Series 6 - STC Final Exam 07 Questions with 100%
Correct Answers
The Statement of Additional Information is supplied to a
customer when: Correct Answer: It is requested by a
customer
The cover page of a mutual fund prospectus indicates
that an investor may receive a Statement of Additional
Information upon request. There is no requirement for
periodic distribution.
Three clients share in a tenancy-in-common (TIC)
account that has a current value of $600,000. The
account holds several mutual fund and individual stock
positions. Which of the following statements is MOST
accurate?
A) Each party owns an equal portion of the assets and
receives a Form 1099 for his portion of the taxes due.
,B) Each party owns an equal portion of the assets, but
only one of the three receives a Form 1099.
C) Since each party may own differing percentages of
the account assets an Correct Answer: D) Each party
may own equal or differing percentages of the account
assets, but only one of the three receives a Form 1099.
In a TIC account, holders may have equal or unequal
interests. In this question, each may own 1/3 of the
account or one could potentially own 80% with the
other two each owning 10%. Under IRS rules, each
account is given a primary tax identification number
that's associated with one of the individual owners. Only
one Form 1099 is sent out. Thereafter, it's up to the
account holders to divide their respective tax
responsibility.
A 529A or ABLE account provides which of the
following?
,A) Taxable qualified withdrawals
B) Tax-free growth on qualified withdrawals
C) Pre-tax contributions
D) Growth that's taxed at a lower rate Correct Answer:
B) Tax-free growth on qualified withdrawals
A 529A or Achieving a Better Life Experience (ABLE)
account allows individuals to save for qualified medial
expenses. If the earnings are spent on qualifying
expenses, they're distributed tax-free. Qualified
expenses include basic living expenses, education,
employment support, housing, financial management,
legal fees, transportation, and wellness for disabled
persons. ABLE accounts are funded with after-tax (i.e.,
non-deductible) contributions.
A single father owns a variable annuity and has selected
a life annuity with a 20-year period certain payout
option. He has selected his son as his beneficiary. If the
father dies after receiving 22 years of payments:
, A) Future payments will be made to the beneficiary for
20 years
B) Future payments will be made to the beneficiary for
two years
C) Future payments will be made to the beneficiary for
his life
D) No additional payments will be made Correct
Answer: D) No additional payments will be made
Since the father's death occurred two years after the
end of the period certain, the insurance company is
relieved of making additional payments to his
beneficiary. However, if the father had died after year
10, payments would have continued to his beneficiary
for the remaining 10 years of the contract.
A client purchased 100 shares of a growth fund on April
1 at $30 per share. On July 5, believing a bear market
Correct Answers
The Statement of Additional Information is supplied to a
customer when: Correct Answer: It is requested by a
customer
The cover page of a mutual fund prospectus indicates
that an investor may receive a Statement of Additional
Information upon request. There is no requirement for
periodic distribution.
Three clients share in a tenancy-in-common (TIC)
account that has a current value of $600,000. The
account holds several mutual fund and individual stock
positions. Which of the following statements is MOST
accurate?
A) Each party owns an equal portion of the assets and
receives a Form 1099 for his portion of the taxes due.
,B) Each party owns an equal portion of the assets, but
only one of the three receives a Form 1099.
C) Since each party may own differing percentages of
the account assets an Correct Answer: D) Each party
may own equal or differing percentages of the account
assets, but only one of the three receives a Form 1099.
In a TIC account, holders may have equal or unequal
interests. In this question, each may own 1/3 of the
account or one could potentially own 80% with the
other two each owning 10%. Under IRS rules, each
account is given a primary tax identification number
that's associated with one of the individual owners. Only
one Form 1099 is sent out. Thereafter, it's up to the
account holders to divide their respective tax
responsibility.
A 529A or ABLE account provides which of the
following?
,A) Taxable qualified withdrawals
B) Tax-free growth on qualified withdrawals
C) Pre-tax contributions
D) Growth that's taxed at a lower rate Correct Answer:
B) Tax-free growth on qualified withdrawals
A 529A or Achieving a Better Life Experience (ABLE)
account allows individuals to save for qualified medial
expenses. If the earnings are spent on qualifying
expenses, they're distributed tax-free. Qualified
expenses include basic living expenses, education,
employment support, housing, financial management,
legal fees, transportation, and wellness for disabled
persons. ABLE accounts are funded with after-tax (i.e.,
non-deductible) contributions.
A single father owns a variable annuity and has selected
a life annuity with a 20-year period certain payout
option. He has selected his son as his beneficiary. If the
father dies after receiving 22 years of payments:
, A) Future payments will be made to the beneficiary for
20 years
B) Future payments will be made to the beneficiary for
two years
C) Future payments will be made to the beneficiary for
his life
D) No additional payments will be made Correct
Answer: D) No additional payments will be made
Since the father's death occurred two years after the
end of the period certain, the insurance company is
relieved of making additional payments to his
beneficiary. However, if the father had died after year
10, payments would have continued to his beneficiary
for the remaining 10 years of the contract.
A client purchased 100 shares of a growth fund on April
1 at $30 per share. On July 5, believing a bear market
