question

He will receive a reduced load on $13,200 worth of the shares.

answer

client invests $2,200 in an open-end investment company and signs a letter of intent for a $10,000 breakpoint. If he deposits $11,000 6 months later, which of the following statements is TRUE?

question

the sale of investment company shares in dollar amounts just below the point at which the sales charge is reduced on quantity transactions to incur the higher sales charge.

answer

A breakpoint sale is:

question

II and IV.

answer

The NAV of a mutual fund Class A share: I. must be calculated at least twice per business day. II. can never be higher than the POP. III. can never be equal to the POP. IV. can never be so much lower than the POP that the difference exceeds 8.5% of the POP.

question

an application to invest.

answer

A national financial magazine advertisement for ABC mutual funds is permitted to include all of the following EXCEPT:

question

I and II

answer

The following testimonial appears in an advertisement for the ABC International Growth Fund; "The ABC International Growth Fund has been an excellent investment for me and my family and I recommend it to anyone seeking more than 10% average annual returns over the next five to ten years." Walt White, International traveler. Which of the following are TRUE? I. If Walt was compensated more than $100 for the testimonial, disclosure is required. II. A disclosure that past performance does not indicate future performance is required. III. The ABC International Growth fund is appropriate for any investor seeking more than 10% average annual returns over the next five to ten years IV. Walt's title qualifies him to give advice on international investments because of his extensive experience and knowledge of international travel.

question

prospectuses.

answer

All of the following are considered public communications EXCEPT:

question

I and IV.

answer

Which of the following statements regarding investment companies are TRUE? I. Investment companies may offer breakpoints provided they are offered uniformly. II. Investment companies may tell their customers that the role of the custodian is to supervise the sale and purchase of portfolio securities. III. Investment companies must send all advertisements to FINRA within 30 days of their first use. IV. The Securities Act of 1933 requires that a prospectus be provided in conjunction with the solicitation of orders for mutual fund shares.

question

a back-end sales charge that decreases the longer the investor holds the shares.

answer

A contingent deferred sales charge is best described as:

question

I and II.

answer

Which of the following mutual fund share classes are specially suited to investors that have long-term objectives? I. Class A shares for investors that have a large amount to invest. II. Class B shares for investors that have a small amount to invest. III. Class A shares for investors that have a small amount to invest. IV. Class C shares.

question

I and III.

answer

Which of the following are features of Class C mutual fund shares? I. Typically charge no front-end load. II. Typically charge a front-end load. III. Typically impose lower CDSCs than Class B shares for a shorter period. IV. Typically convert to Class A shares after they are held for a defined period of time.

question

Shares will be redeemed at a price equal to the next calculated net asset value.

answer

A customer purchases 1,000 ABC mutual fund Class A shares and wishes to redeem the shares 30 days later. Which of the following will occur?

question

Mutual fund advertisements placed by a broker-dealer that became a member of FINRA 7 months ago

answer

Filing at least 10 business days before first use is required for which of the following?

question

I and II

answer

Which of the following entities must review retail communications for investment company shares prepared by principal underwriters? I. Principal of the underwriting broker-dealer distributing the shares II. FINRA III. SEC IV. NYSE

question

AAA bonds to a client who has income as an objective.

answer

Selling which of the following is NOT a violation of the Conduct Rules?

question

Class A.

answer

Your customer has inherited $50,000, with which he would like to make a onetime, long-term investment for growth. Of the funds you recommend to him, he has selected one that offers A-, B-, and C-class shares. Which should he purchase?

question

convert shares to a different mutual fund within the family of funds on a dollar-for-dollar basis.

answer

Some mutual funds that are in a family of funds managed by the same company offer an exchange privilege. This privilege gives a shareholder the right to:

question

The fund does not offer breakpoints.

answer

Which of the following would prevent a mutual fund with a front- end load from charging as much as 8.5% of POP as a sales charge?

question

combine the investments of one fund with another in the same fund family to reach a breakpoint.

answer

Some open-end investment companies offer their investors combination privileges which permit an investor to:

question

The fund may halt redemption during the time the letter of intent is in effect.

answer

A letter of intent for a mutual fund does NOT contain which of the following provisions?

