Series 6 Free Sample Questions

The primary federal tax advantage of a 529 plan is that the earnings grow on a tax-deferred basis and distributions are tax-free if used for qualified higher education expenses. Contributions to 529 plans are not deductible on a federal level, although some states offer tax deductions or credits for contributions. The ability to change the beneficiary is a feature but not the most significant tax advantage. While 529 assets are considered parental assets for FAFSA, which is favorable, the core tax benefit lies in the tax-free growth and withdrawal.

A breakpoint sale is the prohibited practice of a representative failing to inform a client about their eligibility for a reduced sales charge (a breakpoint) on a mutual fund purchase, resulting in the client paying a higher sales charge. Representatives have an obligation to ensure clients receive any applicable breakpoints. Selling dividends is encouraging a purchase just before a distribution. Churning is excessive trading. Backing away is a market maker violation.

Any written communication distributed or made available to more than 25 retail investors within any 30 calendar-day period is defined as retail communication. This includes seminar handouts and presentation slides. FINRA rules require that all retail communications must be reviewed and approved by a qualified registered principal before use.

Mutual funds are traded based on the rule of 'forward pricing.' This means that all orders to buy or sell shares are executed at the next Net Asset Value (NAV) calculated after the order is received. Since the order was received at 3:30 PM ET and the NAV is calculated at 4:00 PM ET, the client will receive the 4:00 PM NAV for that day.

While all factors are important, the most critical concern in a 1035 exchange is that the client will likely be subject to a new surrender charge period. Since the client's current annuity is already past its surrender period, moving to a new one re-imposes a significant liquidity constraint. This must be weighed heavily against the benefits of the new rider. A properly executed 1035 exchange is tax-free. Fee differences and sub-account comparisons are also important but secondary to the impact of a new surrender period.

A Joint Tenants with Rights of Survivorship (JTWROS) account is designed so that when one owner dies, their share of the account automatically passes to the surviving owner(s), avoiding the time-consuming and often costly probate process. Tenants in Common (TIC) allows each owner's share to pass to their estate or designated heirs. A TOD registration applies to individual accounts, not joint ones. A trust account is a separate legal entity.

The Established Business Relationship (EBR) exemption to the Do-Not-Call rules applies at the firm level, not the individual representative level. If a consumer has a transaction or account with the firm within the last 18 months, any representative from that firm may call them, even if their number is on the National Do-Not-Call Registry.

FINRA rules require that a firm must send a copy of the new account record or the information it contains to the customer within 30 days of the account being opened. This gives the customer an opportunity to verify the accuracy of the information and request any necessary corrections.

In a variable life insurance policy, the cash value is invested in sub-accounts within a separate account, and its performance is not guaranteed. The policyholder bears the investment risk. A decline in cash value, despite premium payments, is most likely due to poor performance of these underlying investments, after mortality and expense charges have been deducted.