FINRA-SERIES-6 Online Practice Questions and Answers

Which of the following statements about specialists is false?

A. Specialists are market makers in assigned stocks and, as such, can profit from these investments.

B. Specialists are required to maintain a fair and orderly market in their assigned stocks, meaning that they must buy if there is an excess of sell orders and sell out of their own portfolios if there is an excess of buy orders.

C. Specialists are employees of the exchange on which they oversee trades.

D. In addition to acting as market makers, specialists also act as agents and execute limit orders placed by commission brokers for their clients if the specified price is reached.

GoForBroke Investments has registered with the SEC to be a market maker in certain NASDAQ-listed securities. In order to be able to enter bid and ask quotes for the securities in which it is going to make a market, GoForBroke must subscribe to which level of NASDAQ?

A. Level I

B. Level II

C. Level III

D. Level IV

A new issue of common stock can be classified in which of the following categories?

I. primary market

II. money market

III. secondary market

IV.

capital market

A.

I only

B.

III only

C.

I and IV only

D.

II and III only

Connie Serve placed an order to purchase five, $1,000 Treasury bonds in the secondary market on Tuesday, October 12th. Connie will be required to pay for this purchase on which day?

A. Tuesday, October 12th.

B. Wednesday, October 13th.

C. Thursday, October 14th.

D. Friday, October 15th.

Mr. Big of HiGrow Corporation needs more money to support the exceptional growth rate that his firm is enjoying. He meets with BigFee Investment Banker, who agrees to handle the IPO for HiGrow. Subsequently, InTheLoop Brokerage is tapped to be part of the selling group that will handle the sale of the new stock to the public. In this example, the underwriter is:

A. Mr. Big

B. HiGrow Corporation

C. BigFee Investment Banker

D. InTheLoop Brokerage

Any person who willfully acts in violation of the Securities Act of 1933, or any SEC rule, is subject to a penalty of:

A. 10 years in prison or a $10,000 fine, or both.

B. 5 years in prison or a $10,000 fine, or both.

C. 10 years in prison or a $25,000 fine, or both.

D. 5 years in prison or a $5,000 fine, or both.

Patty Planner has been contributing a sum to a non-qualified variable annuity each month for the last fifteen years in order to reach her ultimate goal of an early retirement. Now that she has turned 60, Patty has decided to retire. Her annuity is now worth $69,000, and her total contributions were $36,000. Patty decides to withdraw $15,000 of her accumulation as a lump sum to fund an extended vacation to Europe that she has always promised herself.

Which of the following statements applies to Patty's situation?

A. Her $15,000 withdrawal will be taxed as capital gain income, at a preferential rate, but she will also have to pay a 10% penalty for withdrawing the funds prior to turning 62.

B. Her $15,000 withdrawal will be taxed as ordinary income to her at her marginal tax rate.

C. Her $15,000 withdrawal is not taxable since it is less than the amount of her total contributions to the plan, but she will be subject to a 10% penalty for early withdrawal.

D. Her $15,000 withdrawal will be taxable as ordinary income to her at her marginal tax rate, and she will also be subject to a 10% penalty for early withdrawal.

Which of the following statements about mutual funds is false?

A. Mutual funds may be organized as corporations, statutory trusts, or partnerships.

B. Mutual funds are organized under state law.

C. Mutual funds issue redeemable shares.

D. Mutual funds may be either actively or passively managed.

Which of the following statements regarding variable life insurance policies is false?

A. Policyholders have voting rights similar to those of mutual fund investors.

B. Most policies have an expense guarantee provision that establishes a firm limit on how much the insurance company can increase administrative charges.

C. Insurance companies are required to give variable life policyholders at least 24 months from the date of purchase to switch to a traditional whole life policy without having to prove insurability.

D. The surrender value of a variable life insurance policy will always be less than its cash value.

The Bank Secrecy Act (BSA) requires any financial institution to:

I. file a suspicious activity report (SAR) when a possible violation of a law is suspected.

II. inform its customer that it is filing the SAR.

III. provide any customer that is suspected of engaging in an illegal transaction the opportunity to explain himself prior to filing an SAR.

IV.

obtain specified information on any party sending or receiving a wire transfer of $3,000 or more.

A.

I and II only

B.

I, II, and IV only

C.

I and IV only

D.

I, II, III and IV