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FINRA Series 6 Exam (page: 5)
FINRA Investment Company and Variable Contracts Products Representative Examination (IR)
Updated on: 15-Feb-2026

Viewing Page 5 of 66
Series 6 PDF 325 Questions

Which of the following do not fall under the category of "advertisement," as defined by FINRA?

I). scripts used in telemarketing the products of the member firm
II). a website maintained by the member firm
III). research reports that the member firm distributes to both its existing clients and its prospective clients
IV). sales material that a member firm distributes only to its institutional clients

  1. I only
  2. IV only
  3. I, III, and IV only
  4. III and IV only

Answer(s): C

Explanation:

Only the materials described in Selections I, III, and IV do not fall under the category of
"advertisement," as defined by FINRA. Scripts (Selection I) and research reports (Selection II) are considered to be "sales literature," not advertisements. Sales material that is distributed only to institutional investors (Selection IV) is in a category all by itself.



MoeMoney Investments is a diversified management company. This means that:

  1. it is a closed-end company.
  2. it is a mutual fund.
  3. it may invest no more than 5% of its investment monies in one issuer.
  4. it must be invested in a variety of industries and geographic regions.

Answer(s): C

Explanation:

Since MoeMoney is a diversified management company, it may invest no more than 5% of its investment monies in one issuer. It may be either a closed-end or an open-end company (mutual fund), and it need not necessarily be invested in a variety of industries and geographic regions.



Mr. Bashful, Mr. Sleepy, Mr. Doc, Mr. Grumpy, Mr. Sneezy, and Mr. Happy are all employees of S. White Investment Advisers. Mr. Doc, Mr. Sneezy, and Mr. Happy give investment advice to the firm's clients and manage their portfolios. Mr. Sleepy greets clients and makes cold calls to solicit more business for the firm. Mr. Bashful performs general clerical services, such as filing. Mr. Grumpy is the office manager and is the direct supervisor of the other five employees.
Which of S. White's employees must register as investment adviser representatives under
the Investment Advisers Act of 1940?

  1. only Mr. Grumpy
  2. Mr. Grumpy, Mr. Doc, Mr. Sneezy, and Mr. Happy
  3. Mr. Grumpy, Mr. Doc, Mr. Sneezy, Mr. Happy, and Mr. Sleepy
  4. All of them must register as investment adviser representatives.

Answer(s): C

Explanation:

Mr. Grumpy, Mr. Doc, Mr. Sneezy, Mr. Happy, and Mr. Sleepy must register as investment adviser representatives under the Investment Advisers Act of 1940. Only Mr. Bashful need not register since he performs only clerical duties. Any employee who makes investment recommendations and/or manages client portfolios and any employee who solicits or offers investment advisory services must register. Anyone who is a supervisor to those performing these duties must also register.



Which of the following activities are permitted during the "cooling off" period associated with a new offering?

I). A preliminary prospectus may be provided to prospective investors.
II). The security can be registered in any states in which it will be sold.
III). The management of the issuing firm may give interviews in which they discuss the market for their products and future revenue expectations.
IV). The underwriter of the issue may run a tombstone advertisement in the Wall Street Journal to announce the upcoming offering.

  1. I only
  2. I and IV only
  3. I, II and IV only
  4. I, III and IV only

Answer(s): C

Explanation:

Only the activities described in Selections I, II, and IV are permitted during the "cooling off" period associated with a new offering. A preliminary prospectus can be provided to prospective investors; the security can be registered in any states in which it will be sold, and the underwriter of the issue can run a tombstone advertisement in the Wall Street Journal, or any other publication for that matter. The management of the issuing firm may not, however, give interviews in which they discuss future revenue expectations, among other things.



Asset allocation involves:

  1. selecting the investments that are expected to offer the highest return over your client's investment horizon.
  2. determining the percentages that your client should be investing in various types of investments (e.g., stocks, bonds) based on his investment objectives.
  3. selecting the investments that will expose your client to the least amount of risk.
  4. determining the specific stocks and bonds in which your client should invest his funds.

Answer(s): B

Explanation:

Asset allocation involves determining the percentages that your client should be investing in various types of investments (e.g., stocks, bonds) based on his investment objectives. You should not necessarily select investments that are expected to offer the highest return for a risk-averse client because higher returns entail more risk exposure. Nor should you necessarily select investments that will expose your client to the least amount of risk. These may not offer the client the return he needs to achieve his investment goals. Asset allocation refers only to determining the types of investments, not the specific investments within each category. Specific investment selection is the next step after the asset allocation decision is made.



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