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Frequently Asked Questions

FINRA Series-6 Sample Question Answers

Question # 1

The entity that serves as the auctioneer for trades conducted on an organized exchange floor is known as a:

A. registered trader.
B. specialist.
C. floor broker. 
D. commission broker.

Question # 2

Under current tax law, in order for the profits from the sale of any investment to be considered long -term capital gain income, the investment must have been held for:

A. longer than 6 months.
B. longer than 12 months.
C. longer than 18 months.
D. longer than 24 months.

Question # 3

The board of directors of a mutual fund is responsible for:I. authorizing purchases and sales of securities made by the fund.II. approving the fund’s contract with its investment adviser.III. ensuring that the fund complies with federal securities laws regarding such issues as 12b -1 fees.IV. establishing the fund’s dividend and capital gains policy.

A. I and IV only
B. I, II, and IV only
C. II, III, and IV only
D. I, II, III, and IV

Question # 4

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.

Question # 5

Mr. Shortfall placed a market order to buy 100 shares of Google (GOOG) with GetErDone Broker-Dealers. The market order was executed at $530 a share. In accordance with Regulation T:

A. Mr. Shortfall must pay for the purchased shares within 3 business days.
B. Mr. Shortfall must pay for the purchased shares within 5 business days.
C. GetErDone can request an extension from FINRA or another SRO for Mr. Shortfall if he is unable to pay for the shares within 5 business days.
D. Both B and C are true statements. 

Question # 6

A new issue of common stock can be classified in which of the following categories?I. primary marketII. money marketIII. secondary marketIV. capital market

A. I only
B. III only
C. I and IV only
D. II and III only

Question # 7

Main Street Capital Corporation (MAIN) is registered as a non-diversified investment company under the Investment Company Act of 1940.Based on this, which of the following statements regarding MAIN are true? I. MAIN may not invest more than 5% of its investment monies in any single issuer. II. The net asset value of MAIN’s shares is likely to fluctuate more than that of a diversified investment company. III. MAIN’s returns are more likely to be affected by any single, specific economic occurrence or regulatory change. 

A. I only 
B. I and II only
C. II and III only 
D. I, II, and III 

Question # 8

Which of the following relationships regarding shares of common stock are necessarily true?I. shares outstanding > issued sharesII. authorized shares issued sharesIII. issued shares = treasury sharesIV. issued shares shares outstanding

A. I and II only
B. II and IV only
C. I, II, and III only
D. II, III, and IV only

Question # 9

Your nephew has asked you to help him formulate a financial plan for his family. Scott is 27 years old and has been employed as an associate with a law firm for two years. Sarah, his wife, is 26 years old and works in the human resources department of a large corporation. The couple is childless now, but they plan to begin a family in a few years. Together, they have accumulated $10,000 in a savings account and recently inherited $40,000 cash. They expect to be able to start saving at least $5,000 annually since their incomes more than meet their current needs. They each have employer-provided health insurance and retirement plans. Both have excellent upward mobility potential in their careers. They currently pay taxes at the marginal rate of 15%. Scott tells you that although they regularly read some of the more popular financial investment magazines, neither feels particularly knowledgeable about the world of investments.Based on this information, which of the following statements is true?

A. A greater than average percentage of their money should be invested in money market mutual funds to meet their needs for liquidity.
B. A greater than average percentage of their money should be invested in municipal bonds to minimize their currently high tax bill.
C. Although some money should be allocated to bond funds for diversification purposes, bond funds should be underweighted in favor of stock funds.
D. Purchasing power risk is not an issue in their situation.

Question # 10

Your client bought a variable annuity contract that has a 5% contingent deferred sales charge with a 7-year surrender period four years ago. He has been reading about bonus annuities and 1035 exchanges and has asked for your advice. You can tell him:

A. that it’s a great idea, and you plan on how you’re going to spend the unexpected income.
B. that although the exchange doesn’t have any tax consequences, he’ll be looking at a new, longer, surrender period.
C. that he’ll have to pay the 5% deferred sales charge if he executes the exchange.
D. both B and C.

Question # 11

Which of the following statements regarding both a Uniform Gifts to Minors account (UGMA) and a Uniform Transfers to Minors account (UTMA) is false? 

A. There can be only one custodian named on the account. 
B. The account must be established in the name of one minor child only. 
C. Once established, the account is irrevocable. 
D. The assets must be re-registered in the minor child’s name when the child turns 18. 

