Series 6 - STC Greenlight Exam 01
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1. An investor asks a registered representative to underline the most important
facts found in a preliminary prospectus. The registered representative:
A) May not do this since it violates federal securities laws
B) May do this with the approval of a principal at the firm
C) May do this with the approval of FINRA
D) May do this without restrictions or approvals: A) May not do this since it violates federal
securities laws
Once a prospectus is filed with the SEC, it may not be amended in any way.
2. Listed below are the net asset value and offer prices of two investment
companies:
Net Asset Value:
Fund A - $9.20
Fund B - $12.50
Offer Price:
Fund A - $10.00
Fund B- $12.00
Based upon the information shown above, you can determine that:
A) Both funds are open-end
B) Both funds are closed-end
C) A is closed-end and B is open-end
D) B is definitely closed-end and A is probably open-end: D) B is definitely closed-end and
A is probably open-end
When the net asset value is higher than the offering price, the fund definitely is closed-end. Closed-end funds have a
price determined by supply and demand, and their prices may be more or less than the net asset value per share, while
open-end funds are prohibited from ever selling their shares for less than the net asset value. Thus Fund B, which has
an offering price less than its net asset value, must be a closed-end fund, while Fund A could be either.
3. Cash dividends declared by a corporation:
A) Must be approved for payment by the shareholders
, Series 6 - STC Greenlight Exam 01
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B) Must be approved for payment by the board of directors
C) Are taxed as capital gains
D) Are not taxed: B) Must be approved for payment by the board of directors
Cash dividends declared by a corporation must be approved by the corporation's board of directors. Shareholder
approval is not needed to declare a cash dividend, although a company must obtain shareholder approval for a stock
split.
Any cash dividends paid to shareholders are taxed as ordinary income in the year received, not capital gains.
4. A customer calls to lodge a complaint against a registered representative (RR).
The customer should be advised to:
A) Call FINRA
B) Call the RR
C) Call the appropriate principal
D) Put the complaint in writing: D) Put the complaint in writing
In order to be officially considered a complaint, the complaint should be put in writing. This mandates an appropriate
response from the member firm.
5. A Regulation D offering may be sold to a maximum of:
A) 15 nonaccredited investors
B) 15 accredited investors
C) 35 nonaccredited investors
D) 35 accredited investors: C) 35 nonaccredited investors
A Regulation D (private placement) offering may be sold to a maximum of 35 nonaccredited investors. There is no limit
on the number of accredited investors. An individual will be considered an accredited investor if he has a net worth
of $1,000,000 or has had $200,000 ($300,000 for a married couple) of income for the previous two years with an
anticipation of continued earnings at the same or a greater level.
6. A fee-based account is most suitable for customers who:
A) Have discretionary accounts
B) Utilize a buy-and-hold strategy
, Series 6 - STC Greenlight Exam 01
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C) Engage in frequent trading
D) Are unsure of which investments will best meet their objectives: C) Engage in
frequent trading
Fee-based accounts charge an annual fee for investment advice regardless of whether any transactions occur. These
accounts are most suitable for customers who engage in frequent trading and want to avoid being charged commis-
sions on each trade separately.
7. Which of the following mutual fund communications is NOT considered sales
literature?
A) Material prepared for television
B) Material prepared for a password protected website
C) Material prepared and communicated only between an issuer and under-
writer
D) Material prepared for radio: C) Material prepared and communicated only between an issuer and
underwriter
Material prepared only for use between issuers, underwriters, and dealers is not considered sales literature if it's not
being directed to prospective investors.
8. A student fresh out of school, receives an inheritance of $25,000. He is
concerned about what this may mean to his financial situation. The student
inquires about where he should park the money while he gets some help.
Which of the following is the MOST appropriate recommendation?
A) A short-term municipal bond fund
B) A money-market mutual fund
C) A municipal money-market mutual fund
D) A U.S. government inflation-protected bond fund: B) A money-market mutual fund
Whenever a person is looking to park his cash, the most viable option is some form of money-market account. Parking
implies a very short-term time horizon (perhaps as little as a few weeks). Neither bond fund would be appropriate, a
fund that purchases bonds is subject to principal fluctuation based on interest rate risk. This would not suit his needs.
