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FINRA Investment Company and Variable Contracts Products Representative Examination (IR) Sample Questions:
1. Total Investments, a family of mutual funds, has prepared some new PowerPoint slides that it will use at a
free financial planning seminar it offers to the general public. The new slides:
I. must be signed and dated by a registered principal of Total Investments.
II. must be filed with FINRA 10 business days prior to their first use.
III. must be kept in a separate file by Total for three years after the date of their first use.
A) I only
B) I and II only
C) I, II, and III only
D) I and III only
2. Your client bought a variable annuity contract that has a 5% contingent deferred sales charge with a
7 -year surrender period four years ago. He has been reading about bonus annuities and 1035 exchanges
and has asked for your advice. You can tell him:
A) that he'll have to pay the 5% deferred sales charge if he executes the exchange.
B) that although the exchange doesn't have any tax consequences, he'll be looking at a new, longer,
surrender period.
C) that it's a great idea, and you plan on how you're going to spend the unexpected income.
D) both B and C.
3. A bond has a face value of $1,000, matures in 12 years, and pays an 4% coupon, with interest paid
semiannually. If the bond is priced to yield 3.5%, it is selling:
A) at its maturity value.
B) at a premium.
C) at par.
D) at a discount.
4. Which of the following investment companies will always be passively managed?
A) a closed-end investment company
B) a mutual fund
C) a face-amount certificate company
D) a unit investment trust
5. Ms. Ears is an investment adviser representative. During lunch today, she overheard two men talking
about a hostile takeover that their firm was preparing to undertake. Based on this information, Ms. Ears
does not hesitate to advise the client she meets with immediately after lunch-Mrs. Clueless-- to invest a
sum of money in the firm the men had named as the target firm. Ms. Ears remembers that the price of
target firms, on average, increases significantly with an announcement of this sort, but she does not
inform Mrs. Clueless of the reason underlying her recommendation. Has there been any violation of
insider trading laws in this scenario, as described?
A) Yes. Both Ms. Ears and the two men have violated insider trading laws. The two men are prohibited
from discussing such private information in a public setting, and Ms. Ears is prohibited from making a
recommendation based on that information.
B) No. Ms. Ears is not considered to be an insider of the company preparing the hostile takeover.
C) Yes. In making a recommendation based on information that was not publicly available, Ms. Ears has
violated insider trading laws and is subject to both civil and criminal penalties.
D) No. The scenario does not suggest that Ms. Ears herself made any investment in the target firm, and
Mrs. Clueless was not made aware of the basis for Ms. Ears' recommendation.
Solutions:
| Question # 1 Answer: D | Question # 2 Answer: D | Question # 3 Answer: B | Question # 4 Answer: D | Question # 5 Answer: C |