Question # 12

Anna Lyst observes that the beta of a certain stock is 0.8. This means that:

A. if the S&P 500 Index loses 10%, this stock can be expected to lose 8%.
B. the stock is 80% more volatile than the S&P 500 Index.
C. if the S&P 500 Index is up 10%, this stock can be expected to lose 8%.
D. the stock is riskier than the overall market.

Question # 13

After having been divorced for several years, Mrs. Blended has remarried a man with three children of his own. She has set up a revocable trust in which she deposited funds that she inherited when her mother died, so that the monies will go uncontested to her two biological children in the event of her own death. These two adult children are the only beneficiaries of the trust. Mrs. Blended has no plans to touch any of the money in the trust unless circumstances demand it in the future. The trust is invested in a mutual fund that paid $500 in dividend income and distributed $3,000 in long-term capital gain income to the trust this year.Which of the following statements is true regarding the tax treatment of these distributions? 

A. The distributions will not be taxed at this point; they will be taxed only when Mrs. Blended or her beneficiaries make withdrawals from the trust. 
B. Assuming her two adult children are equal beneficiaries, each one is responsible for paying tax on 50% of the income to the trust, or $1,750. 
C. Mrs. Blended must pay taxes on the $3,500 in distributions. 
D. The distributions will not be taxed at this point; they will be taxed as part of the estate upon Mrs. Blended’s death. 

Question # 14

Which of the following is true about treasury bonds?

A. have no default risk.
B. have no interest-rate risk.
C. have no prepayment risk.
D. are totally risk-free.

Question # 15

Joan is a customer of GetErDone Broker-Dealers. Her twin sister, Jean, has accompanied her to GetErDone’s office and has gathered some information regarding opening an account with the firm, giving it her contact information at the same time.Under Regulation S-P, which of the following statements regarding GetErDone’s handling of Joan’s and Jean’s personal information is true?

A. GetErDone must provide Joan with a notification of its privacy policies annually and provide her with information on how to mandate that it not share her nonpublic personal information with nonaffiliated third parties.
B. GetErDone can disclose any information that Jean provided them to nonaffiliated third parties since Jean is not a customer of the broker-dealer.
C. GetErDone is required to have provided Jean with a copy of its privacy policy when she inquired about opening an account with the broker-dealer.
D. All of the above are true statements.

Question # 16

Which of the following would be required to register as an investment company?I. a non-diversified management companyII. a unit investment trustIII. a face-amount certificate company

A. I, II, and III
B. II only 
C. II and III only 
D. I and II only 

Question # 17

Given the same maturity, which of the following debt instruments would you expect to offer the highest yield-to-maturity?

A. a debenture issued by Abbott Laboratories
B. a bond issued by the Federal Home Loan Bank Board
C. a general obligation bond issued by the state of Massachusetts
D. a U.S. Treasury bond

Question # 18

Matt is a registered representative with Fine, Howard, Fine and Associates. Tom, an old fraternity brother, is one of his clients. Business has been bad, and Matt is going to have difficulties making this month’s mortgage payment. Tom was commiserating with him when the two hooked up to have a couple of beers together and offered to lend Matt some money to see him through the rough times. Based on these facts:

A. Matt must refuse Tom’s offer since Tom is one of his clients.
B. Matt can accept Tom’s offer, but only after obtaining pre-approval from Fine, Howard, Fine.
C. Matt can accept the offer without having to obtain pre-approval from his employer since he and Tom are former fraternity brothers and their friendship pre-dates their agent/client relationship.
D. Matt can accept the offer as long as Tom will not need to sell any investments to lend Matt the money. This would constitute a conflict of interest.

Question # 19

Which of the following is not a secured debt issue?

A. a collateral trust receipt 
B. a subordinated debenture 
C. an equipment trust receipt 
D. a mortgage bond 

Question # 20

stion No: 159In 2004, your Uncle Oscar purchased 300 shares of Hasbro, Inc. for $19 a share. Uncle Oscar died earlier year and left his Hasbro stock to you. The stock was selling for $44 on the day he died, but by the time you learned that you were the beneficiary of the stock, the price was $47. What is your cost basis in Hasbro?

