Series 6 - STC Final Exam 2 Questions with 100%
Correct Answers
Cash trades (trades done for cash), as compared to
trades done in a cash account, have a delivery date on
the: Correct Answer: Same day as the trade date
Cash trades, or trades made for cash, have a delivery
date on the same day as the trade date. Be sure to
distinguish a cash trade from a trade done in a cash
account which generally settles regular way.
An RR receives a letter from a client complaining about
the performance of a mutual fund that the RR's firm has
recommended. The RR should:
A) Send a copy to the mutual fund, since it is really a
complaint about the fund
B) Return the letter to the customer with the statement
that the customer must provide written evidence to
support the grievance
,C) Forward the complaint to a supervisor, who must
place a copy in the complaint file
D) Attempt to satisfy the customer before taking any
other action Correct Answer: C) Forward the complaint
to a supervisor, who must place a copy in the complaint
file
FINRA rules require customer complaints to be given to a
principal. The firm is then required to keep a copy in a
complaint file.
A variable annuity contract holder dies during the
accumulation period. Which of the following is TRUE
regarding the tax consequences?
A) All proceeds are considered a return of capital
B) The growth is taxable as a capital gain to the
beneficiary
,C) Proceeds in excess of cost are taxable as ordinary
income to the beneficiary
D) The growth above cost is not taxable if the
beneficiary rolls them over into an IRA Correct Answer:
C) Proceeds in excess of cost are taxable as ordinary
income to the beneficiary
When a variable annuity contract holder dies during the
accumulation period, the proceeds in excess of cost are
taxable to the beneficiary as ordinary income.
Your client owns a portfolio of blue-chip equity securities
and would like to reduce his risk of a market downfall
through the use of options. The most effective way to
achieve this objective is to:
A) Write covered calls
B) Buy calls
C) Write covered puts
, D) Buy puts Correct Answer: D) Buy puts
The most effective way for the investor to achieve this
objective is to buy puts. The buyer of a put pays a
premium representing the price of the option. In
exchange for the premium, the buyer has the right to sell
stock at a preset price. This would give him protection
against a downturn in the market.
Which of the following statements best defines the term
duration?
A) It is a measure of a fixed-income security's relative
interest-rate risk.
B)It is a measure of a fixed income portfolio's average
yield.
C) It is the period before a fixed-income security will be
called.
Correct Answers
Cash trades (trades done for cash), as compared to
trades done in a cash account, have a delivery date on
the: Correct Answer: Same day as the trade date
Cash trades, or trades made for cash, have a delivery
date on the same day as the trade date. Be sure to
distinguish a cash trade from a trade done in a cash
account which generally settles regular way.
An RR receives a letter from a client complaining about
the performance of a mutual fund that the RR's firm has
recommended. The RR should:
A) Send a copy to the mutual fund, since it is really a
complaint about the fund
B) Return the letter to the customer with the statement
that the customer must provide written evidence to
support the grievance
,C) Forward the complaint to a supervisor, who must
place a copy in the complaint file
D) Attempt to satisfy the customer before taking any
other action Correct Answer: C) Forward the complaint
to a supervisor, who must place a copy in the complaint
file
FINRA rules require customer complaints to be given to a
principal. The firm is then required to keep a copy in a
complaint file.
A variable annuity contract holder dies during the
accumulation period. Which of the following is TRUE
regarding the tax consequences?
A) All proceeds are considered a return of capital
B) The growth is taxable as a capital gain to the
beneficiary
,C) Proceeds in excess of cost are taxable as ordinary
income to the beneficiary
D) The growth above cost is not taxable if the
beneficiary rolls them over into an IRA Correct Answer:
C) Proceeds in excess of cost are taxable as ordinary
income to the beneficiary
When a variable annuity contract holder dies during the
accumulation period, the proceeds in excess of cost are
taxable to the beneficiary as ordinary income.
Your client owns a portfolio of blue-chip equity securities
and would like to reduce his risk of a market downfall
through the use of options. The most effective way to
achieve this objective is to:
A) Write covered calls
B) Buy calls
C) Write covered puts
, D) Buy puts Correct Answer: D) Buy puts
The most effective way for the investor to achieve this
objective is to buy puts. The buyer of a put pays a
premium representing the price of the option. In
exchange for the premium, the buyer has the right to sell
stock at a preset price. This would give him protection
against a downturn in the market.
Which of the following statements best defines the term
duration?
A) It is a measure of a fixed-income security's relative
interest-rate risk.
B)It is a measure of a fixed income portfolio's average
yield.
C) It is the period before a fixed-income security will be
called.
