SERIES 6 - STC GREENLIGHT EXAM
01
An0investor0asks0a0registered0representative0to0underline0the0most0important0facts0fou
nd0in0a0preliminary0prospectus.0The0registered0representative:
A)0May0not0do0this0since0it0violates0federal0securities0laws
B)0May0do0this0with0the0approval0of0a0principal0at0the0firm
C)0May0do0this0with0the0approval0of0FINRA
D)0May0do0this0without0restrictions0or0approvals0-
0ans✔A)0May0not0do0this0since0it0violates0federal0securities0laws
Once0a0prospectus0is0filed0with0the0SEC,0it0may0not0be0amended0in0any0way.
Listed0below0are0the0net0asset0value0and0offer0prices0of0two0investment0companies:
Net0Asset0Value:
Fund0A0-0$9.20
Fund0B0-0$12.50
Offer0Price:
Fund0A0-0$10.00
Fund0B-0$12.00
Based0upon0the0information0shown0above,0you0can0determine0that:
A)0Both0funds0are0open-end
B)0Both0funds0are0closed-end
C)0A0is0closed-end0and0B0is0open-end
D)0B0is0definitely0closed-end0and0A0is0probably0open-end0-
0ans✔D)0B0is0definitely0closed-end0and0A0is0probably0open-end
When0the0net0asset0value0is0higher0than0the0offering0price,0the0fund0definitely0is0close
d-end.0Closed-
end0funds0have0a0price0determined0by0supply0and0demand,0and0their0prices0may0be0
more0or0less0than0the0net0asset0value0per0share,0while0open-
end0funds0are0prohibited0from0ever0selling0their0shares0for0less0than0the0net0asset0val
ue.0Thus0Fund0B,0which0has0an0offering0price0less0than0its0net0asset0value,0must0be0a
0closed-end0fund,0while0Fund0A0could0be0either.
,Cash0dividends0declared0by0a0corporation:
A)0Must0be0approved0for0payment0by0the0shareholders
B)0Must0be0approved0for0payment0by0the0board0of0directors
C)0Are0taxed0as0capital0gains
D)0Are0not0taxed0-0ans✔B)0Must0be0approved0for0payment0by0the0board0of0directors
Cash0dividends0declared0by0a0corporation0must0be0approved0by0the0corporation's0boa
rd0of0directors.0Shareholder0approval0is0not0needed0to0declare0a0cash0dividend,0althou
gh0a0company0must0obtain0shareholder0approval0for0a0stock0split.
Any0cash0dividends0paid0to0shareholders0are0taxed0as0ordinary0income0in0the0year0re
ceived,0not0capital0gains.
A0customer0calls0to0lodge0a0complaint0against0a0registered0representative0(RR).0The0c
ustomer0should0be0advised0to:
A)0Call0FINRA
B)0Call0the0RR
C)0Call0the0appropriate0principal
D)0Put0the0complaint0in0writing0-0ans✔D)0Put0the0complaint0in0writing
In0order0to0be0officially0considered0a0complaint,0the0complaint0should0be0put0in0writing.
0This0mandates0an0appropriate0response0from0the0member0firm.
A0Regulation0D0offering0may0be0sold0to0a0maximum0of:
A)0150nonaccredited0investors
B)0150accredited0investors
C)0350nonaccredited0investors
D)0350accredited0investors0-0ans✔C)0350nonaccredited0investors
A0Regulation0D0(private0placement)0offering0may0be0sold0to0a0maximum0of0350nonacc
redited0investors.0There0is0no0limit0on0the0number0of0accredited0investors.0An0individu
al0will0be0considered0an0accredited0investor0if0he0has0a0net0worth0of0$1,000,0000or0ha
s0had0$200,0000($300,0000for0a0married0couple)0of0income0for0the0previous0two0years
0with0an0anticipation0of0continued0earnings0at0the0same0or0a0greater0level.
A0fee-based0account0is0most0suitable0for0customers0who:
A)0Have0discretionary0accounts
B)0Utilize0a0buy-and-hold0strategy
C)0Engage0in0frequent0trading
D)0Are0unsure0of0which0investments0will0best0meet0their0objectives0-
0ans✔C)0Engage0in0frequent0trading
, Fee-
based0accounts0charge0an0annual0fee0for0investment0advice0regardless0of0whether0an
y0transactions0occur.0These0accounts0are0most0suitable0for0customers0who0engage0in
0frequent0trading0and0want0to0avoid0being0charged0commissions0on0each0trade0separ
ately.
