Free Series 6 Exam Braindumps (page: 34)

Page 34 of 83

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?

  1. 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.
  2. Since Ken is essentially borrowing his own money; the loan is interest-free.
  3. 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.
  4. 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.

Answer(s): C

Explanation:

The true statement is that 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. He can borrow up to at least 75% of the cash value, but there is interest charged on the loan. (In essence, he's paying interest to himself, though.)



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 compensation
II). names of the associated persons receiving the compensation
III). the amount of cash received
IV). the nature and value (if known) of any non-cash compensation received

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

Answer(s): D

Explanation:

The compensation records that FINRA member firms are required to maintain must include the names of the persons that have provided the compensation (the offerors), the names of the associated persons receiving the compensation, the amount of cash received, and the nature and value (if know) of any non-cash compensation received.



Mandatory guidelines for the prospectuses of which of the following are dictated by the Investment Company Act of 1940?

I). mutual funds
II). closed-end investment companies
III). unit investment trusts
IV). variable contracts

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

Answer(s): D

Explanation:

Mandatory guidelines for the prospectuses of all of the selections are dictated by the Investment Company Act of 1940.



Which of the following statements regarding a Coverdell Education Savings Plan (ESA) are true?

I). There are income limitations regarding those who may contribute to an ESA.
II). There is a maximum annual aggregate amount that can be contributed to a single beneficiary's account.
III). Contributions to an ESA are tax deductible.
IV). The monies must be used prior to the beneficiary's 30th birthday for education-related expenses in order to avoid paying both taxes and a penalty.

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

Answer(s): C

Explanation:

Only Statements I, II, and IV regarding an ESA are true. The ability to establish one is limited to those with an adjusted gross income specified by government guidelines, and there is a maximum annual aggregate amount that can be contributed to a single beneficiary's account regardless of how many contributors there are to that account. If the monies are not used for education-related expenses prior to the beneficiary's 30th birthday, there is a mandatory distribution requirement, at which point the distribution will be taxed as ordinary income and a 10% penalty will be assessed.



Page 34 of 83



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asl commented on September 14, 2023
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Av dey commented on August 16, 2023
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