Free Series-6 Practice Test Questions and Answers (2026) | Cert Empire Practice Questions

When Jack e-mails some of his existing retail clients with a summary of the tax article, he must

submit a copy of the e-mail to a principal of the company, but he does not need to do so prior to

sending the e-mail. Since this was sent to Jack’s existing retail customers, it falls under the category

of “correspondence,” which does not need to be approved by a principal beforehand, but is subject

to review and supervision requirements.

The true statement regarding a mutual fund’s expenses is that a mutual fund’s record maintenance

fees cannot exceed 0.25% of average net assets. Mutual funds are permitted to have both front-end

loads and charge 12b-1 fees, and the expense ratio of a mutual fund can exceed 1.0% (although a

common recommendation is to select a fund with an expense ratio ≤ 1.0%.) Mutual fund families

have the option of charging an “exchange fee” when an investor switches between their funds.

Of the selections, only 12b-1 fees and management fees are included in the expense ratio of the

fund. Brokerage costs that the fund incurs when it buys and sells securities are not included (which is

why a fund’s turnover ratio is important to consider.) Redemption fees are paid by the shareholder to

the fund, so it would not be included in a fund’s expense ratio since it is not an expense of the fund.

As a value fund, Glamourless invests primarily in stocks with low earnings growth rates.

Because these firms don’t need as much money to support a high growth rate, they tend to have

high dividend yields. Their betas are generally less than 1.0, the average stock beta. Value stocks are

generally out of favor, which results in low price-earnings ratios since investors aren’t clamoring to

buy them.

The Investment Company Act of 1940 regulates the organizational structure and day-to-day

operations of investment companies. The Act includes requirements regarding a fund’s capital

structure, the custody of its assets, its investment activities, and the duties of a fund’s board of

directors, among other things. The Securities Act of 1933 regulates the offering of a fund’s shares

and requires that prospective investors be provided with a prospectus. The Securities Exchange Act

of 1934 regulates secondary market activities in investment company shares and includes laws

governing the principal underwriters and brokers and dealers who sell investment company shares.

The Investment Advisers Act of 1940 regulates investment advisers and includes laws pertaining to

their registration and recordkeeping, custodial, and reporting responsibilities.

Based on the information provided, an investor who wants to buy shares of the URMoney Mutual

Fund will pay $47 a share. Since the fund is a no load fund, the shares can be purchased at the net

asset value per share of the fund. Net asset value per share (NAVPS) = (market value of fund’s assets

- fund liabilities) ÷ total number of share outstanding, so NAVPS = ($620 million - $150 million) ÷ 10

million shares = $47.

The total return reported by a mutual fund includes both the dividend and interest income earned by

the fund and any increase in the fund’s net asset value. It includes both the return on dividends and

interest income and the return due to the capital appreciation of the fund’s value.

Price discovery is not a potential advantage associated with investing through a mutual fund. The net

asset value of the fund determines its price, not the interaction of buyers and sellers in the market.

All the other choices are advantages of investing through a mutual fund.

If Annie, who lives on the west coast, enters an order to redeem 500 shares at 12 P.M. her time on

October 9th, the order will be executed at the net asset value calculated at the end of that trading

day, which is $10.10. Orders received prior to 4 P.M. Eastern Standard Time (EST) are required to be

processed at the net asset value of the fund determined at the end of that some trading day, and 12

P.M. in Seattle is 3 P.M. on the east coast.

Only Mr. and Mrs. Smith and Mrs. Smith and her 8-year-old daughter, Susie, can combine their funds

in order to meet the breakpoint and get the reduced sales charge. Investments made by a husband

and a wife and by a parent on their own account and on a custodial account for a minor child can be

combined toward the total needed to reach the breakpoint. (The child cannot be an adult, however.)

Investments made by siblings and investment clubs cannot be combined to meet a breakpoint.

As a high-yield bond fund, Slippery invests a substantial amount of its money in junk bonds. High

yield = high risk. Junk bonds have a rating below BBB.

The risk that the nation will enter a recession is an example of market risk. A recession will affect the

prices of all securities to one degree or another. The other choices are examples of business risk-a

risk that is tied to a specific firm. In finance, risk means uncertainty, so even the possibility that a

drug company will produce a pill that will cure cancer is referred to as a risk.

Selections I and II correctly describe differences between a profit -sharing plan and a money purchase plan. Under a profit-sharing plan, an employer can elect to make no contribution in a bad year, but an employer must make contributions to a money purchase plan, regardless. Only employers make contributions to profit-sharing plans, but both employers and employees can contribute to a money purchase plan. Both profit-sharing plans and money purchase plans are defined contribution plans, so the statement made in Selection III is false.

Both A and C are eligible to establish a Keogh Plan. Any individual who is self -employed, even in a

second job, is eligible to set up a Keogh Plan as long as they have established themselves as sole

proprietors and not as any form of corporation.

If you sell Hasbro stock for $55 and it was selling for $44 on the day that your uncle died, the sale will

result in $3,300 of taxable income, taxed to you as long-term capital gain income. Your cost basis is

the price at which the stock was selling on the day your uncle died, $44, so your gain on the sale is

($55 - $44) x 300 shares = $3,300. Although you owned the stock for only a month, the IRS stipulates

that capital gain (or loss) earned on the disposition of inherited investment property will be

considered to be long-term capital gain, regardless of how long it is held by the beneficiary prior to

its sale.

Invesco Utilities Fund profile suggests that the fund is a sector fund, which is a specialized fund that

invests mainly in stocks within a specific industry. This does not mean that it is non -diversified. As

long as it is invested in a portfolio of securities with a value exceeding 75% of its assets such that no

more than 5% is invested in any one firm and no more than 10% of any firm’s voting stock is owned,

it is considered to be a diversified management company.

Yes, there have been violations of FINRA/NASD rules in this instance. It is a violation of Rule 2110 for

an exam-past or present-to be reproduced and distributed for study purposes. Whether there has

been compensation paid or not is irrelevant.

Because Joel’s client is adamant about being risk-averse, but also desires growth, Joel should invest

his client’s monies in a growth fund to target her desired objective. He should avoid the riskier

aggressive growth and foreign stock funds. Although her long-term investment horizon indicates that

she is able to tolerate more risk, her desires trump that. Investing in stocks of her home country

doesn’t make sense at this point since no one knows what the future exchange rate will be. Investing

in a U.S. government bond fund has less risk, but does not target her growth objective.

A table providing detailed information on the various fees and expenses charged by a mutual fund

can be found in the fund’s prospectus. The other choices provide a wealth of information regarding

such items as investment strategies, fund holdings, and financial statements, however.

Since MoeMoney is a diversified management company, it may invest no more than 5% of its

investment monies in one issuer. It may be either a closed-end or an open-end company (mutual

fund), and it need not necessarily be invested in a variety of industries and geographic regions.