question

Correspondence to 25 or fewer retail investors within any 30 calendar-day period

answer

Under the rules on communication with the public, review of which of the following by a principal may take place either before or after distribution?

question

a training presentation that is marked for internal use only

answer

All of the following items require review by a principal of the member firm EXCEPT

question

$50.

answer

A customer wishes to redeem 1,000 shares of a mutual fund. The NAV and POP are $10, and a redemption fee of 0.5% will be charged. How much will the customer pay in redemption fees? ** The question did not ask how much he would receive upon redemption, but how much he would pay in redemption fees. Mutual fund shares are redeemed at the NAV (bid): 1,000 shares × $10 each = $10,000. $10,000 × .005 (.5% redemption fee) = $50.

question

literature on an investment company that includes a ranking prepared by the member firm

answer

All of the following communications may be filed with FINRA by an established firm at least 10 business days after use EXCEPT

question

A registered representative in California places several cold calls at 7:00 pm Pacific time to prospective customers in New York.

answer

Which of the following is a violation of the Telephone Consumer Protection Act of 1991?

question

Father and his 35-year-old son investing in separate accounts.

answer

To qualify for the quantity discount, which of the following could NOT be defined as a person?

question

buy the XYZ Aggressive Growth Class C shares with a 1% CDSC expiring in one year and .75 12b-1 fee.

answer

A customer with an aggressive growth investment objective and short-term (6- to 12-month) time horizon wants to invest $50,000 in a mutual fund. He has a substantial net worth, but none of it is invested in mutual funds. You inform him that mutual fund investments are intended to be long-term investments, but he expresses his intention to make the short-term investment anyway. If the XYZ fund family (one you have dealt with in the past) offers an aggressive growth fund that has a respectable track record, your recommendation should be to:

question

6.25%

answer

A customer invests $35,000 in a fund with breakpoints as shown below: $25,000 - $49,000 - 7% $50,000 - $99,000 - 6.25% If she has signed a letter of intent for a total of $50,000, what is her sales charge on the $35,000 initial investment?

question

the highest sales charge.

answer

Performance charts of a particular mutual fund must be based on an assumption that the investor paid:

question

performance predictions.

answer

All of the following may be included in mutual fund communications with the public EXCEPT:

question

both the job opportunity and the industry itself be represented honestly.

answer

Your firm is doing interviews of the top candidates from among those who responded to a recruiting advertisement. Advertising rules require that:

question

The exchange is considered a taxable event that must be recognized in the current year.

answer

An investor owns $10,000 of shares in ABC bond fund. Due to a change in his financial situation, he wishes to exchange the bond fund shares for shares in ABC's aggressive growth fund. Which of the statements below correctly describes the tax consequences of this action?

question

the name of the broker-dealer placing the ad, but not the name of the investment company.

answer

A generic ad for an investment company placed by a broker-dealer would contain:

question

the address where a check to purchase shares is to be mailed.

answer

Mutual fund tombstone advertisements complying with SEC Rule 482 may include all of the following information EXCEPT:

question

deducted from the lower of the original cost or the NAV when those shares are redeemed.

answer

An investor in Class B shares with a 7 year contingent deferred sales charge liquidates shares four years after purchase. The CDSC is:

question

Net asset value plus the underwriter's concession.

answer

Which of the following describes the price of a Class A mutual fund share paid by a dealer on contract with the fund's underwriter?

question

at the discretion of investment company management.

answer

A mutual fund may temporarily suspend the redemption provision under all of the following circumstances EXCEPT:

question

it must have prior principal approval

answer

All of the following are true regarding institutional communications EXCEPT

question

$375.

answer

The GEM Fund Group offers a combination privilege and has breakpoints for its Class A shares as follows: $10,000 - $24,999 4% $25,000 - $49,999 3% $50,000 - $99,999 2% $100,000 - $249,999 1.5% $250,000 - $499,999 1.0% $500,000 and over 0.0% If your client signs a letter of intent for $100,000 and makes an initial deposit of $25,000, the amount of sales charge on that purchase would be: ** When one signs a letter of intent, the sales charge is applicable to the dollar amount designated in the letter. In this case, the amount of $100,000 has a 1.5% sales load; 1.5% × $25,000 invested equals a $375 sales charge on the initial purchase.

