FINRA-SERIES-6 Online Practice Questions and Answers

You have a client, Richie Rich, who is in the 39.6% marginal tax bracket, and one of his investment goals is to minimize his payments to the IRS.

Which of the following instruments would serve this purpose?

A. U.S. Treasury bills

B. general obligation bonds

C. an investment-grade corporate bond

D. Both Selections A and B would serve to minimize his payments to the IRS.

The primary difference between dealers and brokers is that:

A. dealers operate exclusively in the primary market whereas brokers operate only in the secondary market.

B. dealers operate only in the bond market, while brokers conduct trades in stocks, bonds and options.

C. dealers are market makers, who buy and sell out of their own inventory of securities, while brokers are matchmakers, who match buyers with sellers.

D. Both Choices B and C describe differences between dealers and brokers.

Which of the following statements regarding a unit investment trust (UIT) is false?

A. A UIT has a fixed number of shares.

B. UITs are actively managed.

C. Shares of UITs trade on exchange floors.

D. All UITs are established with a termination date.

Which of the following is not one of the purposes of FINRA as stated in its articles of incorporation?

A. maintain a fair and orderly securities market

B. encourage members to uphold high ethical standards

C. develop lines of communication between the securities industry and governmental agencies

D. police members and assist with dispute settlements

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.

Which of the following correctly describes how the holding period of a security is calculated when determining whether its sale will result in a short-term or a long-term capital gain?

A. The holding period begins the day after the buy order is submitted and ends the day the sell order is submitted.

B. The holding period begins on the settlement day of the purchase and ends on the settlement day associated with the sale.

C. The holding period begins on the settlement day of the purchase and ends on the day the sell order is submitted.

D. The holding period begins on the settlement day of the purchase and ends on the day the sell order is submitted.

Which of the following would offer an investor the most protection against purchasing power risk?

A. a stock mutual fund

B. a government bond fund

C. a high-yield bond fund

D. a money market fund

You have a young client whose primary investment objective is to be able to retire early. Really early. She's thinking 40. She has more than sufficient income to meet her current needs for cash.

Which of the following types of stock funds would be most suitable for her?

A. balanced

B. value

C. growth

D. All of the above. All stock funds invest in stocks, which can be expected to appreciate in value.

Which of the following statements regarding a mutual fund's expenses are true?

A. A mutual fund that has a front-end load cannot also charge 12b-1 fees.

B. A mutual fund's record maintenance fees cannot exceed 0.25% of average net assets.

C. The expense ratio of a mutual fund cannot exceed 1.0%.

D. A mutual fund family is prohibited from charging a fee when an investor exchanges his shares of one of its funds for another.

A discretionary account authorization permits a registered representative to decide:

A. whether to make a purchase or a sale.

B. what specific asset to purchase or sell.

C. how much of an asset to buy or sell for the account.

D. all of the above.