美国寿险经纪执照考试S6_1a Answer.pdf

QBank Printable Exam Answers Only 1 Question 1 6326 The correct answer was B The shares are sold at a current market price Explanation A closed end company issues a limited number of shares in a single offering to be sold by the underwriter at a set public offering price Once the shares are sold they trade on an exchange or OTC where supply and demand sets the trading price Reference 2 1 2 3 1 in the License Exam Manual Question 2 6288 The correct answer was C II and III Explanation With a Series 6 license a registered representative can sell variable contracts and investment company offerings by prospectus This would include the common stock being offered by the closed end company in its IPO and the insurance company s variable annuity Reference 3 2 1 1 in the License Exam Manual Question 3 6618 The correct answer was C 3 000 00 Explanation The contractual plan has been sold under the provisions of the Act of 1970 After 45 days the investor will receive his account value only or in this case 3 000 Contractual plans are no longer sold but many contracts are still in effect Reference 2 5 1 2 in the License Exam Manual Question 4 6886 The correct answer was B Only the amount that represents investment income is subject to tax Explanation The payment is divided into investment income and the client s original investment Tax is owed on the investment income only which is taxed at an ordinary income rate Reference 3 8 1 in the License Exam Manual Question 5 7211 The correct answer was D the highest sales charge Explanation It would be misleading to base performance charts on anything other than the highest sales charge Reference 4 1 6 2 in the License Exam Manual 1 of 208 29 2012 10 56 AM Question 6 6447 The correct answer was A I and III Explanation Class C shares generally have the following features no front end sales charge lower CDSCs than Class B shares for a shorter period of time and no conversion to Class A shares regardless of how long they are held Because of these features Class C shares may be less expensive for investors with shorter investment horizons They may be more expensive for investors who plan to hold their shares for a long time since the level load never discontinues Reference 4 2 2 4 in the License Exam Manual Question 7 5978 The correct answer was B fall Explanation Like the price of other debt instruments the price of outstanding T bills decreases as interest rates rise Reference 1 3 1 8 in the License Exam Manual Question 8 6812 The correct answer was B unsuitable because of surrender fees Explanation Incurring the surrender fee for the 1035 exchange of one contract and initiating a new long term contract is inappropriate for a customer in general and particularly for this customer considering her need to access her funds only two years later Reference 3 8 2 1 1 in the License Exam Manual Question 9 6680 The correct answer was D It is solely up to the company who may participate in this type of plan Explanation Only qualified plans must be offered to all eligible employees Since a deferred compensation plan is not qualified the company may discriminate as to who participates in the plan Reference 3 9 1 1 in the License Exam Manual Question 10 6879 The correct answer was A II and III Explanation The number of accumulation units an investor owns may vary as additional units are purchased or as units are redeemed The number of annuity units is fixed at annuitization Reference 2 7 3 in the License Exam Manual 2 of 208 29 2012 10 56 AM Question 11 6979 The correct answer was D Someone who sold the same stock at about the same time Explanation When someone is convicted of insider trading a person who can demonstrate that he was on the other side of the market buying if the insider was selling and vice versa at or about the same time contemporaneously is permitted to bring a civil suit under the Insider Trading Act If successful the injured party may recover the amount lost plus interest but no punitive treble damages Reference 3 11 2 in the License Exam Manual Question 12 6256 The correct answer was C I and II Explanation Unlike that of individual stock in the secondary market the ex dividend date for a mutual fund is set by the fund s board of directors or the fund s principal underwriter It commonly falls on the first business day after the record date Reference 3 7 2 4 3 in the License Exam Manual Question 13 6088 The correct answer was B Put writer Explanation The put writer also known as the put seller receives a premium and in exchange for it stands ready to buy stock from the put buyer at the strike price If the stock loses value the put buyer will offer his stock to the put writer who will be obligated to purchase it at the strike price Reference 1 2 6 1 in the License Exam Manual Question 14 6635 The correct answer was D She will be charged whatever sales charge she is entitled to for the actual amount invested Explanation An LOI is not a binding contract on the customer and she is not required to deposit the rest of the money She will be entitled to the breakpoint for which her 12 000 investment qualifies Reference 4 2 2 2 2 in the License Exam Manual Question 15 7194 The correct answer was B in violation of selling away because you did not obtain your firm s permission in writing before putting the two clients together Explanation Any registered individual must notify the member firm in writing before engaging in any activity outside of the firm that is related to the sale of securities If compensation was received regardless of the amount the firm must give its permission in writing and agree to handle the transaction on its books as it would any trade run through the firm Reference 5 3 2 1 in the License Exam Manual 3 of 208 29 2012 10 56 AM Question 16 6305 The correct answer was A Face amount certificate companies unit investment trusts and management companies Explanation There are