question

FINRA.

answer

Which of the following entities must review retail communications to be used by a member firm in connection with the offering of investment company shares?

question

I and III.

answer

Which of the following services must a mutual-fund sponsor offer to be permitted to charge the maximum allowable sales charge for the fund shares? I. Rights of accumulation. II. Conversion and exchange privileges. III. Price breakpoints offering reduced sales charges for larger purchases. IV. The right to purchase fractional shares.

question

Announcement on television that your firm's offices have moved.

answer

A registered representative at your firm made a public appearance that was not subject to the rules of conduct regarding public appearances. Which of the following might it have been?

question

II and III.

answer

An investor has $250,000 to invest in mutual funds. Which of the following would be appropriate statements to make to him? I. Buying a no load fund will insure better performance in the long run. II. If you purchase Class B shares, you will have no load now, but you will probably incur higher operating costs. III. A purchase of Class A shares in this quantity will probably lead to a reduction in sales charge.

question

II and III.

answer

In recommending securities to customers, a FINRA member firm must do which of the following? I. Guarantee that future performance will match or exceed past performance. II. Have a suitable basis for recommendations. III. Disclose or offer to disclose supporting documentation. IV. Offer to reimburse execution costs associated with recommendations.

question

retail communication

answer

Filing with FINRA is required for mutual fund-related

question

A report created and sent to the firm's institutional customers only

answer

Which of the following is NOT considered retail communication?

question

Encourage the customer to sign a letter of intent.

answer

You have a client with $15,000 to invest in a mutual fund whose first breakpoint is at $25,000. Which of the following would be ways to enable the client to obtain the reduced sales charge applicable at that breakpoint?

question

$3,540.

answer

An investor redeems 300 shares in ACE Fund. When the investor bought the shares at $12, the NAV was $11.08. If the current POP is $12.50 and the NAV is $11.80, the investor receives: ** Shares are redeemed at NAV. If the investor redeems 300 shares at an NAV of $11.80, he receives $3,540 (300 × $11.80).

question

Our managers are dedicated to giving you the very best service.

answer

Which of the following statements could legally appear in mutual fund communications with the public?

question

$8.30.

answer

A mutual fund has a net asset value (NAV) of $7.80 per share, and the fund pays its underwriter a concession of $0.12 per share. If the fund has a sales load of $0.50 per share and an administrative fee of $0.15 per share, how much does the investor pay per share to purchase a Class A share of this fund?

question

a principal of the firm.

answer

Written recommendations prepared by a research department for dissemination to the public need prior approval of:

question

90 days

answer

Letters of intent may be backdated up to how many days?

question

I and IV

answer

Which of the following is a form of retail communication? I. A form letter sent to more than 25 prospective retail customers within a 30-day period II. A letter to a prospect outlining the details of a recent meeting III. An email sent to 30 banks promoting a new service of the broker-dealer IV. A form letter sent to 20 prospective retail investors and 20 existing customers within a 30-day period

question

I and II.

answer

Under which of the following circumstances could a member firm make alterations to an article on securities before using it as an independently prepared reprint? I. The member firm could alter the presentation format to make it consistent with regulatory standards. II. The member firm could correct the reported number of shares being offered if the original article stated the number incorrectly. III. The member firm could make alterations, provided the article was commissioned by the issuer, not the member firm itself. IV. The member firm could make alterations of content as long as the publisher of the article was an affiliate of either the issuer or the member firm.

question

I and II.

answer

Which of the following must be reviewed and approved by a principal before it may be sent out? I. A communication sent to 36 prospective customers this week, recommending a new mutual fund II. A communication sent to 36 of the firm's existing customers this week, introducing a new service offered by the firm III. A communication sent to 36 of the firm's registered representatives, recommending a new sales approach IV. A communication sent only to 36 institutional customers, recommending a security in which the firm makes a market

question

I and IV.

answer

Which of the following constitute a public appearance? I. Interactive electronic forum. II. Radio advertisement. III. Television commercial. IV. Television interview.

