Series 6 (Investment Company and Variable Contracts Products Representative Exam) Free Trial
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Question 1 of 10
1. Question
The Insider Trading and Securities Fraud Enforcement Act of 1988 broadened the civil penalties that can be imposed upon controlling persons, including damages of up to three times the profit gained or loss avoided, up to a maximum of –
Correct
The Insider Trading and Securities Fraud Enforcement Act of 1988 broadened the civil penalties that can be imposed upon controlling persons, including damages of up to three times the profit gained or loss avoided, up to a maximum of $1,000,000.
Incorrect
The Insider Trading and Securities Fraud Enforcement Act of 1988 broadened the civil penalties that can be imposed upon controlling persons, including damages of up to three times the profit gained or loss avoided, up to a maximum of $1,000,000.
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Question 2 of 10
2. Question
Which of the following statement(s) is(are) true about long-term liquidity needs?
I. Long-term liquidity needs provide for much more flexibility in risk tolerance than do short-term liquidity needs.
II. With a longer time horizon until liquidity is needed, an investor can increase the risk in his portfolio without being adversely impacted by the fluctuations in portfolio value.
III. With longer term liquidity needs, an investor has more time to experience the fluctuations in the price of a security without having immediate needs to withdraw those funds.
IV. A more conservative investment may not be suitable for an investor with long term liquidity needs.Correct
Long-term liquidity needs provide for much more flexibility in risk tolerance than do short-term liquidity needs. While short-term liquidity needs make it more difficult to appropriately time withdrawals so that withdrawals are not taken at times of low performance, with a longer time horizon until liquidity is needed, an investor can increase the risk in his portfolio without being adversely impacted by the fluctuations in portfolio value. With longer term liquidity needs, an investor has more time to experience the fluctuations in the price of a security without having immediate needs to withdraw those funds. Thus, the investor can choose an ideal time to diversify out of the riskier assets and into a safer portfolio as he approaches his future liquidity needs. This investor will want to ensure that he invests in securities that provide enough expected return to meet his financial objectives. Thus, a more conservative investment may not be suitable for an investor with long term liquidity needs.
Incorrect
Long-term liquidity needs provide for much more flexibility in risk tolerance than do short-term liquidity needs. While short-term liquidity needs make it more difficult to appropriately time withdrawals so that withdrawals are not taken at times of low performance, with a longer time horizon until liquidity is needed, an investor can increase the risk in his portfolio without being adversely impacted by the fluctuations in portfolio value. With longer term liquidity needs, an investor has more time to experience the fluctuations in the price of a security without having immediate needs to withdraw those funds. Thus, the investor can choose an ideal time to diversify out of the riskier assets and into a safer portfolio as he approaches his future liquidity needs. This investor will want to ensure that he invests in securities that provide enough expected return to meet his financial objectives. Thus, a more conservative investment may not be suitable for an investor with long term liquidity needs.
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Question 3 of 10
3. Question
Which of the following is important in determining a suitable recommendation in terms of both the timing and magnitude of the liquidity requirement?
Correct
Liquidity needs are also important in determining a suitable recommendation in terms of both the timing and magnitude of the liquidity requirement.
Incorrect
Liquidity needs are also important in determining a suitable recommendation in terms of both the timing and magnitude of the liquidity requirement.
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Question 4 of 10
4. Question
Which of the following(s) is(are) the feature(s) of a variable annuity contract?
I. Tax-deferred accumulation
II. Ownership interests
III. Voting rights
IV. Distribution optionsCorrect
The four key features of a variable annuity contract are tax-deferred accumulation, ownership interests, voting rights, and distribution options.
Incorrect
The four key features of a variable annuity contract are tax-deferred accumulation, ownership interests, voting rights, and distribution options.
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Question 5 of 10
5. Question
Which of the following risks will an investor purchasing an emerging markets equity security?
I. Social and political risk
II. Liquidity risk
III. Business risk
IV. Currency exchange riskCorrect
An investor purchasing an emerging markets equity security will face a number of risks. Two of the most important of these risks include social and political risk and currency exchange risk.
Incorrect
An investor purchasing an emerging markets equity security will face a number of risks. Two of the most important of these risks include social and political risk and currency exchange risk.
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Question 6 of 10
6. Question
In a security’s prospectus, which of the following(s) relevant information related to each share class’s must be included?
I. Breakpoints
II. Rights of accumulation
III. Combination of accounts
IV. Letters of intentCorrect
A security’s prospectus must include certain relevant information related to each share class’s breakpoints, rights of accumulation, combination of accounts, and letters of intent.