A. $19
B. $44 
C. $47 
D. $28

Question # 21

Your client has recently heard about “principal-protected funds” and has asked your ad vice. You should tell her that: I. the majority of principal-protected funds guarantee the investor’s initial investment, less any front-end load, even if the stock market falls. II. it would not be a good investment if she thinks she will need the money within the next five to ten years.III. it will beat the returns she could earn on an S&P 500 Index fund in most years. IV. if she sells her shares at any time other than the maturity date specified, she could lose money if the price per share has fallen. 

A. I only
B. I and II only
C. I and III only 
D. I, II, and IV only

Question # 22

The total return reported by a mutual fund:

A. is calculated as the percentage change in the net asset value of the fund.
B. is equal to the return it earned on the dividend and interest income it received from its investments.
C. is equal to the annual percentage increase in the dollars invested in the fund by investors.
D. includes both the dividend and interest income earned by the fund and any increase in the fund’s net asset value.

Question # 23

The Slippery Fund is a high-yield bond fund, which means it invests a substantial amount of its money in:

A. investment-grade bonds.
B. high-quality bonds.
C. junk bonds.
D. bonds with an AAA rating.

Question # 24

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.

Question # 25

The Securities Act of 1933 did what?

A. It established the requirement that investment advisers be registered with the SEC. 
B. It established the SEC as the regulatory agency for the secondary market. 
C. It established the requirement that new securities be registered. 
D. All of the above are correct answers. 

Question # 26

Andy and Annie Raggedy own their own graphics art business that they operate out of their home and, happily, generate enough income to meet their current needs. The couple is planning on having children in the not too distant future, however, and they want to start putting money aside for their children’s college education and also want to start saving for retirement more aggressively.

A. Which of the following describes one of their primary investment objectives? tax-exempt income
B. preservation of capital
C. current income
D. capital appreciation

Question # 27

The compensation records that FINRA member firms are required to maintain must include which of the following?I. the names of the persons that have provided the compensationII. names of the associated persons receiving the compensationIII. the amount of cash receivedIV. the nature and value (if known) of any non-cash compensation received

A. I and III only
B. II and III only
C. II, III, and IV only
D. I, II, III, and IV

Question # 28

on No: 187A plan under which employees of state and local governments can contribute part of their salaries such that those earnings will grow tax-deferred until retirement is called a: 

A. profit-sharing plan. 
B. money purchase plan. 
C. Section 457 plan. 
D. Section 501 plan. 

Question # 29

When a mutual fund is valuing your pre-existing holdings to see if you qualify for a reduced sales charge under its rights of accumulation program, it must use:

A. the current NAV of your holdings.
B. the current public offering price (POP) of your holdings.
C. the price you paid when you purchased the shares originally.
D. none of the above.

Question # 30

Which of the following activities are permitted during the “cooling off” period associated with a new offering?I. A preliminary prospectus may be provided to prospective investors.II. The security can be registered in any states in which it will be sold.III. The management of the issuing firm may give interviews in which they discuss the market for their products and future revenue expectations.IV. The underwriter of the issue may run a tombstone advertisement in the Wall Street Journal to announce the upcoming offering.

A. I only
B. I and IV only
C. I, II and IV only
D. I, III and IV only

Question # 31

Which of the following are fiscal policy tools under the jurisdiction of the U.S. Congress?

A. the decision on the amount of cash reserves that a bank must hold 
B. the decision on whether to raise or lower effective tax rates 
C. the decision on whether to raise or lower the rate at which banks can borrow money from the Federal Reserve 
D. Both A and B are fiscal policy tools

Question # 32

The URMoney Mutual fund, a no load fund, has 10 million shares outstanding. The market value of its assets is $620 million and its liabilities are $150. Based on this information, an investor who wants to buy shares of the fund will pay:

A. $62 a share.
B. $47 a share.
C. $15 a share.
D. This cannot be answered without knowing what, if any, the front-end load is.

Question # 33

The Invest4U Mutual Fund is a regulated investment company under Internal Revenue Code Subchapter M. This means that:

A. Invest4U must submit an annually-updated prospectus to the IRS as well as to the SEC. 
B. Invest4U does not itself have to pay taxes on any dividend or capital gain income it receives and distributes to its shareholders. 
C. Invest4U is a UIT. 
D. Invest4U is a non-diversified management company. 