question

The minimum death benefit is guaranteed.

answer

You are preparing a sales presentation for a customer whose portfolio you think would best be served by variable life insurance. You are considering several statements you might wish to make. Which of the following would be permitted?

question

A contingent deferred sales charge.

answer

Your customer has redeemed some of his mutual fund shares, but finds that the price he received is somewhat less than was reported as the NAV of his fund in the newspaper the next day. The most likely reason for this is which of the following?

question

front-end load.

answer

Class A shares of a mutual fund have a:

question

II and IV.

answer

Which of the following share classes typically have a higher expense ratio than Class A shares? I. No-load shares. II. Class B shares. III. Front-end load shares. IV. Class C shares.

question

The redemption value of mutual fund shares fluctuates according to the fund's portfolio value.

answer

When an agent explains mutual funds to a prospective investor, which of the following statements may be made?

question

II and IV.

answer

Which of the following steps must a representative take when making cold calls? I. Strike the names of uninterested prospects off of the call list. II. Inform prospects of the firm's name and telephone number or address. III. Limit calls to between 8:00 am and 10:00 pm of the time zone in which prospects are located. IV. Not call prospects who have made a Do-Not-Call request.

question

II and IV.

answer

If a registered representative wishes to distribute a copy of a national magazine article about the GAON Mutual Fund, which of the following statements is CORRECT? I. Because this material is already in the public domain, it is excluded from the rules on communication with the public. II. This material meets the definition of an independently prepared reprint. III. The article may be used without prior approval of a principal of the member firm. IV. The article may not be sent without prior or concurrent delivery of the GAON Fund prospectus.

question

The name is filed with both FINRA and SEC.

answer

Under what circumstances may a member firm use a fictional name or DBA (doing business as) in its communications?

question

Letter sent this month to 50 prospective customers offering advice about a stock

answer

Which of the following forms of written communication must a principal approve before use?

question

permitted as long as there is nothing misleading about the name.

answer

A broker-dealer member firm of FINRA would like to conduct business under another name. The use of a DBA is:

question

an investment club.

answer

All of the following may receive breakpoint discounts EXCEPT:

question

II and III

answer

Which of the following statements regarding letters of intent used in connection with mutual fund purchases are TRUE? I. The letter can cover a period totaling 16 months. II. The letter may be backdated 90 days. III. Some shares purchased are held in escrow until the letter is completed. IV. During the period covered by the letter, the customer may not redeem his shares.

question

I and III.

answer

Which of the following statements regarding a mutual fund omitting prospectus are TRUE? I. It does not have certain information contained in a full prospectus. II. It may contain an application to invest. III. It is a form of advertising. IV. It need not contain information on how to obtain a full prospectus.

question

II and III.

answer

Your client owns shares of the RAN Fund, an open-end investment company with an objective of aggressive growth. If the client wished to redeem a portion of her holdings: I. the RAN Fund will find another investor to purchase the shares redeemed. II. the mutual fund would send her a check within seven days of her redemption request. III. any fees or concessions earned by the firm would be returned to the underwriter if the redemption occurs within seven days of the original sale IV. she would have to pay a penalty for redeeming less than the entire account.

question

Class A shares.

answer

An investor with a long time horizon and $100,000 to invest would most likely be interested in:

question

state of incorporation of the companies.

answer

When comparing investment alternatives, all of the following must be considered EXCEPT:

question

I and II.

answer

Which of the following statements about an established FINRA member firm's handling of a mutual fund's sale literature are TRUE? I. The material used to solicit the sale of mutual fund shares requires prior approval by a principal of the firm. II. FINRA must review all mutual fund retail communications within three days of its first use. III. If the mutual fund sponsor has had the literature reviewed by FINRA in advance, other firms need not submit it. IV. FINRA must review all mutual fund sales literature within seven days of its first use.

question

I and II

answer

Institutional communications include all of the following EXCEPT I. informational material on a new mutual fund offered by a registered investment company intended for use by registered sales personnel only II. television appearances by an officer of a member firm III. a recommendation report prepared for an insurance company IV. a research report specifically prepared for a Section 457 plan with 100 participants

question

II and III.

