Free SERIES-6 Exam Braindumps (page: 1)

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Lana is registered as a limited representative and is employed by Everything Investments. Her duties include selling mutual funds and variable contracts products to the firm's clients. She has been particularly successful in selling variable contracts offered by OneLife insurance company. As a "thank you" for her hard work, OneLife has offered her a ticket to an upcoming play at a local dinner theatre.
Given this scenario, which of the following statements applies?

  1. Lana will have to pass on the offer. Lana is prohibited from receiving compensation from anyone other than Everything Investments.
  2. Lana can accept the offer as long as Everything agrees to it and as long as it is not an ongoing thing and/or preconditioned on her achieving a specified sales target.
  3. Lana can accept the offer without Everything's approval in this instance since the offer does not involve cash.
  4. Lana will have to pass on the offer. She is permitted to receive only cash compensation in an amount not to exceed $100 from an entity other than Everything, and then only with Everything's approval.

Answer(s): B

Explanation:

Lana can accept the dinner theatre ticket offer as long as Everything agrees to it and as long as it is not an ongoing thing and/or preconditioned on her achieving a specified sales target. Occasional meals, tickets to the theatre, a sporting event, or a similar entertainment venue may be accepted as long as they aren't too excessive or too frequent and as long as the member firm with whom the representative is employed is agreeable.



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

  1. I and II only
  2. I, II, and III only
  3. I, II, and IV only
  4. I, II, III, and IV

Answer(s): C

Explanation:

Selections I, II, and IV all describe individuals who qualify as insiders under the definition provided by the Securities Exchange Act of 1934. An insider is any director or officer of the firm or any member of their immediate family. An investor who owns 10% of the voting stock of the firm and his immediate family members are also classified as insiders; an investor who owns 5% of the voting stock does not fall within the guidelines of the definition.



Which of the following activities are prohibited by FINRA when a representative is selling shares of a mutual fund?

I). recommending that a client purchase shares of a mutual fund prior to its ex-dividend date, so that the client will receive the dividends when they are distributed unless this recommendation is justified by the specific circumstances of the client
II). telling a client that a mutual fund that has only a contingent deferred sales charge is a no load fund
III). telling a client that the interest he earns on a municipal bond fund will be free from federal taxation
IV). refraining from placing the customer's order promptly in order to profit himself as a result of having done so

  1. I and III only
  2. II and IV only
  3. I, II, and IV only
  4. I, II, III, and IV

Answer(s): C

Explanation:

The activities described in Selections I, II, and IV are prohibited by the FINRA when a representative is selling shares of a mutual fund. Representatives are prohibited from recommending that a client purchase shares of a mutual fund prior to its ex-dividend date, so that the client will receive the dividends when they are distributed-a practice known as "selling dividends"-- unless this recommendation is justified by the specific circumstances of the client; they are prohibited from telling a client that a fund that has only a contingent deferred sales charge is a no load fund; and they are prohibited from withholding an order- i.e., refraining from placing a customer's order promptly--in order to profit themselves as a result of having done so. There is nothing wrong with telling a client that the interest he earns on a municipal bond fund will be free from federal taxation since this is a true statement.



One difference between a unit investment trust (UIT) and a closed-end fund is that

  1. shares of closed-end funds trade on the exchange floors, unlike shares of UITs.
  2. unlike UITs, closed-end funds have a fixed number of shares.
  3. the shares of UITs are redeemable, whereas the shares of closed-end funds are not.
  4. closed-end funds are established with a termination date, unlike UITs.

Answer(s): C

Explanation:

A difference between a UIT and a closed-end fund is that the shares of UITs are redeemable, whereas the shares of closed-end funds are not. Shares of UITs also trade on exchange floors, like the shares of closed-end funds. Both UITs and closed-end funds have a fixed number of shares, but UITs are established with a termination date, while closed- end funds have no termination date.



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