Question # 34

Which of the following do not fall under the category of “advertisement,” as defined by FINRA?I. scripts used in telemarketing the products of the member firmII. a website maintained by the member firmIII. research reports that the member firm distributes to both its existing clients and itsprospective clientsIV. sales material that a member firm distributes only to its institutional clients

A. I only
B. IV only
C. I, III, and IV only
D. III and IV only

Question # 35

Annie Vestor owns shares of the URMoney Mutual Fund. Annie lives on the west coast in Seattle, Washington. URMoney reported a net asset value per share of $10.10 on October 9th. On October 10th, its reported net asset value per share was $10.20. Upon arriving home at 12 P.M. (her time) on October 9th, Annie logged into the URMoney website and entered an order to redeem 500 shares of her holdings in the fund. This order will be transacted at:

A. the net asset value of the fund at the end of the trading day on October 11th.
B. $10.20
C. $10.10
D. The price at which this order will be transacted cannot be estimated based on the information provided.

Question # 36

Regulation D:I. enables smaller firms to raise capital more quickly and more cheaply.II. exempts the issuing firm from all disclosure requirements as long as the issue is beingsold to no more than five investors.III. has restrictions regarding the resale of the securities being sold.

A. I only
B. I and II only
C. I and III only
D. I, II, and III

Question # 37

Mr. Cashout recently sold some mutual fund shares that he owned. The sale resulted in long -term capital gain income of $6,000. He also sold some shares of a stock he had purchased during the year and realized a short-term capital gain on the sale of $2,000. The sale of another individual stock resulted in a short-term capital loss of $3,500. Mr. Cashout also had some bonds that he had bought at a premium mature, resulting in a long-term capital loss of $500. What is Mr. Cashout’s net capital gain or loss from these transactions?

A. a net long-term capital gain of $4,500 
B. a net long-term capital gain of $4,000 
C. a net short-term capital loss of $4,000 
D. a net long-term capital gain of $8,000 

Question # 38

Which of the following investment companies will always be passively managed?

A. a face-amount certificate company
B. a unit investment trust
C. a mutual fund
D. a closed-end investment company

Question # 39

The total of a mutual fund’s front-end load, rear-end load, and 12b-1 fees may not exceed:

A. 10.0% of the fund’s offer price.
B. 10.0% of the fund’s net asset value.
C. 8.5% of the fund’s offer price.
D. 8.5% of the average annual net assets of the fund.

Question # 40

Private placements are exempt from the registration requirements of the Securities Act of 1933 under the rules contained in: 

A. Regulation A. 
B. Regulation D. 
C. Regulation E. 
D. the Securities Exchange Act of 1934. 

Question # 41

Ralph has a traditional IRA from which he has yet to make any withdrawals. Ralph will be turning 70 ½ in June, 2011.According to the required minimum distribution rule associated with traditional IRAs, Ralph is required to start withdrawing funds from this account:

A. no later than the day after he turns 70 ½.
B. on April 15, 2011.
C. on April 1, 2012.
D. on April 15, 2012.

Question # 42

Which of the following statements regarding the separate account of an insurance company is true?

A. The monies in the separate account are used to make payments to all the policyholders of the company when a payment is triggered. 
B. The separate account contains the monies from which the company pays its operating expenses, e.g., salaries, etc
C. Funds from the separate account are used to make payments to fixed annuity investors.
D. The separate account must register as an investment company under the Investment Company Act of 1940. 

Question # 43

A retirement plan under which the benefit to be paid upon retirement is specified when an employee is signed up for the plan is known as a:

A. 401(k) plan.
B. SIMPLE-IRA.
C. defined benefit plan.
D. defined contribution plan.

Question # 44

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

Question # 45

Which of the following would not have to register as an investment adviser or an investment adviser representative under the Investment Advisers Act of 1940?I. an insurance agent who sells only whole life and term life policiesII. a commodity futures brokerIII. a bank employee who sells the bank’s customers only CDs and other bank securities that are FDIC-insured IV. a person that is registered as a broker-dealer with the SEC that also provides investment advice to its customers for additional compensation 

IV. a person that is registered as a broker-dealer with the SEC that also provides investment advice to its customers for additional compensation
B. I, II, and III only 
C. II and III only 
D. I, II, III, and IV 

Question # 46

Ken has a variable life policy and recently learned that he can borrow against its cash value to help pay for some of the expenses he’s incurring while pursuing a graduate degree. Which of the following statements about the loan he can get is true?