Which0of0the0following0mutual0fund0communications0is0NOT0considered0sales0literatur
e?
A)0Material0prepared0for0television
B)0Material0prepared0for0a0password0protected0website
C)0Material0prepared0and0communicated0only0between0an0issuer0and0underwriter
D)0Material0prepared0for0radio0-
0ans✔C)0Material0prepared0and0communicated0only0between0an0issuer0and0underwrit
er
Material0prepared0only0for0use0between0issuers,0underwriters,0and0dealers0is0not0cons
idered0sales0literature0if0it's0not0being0directed0to0prospective0investors.
A0student0fresh0out0of0school,0receives0an0inheritance0of0$25,000.0He0is0concerned0ab
out0what0this0may0mean0to0his0financial0situation.0The0student0inquires0about0where0h
e0should0park0the0money0while0he0gets0some0help.0Which0of0the0following0is0the0MOS
T0appropriate0recommendation?
A)0A0short-term0municipal0bond0fund
B)0A0money-market0mutual0fund
C)0A0municipal0money-market0mutual0fund
D)0A0U.S.0government0inflation-protected0bond0fund0-0ans✔B)0A0money-
market0mutual0fund
Whenever0a0person0is0looking0to0park0his0cash,0the0most0viable0option0is0some0form0
of0money-market0account.0Parking0implies0a0very0short-
term0time0horizon0(perhaps0as0little0as0a0few0weeks).0Neither0bond0fund0would0be0app
ropriate,0a0fund0that0purchases0bonds0is0subject0to0principal0fluctuation0based0on0inter
est0rate0risk.0This0would0not0suit0his0needs.0However,0this0question0also0has0an0extra0
dimension0to0it.0The0person0in0this0question0is0a0recent0graduate,0which0implies0a0low
0income0level0(and0probably0a0high0level0of0student0loan0debt).0Furthermore,0he0expre
ssly0states0he0is0worried0about0his0financial0situation.0The0fact0that0there0is0no0mentio
n0of0tax0issues0implies0the0student0is0not0concerned0about0taxes.0In0this0case,0the0mo
ney-
market0mutual0fund0is0the0BEST0answer.0It0provides0the0safety0of0principal0the0studen
t0needs.0The0tax0relief0that0the0municipal0money-
market0mutual0fund0provides0is0not0needed0here.
01
An0investor0asks0a0registered0representative0to0underline0the0most0important0facts0fou
nd0in0a0preliminary0prospectus.0The0registered0representative:
A)0May0not0do0this0since0it0violates0federal0securities0laws
B)0May0do0this0with0the0approval0of0a0principal0at0the0firm
C)0May0do0this0with0the0approval0of0FINRA
D)0May0do0this0without0restrictions0or0approvals0-
0ans✔A)0May0not0do0this0since0it0violates0federal0securities0laws
Once0a0prospectus0is0filed0with0the0SEC,0it0may0not0be0amended0in0any0way.
Listed0below0are0the0net0asset0value0and0offer0prices0of0two0investment0companies:
Net0Asset0Value:
Fund0A0-0$9.20
Fund0B0-0$12.50
Offer0Price:
Fund0A0-0$10.00
Fund0B-0$12.00
Based0upon0the0information0shown0above,0you0can0determine0that:
A)0Both0funds0are0open-end
B)0Both0funds0are0closed-end
C)0A0is0closed-end0and0B0is0open-end
D)0B0is0definitely0closed-end0and0A0is0probably0open-end0-
0ans✔D)0B0is0definitely0closed-end0and0A0is0probably0open-end
When0the0net0asset0value0is0higher0than0the0offering0price,0the0fund0definitely0is0close
d-end.0Closed-
end0funds0have0a0price0determined0by0supply0and0demand,0and0their0prices0may0be0
more0or0less0than0the0net0asset0value0per0share,0while0open-
end0funds0are0prohibited0from0ever0selling0their0shares0for0less0than0the0net0asset0val
ue.0Thus0Fund0B,0which0has0an0offering0price0less0than0its0net0asset0value,0must0be0a
0closed-end0fund,0while0Fund0A0could0be0either.
,Cash0dividends0declared0by0a0corporation:
A)0Must0be0approved0for0payment0by0the0shareholders
B)0Must0be0approved0for0payment0by0the0board0of0directors
C)0Are0taxed0as0capital0gains
D)0Are0not0taxed0-0ans✔B)0Must0be0approved0for0payment0by0the0board0of0directors
Cash0dividends0declared0by0a0corporation0must0be0approved0by0the0corporation's0boa
rd0of0directors.0Shareholder0approval0is0not0needed0to0declare0a0cash0dividend,0althou
gh0a0company0must0obtain0shareholder0approval0for0a0stock0split.
