Description
Wiley FINRA Series 6 Exam Review 2017
The Investment Company and Variable Contracts Products Representative Examination
Language: English
Subject for Wiley FINRA Series 6 Exam Review 2017 :
384 p. · 21.8x27.6 cm · Paperback
Description
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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 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 2017 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 2017 is your ticket to passing this difficult test on the first try with flying colors!
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The Securities Institute of America, Inc. helps thousands of securities and insurance professionals build successful careers in the financial services industry every year. Our securities training options include:
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As a result, you can choose a securities training solution that matches your skill level, learning style, and schedule. Regardless of the format you choose, you can be sure that our securities training courses are relevant, tested, and designed to help you succeed. It is the experience of our instructors and the quality of our materials that make our courses requested by name at some of the largest financial services firms in the world.
To contact The Securities Institute of America, visit us on the web at or call 877–218–1776.
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 51
Types of CMOs 51
Private–Label CMOs 53
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 104
Mutual Fund Investment Objectives 105
Other Types of Funds 106
Bond Funds 107
Valuing Mutual Fund Shares 109
Changes in the NAV 110
Sales Charges 111
12B–1 Fees 113
Calculating a Mutual Fund s Sales Charge Percentage 113
Finding the Public Offering Price 114
Sales Charge Reductions 114
Breakpoint Schedule 115
Letter of Intent 115
Backdating a Letter of Intent 116
Breakpoint Sales 116
Rights of Accumulation 116
Automatic Reinvestment of Distributions 117
Other Mutual Fund Features 117
Cost Base of Multiple Purchases 121
Purchasing Mutual Fund Shares 122
Sales Charges 125
45–Day Free Look 126
Withdrawal Plans 126
Recommending Mutual Funds 127
Structured Retail Products/SRPs 128
Pretest 129
Chapter 7 Variable Annuities and Life Insurance 135
Annuities 135
Equity Indexed Annuity 138
Recommending Variable Annuities 139
Annuity Purchase Options 140
Accumulation Units 141
Annuity Units 141
Annuity Payout Options 142
Factors Affecting the Size of the Annuity Payment 143
The Assumed Interest Rate (AIR) 143
Taxation 144
Types of Withdrawals 144
Annuitizing the Contract 145
Expenses and Guarantees 145
Other Charges 146
Life Insurance 147
Premiums and Death Benefits 149
Assumed Interest Rate 150
Variable Policy Features 151
Tax Implications of Life Insurance 151
Pretest 153
Chapter 8 Retirement Plans 157
Individual Plans 157
Individual Retirement Accounts (IRAs) 158
Traditional IRAs 158
Roth IRAs 159
Simplified Employee Pension IRA (SEP IRA) 160
Death of an IRA Owner 162
Educational IRA/Coverdell IRA 162
529 PLANS 163
Tax–Sheltered Annuities (TSAs)/Tax–Deferred Accounts (TDAs) 164
Corporate Plans 166
Rolling Over a Pension Plan 169
Employee Retirement Income Security Act of 1974 (ERISA) 169
ERISA 404C Safe Harbor 171
Department of Labor Fiduciary Rules 171
Health Savings Accounts 172
Pretest 173
Chapter 9 Customer Accounts 177
Holding Securities 179
Mailing Instructions 180
Types of Accounts 181
Commingling Customer s Pledged Securities 191
Wrap Accounts 191
Regulation S–P 191
Pretest 193
Chapter 10 Customer Recommendations, Professional Conduct, and Ta xation 197
Professional Conduct in the Securities Industry 198
Fair Dealings with Customers 198
Periodic Payment Plans 203
Mutual Fund Current Yield 203
Information Obtained from an Issuer 203
Disclosure of Client Information 204
Borrowing and Lending Money 204
Gift Rule 204
Outside Employment 205
Private Securities Transactions 205
Customer Complaints 205
Investor Information 206
NYSE/FINRA Know Your Customer 206
Investment Objectives 207
Risk vs. Reward 209
Alpha 211
Beta 211
Products Made Available through Member Firms 211
Recommendations through Social Media 212
Tax Structure 214
Investment Taxation 214
Calculating Gains and Losses 214
Cost Base of Multiple Purchases 215
Deducting Capital Losses 216
Wash Sales 216
Taxation of Interest income 217
Inherited Securities 217
Donating Securities to Charity 218
Gift Taxes 218
Estate Taxes 218
Withholding Tax 218
Corporate Dividend Exclusion 219
Alternative Minimum Tax (AMT) 219
Taxes on Foreign Securities 219
Pretest 221
Chapter 11 Securities Industry Rules and Regulations 225
The Securities Exchange Act of 1934 225
The Securities and Exchange Commission (SEC) 226
Extension of Credit 227
The National Association of Securities Dealers (NASD) 227
Becoming a Member of FINRA 229
Hiring New Employees 230
Disciplinary Actions Against a Registered Representative 231
Resignation of a Registered Representative 232
Continuing Education 232
Firm Element Continuing Education 233
Regulatory Element 233
Termination for Cause 234
Retiring Representatives/Continuing Commissions 234
State Registration 234
Registration Exemptions 235
Persons Ineligible to Register 235
Communications with the Public 235
FINRA Rule 2210 Communications with the Public 236
Broker Dealer Websites 239
Blind Recruiting Ads 239
Generic Advertising 240
Tombstone Ads 240
Testimonials 241
Free Services 241
Misleading Communication with the Public 241
Securities Investor Protection Corporation Act of 1970 241
Net Capital Requirement 242
Customer Coverage 242
Fidelity Bond 243
The Insider Trading & Securities Fraud Enforcement Act of 1988 243
Firewall 244
Telemarketing Rules 244
Do Not Call List Exemptions 245
The Role of the Principal 245
Violations and Complaints 246
Resolution of Allegations 246
Minor Rule Violation 246
Code of Arbitration 247
The Arbitration Process 247
Mediation 249
Currency Transactions 249
The Patriot Act 250
U.S. Accounts 251
Foreign Accounts 251
Identity Theft 252
Annual Compliance Review 252
Business Continuity Plan 252
Sarbanes–Oxley Act 253
The Uniform Securities Act 254
Pretest 257
Answer Keys 263
Glossary of Exam Terms 273
Index 339
