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Ace Your FINRA Series-6 Exam: Unlock Investment Rep Success
Question 1
Clem Shyster is a registered representative with a family of mutual funds. A married couple in their 50s sought his advice about how they should best invest an $80,000 profit that they had received when they sold a rental property they owned for a number of years. Their investment profile indicated to Clem that their main investment objective was capital appreciation and that they were willing to accept moderate levels of risk. Clem advised them to invest $10,000 in eight different growth funds, each of which had a 7% front-end load.
Has Clem violated any securities laws with his recommendation?
Correct : D
Yes, Clem has violated securities laws with his recommendation that his clients spread their money among eight different load, growth funds because there is a lot of overlap in the individual stocks in which these funds invest, so this strategy has not provided them with significantly more diversification; it has just cost them more, which will benefit Clem since he gets to pocket part of that load fee himself. He has made an unsuitable recommendation and has not upheld NASD's rules involving fair dealing with customers.
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Question 2
Which of the following share classes do not have front-end loads?
Correct : D
Neither Class B nor Class C shares have front-end loads. Class B and Class C shares typically have higher 12b -1 fees, however, with Class C having the highest 12b-1 fees of the three classes.
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Question 3
Which of the following is a true statement about FINRA rules regarding material that Giant Investments submits to its institutional investors?
i. FINRA requires that each member firm establish procedures for each institutional investor separately.
ii. Procedures to be followed in distributing material to institutional investors must be in writing.
iii. All institutional sales material must be submitted to a principal for approval prior to being used.
IV. Institutional sales material must be maintained by the member firm for at least three years from the date of last use.
Correct : D
Only Statements I, II, and IV are true statements regarding FINRA rules on material that Giant submits to its institutional investors. FINRA requires that each member firm establish procedures for each institutional investor separately, and that the procedures to be followed in distributing material to institutional investors be established in writing. Institutional sales material must be maintained by the member firm for at least three years from the date of last use, but there is no requirement that institutional sales material be submitted to a principal for approval prior to being used.
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Question 4
Main Street Capital Corporation (MAIN) is registered as a non-diversified investment company under the Investment Company Act of 1940.Based on this, which of the following statements regarding MAIN are true?
i. MAIN may not invest more than 5% of its investment monies in any single issuer.
ii. The net asset value of MAIN's shares is likely to fluctuate more than that of a diversified investment company.
iii. MAIN's returns are more likely to be affected by any single, specific economic occurrence or regulatory change.
Correct : C
Only Selections II and III are true. Because MAIN is a non-diversified investment company, it may invest more than 5% of its investment monies in a single issuer. This results in less risk diversification, so its net asset value is likely to fluctuate more than that of a diversified investment company. In addition, this means its returns are more likely to be affected by any single, specific economic occurrence or regulatory change.
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Question 5
Ms. Pye has quit her job to become a full-time mother and wants to roll over the funds from her 401(k) plan into an IR
Correct : B
If Ms. Pye wants to rollover the funds from her 401(k) plan into an IRA, you should tell her that if she has the funds transferred directly from her 401(k) plan to the IRA, she will avoid having 20% withheld. She will not have to pay either taxes or a penalty on the funds that are rolled over if she follows specified guidelines, and if she opts to take possession of the funds herself prior to depositing them in the IRA account, she has 60 days in which to do so before a 10% penalty is assessed.
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- Exam Name: Investment Company and Variable Contracts Products Representative
- Exam Code: Series-6
- Last Update: 26-Feb-2026
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