answer

Which of the following are TRUE about testimonials used in a public communication? I. The person giving the testimonial must not be paid. II. If the person giving the testimonial received compensation in excess of $100, this must be indicated. III. It must be clearly stated that the listener's experience may be different from that described in the testimonial. IV. The qualifications of the person giving the testimonial need not be given.

question

$2,410.

answer

An investor redeems 200 shares of ABC Fund, which has no redemption fee. If the quote is $12.05 bid $13.01 asked, what amount will the investor receive? ** If a mutual fund has no redemption fee, the investor will receive the bid price per share (net asset value) multiplied by the number of shares being redeemed. In this case, the investor would receive $2,410 ($12.05 × 200 shares).

question

II and IV.

answer

A registered representative is hosting a seminar to solicit sales of a specific mutual fund. He has highlighted features of the fund in the prospectuses he will hand out and has prepared summary sheets of the prospectus for distribution. Regarding this situation, which of the following statements are TRUE? I. It is acceptable to highlight the key points in the prospectus. II. A prospectus may not be highlighted. III. Distributing summary sheets of a prospectus is acceptable. IV. The representative may not distribute summary sheets of the prospectus.

question

internal memos

answer

All of the following are included under the term retail communication EXCEPT

question

exchange shares of one mutual fund for those of another within the same fund family, at net asset value.

answer

Some open-end investment companies offer their investors a conversion privilege, which permits an investor to:

question

Class C shares.

answer

Mutual fund shares that carry a level load are:

question

5% on each purchase, 0% deferred sales load

answer

Your client is interested in purchasing the Class A shares of the BACH Investment Company, whose maximum sales charge is 5%. Which of the following choices best describes the sales load she would probably be charged on her purchase of the BACH?

question

I and IV

answer

To charge an 8.5% sales load, a mutual fund must offer all of the following rights and privileges EXCEPT I. conversion (exchange) II. breakpoints III. rights of accumulation IV. redemption checks sent within 7 days of request

question

Form letter sent to 10 prospective retail customers every week

answer

Which of the following communications are subject to principal approval before first use?

question

Wall Street Journal article on investing

answer

Which of the following is classified as an independently prepared reprint (IPR)?

question

to FINRA member firms engaged in the investment banking or securities business.

answer

In general, the Conduct Rules permit selling concessions and discounts:

question

the risks inherent in the investment.

answer

Investment recommendations must be fully explained, with special emphasis placed on:

question

A radio spot saying that offices have moved.

answer

All of the following would be subject to the Conduct Rules regarding public appearances EXCEPT:

question

With the size of the companies in KLP's portfolio, you can be sure that your fund shares will at least hold steady in value.

answer

The KLP Fund is a blue-chip growth mutual fund that concentrates on the stock of manufacturing companies that have total capitalization of at least $7.5 billion. Bid prices on KLP shares have shown mild to moderate growth in recent years. In addressing a client for whom the fund appears to be a suitable investment, which of the following statements would NOT be permissible?

question

I and IV.

answer

Which of the following share classes have a back-end load? I. Class B. II. Class A. III. No-load shares. IV. Class C.

question

A breakdown schedule

answer

A mutual fund prospectus displays which of the following?

question

This product gives you the possibility of a greater death benefit in exchange for accepting investment risks.

answer

In promoting a variable life insurance contract to a customer, which of the following statements would be permissible?

question

a deferred sales load.

answer

Mutual fund Class B shares assess:

question

He must declare $12,000 as a taxable gain upon exchange into the ACE income fund.

answer

Your customer originally invested $20,000 into the ACE Growth Fund and has reinvested dividends and gains of $8,000. His shares in ACE are now worth $40,000. He exchanges his investment to the ACE Income Fund. Which of the following statements is TRUE? ** The exchange privilege offers exchange without an additional sales charge, but the exchange is still taxable. The customer is taxed on the gain of $12,000 ($40,000 − $28,000). The taxes on $8,000 (dividends and capital gains) were taxed in the years distribution took place.

question

The fund has had a positive performance in the last few years.