However, this question also has an extra dimension to it. The person in this question is a recent graduate, which implies
Study online at https://quizlet.com/_e4dkqe
1. An investor asks a registered representative to underline the most important
facts found in a preliminary prospectus. The registered representative:
A) May not do this since it violates federal securities laws
B) May do this with the approval of a principal at the firm
C) May do this with the approval of FINRA
D) May do this without restrictions or approvals: A) May not do this since it violates federal
securities laws
Once a prospectus is filed with the SEC, it may not be amended in any way.
2. Listed below are the net asset value and offer prices of two investment
companies:
Net Asset Value:
Fund A - $9.20
Fund B - $12.50
Offer Price:
Fund A - $10.00
Fund B- $12.00
Based upon the information shown above, you can determine that:
A) Both funds are open-end
B) Both funds are closed-end
C) A is closed-end and B is open-end
D) B is definitely closed-end and A is probably open-end: D) B is definitely closed-end and
A is probably open-end
When the net asset value is higher than the offering price, the fund definitely is closed-end. Closed-end funds have a
price determined by supply and demand, and their prices may be more or less than the net asset value per share, while
open-end funds are prohibited from ever selling their shares for less than the net asset value. Thus Fund B, which has
an offering price less than its net asset value, must be a closed-end fund, while Fund A could be either.
3. Cash dividends declared by a corporation:
A) Must be approved for payment by the shareholders
, Series 6 - STC Greenlight Exam 01
Study online at https://quizlet.com/_e4dkqe
B) Must be approved for payment by the board of directors
C) Are taxed as capital gains
D) Are not taxed: B) Must be approved for payment by the board of directors
Cash dividends declared by a corporation must be approved by the corporation's board of directors. Shareholder
approval is not needed to declare a cash dividend, although a company must obtain shareholder approval for a stock
split.
Any cash dividends paid to shareholders are taxed as ordinary income in the year received, not capital gains.
4. A customer calls to lodge a complaint against a registered representative (RR).
The customer should be advised to:
A) Call FINRA
B) Call the RR
C) Call the appropriate principal
D) Put the complaint in writing: D) Put the complaint in writing
In order to be officially considered a complaint, the complaint should be put in writing. This mandates an appropriate
response from the member firm.
5. A Regulation D offering may be sold to a maximum of:
A) 15 nonaccredited investors
B) 15 accredited investors
C) 35 nonaccredited investors
D) 35 accredited investors: C) 35 nonaccredited investors
A Regulation D (private placement) offering may be sold to a maximum of 35 nonaccredited investors. There is no limit
on the number of accredited investors. An individual will be considered an accredited investor if he has a net worth
of $1,000,000 or has had $200,000 ($300,000 for a married couple) of income for the previous two years with an
anticipation of continued earnings at the same or a greater level.
6. A fee-based account is most suitable for customers who:
A) Have discretionary accounts
B) Utilize a buy-and-hold strategy
, Series 6 - STC Greenlight Exam 01
Study online at https://quizlet.com/_e4dkqe
C) Engage in frequent trading
D) Are unsure of which investments will best meet their objectives: C) Engage in
frequent trading
Fee-based accounts charge an annual fee for investment advice regardless of whether any transactions occur. These
accounts are most suitable for customers who engage in frequent trading and want to avoid being charged commis-
sions on each trade separately.
7. Which of the following mutual fund communications is NOT considered sales
literature?
A) Material prepared for television
B) Material prepared for a password protected website
C) Material prepared and communicated only between an issuer and under-
writer
D) Material prepared for radio: C) Material prepared and communicated only between an issuer and
underwriter
Material prepared only for use between issuers, underwriters, and dealers is not considered sales literature if it's not
being directed to prospective investors.
8. A student fresh out of school, receives an inheritance of $25,000. He is
concerned about what this may mean to his financial situation. The student
inquires about where he should park the money while he gets some help.
Which of the following is the MOST appropriate recommendation?
A) A short-term municipal bond fund
B) A money-market mutual fund
C) A municipal money-market mutual fund
D) A U.S. government inflation-protected bond fund: B) A money-market mutual fund
Whenever a person is looking to park his cash, the most viable option is some form of money-market account. Parking
implies a very short-term time horizon (perhaps as little as a few weeks). Neither bond fund would be appropriate, a
fund that purchases bonds is subject to principal fluctuation based on interest rate risk. This would not suit his needs.
However, this question also has an extra dimension to it. The person in this question is a recent graduate, which implies
