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Handling Customer Accounts
FINRA
Shopping for Mutual Funds
Taxation
Acronyms
100
If a client refuses to provide certain information, may the account still be opened?
What is Yes, although name and address are required.
100
May an RR modify a prospectus?
What is No. The underlining, photocopying, or highlighting of a prospectus is prohibited.
100
A _______________________ fund is one that invests in a specific industry or geographic region.
What is A Sector or Specialized fund is one that invests in a specific industry or geographic region.
100
Bill has unrealized losses of $10,000. How much may he claim in the current tax year?
What is Zero. Unrealized losses do not count for tax purposes.
100
Identify the acronym: SAI
What is Statement of Additional Information
200
When do gifts become the property of the minor in a custodial account?
What is when they are gifted
200
What is the main concern when an RR recommends that a client diversify among several fund families?
What is The client may lose out on the opportunity to receive a breakpoint.
200
Funds offer ______________________ to allow buyers to add all purchases made from a fund family to reduce sales charge.
What is Rights of Accumulation
200
If an investor does not use Specific Identification when selling securities, the IRS assumes __________________.
What is FIFO
200
Identify the acronym: TCPA
What is Telephone Consumer Protection Act (of 1991)
300
Customers become ___________________ if their cash or securities positions exceed SIPC coverage.
What is General Creditors
300
When must RRs complete the Regulatory Element of Continuing Education?
What is On the 2-year anniversary of their registration and every 3 years thereafter.
300
To what risks would Treasury bond funds be subject?
What is Interest rate, purchasing power, and market risk
300
Cash dividends received by individuals are generally taxed at a maximum rate of ____%.
What is 20%
300
Identify the acronym: SEP
What is Simplified Employee Pension Plan
400
What is the tax implication of a person-to-person gift of $100,000?
What is Tax-free to the recipient, but any amount in excess of $14,000 per year is taxable to the donor
400
If a trainee fails his Series 6 examination on the third attempt, he must wait _____ months to re-test.
What is 6 months
400
What is the best investment for a part-time teacher who is undecided about a long-term allocation?
What is A taxable money-market fund, since the teacher may be in a lower tax bracket
400
Ann invests $15,000 in a non-qualified annuity. At age 64, she withdraws all $22,000. What's Ann's basis; what's taxed?
What is Her basis is $15,000 since the annuity is funded after-tax and the $7,000 of earnings would be taxed as ordinary income.
400
Identify the acronym: CRD
What is Central Registration Depository
500
Describe a wrap account.
What is An account that charges the client a single fee that covers transactions and management
500
Of what violation is an RR guilty when buying stock based on knowledge of a pending large client order?
What is Front Running
500
If a client's goal is preservation of principal, what fund would be most appropriate?
What is Money-Market Fund
500
A fund distributes a gain on shares held for 3 yrs. Joe has owned the fund shares for 6 months. How is Joe's gain taxed?
What is As a long-term capital gain, since the fund held the shares for three years. Joe's holding period is irrelevant.
500
Identify the acronym: EIA
What is Equity-Indexed Annuity