Wiley Series 6 Exam Review 2015 + Test Bank. The Investment Company Products / Variable Contracts Limited Representative Examination. Wiley FINRA

  • ID: 2785692
  • Book
  • 360 Pages
  • John Wiley and Sons Ltd
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The go-to guide to acing the Series 6 Exam!

Passing the Series 6 Exam qualifies an individual to function as an agent of a broker dealer and allows the limited representative to transact business in mutual funds (closed-end funds on the initial offering only), unit investment trusts, variable annuities, and variable life insurance products. In addition to passing the Series 6 Exam, an agent may be required to pass a state life insurance exam to transact business in variable contracts.

Created by the experts at The Securities Institute of America, Inc., Wiley Series 6 Exam Review 2015 arms you with what you need to score high on this tough 100-question test. Designed to let you build and fine-tune your knowledge of all areas covered in the exam and to guarantee that you're prepared mentally and strategically to take the test, it provides:
- Dozens of examples
- Assorted practice questions for each subject area covered in the exam
- Priceless test-taking tips and strategies
- Helpful hints on how to study for the test, manage stress, and stay focused

Wiley Series 6 Exam Review 2015 is your ticket to passing the Series 6 test on the first try—with flying colors!
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ABOUT THE SERIES 6 EXAM XV

ABOUT THIS BOOK XIX

ABOUT THE TEST BANK XXI

ABOUT THE SECURITIES INSTITUTE OF AMERICA XXIII

CHAPTER 1 EQUITY SECURITIES 1

What Is a Security? 1

Equity = Stock 2

Common Stock 2

Preferred Stock 12

Options 20

Calls 20

Puts 20

Bullish vs. Bearish 21

Characteristics of All Options 21

Exercise Price 22

Buyer vs. Seller 22

Possible Outcomes for an Option 22

Currency Risks 23

Functions of the Custodian Bank Issuing ADRs 23

Real Estate Investment Trusts (REITs) 23

Issuing Corporate Securities 24

Types of Underwriting Commitments 24

Types of Offerings 25

Awarding the Issue 26

The Underwriting Syndicate 26

Selling Group 26

Securities Markets 27

The Exchanges 28

Over the Counter/Nasdaq 28

Market Makers 29

Third Market 29

Fourth Market 29

Broker vs. Dealer 29

Pretest 31

CHAPTER 2 DEBT SECURITIES 35

Corporate Bonds 35

Types of Bond Issuance 36

Bond Certificate 37

Bond Pricing 37

Corporate Bond Pricing 38

Bond Yields 38

Bond Maturities 41

Types of Corporate Bonds 42

Converting Bonds into Common Stock 45

Advantages of Issuing Convertible Bonds 46

Disadvantages of Issuing Convertible Bonds 46

Convertible Bonds and Stock Splits 46

The Trust Indenture Act of 1939 47

Bond Indenture 47

Ratings Considerations 47

Retiring Corporate Bonds 48

Collateralized Mortgage Obligation (CMO) 50

CMOs and Interest Rates 50

Types of CMOs 51

Private-Label CMOs 52

Exchange-Traded Notes (ETNs) 53

Pretest 55

CHAPTER 3 GOVERNMENT AND MUNICIPAL SECURITIES 59

Series EE Bonds 59

Series HH Bonds 60

Treasury Bills, Notes, and Bonds 60

Treasury Bond and Note Pricing 61

Treasury Strips 62

Treasury Receipts 62

Treasury Inflation-Protected Securities (TIPS) 63

Agency Issues 63

Government National Mortgage Association (GNMA) 63

Federal National Mortgage Association (FNMA) 64

Federal Home Loan Mortgage Corporation (FHLMC) 64

Federal Farm Credit System (FFCS) 64

Municipal Bonds 65

Legal Opinion 66

Municipal Bond Insurance 66

Tax Equivalent Yield 67

Purchasing a Municipal Bond Issued in the State in Which the Investor Resides 67

Triple Tax-Free 68

Capital Gains 68

Pretest 69

CHAPTER 4 THE MONEY MARKET 71

Money Market Instruments 71

Corporate Money Market Instruments 71

Government Money Market Instruments 73

Municipal Money Market Instruments 74

International Money Market Instruments 74

Interest Rates 74

Pretest 77

CHAPTER 5 ECONOMIC FUNDAMENTALS 79

Gross Domestic Product (GDP) 79

Recession 81

Depression 81

Economic Indicators 81

Economic Policy 83

Tools of The Federal Reserve Board 83

Fiscal Policy 86

Consumer Price Index (CPI) 87

Inflation/Deflation 87

Real GDP 87

International Monetary Considerations 88

Pretest 89

CHAPTER 6 MUTUAL FUNDS 93

Investment Company Philosophy 93

Types of Investment Companies 94

Open-End vs. Closed-End Funds 95

Diversified vs. Nondiversified 96

Investment Company Registration 97

Investment Company Components 99

Mutual Fund Distribution 101

Selling Group Member 101

Distribution of No-Load Mutual Fund Shares 102

Distribution of Mutual Fund Shares 102

Mutual Fund Prospectus 102

