Series 6 - STC Final Exam 3 Questions with 100%
Correct Answers
A registered representative wants to place an
advertisement in his local paper for the mutual funds he
sells. According to FINRA, approval for the
advertisement must be given by: Correct Answer: A
principal of the firm
According to FINRA rules, a registered principal must
approve advertising before it is used.
Which of the following statements about interest on U.S.
government bonds is NOT TRUE?
A) Interest is subject to federal income tax.
B) Interest is exempt from state income tax.
C) Interest is exempt from local income tax.
,D) Interest is exempt from all taxation. Correct Answer:
D) Interest is exempt from all taxation.
Interest on U.S. government bonds is subject to federal
income tax but exempt from state income tax. This is just
the opposite of the tax treatment on municipal (state)
bonds where the interest is exempt from federal but
subject to state tax. This is based on the doctrine of
powers between the federal government and state
governments. Each government can tax the interest on
its own obligations, but cannot tax the others. In
addition, states usually do not tax the interest received
from their obligations owned by residents of that
particular state and, in effect, interest is completely tax-
free.
The day of settlement for a corporate security is: Correct
Answer: 2 business days after the trade date
For trades involving corporate securities (both stocks
and bonds), settlement is two business days after the
,trade date (T + 2). This time period is referred to as
regular-way settlement.
Which of the following indexes or averages is considered
the best indicator of how large U.S. stocks are
performing on a daily basis?
A) Wilshire Equities Index
B) Dow Jones Industrial Average
C) Standard & Poor's 500 Index
D) Major Market Index Correct Answer: C) Standard &
Poor's 500 Index
The Standard & Poor's 500 Index is considered the best
indicator of how large U.S. stocks are performing on a
daily basis. The Dow Jones Industrial Average is
considered the most widely followed average. The
Wilshire index is the largest index. The Major Market Index
consists of 20 well-known, highly capitalized stocks.
, A 67-year-old man owns 3,250 accumulation units of a
variable annuity that are each valued at $7.70. He
wants to retire and begin receiving benefit payments
each month for life. All of the following are used to
determine the number of annuity units he would have,
EXCEPT his:
A) Age
B) Health
C) Gender
D) Choice of payout option Correct Answer: B) Health
When a client wants to receive benefit payments from
an annuity, he must exchange his accumulation units for
annuity units. The factors considered are the annuitant's
age, gender, value of the accumulation units held, the
payout option selected, and the assumed interest rate.
Correct Answers
A registered representative wants to place an
advertisement in his local paper for the mutual funds he
sells. According to FINRA, approval for the
advertisement must be given by: Correct Answer: A
principal of the firm
According to FINRA rules, a registered principal must
approve advertising before it is used.
Which of the following statements about interest on U.S.
government bonds is NOT TRUE?
A) Interest is subject to federal income tax.
B) Interest is exempt from state income tax.
C) Interest is exempt from local income tax.
,D) Interest is exempt from all taxation. Correct Answer:
D) Interest is exempt from all taxation.
Interest on U.S. government bonds is subject to federal
income tax but exempt from state income tax. This is just
the opposite of the tax treatment on municipal (state)
bonds where the interest is exempt from federal but
subject to state tax. This is based on the doctrine of
powers between the federal government and state
governments. Each government can tax the interest on
its own obligations, but cannot tax the others. In
addition, states usually do not tax the interest received
from their obligations owned by residents of that
particular state and, in effect, interest is completely tax-
free.
The day of settlement for a corporate security is: Correct
Answer: 2 business days after the trade date
For trades involving corporate securities (both stocks
and bonds), settlement is two business days after the
,trade date (T + 2). This time period is referred to as
regular-way settlement.
Which of the following indexes or averages is considered
the best indicator of how large U.S. stocks are
performing on a daily basis?
A) Wilshire Equities Index
B) Dow Jones Industrial Average
C) Standard & Poor's 500 Index
D) Major Market Index Correct Answer: C) Standard &
Poor's 500 Index
The Standard & Poor's 500 Index is considered the best
indicator of how large U.S. stocks are performing on a
daily basis. The Dow Jones Industrial Average is
considered the most widely followed average. The
Wilshire index is the largest index. The Major Market Index
consists of 20 well-known, highly capitalized stocks.
, A 67-year-old man owns 3,250 accumulation units of a
variable annuity that are each valued at $7.70. He
wants to retire and begin receiving benefit payments
each month for life. All of the following are used to
determine the number of annuity units he would have,
EXCEPT his:
A) Age
B) Health
C) Gender
D) Choice of payout option Correct Answer: B) Health
When a client wants to receive benefit payments from
an annuity, he must exchange his accumulation units for
annuity units. The factors considered are the annuitant's
age, gender, value of the accumulation units held, the
payout option selected, and the assumed interest rate.
