Question 1

NASDAQ is:

Options :

A : an acronym for Norway’s major stock exchange.

B : the government organization that insures accounts at U.S. brokerage firms.

C : a computerized system that links together the U.S. regional exchanges.

D : a computerized quotation system used in the over-the-counter market.

Answer: D

Question 2

Which of the following must be true for a fund to be called a “no load” fund? I. The fund can have no front-end load. II. The fund can have no contingent deferred sales charge. III. The fund can charge no 12b-1 fees. IV. The fund cannot charge investors an exchange fee.

Options :

A : Only I and II must be true.

B : I, II, and III must all be true.

C : Only I must be true.

D : I, II, III, and IV must all be true.

Answer: A

Question 3

Which of the following statements regarding CMOs is false?

Options :

A : CMOs are zero-coupon bonds that are backed by real estate.

B : Relative to other bonds, CMOs are illiquid.

C : CMO investors are divided into classes, and the class determines when the investor will receive payments of principal.

D : CMOs are considered to have lower risk and, therefore, offer lower returns.

Answer: A

Question 4

Ms. Scatty is a registered representative with a well-known family of mutual funds. When selling one of the funds, she forgets to give her buyer a prospectus. Which of the following statements is true?

Options :

A : Ms. Scatty can be held civilly liable under the Securities Act of 1933.

B : Ms. Scatty can be held criminally liable under the Securities Act of 1933.

C : Since mutual funds are not covered under the Securities Act of 1933, there is no liability in this instance.

D : Both A and B are true statements.

Answer: A

Question 5

In order for the Invest4U Mutual Fund to qualify as a regulated investment company under Internal Revenue Code Subchapter M, it must:

Options :

A : distribute at least 90% of its net investment income to its shareholders.

B : distribute at least 98% of its net income from capital gains to its shareholders.

C : invest at least 75% of its monies in diversified securities.

D : Both A and B are required for Invest4U to qualify as a regulated investment company.

Answer: D

Free Series-6 Mock Exam – Practice Online Confidently

Buying Options: