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.

SuperDOT is:

A. an electronic communication network (ECN).

B. an electronic system whereby trades are executed on NASDAQ.

C. an electronic system used to place orders on the NYSE.

D. both A and C.

Mr. A. D. Venturer owns 10,000 shares of Risky Corporation, which is currently selling for $8 a share. He is leaving shortly for an extended trip to Antarctica and will be out of communication for that time. He doesn't want to liquidate his investment in Risky before he goes, but he doesn't want to return to find that his $80,000 investment is worth little to nothing.

Which of the following options would make sense for Mr. Venturer?

A. buy a call option on Risky stock with an $8 strike price and an expiration date that occurs after his return

B. place a stop sell order at a price less than $8 a share-perhaps $6 or $7 a share

C. place a limit order to sell Risky at either $8 a share or a price slightly less than $8 a share

D. enter a good 'til cancelled (GTC) market order to sell Risky

Which of the following is not considered to be a “security” as defined by the Securities Exchange Act of 1934?

A. an interest in an oil drilling lease

B. a collateral trust certificate with an initial maturity of 5 years

C. a straddle that expires in 3 months

D. a bankers’ acceptance, issued with a maturity of 4 months

Which of the following qualifies as an insider under the definition provided by the Securities Exchange Act of 1934?

I. a member of the board of directors of a firm

II. the vice-president of marketing of a firm

III.

an investor who owns 5% of the voting stock of the firm IV. the daughter of the CEO of a firm

A.

I and II only

B.

I, II, and III only

C.

I, II, and IV only

D.

I, II, III, and IV

Joe Cool is a member of the All Greek Fraternity. A few of the alumni of his fraternity sat for the FINRA Series 6 exam over the past couple of years and, using their cell phones, took pictures of the exam questions. They forwarded these to their fraternity to be included in the test bank file the fraternity keeps in its study room.

Have there been any violations of FINRA/NASD rules in this instance?

A. No. It is standard practice for sororities and fraternities to compile test banks of old exams, and since the forwarded tests are not copies of an actual future exam that will be administered, there has been no violation of any rules.

B. Yes. It is a violation of Rule 2110 for an exam-past or present-to be reproduced and distributed for study purposes.

C. No. Rule 2110 only prohibits the reproduction and distribution of a previously administered FINRA exam for study purposes if the exams are being sold. As long as there is no compensation involved, a violation has not been committed.

D. Both A and C are true statements.

Under FINRA rules, the variable contract sales agreement must specify that any sales commission is to be returned to the insurance company if the buyer terminates the contract within:

A. one week.

B. 5 business days.

C. 7 business days.

D. 10 business days.

Which of the following statements about 1035 exchanges are true?

I. A 1035 exchange refers to the exchange of all of the shares owned in one mutual fund for shares of another mutual fund in the same family of funds.

II. A 1035 exchange refers to the exchange of one variable annuity contract for another variable annuity contract without the need to pay tax on any of the income or capital appreciation associated with the original contract.

III.

A 1035 exchange refers to the exchange of a variable annuity contract for a whole life insurance policy offered by the same company with no tax consequences to the transaction.

A.

I only

B.

II only

C.

I and II only

D.

I, II, and III

In 2008, Mr. Conservative bought a 1-year Treasury bill that was yielding 1.63%. The average annual rate of inflation in 2008 was 3.85%. In this case:

A. Mr. Conservative earned a nominal return of +3.85% on his T-bill investment.

B. Mr. Conservative earned a real return of -2.22% on his investment.

C. Mr. Conservative earned a real return of +1.63% on his investment.

D. Mr. Conservative earned a nominal return of +2.22% on his investment.

Upon receiving a complaint about one of its member firms, FINRA may: I. require any person associated with the member firm to provide information to FINRA and to testify under oath.

II. inspect and copy the books, records and accounts of the member firm.

III.

share information obtained from its investigation of a member firm with a foreign regulatory agency.

A.

II only

B.

I and II only

C.

II and III only

D.

I, II, and III