Incorrect
A security’s prospectus must include certain relevant information related to each share class’s breakpoints, rights of accumulation, combination of accounts, and letters of intent.
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Question 7 of 10
7. Question
Which of the following(s) is(are) included in the classifications of an accredited investor?
I. A bank
II. An insurance company
III. An investment company registered under the investment company act of 1940
IV. A small business investment company licensed by the small business administrationCorrect
The five classifications of an accredited investor are as follows:
i. a bank
ii. an insurance company
iii. an investment company registered under the Investment Company Act of 1940
iv. a Small Business Investment Company licensed by the Small Business AdministrationIncorrect
The five classifications of an accredited investor are as follows:
i. a bank
ii. an insurance company
iii. an investment company registered under the Investment Company Act of 1940
iv. a Small Business Investment Company licensed by the Small Business Administration -
Question 8 of 10
8. Question
Which of the following statement(s) is (are) true about capital appreciation investment objective?
I. A capital appreciation investment objective seeks to achieve a high level of return through growth in the price of the security.
II. Investors with capital appreciation investment objective would prefer that funds be reinvested into the high growth company instead of being paid out in the form of dividends.
III. Investors pursuing capital appreciation investment objective typically have longer time horizons as capital appreciation is considered to be a much riskier source of return than current income or capital preservation.
IV. Equity securities, particularly those of small and mid-cap companies, are a great example of the capital appreciation investment objective as they typically reinvest their earnings and pay out very low, if any, dividends.Correct
A capital appreciation investment objective seeks to achieve a high level of return through growth in the price of the security. As a result, investors with this objective would prefer that funds be reinvested into the high growth company instead of being paid out in the form of dividends. Investors pursuing this investment objective typically have longer time horizons as capital appreciation is considered to be a much riskier source of return than current income or capital preservation. Equity securities, particularly those of small and mid-cap companies, are a great example of the capital appreciation investment objective as they typically reinvest their earnings and pay out very low, if any, dividends. However, these securities are also considered riskier as they are less stable and business conditions and performance can fluctuate much more wildly and success can hinge on the success or failure of a single product.
Incorrect
A capital appreciation investment objective seeks to achieve a high level of return through growth in the price of the security. As a result, investors with this objective would prefer that funds be reinvested into the high growth company instead of being paid out in the form of dividends. Investors pursuing this investment objective typically have longer time horizons as capital appreciation is considered to be a much riskier source of return than current income or capital preservation. Equity securities, particularly those of small and mid-cap companies, are a great example of the capital appreciation investment objective as they typically reinvest their earnings and pay out very low, if any, dividends. However, these securities are also considered riskier as they are less stable and business conditions and performance can fluctuate much more wildly and success can hinge on the success or failure of a single product.
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Question 9 of 10
9. Question
Within how many days following the termination of an associated person, a member must give notice of the termination to FINRA?
Correct
Within 30 days following the termination of an associated person, a member must give notice of the termination to FINRA.
Incorrect
Within 30 days following the termination of an associated person, a member must give notice of the termination to FINRA.
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Question 10 of 10
10. Question
Which of the following statement(s) is (are) true about the Qualification examinations and waiver of requirements?
I. Qualification Examinations are a series of questions based on topic outlines from the Association.
II. Results from Qualification Examinations are given to the member firms.
III. NASD may waive the requirement of a Qualification Examination in lieu of other standard acceptable as proof of qualification.
IV. If a person fails the examination, he may take it again after 60 days, unless he has failed three times, in which case he must wait a period of 180 days.Correct
Qualification examinations and waiver of requirements (NASD Rule 1070) – Qualification Examinations are a series of questions based on topic outlines from the Association. Results from such examinations are given to the member firms. In certain cases, NASD may waive the requirement of a Qualification Examination in lieu of other standard acceptable as proof of qualification. If a person fails the examination, he may take it again after 30 days, unless he has failed three times, in which case he must wait a period of 180 days.
Incorrect
Qualification examinations and waiver of requirements (NASD Rule 1070) – Qualification Examinations are a series of questions based on topic outlines from the Association. Results from such examinations are given to the member firms. In certain cases, NASD may waive the requirement of a Qualification Examination in lieu of other standard acceptable as proof of qualification. If a person fails the examination, he may take it again after 30 days, unless he has failed three times, in which case he must wait a period of 180 days.
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