Important Finra Series-6 Exam Questions

CertPrep • Finra • Series-6 Exam Questions

Select Certification Providers

Select Certification Exam

Get Full Version

Finra Investment Company and Variable Contracts Products Representative Series-6 Exam

Attempt the Products Representative Qualification practice test and solve real exam-like Series-6 questions to prepare efficiently and increase your chances of success. Our Finra Series-6 practice questions match the actual Investment Company and Variable Contracts Products Representative exam format, helping you enhance confidence and improve performance. With our Series-6 practice exam software, you can analyze your performance, identify weak areas, and work on them effectively to boost your final Products Representative Qualification exam score.

Vendor:	Finra
Exam Name:	Investment Company and Variable Contracts Products Representative
Registration Code:	Series-6
Related Certification:	Finra Products Representative Qualification Certification
Exam Track:	Investment And Variable Contracts
Exam Audience:

Total Questions

325

Last Updated

05-12-2025

Exam Duration

135 MINUTES

Upgrade to Premium

GET FULL PDF

Question: 1

Which of the following correctly describes a difference between closed-end and open-end investment companies?

AOpen-end investment companies have a fixed number of shares; closed-end companies can create new shares if there are more buyers than sellers.

BOpen-end investment company shares will never be offered at a price below the net asset value per share of the fund; this is not true of closed-end companies.

COpen-end companies may invest in non-diversified portfolios; closed-end companies are required to invest only in diversified portfolios.

DShares of open-end companies sell on exchange floors; shares of closed-end companies are bought and sold through the company itself.

Answer: B

Explanation:

A difference between closed-end and open-end investment companies is that open-end investment company shares will never be offered at a price below the net asset value of the fund; this is not true of closed-end companies. The shares of open-end investment companies (mutual funds) are bought (and sold) through the company itself at net asset value or net asset value plus a load charge.

Therefore, the offer price will always be greater than or equal to the fund's net asset value per share.

Closed-end company shares are bought and sold on exchange floors, and the price is set by supply and demand, so closed-end shares may sell for less than the net asset value of the fund. Closed-end companies have a fixed number of shares. Open-end companies can create new shares if there are more buyers than sellers. Both types of management companies can be either diversified or non-diversified in their holdings.

Question: 2

When a broker-dealer hires a new agent, it must submit:

Aa U-4 form that includes information about the agent's name, address, education, and employment history.

Ba U-5 form that includes information about the agent's name, address, education, employment history, and marital status.

Can REP form that includes information about the agent's name, address, education, and employment history.

Da U-4 form that includes information about the agent's name, address, and employment history.

Answer: D

Explanation:

When a broker-dealer hires a new agent, it must submit a U-4 form that includes information about the agent's name, address, and employment history. The form must also include information on any felony charges or securities-related misdemeanors, but it does not include anything about the agent's education or marital status. The U-5 form, which is filed when an agent is terminated, would include this additional information.

Question: 3

After having been divorced for several years, Mrs. Blended has remarried a man with three children of his own. She has set up a revocable trust in which she deposited funds that she inherited when her mother died, so that the monies will go uncontested to her two biological children in the event of her own death. These two adult children are the only beneficiaries of the trust. Mrs. Blended has no plans to touch any of the money in the trust unless circumstances demand it in the future. The trust is invested in a mutual fund that paid $500 in dividend income and distributed $3,000 in long-term capital gain income to the trust this year.

Which of the following statements is true regarding the tax treatment of these distributions?

AThe distributions will not be taxed at this point; they will be taxed only when Mrs. Blended or her beneficiaries make withdrawals from the trust.

BAssuming her two adult children are equal beneficiaries, each one is responsible for paying tax on 50% of the income to the trust, or $1,750.

CMrs. Blended must pay taxes on the $3,500 in distributions.

DThe distributions will not be taxed at this point; they will be taxed as part of the estate upon Mrs. Blended's death.

Answer: C

Explanation:

If Mrs. Blended established a revocable trust that invested in a mutual fund that distributed $3,500 total in dividend and capital gain income this year, Mrs. Blended is responsible for paying taxes on the distributions. Whether or not any monies or assets are withdrawn from a revocable trust, the grantor of the trust-in this case, Mrs. Blended-- is responsible for any taxes due.

Question: 4

An order to buy or sell a stock at the prevailing market price is called a(n):

Aopen-ended order.

Bmarket order.

Cstop order.

Dlimit order.

Answer: B

Explanation:

An order to buy or sell a stock at the prevailing market price is called a market order. Stop orders and limit orders specify prices at which the order is triggered.

Question: 5

Which of the following statements about hedge funds is true?

AThey are fairly low risk since the portfolio managers use investment strategies designed to ''hedge their bets.''

BThey are not regulated by the Investment Company Act of 1940.

CThey are considered to be very liquid investments.

DThey have low management fees, like index funds.

Answer: B

Explanation:

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.

SAVE TIME & QUICKLY PREPARE WITH REAL QUESTIONS

GET FULL ACCESS

Other Finra Certification Exams

Series-7 Exam

General Securities Representative Examination (GS)

Series-63 Exam

Uniform Securities State Law Examination

SIE Exam

Securities Industry Essentials Exam