A. Ken can borrow at most only 50% of the cash value, and only as long as he’s had the policy for at least three years.
B. Since Ken is essentially borrowing his own money; the loan is interest-free.
C. Ken never has to repay the loan, but if he chooses not to do so, his wife, Barbie, won’t get as much when he dies.
D. Ken has been misinformed. He cannot borrow against the cash value of a variable life policy because the cash values of these policies fluctuate constantly.

Question # 47

Ms. Newbie’s client, Mr. Nomad, has decided that he wants to go on an extended backpack trip through the Amazon. Since he’ll be out of touch, he has given a friend of his limited power attorney to act on his behalf. Based on this, Mr. Nomad’s friend can:I. present Ms. Newbie with an order to purchase securities on Mr. Nomad’s behalf.II. present Ms. Newbie with an order to sell securities on Mr. Nomad’s behalf.III. request a check be issued to him so that he can send Mr. Nomad some money.

A. I only
B. I and II only
C. I, II, and III
D. none of the above. Only a relative can hold a power of attorney to engage in financial transactions for the grantor.

Question # 48

No: 102 Which of the following bonds would not be considered investment grade?

A. a municipal bond with a BB rating. 
B. a corporate bond with a BBB rating. 
C. a general obligation bond with an AA rating. 
D. a debenture with an A rating. 

Question # 49

When a broker-dealer hires a new agent, it must submit:

A. a U-4 form that includes information about the agent’s name, address, education, and employment history.
B. a U-5 form that includes information about the agent’s name, address, education, employment history, and marital status.
C. an REP form that includes information about the agent’s name, address, education, and employment history.
D. a U-4 form that includes information about the agent’s name, address, and employment history.

Question # 50

Ms. Newbie has recently become licensed as a registered representative and is disappointed to discover no clients standing in line at the door to her office at Savvy Investments. She decides she simply must take on a second job in order to pay the rent. The fitness club to which she belongs is advertising for a weekend receptionist, and the club manager has told her the job is hers if she wants it. Given this scenario, Ms. Newbie:

A. can accept the job since it only entails weekend work, which does not conflict with the hours she works as a registered representative.
B. can accept the job only if she tells her supervisor at Savvy that she will be working weekends.
C. must provide a written notice to Savvy Investments and await the firm’s approval before accepting the job.
D. can accept the job without any restrictions. She is not tied to Savvy by ball and chain, and her work as a receptionist at a fitness club does not have anything to do with the financial industry.

Question # 51

Tex Payor owns 500 shares of Amazon.com, Inc. that he bought seven years ago when the stock price was $18 a share, at which time he paid a commission of $12.95 to purchase the stock. At the beginning of this year, Amazon was selling for $89 a share. Today, December 31st, Amazon’s stock closed at $152 a share. Based on this information, what must Tex include on this year’s tax return as taxable income from his investment in Amazon? 

A. only the capital appreciation on the stock this year: $63 a share x 500 shares = $31,500
B. the value of the stock on December 31st minus the price he paid for it, which includes the commission he paid, divided by the 7 years he has owned the stock: $152 - ($18 + $12.95) x 500 shares = $60,525 ÷ 7 = $8,646 
C. the capital appreciation on the stock this year minus the commission he originally paid to purchase the stock:($63 - $12.95) x 500 = $25,025 
D. none of the above 

Question # 52

MBIA, Inc., a municipal bond insuring company, has a bond issue that is selling for $80.05 per $100 of par. The bond has a coupon rate of 7%, with semiannual payments, and matures in 2025. The current yield on this bond is:

A. 8.745%.
B. 7.000%.
C. 9.550%.
D. none of the above

Question # 53

Which of the following entities is eligible to establish a Keogh Plan?

A. Ms. Dee Ziner is the owner of an interior design company that is established as a sole proprietorship.
B. Mr. Hans Deutsch is the owner of a Subchapter S Corporation that imports only Bavarian -made goods.
C. Mr. Will Writer teaches English at a community college and does freelance writing to supplement his income.
D. Both A and C are eligible to establish a Keogh Plan.

Question # 54

The difference between an international fund and a global fund is:

A. an international fund invests in both domestic and foreign securities while a global fund invests only in foreign securities. 
B. a global fund has more currency risk exposure than an international fund. 
C. an international fund invests only in stocks of foreign companies whereas a global fund invests in both stocks and bonds of foreign companies. 
D. None of the above is a true statement. 