Characteristics of Open-End Mutual Fund Shares 103

Mutual Fund Investment Objectives 104

Other Types of Funds 106

Bond Funds 106

Valuing Mutual Fund Shares 108

Changes in the NAV 109

Sales Charges 109

Calculating a Mutual Fund’s Sales Charge Percentage 111

Finding the Public Offering Price 112

Sales Charge Reductions 112

Breakpoint Schedule 113

Letter of Intent 113

Backdating a Letter of Intent 114

Breakpoint Sales 114

Rights of Accumulation 114

Automatic Reinvestment of Distributions 115

Other Mutual Fund Features 115

Cost Base of Multiple Purchases 119

Purchasing Mutual Fund Shares 120

Sales Charges 123

45-Day Free Look 123

Withdrawal Plans 123

Pretest 125

CHAPTER 7 VARIABLE ANNUITIES AND LIFE INSURANCE 131

Annuities 131

Equity Indexed Annuity 134

Annuity Purchase Options 135

Accumulation Units 136

Annuity Units 136

Annuity Payout Options 136

Factors Affecting the Size of the Annuity Payment 138

The Assumed Interest Rate (AIR) 138

Taxation 139

Types of Withdrawals 139

Annuitizing the Contract 139

Expenses and Guarantees 140

Other Charges 140

Life Insurance 141

Premiums and Death Benefits 143

Assumed Interest Rate 144

Variable Policy Features 145

Pretest 147

CHAPTER 8 RETIREMENT PLANS 151

Individual Plans 151

Individual Retirement Accounts (IRAs) 152

Traditional IRAs 152

Roth IRAs 153

Simplified Employee Pension IRA (SEP IRA) 154

Death of an IRA Owner 156

Educational IRA/Coverdell IRA 156

Tax-Sheltered Annuities (TSAs)/Tax-Deferred Accounts (TDAs) 158

Corporate Plans 160

Rolling Over a Pension Plan 162

Employee Retirement Income Security Act of 1974 (ERISA) 162

ERISA 404C SAFE HARBOR 164

Pretest 165

CHAPTER 9 CUSTOMER ACCOUNTS 169

Holding Securities 171

Mailing Instructions 172

Types of Accounts 172

Commingling Customer’s Pledged Securities 182

Wrap Accounts 182

Regulation S-P 182

Pretest 183

CHAPTER 10 CUSTOMER RECOMMENDATIONS, PROFESSIONAL CONDUCT, AND TAXATION 187

Professional Conduct in the Securities Industry 188

Fair Dealings with Customers 188

Periodic Payment Plans 193

Mutual Fund Current Yield 193

Information Obtained from an Issuer 193

Disclosure of Client Information 194

Borrowing and Lending Money 194

Gift Rule 194

Outside Employment 195

Private Securities Transactions 195

Customer Complaints 195

Investor Information 195

NYSE/FINRA Know Your Customer 196

Investment Objectives 197

Risk vs. Reward 199

Alpha 200

Beta 201

Tax Structure 201

Investment Taxation 201

Calculating Gains and Losses 202

Cost Base of Multiple Purchases 202

Deducting Capital Losses 203

Wash Sales 203

Taxation of Interest income 204

Inherited Securities 204

Donating Securities to Charity 205

Gift Taxes 205

Estate Taxes 205

Withholding Tax 206

Corporate Dividend Exclusion 206

Alternative Minimum Tax (AMT) 206

Taxes on Foreign Securities 206

Pretest 207

CHAPTER 11 SECURITIES INDUSTRY RULES AND REGULATIONS 213

The Securities Exchange Act of 1934 213

The Securities and Exchange Commission (SEC) 214

Extension of Credit 215

The National Association of Securities Dealers (NASD) 215

Becoming a Member of FINRA 217

Registration of Agents/Associated Persons 217

Disciplinary Actions Against a Registered Representative 218

Resignation of a Registered Representative 218

Continuing Education 219

Firm Element Continuing Education 219

Regulatory Element 220

Termination for Cause 220

Retiring Representatives/Continuing Commissions 221

State Registration 221

Registration Exemptions 221

Persons Ineligible to Register 221

Communications with the Public 222

FINRA Rule 2210 Communications with the Public 223

Broker Dealer Websites 225

Blind Recruiting Ads 226

Generic Advertising 226

Tombstone Ads 226

Testimonials 227

Free Services 227

Misleading Communication with the Public 228

Securities Investor Protection Corporation Act of 1970 228

Net Capital Requirement 228

Customer Coverage 228

Fidelity Bond 229

The Insider Trading & Securities Fraud Enforcement Act of 1988 229

Firewall 230

The Telephone Consumer Protection Act of 1991 230

Exemption from the Telephone Consumer Protection Act of 1991 231

The Role of the Principal 231

Violations and Complaints 232

Resolution of Allegations 232

Minor Rule Violation 232

Code of Arbitration 233

The Arbitration Process 233

Mediation 234

Currency Transactions 235

The Patriot Act 235

U.S. Accounts 236

Foreign Accounts 236

Annual Compliance Review 237

Business Continuity Plan 237

Sarbanes-Oxley Act 237

The Uniform Securities Act 239

Pretest 241

ANSWER KEYS 247

GLOSSARY OF EXAM TERMS 257

INDEX 323
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