answer

A registered representative making a sales presentation based on performance statements and charts is permitted to make which of the following observations?

question

must include assurances or guarantees regarding investment performance.

answer

Recommendations to a customer:

question

sending a copy of a newspaper article (with supervisory approval) about a company whose stock is being solicited.

answer

All of the following actions are potential violations EXCEPT:

question

A RR uses outside electronic addresses and Twitter among other sources to communicate with clients and provides copies to the firm.

answer

With regard to social media used for communication, all of the following would result in regulatory sanctions, EXCEPT:

question

a registered principal.

answer

If a registered representative wishes to place an advertisement in a local newspaper offering her services as a mutual fund representative for XYZ Funds, the advertisement must be approved by:

question

II and IV.

answer

In making a sales presentation to a prospective customer, a registered representative selling open-end investment company shares may compare the shares to a savings account at a bank if: I. it is pointed out that mutual funds have the advantage of federal backing. II. the risk of share price fluctuation is discussed. III. it is pointed out that mutual funds have the advantage of higher liquidity. IV. a statement is made concerning variability of dividend returns.

question

II and III.

answer

If an investment representative hosts an investment seminar and intends to discuss general investment concepts and a specific mutual fund for which he has performance charts, which of the following are TRUE? I. He may discuss the investment returns of the mutual fund in general, provided he does not use a specific time frame. II. He may discuss the investment returns of the mutual fund using a specific time frame. III. He must disclose all material facts regarding the mutual fund to the audience. IV. He may emphasize the positive aspects of the mutual fund and refer prospective investors to the prospectus for further details.

question

a violation of the Conduct Rules.

answer

A registered representative tells his client, "Because this investment made a 5% return for the last 20 years, it should easily do so again next year." This constitutes:

question

Class B.

answer

Shares of which of the following classes may eventually convert to another share class?

question

Three years from August 14, 2010

answer

A first year broker-dealer posts an ad in the newspaper to recruit series 6 registered representatives on May 5, 2010 and again on August 14, 2010. How long must the broker-dealer maintain records of this?

question

place the order as instructed.

answer

A customer with no other mutual fund investments wishes to invest $47,000 in the XYZ Technology Fund. If the Class A shares are eligible for a breakpoint sales charge discount at the $50,000 investment level, the action least appropriate for an agent is to:

question

is also a FINRA member and there is a sales agreement between ALFA and the sponsor.

answer

ALFA Securities, a FINRA member firm, wants to buy shares in ATF Mutual Fund from the fund's sponsor at a discount. This arrangement is possible if ATF's sponsor:

question

Other member firms.

answer

According to the Conduct Rules, a FINRA member firm may give certain selling concessions to which of the following?

question

other FINRA member firms.

answer

According to the Conduct Rules, a member firm may give certain selling concessions to:

question

II and III.

answer

Which of the following statements regarding the Cold-Calling Rule are TRUE? I. The rule imposes a time limit on the length of a call to a customer. II. Cold calls may not be made before 8:00 am or after 9:00 pm in the contact's time zone. III. Upon request, contact names must be placed on a Do-Not-Call list and the request must be honored. IV. Faxes may be sent at any time of the day on an unsolicited basis.

question

By downloading an electronic copy of the statutory prospectus.

answer

An investor buys a mutual fund over the Internet. How does the investor get the required information?

question

within seven business days of the initial purchase.

answer

A broker-dealer with a sales agreement with a mutual fund must return all concessions to the underwriter if a customer redeems his shares:

question

$13.66.

answer

A customer owns 200 shares of ABC Growth Fund, which has a POP of $12 and an NAV of $11. She wants to convert these shares to ABC Balanced Fund, which has a POP of $14.77 and an NAV of $13.66. ABC offers a conversion privilege. At what price will the ABC Balance Fund shares be purchased?

question

attempts to recruit registered representatives for the local branch office.

answer

The rules on communications with the public permit a member firm to exclude mention of its name in any retail communication or correspondence that:

question

lesser of the NAV or purchase price.

answer

An investor purchases $10,000 of the Class B shares of the KAPCO Growth Fund. Two years later, the client redeems the shares. The redemption charge is a percent of the:

question

She will be charged whatever sales charge she is entitled to for the actual amount invested.