Question # 55

Your client, Mr. Whiff, knows nothing about investment companies, and you are educating him about the advantages of investing through one, rather than investing in individual stocks and bonds. Which of the following statements could get you in trouble?

A. “In investing through an investment company you will be able to invest a small amount of money and achieve greater diversification than you could otherwise.”
B. “Investing through an investment company will result in a lower tax bill than had you invested in individual stocks and bonds.”
C. “An investment in an investment company gives you an undivided interest in the company, in proportion to the number of shares you own.”
D. “By investing your money through an investment company, you are getting the benefit of professional management."

Question # 56

In order for the Invest4U Mutual Fund to qualify as a regulated investment company under Internal Revenue Code Subchapter M, it must: 

A. distribute at least 90% of its net investment income to its shareholders. 
B. distribute at least 98% of its net income from capital gains to its shareholders. 
C. invest at least 75% of its monies in diversified securities. 
D. Both A and B are required for Invest4U to qualify as a regulated investment company. 

Question # 57

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.

Question # 58

Doc purchased shares of the MedTech Fund at its net asset value of $9.66 a share at the beginning of the year. The fund distributed dividends of $0.12 a share and capital gains of $0.10 a share during the year. The net asset value at the end of the year was $12.00. The fund’s total return was:  

A. 21.3%. 
B. 26.5%. 
C. 25.5%. 
D. 10.1%. 

Question # 59

Phil Anthropy wrote his cousin a $15,000 check to pay for medical bills the cousin had accumulated. He also distributed $5,000 checks to three nephews who were in college, and gave his mother a check for $12,000.Have Phil’s actions triggered any gift taxes?

A. Yes, $19,000 of his total distributions is subject to the gift tax.
B. Yes, $2,000 of his total distributions is subject to the gift tax.
C. Yes, $7,000 in distributions is subject to the gift tax.
D. No. None of Phil’s distributions is subject to the gift tax.

Question # 60

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.

Question # 61

Nat Informed places a market order to buy 200 shares of Abercrombie & Fitch (ANF) on Thursday, September 16th. When will Nat be required to pay for this Transaction?

A. by the end of the trading on September 15th. 
B. on the next trading day, September 16th. 
C. on Tuesday, September 21st. 
D. on Friday, September 17th. 

Question # 62

Rank the following funds in order of their relative risk, from highest to lowest:I. growth fundII. high-yield bond fundIII. high-grade bond fundIV. international fund

A. IV, I, II, III
B. I, IV, III, II
C. II, IV, I, III
D. IV, II, I, III

Question # 63

Mr. Bashful, Mr. Sleepy, Mr. Doc, Mr. Grumpy, Mr. Sneezy, and Mr. Happy are all employees of S. White Investment Advisers. Mr. Doc, Mr. Sneezy, and Mr. Happy give investment advice to the firm’s clients and manage their portfolios. Mr. Sleepy greets clients and makes cold calls to solicit more business for the firm. Mr. Bashful performs general clerical services, such as filing. Mr. Grumpy is the office manager and is the direct supervisor of the other five employees. Which of S. White’s employees must register as investment adviser representatives under the Investment Advisers Act of 1940? 

A. only Mr. Grumpy 
B. Mr. Grumpy, Mr. Doc, Mr. Sneezy, and Mr. Happy 
C. Mr. Grumpy, Mr. Doc, Mr. Sneezy, Mr. Happy, and Mr. Sleepy 
D. All of them must register as investment adviser representatives. 

Question # 64

Mr. and Mrs. R. Retired are planning on traveling extensively throughout the U.S. in their new motor home now that they have reached their golden years. Under FINRA rules, upon written instructions from Mr. and Mrs. R. Retired, their broker is required to hold their mail for a maximum of:

A. 1 month.
B. 2 months.
C. 3 months.
D. none of the above. It is Mr. and Mrs. Retired’s responsibility to establish a mail-hold through the post office.

Question # 65

MBIA, Inc., a municipal bond insuring company, has a bond issue that is selling for $80.05 to yield 9.5%. The bond has a coupon rate of 7%, with semiannual payments, and matures in 2025.If interest rates in the economy increase, which of the following statements will be true, all else equal?I. the nominal yield of the bond will increase.II. the yield-to-maturity of the bond will increase.III. the current yield of the bond will increase.

A. I only
B. I and II only
C. II and III only
D. I, II, and III