Ms. Newbie, a registered representative employed by Savvy Investments, has received a letter of complaint from a client that Ms. Newbie believes is unfair and illegitimate. More specifically, she believes that the complaint misstates the facts. Under these circumstances, Ms. Newbie:
Answer(s): D
If Ms. Newbie receives a letter of complaint from a client, she must provide a copy of the complaint to Savvy, who is required to respond to the complaint in writing and to keep a record of it. It doesn't matter whether or not the complaint is deemed to be unfair and illegitimate by Ms. Newbie and/or her employer, Savvy.
Which of the following statements about hedge funds is true?
Answer(s): B
The true statement about hedge funds is that they are not regulated by the Investment Company Act of 1940. They are very risky, are illiquid-investors may only make contributions and withdrawals at specified times-and they have extremely high management fees.
Which of the following are included in the expense ratio of a fund?I). 12b-1 feesII). brokerage costs incurred by the fund when it buys and sells securitiesIII). redemption feesIV). management fees
Answer(s): A
Of the selections, only 12b-1 fees and management fees are included in the expense ratio of the fund. Brokerage costs that the fund incurs when it buys and sells securities are not included (which is why a fund's turnover ratio is important to consider.) Redemption fees are paid by the shareholder to the fund, so it would not be included in a fund's expense ratio since it is not an expense of the fund.
A person's discretionary income is:
Answer(s): C
A person's discretionary income is the income that he has left to spend or save after having paid taxes on the income and for all of the necessities, e.g., housing food, clothing, transportation, utilities, etc. His income after tax is referred to as his disposable income.
Joel has a 28-year-old client who has been promoted to the elevated position of senior software engineer with a large, well-known, software company at her relatively young age. She has come to Joel for investment advice, explaining to him that she is risk-averse, having been influenced by parents who grew up in a foreign country and had little, prior to immigrating to America and working hard to achieve their dreams for themselves and their children. She has $50,000 that she wants him to invest for her, and her primary goal is to be able to have enough money, beyond what she expects to have in her employer's retirement program, to return to her home country and help others achieve their dreams. Joel explains to her that she may have to invest in riskier securities in order to achieve her goal, but his client is adamant that she wants her portfolio to be invested to target growth with the least risk exposure possible. Given the facts:
Because Joel's client is adamant about being risk-averse, but also desires growth, Joel should invest his client's monies in a growth fund to target her desired objective. He should avoid the riskier aggressive growth and foreign stock funds. Although her long-term investment horizon indicates that she is able to tolerate more risk, her desires trump that. Investing in stocks of her home country doesn't make sense at this point since no one knows what the future exchange rate will be. Investing in a U.S. government bond fund has less risk, but does not target her growth objective.
Post your Comments and Discuss FINRA Series 6 exam prep with other Community members:
Our website is free, but we have to fight against AI bots and content theft. We're sorry for the inconvenience caused by these security measures. You can access the rest of the Series 6 content, but please register or login to continue.