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

Updated On: 18-Mar-2026
Page 11 of 66
PDF with 325 Questions

Which of the following securities laws regulates the organizational structure and day-to-day operations of investment companies?

  1. The Securities Act of 1933
  2. The Securities Exchange Act of 1934
  3. The Investment Company Act of 1940
  4. The Investment Advisers Act of 1940

Answer(s): C

Explanation:

The Investment Company Act of 1940 regulates the organizational structure and day-to- day operations of investment companies. The Act includes requirements regarding a fund's capital structure, the custody of its assets, its investment activities, and the duties of a fund's board of directors, among other things. The Securities Act of 1933 regulates the offering of a fund's shares and requires that prospective investors be provided with a prospectus. The Securities Exchange Act of 1934 regulates secondary market activities in investment company shares and includes laws governing the principal underwriters and brokers and dealers who sell investment company shares. The Investment Advisers Act of
1940 regulates investment advisers and includes laws pertaining to their registration and recordkeeping, custodial, and reporting responsibilities.



Jack purchased a new bond of the Candlestick Corporation for its face value of $1,000. The bond has a coupon rate of 3.5%, makes semiannual interest payments, and matures in fifteen years. A year after purchasing the bond, Jack needs to sell the bond to offset some major expenses he incurred when his home caught on fire. Interest rates in the economy at this time have fallen to 3.0%.
Given this scenario, when Jack sells the bond, he can expect to receive which of the following?

  1. more than what he originally paid for the bond.
  2. less than what he originally paid for the bond.
  3. exactly what he paid for the bond.
  4. $965, which is what he paid for the bond less the $35 in interest he received during his year of owning the bond.

Answer(s): A

Explanation:

Since interest rates in the economy have decreased, Jack can expect to receive more than what he originally paid for the bond. Bond prices move inversely with interest rate changes, all else equal.



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

  1. a face-amount certificate company
  2. a unit investment trust
  3. a mutual fund
  4. a closed-end investment company

Answer(s): B

Explanation:

A unit investment trust is always passively managed. Some mutual funds, such as index funds, may also be passively managed, but not all mutual funds are passively managed.



Which of the following is true about a hedge fund?

  1. It is designed to help investors hedge their risk and, as such, is a low risk alternative to a mutual fund.
  2. It is closed to all but sophisticated, wealthy investors.
  3. It is more liquid than almost any investment other than a money market mutual fund.
  4. It has very low management fees since it is passively managed.

Answer(s): B

Explanation:

A hedge fund is closed to all but sophisticated, wealthy investors. Hedge fund managers engage in riskier strategies than mutual fund managers. They are fairly illiquid; the redemption of shares is restricted. They are actively managed, and management fees are much higher than those charged by other types of funds.



Mr. Donald is the owner and CEO of Just Ducky Broker-Dealers. His wife, Ms. Daisy, handles all the ministerial duties for the firm. The firm has three other employees. Huey is the municipal bond specialist and handles client trades in municipal securities only; Dewey handles only mutual fund sales for clients; Louie handles all aspects of client trading in stocks, corporate bonds, and options.
Which of the following statements regarding the minimum FINRA registration requirements for these individuals is true?

  1. Mr. Donald, Huey, Dewey and Louie must all be registered as general securities representative s in accordance with FINRA rules.
  2. Mr. Donald, Ms. Daisy, Dewey and Louie must be registered as general securities representatives, and Huey must be registered as a limited securities representative under FINRA rules.
  3. Under FINRA rules, Mr. Donald must register as a principal, Dewey must be registered as a limited securities representative, and Louie must be registered as a general securities representative. Daisy and Huey need not be registered.
  4. Mr. Donald and Ms. Daisy must be registered as principals, and the other three must be registered as general securities representatives under FINRA rules.

Answer(s): C

Explanation:

The true statement regarding FINRA registration requirements for the individuals is that Mr. Donald must register as a principal; Dewey must be registered as a limited securities representative; and Louie must be registered as a general securities representative. Daisy and Huey need not be registered. Mr. Donald is actively involved in the management of Just Ducky and, as such, he must register as a principal. Dewey handles mutual fund sales and, at a minimum, must be licensed as a limited representative. Louie, who executes stock, bond, and option transactions, must be licensed as a general securities representative. Huey is exempt from registration requirements since he trades in municipal securities only. Daisy is exempt since she handles only the ministerial duties of the firm.



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