answer

A customer signed a letter of intent (LOI) stating that she would purchase $25,000 worth of ACE Fund over the next 13 months. After 13 months, she has invested only $12,000, and she wants to know what effect she can expect. Which of the following may you tell her?

question

must include the name of the broker-dealer placing the advertisement.

answer

A generic advertisement:

question

I and IV.

answer

One of your clients owns shares in several of the mutual funds offered by the ABC Fund family. Unhappy with their performance, he wishes to liquidate the entire account and move the money to shares of the XYZ Growth Fund and the XYZ International fund. In doing this, the client would: I. incur a taxable event. II. be able to make the switch without tax as long as the money was transferred directly from one family to the other. III. be able to acquire the XYZ shares without sales charge. IV. incur the full sales charge appropriate to the purchase of the XYZ shares.

question

I and III.

answer

When the annual report of a mutual fund is used as sales literature, which of the following statements are TRUE? I. The principal of the firm must approve its use for that purpose. II. A prospectus need not accompany the report, provided it includes instructions for obtaining a prospectus. III. The figures contained in the report must be as of a specific date. IV. The report must contain a list of the industries in which the fund invests.

question

A public communication that simply offers a specific security at a specific price

answer

Which of the following pieces of sales material is exempt from routine spot-checking by FINRA?

question

exchange shares of one open-end fund for another for another in the same fund family at a net asset value basis.

answer

The exchange privilege offered by open-end investment companies allows investors to:

question

Comparing an equality growth fund to a money market fund with the intentions of convincing an investor to purchase the growth fund.

answer

If a registered representative is comparing two mutual funds for a customer, which of the following comparisons would NOT be permissible?

question

under no circumstances.

answer

Mutual fund promotional material may predict a rise in share prices:

question

shares of another in that family at net asset value.

answer

The conversion and exchange privilege offered by many mutual fund families permits the exchange of shares in one fund family for:

question

discuss recommendations you made in the type of securities you are most experienced with, not necessarily those now under discussion.

answer

You would like to support a recommendation to a customer by discussing some of your past recommendations. If you do this, you must be sure to do all of the following EXCEPT:

question

I and II.

answer

A prospect receives a telephone solicitation from a registered representative at KPF Brokerage Firm. Under which of the following conditions is this solicitation exempt from the Telephone Consumer Protection Act of 1991? I. The individual, who is not a customer, asked the representative to call him. II. The individual is an active trader with an account at KPF. III. The individual is an active trader with an account at another firm. IV. The representative received permission to make the call from a principal of the firm.

question

Class C shares

answer

Investors with a short time horizon most likely will invest in which class of mutual fund shares?

question

3 years after last use.

answer

There are retention requirements for certain records of a broker-dealer. One of those is the firm's retail communications files. Under FINRA rules, copies of retail communications must be retained for:

question

no earlier than 8 AM nor later than 9 9 PM at the location of the caller.

answer

Under the TCPA of 1991, calls to prospects may be made:

question

may be done within 10 business days after first use

answer

In past years, XYZ Securities has focused primarily on high-net-worth individuals acquired through word of mouth and has never advertised. Their target market has expanded, and they have decided to begin advertising to the public. Under the rules on communications with the public, filing of advertisements

question

$1,830.

answer

The KPF Growth Fund charges no redemption fee. An investor brings 200 shares to your firm for redemption. The next quote on the fund is $9.15 bid, $10.00 ask. If liquidated by the firm without charge, he would receive for his shares:

question

The fund has a portfolio invested primarily in short-term U.S. government debt instruments for stability of principal and regular interest. Since the inception of the fund, the NAV has never varied from $1. The fund will make every effort to maintain the NAV at $1; however, past performance is not an indicator of future results.

answer

Under FINRA rules dealing with communications with the public, a money market mutual fund with a portfolio composed primarily of U.S. government short-term obligations and an NAV that has never varied from $1 per share, may state which of the following?

question

Yes, the ad will be defined as retail communication requiring pre-approval of a principal.

answer

A registered representative places an ad in her church newsletter promoting her services as an expert retirement planner. Does this advertisement need to be pre-approved by a principal?