three classes of investment companies listed in the Investment Company Act of 1940 face amount certificate companies which issue debt certificates unit investment trusts which issue trust units that provide the holder with a share of ownership in a non managed portfolio of securities and management companies which trade the securities in the investment portfolio to achieve the investment objectives of the company and which are subclassified into open end and closed end companies Reference 2 1 2 in the License Exam Manual Question 17 6444 The correct answer was A have higher dividend yields Explanation Value funds focus on companies whose stocks are currently undervalued earnings potential is not reflected in the stock price As a result the dividend yields tend to be higher than growth funds If one is looking for capital gains it is more likely that the growth fund will provide them The management style has no impact on share classes and no mutual funds ever sell at a discount to the NAV that is only true of closed end funds Reference 2 4 4 1 1 in the License Exam Manual Question 18 7155 The correct answer was D using discretionary authority Explanation The use of discretionary authority does not violate the Conduct Rules unless abuse of that authority leads to excessive trading and the misuse of a customer s funds or securities Reference 5 3 3 in the License Exam Manual Question 19 6860 The correct answer was D the customer may pay in as much or as little as frequently or as infrequently as he pleases with no penalty Explanation A variable annuity does not require scheduled premium payments The customer may miss as many payments as he wishes with no fear of forfeiting earlier payments Reference 2 7 2 in the License Exam Manual Question 20 6525 The correct answer was A closed end Explanation It is clear that the asking price has decreased while the NAV has increased This is only possible with shares of a closed end 4 of 208 29 2012 10 56 AM fund because their price is based upon supply and demand not NAV plus sales charge Reference 2 4 3 1 in the License Exam Manual Question 21 295592 The correct answer was C 6 3 Explanation The corporate bond is fully taxable while the municipal bond is tax free On the 9 paid by the corporation bond the client will lose 30 to income tax That is a reduction of 2 7 9 30 leaving a remainder of 6 3 Reference 1 3 4 1 1 in the License Exam Manual Question 22 7072 The correct answer was B I and III Explanation The Code of Procedure is used to deal with violations of the Conduct Rules whereas the Code of Arbitration is used to settle disputes Adverse decisions and penalties under the CoP can be appealed to the National Adjudicatory Council then to the SEC and eventually to the federal appellate court system Settlements under arbitration are not subject to appeal and mediation is not mandatory Reference 5 4 in the License Exam Manual Question 23 6952 The correct answer was A II and III Explanation If the dollar weakens foreign currencies buy more dollars therefore on redemption NAV in U S dollars should benefit Furthermore a strengthening economy abroad should have a favorable impact on the foreign companies in which the fund invests and thus on the NAV of the shares Reference 1 4 2 5 in the License Exam Manual Question 24 6001 The correct answer was B Series EE Explanation Series EE bonds accrue interest which is paid only at maturity or redemption Reference 1 3 3 2 in the License Exam Manual Question 25 6421 The correct answer was B Corporate bond fund Explanation When interest rates fall bond prices rise The other funds listed hold common stock in their portfolios and common stock is not 5 of 208 29 2012 10 56 AM as directly affected by changes in interest rates as are debt instruments Reference 2 4 4 4 in the License Exam Manual Question 26 5931 The correct answer was B yield to maturity Explanation Bond yields are most accurately compared by their yield to maturity The yield to maturity reflects annualized gains and losses based on both interest and the average price of the bond from time of purchase until maturity Reference 1 3 2 1 3 in the License Exam Manual Question 27 295814 The correct answer was C a solo 401 k plan Explanation The only plan that allows loans is the 401 k The solo is used for sole proprietorships Reference 3 9 3 1 in the License Exam Manual Question 28 6452 The correct answer was C 2 410 Explanation 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 Reference 4 2 3 in the License Exam Manual Question 29 5922 The correct answer was A 5 6 Explanation Current yield is determined by dividing annual interest payment by the current market price of the bond 50 900 5 6 Years to maturity is not a factor in calculating current yield Reference 1 3 2 1 2 in the License Exam Manual Question 30 6652 The correct answer was C II and III Explanation The absence of a sales load does not ensure better performance It is correct that Class B shares are sold without a front end load but they usually have a higher expense ratio Class A shares in a quantity of 250 000 would almost certainly qualify for a substantial reduction in sales charge Investing in several fund families would reduce the likelihood of breakpoints and yield no advantage because funds are typically already diversified 6 of 208 29 2012 10 56 AM Reference 4 2 2 1 in the License Exam Manual Question 31 6601 The correct answer was D 9 Explanation The maximum sales load permissible under either type of contractual plan front end load or spread load is 9 over the life of the plan It should be noted that new contractual plans are no longer sold though there are still such plans in force Reference 2 5 1 2 in the License Exam Manual Question 32 6963 The correct answer was C a recession Explanation Recession is six consecutive months of economic decline Depression is six consecutive quarters of economic decline Reference 1 4 1 4 in the License Exam