Any0cash0dividends0paid0to0shareholders0are0taxed0as0ordinary0income0in0the0year0re
ceived,0not0capital0gains.
A0customer0calls0to0lodge0a0complaint0against0a0registered0representative0(RR).0The0c
ustomer0should0be0advised0to:
A)0Call0FINRA
B)0Call0the0RR
C)0Call0the0appropriate0principal
D)0Put0the0complaint0in0writing0-0ans✔D)0Put0the0complaint0in0writing
In0order0to0be0officially0considered0a0complaint,0the0complaint0should0be0put0in0writing.
0This0mandates0an0appropriate0response0from0the0member0firm.
A0Regulation0D0offering0may0be0sold0to0a0maximum0of:
A)0150nonaccredited0investors
B)0150accredited0investors
C)0350nonaccredited0investors
D)0350accredited0investors0-0ans✔C)0350nonaccredited0investors
A0Regulation0D0(private0placement)0offering0may0be0sold0to0a0maximum0of0350nonacc
redited0investors.0There0is0no0limit0on0the0number0of0accredited0investors.0An0individu
al0will0be0considered0an0accredited0investor0if0he0has0a0net0worth0of0$1,000,0000or0ha
s0had0$200,0000($300,0000for0a0married0couple)0of0income0for0the0previous0two0years
0with0an0anticipation0of0continued0earnings0at0the0same0or0a0greater0level.
A0fee-based0account0is0most0suitable0for0customers0who:
A)0Have0discretionary0accounts
B)0Utilize0a0buy-and-hold0strategy
C)0Engage0in0frequent0trading
D)0Are0unsure0of0which0investments0will0best0meet0their0objectives0-
0ans✔C)0Engage0in0frequent0trading
, Fee-
based0accounts0charge0an0annual0fee0for0investment0advice0regardless0of0whether0an
y0transactions0occur.0These0accounts0are0most0suitable0for0customers0who0engage0in
0frequent0trading0and0want0to0avoid0being0charged0commissions0on0each0trade0separ
ately.
Which0of0the0following0mutual0fund0communications0is0NOT0considered0sales0literatur
e?
A)0Material0prepared0for0television
B)0Material0prepared0for0a0password0protected0website
C)0Material0prepared0and0communicated0only0between0an0issuer0and0underwriter
D)0Material0prepared0for0radio0-
0ans✔C)0Material0prepared0and0communicated0only0between0an0issuer0and0underwrit
er
Material0prepared0only0for0use0between0issuers,0underwriters,0and0dealers0is0not0cons
idered0sales0literature0if0it's0not0being0directed0to0prospective0investors.
A0student0fresh0out0of0school,0receives0an0inheritance0of0$25,000.0He0is0concerned0ab
out0what0this0may0mean0to0his0financial0situation.0The0student0inquires0about0where0h
e0should0park0the0money0while0he0gets0some0help.0Which0of0the0following0is0the0MOS
T0appropriate0recommendation?
A)0A0short-term0municipal0bond0fund
B)0A0money-market0mutual0fund
C)0A0municipal0money-market0mutual0fund
D)0A0U.S.0government0inflation-protected0bond0fund0-0ans✔B)0A0money-
market0mutual0fund
Whenever0a0person0is0looking0to0park0his0cash,0the0most0viable0option0is0some0form0
of0money-market0account.0Parking0implies0a0very0short-
term0time0horizon0(perhaps0as0little0as0a0few0weeks).0Neither0bond0fund0would0be0app
ropriate,0a0fund0that0purchases0bonds0is0subject0to0principal0fluctuation0based0on0inter
est0rate0risk.0This0would0not0suit0his0needs.0However,0this0question0also0has0an0extra0
dimension0to0it.0The0person0in0this0question0is0a0recent0graduate,0which0implies0a0low
0income0level0(and0probably0a0high0level0of0student0loan0debt).0Furthermore,0he0expre
ssly0states0he0is0worried0about0his0financial0situation.0The0fact0that0there0is0no0mentio
n0of0tax0issues0implies0the0student0is0not0concerned0about0taxes.0In0this0case,0the0mo
ney-
market0mutual0fund0is0the0BEST0answer.0It0provides0the0safety0of0principal0the0studen
t0needs.0The0tax0relief0that0the0municipal0money-
market0mutual0fund0provides0is0not0needed0here.