question

I and IV.

answer

The rules on communications with the public apply to a registered representative:appearing on a TV show to discuss market trends.conducting a Bible study class every Wednesday evening.sending an email to 17 existing clients regarding their upcoming 25-year college reunion.writing a seminar script to be used by the firm's vice president of sales.

question

7 days

answer

A mutual fund must send a check for its tendered shares within how many days after receiving a written request for their redemption?

question

retail communication that includes a ranking by an independent entity

answer

Regarding communications, filing with FINRA is required for

question

April 10 of this year.

answer

The ABC fund offers breakpoints and letters of intent, and one of your customers would like to add some of his past investments in that fund to his current investments to reach a breakpoint. If the date is June 1, which of his past investments may be included?

question

$7,000.

answer

An investor executes a letter of intent to invest $15,000 in a fund to qualify for a reduced sales charge. The investor makes an initial purchase of $8,000. If the account grows to $11,000 before another purchase is made, how much will be due to fulfill the letter of intent?

question

$6,000.

answer

A customer has invested $9,000 and signed a letter of intent for a $15,000 mutual fund investment. If his reinvested dividends during the 13 months total $720, how much money must he contribute to fulfill the letter of intent?

question

Class A.

answer

Which of the following mutual fund share classes has no back-end load, lower operating expenses, and low or no 12b-1 fees?

question

II and III

answer

Which of the following is accurate with regard to using a summary prospectus for the sale of a mutual fund? I. A statutory prospectus must precede or accompany delivery of the summary prospectus. II. A statutory prospectus may be delivered after the summary prospectus. III. Electronic delivery of the statutory prospectus is allowed after the sale. IV. A paper prospectus must be delivered within 3 days of the sale.

question

II and III

answer

Which of the following actions comes under the guidelines concerning communication with the public? I. Posting an internal memo giving sales tips to registered representatives II. Distributing a letter to all clients regarding a new mutual fund family III. Distributing copies of a magazine article about investment opportunities to existing customers only IV. Calling a client to discuss a new investment strategy

question

when a broker-dealer places a paid advertisement in a local newspaper publicizing the range of investment banking services the firm has provided for locally based corporations.

answer

All of the following activities would be considered violations under FINRA rules EXCEPT:

question

II and III.

answer

An investor has $250,000 to invest in mutual funds. Which of the following would be appropriate statements to make to him? I. Buying a no-load fund will ensure better performance in the long run. II. If you purchase Class B shares, you will have no load now, but you will probably incur higher operating costs. III. A purchase of Class A shares from one fund family in this quantity will probably lead to a reduction in sales charge. IV. The initial investment should be spread over several fund families to ensure proper diversification.

question

member-to -member.

answer

A FINRA member firm must maintain the public offering price in all the following instances EXCEPT:

question

may not be complied with if your firm wishes to continue to treat the material as institutional communications.

answer

Your firm has prepared some institutional sales material on several of the securities it deals in and has provided it to three mutual funds. One of the fund managers calls your firm to ask for some extra copies of the material, because he would like to send it to some of his investor friends. This request:

question

Rights of accumulation.

answer

Which of the following is among the rights and privileges a mutual fund sponsor must offer in order to charge the maximum sales charge of 8.5%?

question

Fund to investor.

answer

An investor will pay a sales charge in all of the following marketing methods EXCEPT:

question

loss of $20.

answer

An investor purchased 200 shares of ACE Fund when the POP was $11.60 and the NAV was $10.60. ACE Fund's current POP is $12.50, and current NAV is $11.50. If the investor liquidates his 200 shares now, he will have a: A) loss of $20. B) loss of $200. C) gain of $200. D) gain of $20. ** The investor's cost basis in the shares is $11.60. If he liquidates, he will receive the net asset value of $11.50, resulting in a loss of $.10 per share. Liquidating 200 shares results in a total loss of $20 (200 × $.10).

SERIES 6: Section 4 … Marketing, Prospecting, & Sales Presentation – Flashcards

Unlock all answers in this set

Haven't found what you were looking for?

Search for samples, answers to your questions and flashcards