Series 6 Exam Study Questions with
Complete Solutions10
What factors determine the number of annuity units an investor will receive after annuitizing a
variable annuity? - ANSWERS-1) The payout option
2) Assumed interest rate (AIR)
3) The annuitant's age
4) The annuitant's gender
Who must sign a new account form? - ANSWERS-The two signatures required on a new account
form are from the registered representative and the principal.
What is the purpose of the form U-4? - ANSWERS-The purpose of the form U-4 is to register a
registered representative with a member firm.
Businesses that do better in bad economic conditions are _________. - ANSWERS-Counter-
cyclical
Registered representatives are prohibited from receiving "off the book" compensation from a
wholesaler. T or F - ANSWERS-True
What is the red herring? - ANSWERS-A preliminary prospectus that includes material
information about an offering and contains an estimate of the range within which the final
offering price is to be set.
What is maximum contribution per year into an IRA? What is the penalty for any excess
contribution? - ANSWERS-Maximum contribution = $5000
, Penalty = 6% of excess amount and earnings on this amount are not tax-deferred
What are the characteristics of a contractual plan? - ANSWERS-1) Required periodic investments
2) Automatic reinvestment of distributions
3) Protection for plan completion
What is the penalty for an early withdrawal from an IRA? What is the age requirement for
withdrawal? - ANSWERS-Penalty = 10% on the taxable portion of the withdrawal, and is also
reported an taxed as income that year.
Age = 59 1/2
What exceptions would waive the penalty of an early withdrawal from IRA? - ANSWERS-The IRA
holder:
-Dies
-Becomes disabled
-Uses the money for the purchase of first home (with a $10,000 lifetime limit)
-Uses the money to pay certain medical or qualifying medical insurance premiums.
Who backs general obligation bonds? - ANSWERS-General obligation bonds are backed by the
full faith and credit of the issuer.
Why are cash dividends and capital gains taxed at a preferential rate? - ANSWERS-They are not
considered ordinary income; therefore, they are taxed at preferential rates.
Where are contributions placed in a fixed annuity issued by an insurance company? - ANSWERS-
The insurance company's general account.
Complete Solutions10
What factors determine the number of annuity units an investor will receive after annuitizing a
variable annuity? - ANSWERS-1) The payout option
2) Assumed interest rate (AIR)
3) The annuitant's age
4) The annuitant's gender
Who must sign a new account form? - ANSWERS-The two signatures required on a new account
form are from the registered representative and the principal.
What is the purpose of the form U-4? - ANSWERS-The purpose of the form U-4 is to register a
registered representative with a member firm.
Businesses that do better in bad economic conditions are _________. - ANSWERS-Counter-
cyclical
Registered representatives are prohibited from receiving "off the book" compensation from a
wholesaler. T or F - ANSWERS-True
What is the red herring? - ANSWERS-A preliminary prospectus that includes material
information about an offering and contains an estimate of the range within which the final
offering price is to be set.
What is maximum contribution per year into an IRA? What is the penalty for any excess
contribution? - ANSWERS-Maximum contribution = $5000
, Penalty = 6% of excess amount and earnings on this amount are not tax-deferred
What are the characteristics of a contractual plan? - ANSWERS-1) Required periodic investments
2) Automatic reinvestment of distributions
3) Protection for plan completion
What is the penalty for an early withdrawal from an IRA? What is the age requirement for
withdrawal? - ANSWERS-Penalty = 10% on the taxable portion of the withdrawal, and is also
reported an taxed as income that year.
Age = 59 1/2
What exceptions would waive the penalty of an early withdrawal from IRA? - ANSWERS-The IRA
holder:
-Dies
-Becomes disabled
-Uses the money for the purchase of first home (with a $10,000 lifetime limit)
-Uses the money to pay certain medical or qualifying medical insurance premiums.
Who backs general obligation bonds? - ANSWERS-General obligation bonds are backed by the
full faith and credit of the issuer.
Why are cash dividends and capital gains taxed at a preferential rate? - ANSWERS-They are not
considered ordinary income; therefore, they are taxed at preferential rates.
Where are contributions placed in a fixed annuity issued by an insurance company? - ANSWERS-
The insurance company's general account.