Manual Question 33 7209 The correct answer was A I and IV Explanation Ordering more shares than the customer wants may increase a commission but is an excessive transaction The same applies to churning that is futile trades designed only to generate commissions Commingling and front running are prohibited practices but are not excessive transactions Reference 5 3 3 2 in the License Exam Manual Question 34 6156 The correct answer was B Complies with the full and fair disclosure requirements of the Securities Act of 1933 Explanation A prospectus is a disclosure document meant for distribution to the public It must constitute full and fair disclosure of all material facts about the issuer and the security Reference 3 4 2 3 in the License Exam Manual Question 35 295851 The correct answer was C the risks inherent in the investment Explanation The primary emphasis on any recommendation must always be the potential risks the client could be exposed to Reference 4 1 5 2 in the License Exam Manual 7 of 208 29 2012 10 56 AM Question 36 6987 The correct answer was C All of the securities and all of the cash Explanation SIPC covers cash and securities up to 500 000 total with cash losses not to exceed 250 000 Reference 3 10 1 1 in the License Exam Manual Question 37 5821 The correct answer was A I and III Explanation Common stockholders of publicly traded companies have a residual claim to assets of a corporation at dissolution and are entitled to receive an annual report containing audited financial statements Stockholders never get to vote on dividends Reference 1 2 1 6 in the License Exam Manual Question 38 6496 The correct answer was C investment advisory board Explanation A 12b 1 plan must be approved by a majority vote of the shares board of directors and noninterested members of the board of directors The fee must be reapproved annually by the board Reference 2 4 3 2 4 in the License Exam Manual Question 39 7242 The correct answer was A unsuitable since she has no need of the death benefit Explanation The customer has no need for the death benefit she has no immediate survivors or tax deferral features with 19 200 in annual income there are virtually no income taxes due of a variable life insurance policy so this transaction is unsuitable Finally she would be replacing income generating assets with one that does not offer immediate income and that could reduce her income cushion to an uncomfortable margin of safety Reference 6 1 3 in the License Exam Manual Question 40 6378 The correct answer was D safeguarding the physical assets of the investment company Explanation The custodian not the transfer agent is responsible for safeguarding the physical assets of the investment company Reference 2 3 4 in the License Exam Manual 8 of 208 29 2012 10 56 AM Question 41 6485 The correct answer was A 90 days Explanation The time limit for a letter of intent is 13 months but the letter may be backdated up to 90 days from the date it was filed In that case the investor has ten months to complete the letter Reference 4 2 2 2 2 in the License Exam Manual Question 42 5871 The correct answer was B Warrants are often issued with other securities to make the offering more attractive Explanation Warrants are generally issued with bond offerings to make the bonds more attractive Warrants are long term options to buy stock and because they are equity securities warrants as investments are considered less safe than bonds Reference 1 2 5 2 in the License Exam Manual Question 43 295544 The correct answer was D Higher Explanation Anytime the actual return exceeds the AIR the next payment will increase In March the actual earnings were 5 and because that is higher than the AIR of 4 April s payment will go up You must remember to only compare the actual to the AIR not to the previous month s return Reference 2 7 4 in the License Exam Manual Question 44 6258 The correct answer was B II and IV Explanation All preferred stockholders must receive dividends before common stockholders do Rights and warrants do not pay dividends Reference 1 2 3 in the License Exam Manual Question 45 6603 The correct answer was C I and II Explanation A contractual planholder receives a certificate evidencing ownership of shares held in trust by the plan company The plan participant holds units in the trust rather than specific mutual fund shares Contractual plans are no longer sold but many plans are still in effect Reference 2 5 1 2 in the License Exam Manual Question 46 7026 9 of 208 29 2012 10 56 AM The correct answer was C deal in closed end funds in the primary market only Explanation As with open end funds the primary market for closed end funds involves the initial offering of investment company shares sold with a prospectus Once the offering is closed to new buyers and the shares trade in the secondary market limited securities representatives may no longer deal in them Reference 3 2 1 1 in the License Exam Manual Question 47 6348 The correct answer was B maintain adequate debt equity diversification in the fund s investments Explanation According to the Investment Company Act of 1940 at least 40 of a company s directors must be noninterested persons a simple majority if the fund charges a 12b 1 fee the company must state and follow a clearly defined investment objective and a company must have a minimum of 100 000 in assets before it may operate Reference 2 2 in the License Exam Manual Question 48 6761 The correct answer was C Taxed as ordinary income Explanation The distribution is taxed as ordinary income A 10 penalty would apply if the customer were younger than age 59 Reference 3 9 3 in the License Exam Manual Question 49 7008 The correct answer was D Placement Explanation Placement the first step in laundering money when no attempt is made to hide its origins is recognized as the step during which the illegal funds are most vulnerable to detection There is no step called relocation Refere