differences and their consequences are carefully explained B) Comparing an equity growth fund to a money market fund with the intention of convincing an investor to purchase the growth fund C) Comparing diversified growth funds from two different fund families D) Comparing a long-term bond fund to a shorter-term bond fund to demonstrate the trade-offs that exist between risk and return None 41. A registered representative of a FINRA member firm is going to present a seminar on retirement planning. It will be a slide show, and no specific advice will be given. The expected attendance is approximately 50 people. Under the FINRA rule on communications with the public, A) this is a public appearance and no approvals are necessary. B) this seminar can take place only if the recommendations are tailored to the specific needs of the audience. C) the slides are considered a retail communication and need principal approval before first use. D) a registered principal is required to attend to ensure that the standards of ethical conduct are maintained. None 42. Which of the following pieces of sales material is exempt from routine spot-checking by FINRA? A) A public communication that simply offers a specific security at a specific price B) An independently prepared reprint that has been materially altered since first published C) Radio commercials D) Telemarketing scripts None 43. When a registered representative is guilty of a rules violation, FINRA may impose all of the following except A) fines of unlimited amounts. B) suspension of registration. C) a jail sentence of up to three years. D) baring from association with other members. None 44. The Code of Procedure contains requirements for A) resolving disputes between two FINRA member firms. B) handling violations of the Conduct Rules. C) reviewing and approving accounts, trades, correspondence, and retail communications. D) resolving disputes between FINRA members and nonmember firms. None 45. All of the following rules apply for complaints except A) a record of a complaint must be maintained for four years. B) written complaints must be maintained for 10 years. C) a quarterly summary report of complaints must be sent to FINRA. D) a quarterly statistical report of complaints must be sent to FINRA. None 46. The system that handles complaints forwarded to FINRA regarding violations of the Conduct Rules is called A) the Code of Conduct. B) the Code of Procedure. C) minor rules violation. D) the Code of Arbitration Procedure. None 47. A change to which of the following items requires amending the Form U-4? A) Marital status B) Member firm address C) Home address D) Vacation home address None 48. Which of the following is not information needed to complete a Form U4? A) Residential history B) Employment history C) Aliases D) Educational history None 49. How many times may a person fail the Series 6 exam before they are permanently prohibited from sitting for the exam? A) Ten times B) There is no limit to how many times the exam may be attempted C) Five times D) Three times None 50. In order to register an associated person a member firm would complete which of these forms? A) Form U2 B) Form BD C) Form U5 D) Form U4 None 1 out of 50 Time is Up! Time's upTime is Up!
