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FINRA Series 6 Exam
Investment Company and Variable Contracts Products Representative Examination (IR) (Page 11 )

Updated On: 26-Jan-2026
Page 11 of 66
PDF with 325 Questions

Which of the following statements regarding a mutual fund's expenses are true?

  1. A mutual fund that has a front-end load cannot also charge 12b-1 fees.
  2. A mutual fund's record maintenance fees cannot exceed 0.25% of average net assets.
  3. The expense ratio of a mutual fund cannot exceed 1.0%.
  4. A mutual fund family is prohibited from charging a fee when an investor exchanges his shares of one of its funds for another.

Answer(s): B

Explanation:

The true statement regarding a mutual fund's expenses is that a mutual fund's record maintenance fees cannot exceed 0.25% of average net assets. Mutual funds are permitted to have both front-end loads and charge 12b-1 fees, and the expense ratio of a mutual fund can exceed 1.0% (although a common recommendation is to select a fund with an expense ratio 1.0%.) Mutual fund families have the option of charging an "exchange fee" when an investor switches between their funds.



Which of the following statements regarding variable life insurance policies is false?

  1. Policyholders have voting rights similar to those of mutual fund investors.
  2. Most policies have an expense guarantee provision that establishes a firm limit on how much the insurance company can increase administrative charges.
  3. Insurance companies are required to give variable life policyholders at least 24 months from the date of purchase to switch to a traditional whole life policy without having to prove insurability.
  4. The surrender value of a variable life insurance policy will always be less than its cash value.

Answer(s): D

Explanation:

The false statement regarding variable life insurance policies is that the surrender value of a variable life insurance policy will always be less than its cash value. The surrender value of a variable life insurance policy is its cash value.



Which of the following formulae is used to calculate the net dividend income per share of a mutual fund?

  1. Subtract operating expenses from dividend and interest income and divide the result by the number of outstanding shares.
  2. Divide gross investment income by the number of outstanding shares.
  3. Subtract operating expenses from the income derived from dividends, interest, and short -term capital gains earned by the fund and divide the result by the number of outstanding shares.
  4. Add dividends, interest, and short-term and long-term capital gains earned by the fund; subtract operating expenses; then divide the result by the number of outstanding shares.

Answer(s): A

Explanation:

The formula that is used to calculate the net dividend income per share of a mutual fund is:
Subtract operating expenses from dividend and interest income and divide the result by the number of outstanding shares. Net dividend income per share is calculated by dividing net investment income by the number of shares outstanding, and net investment income is the income (dividends and interest) generated by the fund's investments minus the fund's operating expenses.



The stock of Nutrisystem, Inc. (NTRI) is selling for $17.70 when Miss Piggy places a limit order to buy the stock at $17.65. During the period the order is open, NTRI falls to $17.60 and then increases to $17.67.
Which of the following statements is most likely to be true in this scenario?

  1. Miss Piggy bought NTRI at $17.67 a share.
  2. Miss Piggy bought the stock for no more than $17.65 a share.
  3. Miss Piggy bought the stock for no more than $17.60 a share.
  4. Miss Piggy bought the stock for $17.66 a share.

Answer(s): B

Explanation:

If Miss Piggy placed an order to buy the stock of Nutrisystem (NTRI) at $17.65, the statement most likely to be true is that she bought the stock for no more than $17.65. A limit order specifies the maximum price she's willing to pay, and her order would not be executed at any price higher than $17.65. It is possible, but highly unlikely, that her order would be executed for as low as $17.60 a share.



The American Funds family of funds offers numerous funds to investors. Among these are a U.S. government bond fund, a high-yield corporate bond fund, a diversified emerging markets fund, and a large stock growth fund. Of these four, the one that would expose the investor to the most social and political risk is its:

  1. U.S. government bond fund.
  2. diversified emerging markets fund.
  3. large stock growth fund.
  4. high-yield corporate bond fund.

Answer(s): B

Explanation:

An investor will be most exposed to social and political risk in American's diversified emerging markets fund. This fund invests, by definition, in securities offered by firms located in developing countries, whose economies are in transition. Often, the political and social environment of these countries is very unstable.



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