QUESTION: 165

GoForBroke Broker-Dealers has distributed a list of ten mutual funds that it suggests are top-notch funds worthy of recommendation by GoForBroke's agents. Coincidentally, all the funds on this list also happen to be those that execute the majority of their trades through GoForBroke.
Is GoForBroke in violation of any FINRA rules?

No. GoForBroke only distributed a list of fund names; it did not offer its agents any form of additional compensation for selling the funds on that list.
No. As long as the list consists of more than five funds, GoForBroke has not violated any FINRA rules.
Yes. By distributing a list naming specific funds that coincidentally all happen to execute a lot of trades through GoForBroke, the broker-dealer is violating FINRA's anti-reciprocal rule.
Yes. GoForBroke is prohibited from selling shares of mutual funds that execute their trades through the broker-dealer. This rule is in place to avoid conflicts of interest.

Answer(s): C

Explanation:

Yes. By distributing a list naming specific funds that coincidentally all happen to execute a lot of trades through GoForBroke, the broker-dealer is violating FINRA's anti-reciprocal rule. Even though GoForBroke does not appear to be offering its agents any additional compensation for selling shares of these funds, it is promoting them above other funds that aren't conducting as many trades through the broker-dealer. Recommendations should be based on a specific client's needs, not on the money the fund generates for the broker-dealer. There is no rule that prohibits a broker-dealer from selling shares of mutual funds that execute their trades through them.

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QUESTION: 166

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:

Mr. Shortfall must pay for the purchased shares within 3 business days.
Mr. Shortfall must pay for the purchased shares within 5 business days.
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.
Both B and C are true statements.

Answer(s): D

Explanation:

After his market order to buy shares of GOOG is executed, Mr. Shortfall must pay for the shares within 5 business days. If he is unable to do so within this time period, GetErDone can request an extension from FINRA or another SRO for him.

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QUESTION: 167

Which of the following statements regarding the taxes associated with a variable life insurance policy is false?

Earnings on a variable life insurance policy grow tax-free.
Payments to beneficiaries upon the death of the policyholder are taxed as ordinary income.
One variable life policy can be exchanged for another variable life policy without triggering any consequences under Section 1035 of the tax code.
If a policyholder withdraws some of the cash value associated with the policy, taxes need only be paid on the amount that exceeds the total amount of the premiums paid to date.

Answer(s): B

Explanation:

The statement that payments to beneficiaries upon the death of the policyholder are taxed as ordinary income is false. When a policyholder dies, the death benefit received by the beneficiaries is tax-free. The death benefit will, however, be included in calculating any estate taxes that might be due. All the other choices are true statements. Unlike the tax treatment of variable annuities, the IRS uses first -in, first out (FIFO) accounting when determining whether the withdrawals have come from earnings or premium payments; therefore, when a policyholder withdraws some of the policy's cash value, it is assumed to be a withdrawal of premiums first, and that amount of the withdrawal is tax-free.

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QUESTION: 168

Ms. Newbie is a registered representative with Savvy Investments and has recently gotten married. (Her new name is Mrs. Newbie-Oldman.)Her husband has been a client of hers, and the couple now wants to put her name on the account. In this case:

Mrs. Newbie-Oldman may only share in the account to the extent that she deposits funds in the account.
Mrs. Newbie-Oldman must obtain written authorization from Savvy Investments to put her name on the account.
Mrs. Newbie-Oldman's husband must provide written authorization to Savvy Investments for his new bride to be included on the account.
Both B and C are true statements.

Answer(s): D

Explanation:

If Mrs. Newbie-Oldman and her new husband want her name on what was previously his account, she must obtain written authorization from her employer, Savvy Investments, and her new husband must provide his written authorization to Savvy. She is exempted from the proportional investment requirement as Mr. Oldman's spouse, but not from the written authorization requirements under FINRA Rule 2150.

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Free Series 6 Exam Braindumps (page: 42)

QUESTION: 165

Explanation:

QUESTION: 166

Explanation:

QUESTION: 167

Explanation:

QUESTION: 168

Explanation: