Download Investment Company and Variable Contracts Products Representative Qualification Examination (IR).Series 6.PassLeader.2019-02-23.325q.vcex

Vendor: FINRA
Exam Code: Series 6
Exam Name: Investment Company and Variable Contracts Products Representative Qualification Examination (IR)
Date: Feb 23, 2019
File Size: 371 KB

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Demo Questions

Question 1
Which of the following statements about the over-the-counter market is true?
  1. Only penny stocks are traded in the over-the-counter market.
  2. Trades in the over-the-counter market are conducted via the auction process.
  3. Only bonds and other debt instruments are traded in the over-the-counter market.
  4. Stocks that are listed on exchange floors are also traded in the over-the-counter market.
Correct answer: D
Explanation:
Stocks that are listed on exchange floors are also traded in the over-the-counter market. The term “third market” refers to over-the-counter trading of listed stocks. All types of securities-stocks, bonds, options, warrants, rights-trade over the counter. The over-the-counter market is a negotiated market, not an auction market.
Stocks that are listed on exchange floors are also traded in the over-the-counter market. The term “third market” refers to over-the-counter trading of listed stocks. All types of securities-stocks, bonds, options, warrants, rights-trade over the counter. The over-the-counter market is a negotiated market, not an auction market.
Question 2
Which of the following is not an auction market?
  1. NASDAQ
  2. NYSE
  3. CHX
  4. All of the above are auction markets
Correct answer: A
Explanation:
NASDAQ is not an auction market. NASDAQ is a computerized system of geographically dispersed securities’ dealers. As such, it is a negotiated market. The NYSE (New York Stock Exchange) and the CHX (Chicago Stock Exchange) are both auction markets.
NASDAQ is not an auction market. NASDAQ is a computerized system of geographically dispersed securities’ dealers. As such, it is a negotiated market. The NYSE (New York Stock Exchange) and the CHX (Chicago Stock Exchange) are both auction markets.
Question 3
The entity that serves as the auctioneer for trades conducted on an organized exchange floor is known as a:
  1. registered trader.
  2. specialist.
  3. floor broker.
  4. commission broker.
Correct answer: B
Explanation:
The entity that serves as the auctioneer for trades conducted on an organized exchange floor is known as a specialist. The specialist is assigned stocks by the exchange and is a market maker in those stocks. A registered trader is a private individual who buys and sells on his own account only. Floor brokers and commission brokers execute trades for other investors.
The entity that serves as the auctioneer for trades conducted on an organized exchange floor is known as a specialist. The specialist is assigned stocks by the exchange and is a market maker in those stocks. A registered trader is a private individual who buys and sells on his own account only. Floor brokers and commission brokers execute trades for other investors.
Question 4
Which of the following statements about specialists is false?
  1. Specialists are market makers in assigned stocks and, as such, can profit from these investments.
  2. Specialists are required to maintain a fair and orderly market in their assigned stocks, meaning that they must buy if there is an excess of sell orders and sell out of their own portfolios if there is an excess of buy orders.
  3. Specialists are employees of the exchange on which they oversee trades.
  4. In addition to acting as market makers, specialists also act as agents and execute limit orders placed by commission brokers for their clients if the specified price is reached.
Correct answer: C
Explanation:
The statement that specialists are employees of the exchange on which they oversee trades is false. Specialists are separate firms that are members of the exchange. Specialists are market makers in the stocks that are assigned them by the exchange and can earn profits (or losses) on these investments, just like any other market maker. They are required to maintain a fair and orderly market in their assigned stocks, however, which means they sometimes must trade against the market. They also maintain a central limit order “book” in their assigned stocks.
The statement that specialists are employees of the exchange on which they oversee trades is false. Specialists are separate firms that are members of the exchange. Specialists are market makers in the stocks that are assigned them by the exchange and can earn profits (or losses) on these investments, just like any other market maker. They are required to maintain a fair and orderly market in their assigned stocks, however, which means they sometimes must trade against the market. They also maintain a central limit order “book” in their assigned stocks.
Question 5
NASDAQ market makers provide investors with assurance that:
  1. there is a market for the listed security.
  2. the investor will be able to buy or sell the security at a price he desires.
  3. the investor will be investing in a high quality investment with relatively low risk.
  4. NASDAQ market makers provide investors with no assurance whatsoever. It is “buyer beware.”
Correct answer: A
Explanation:
NASDAQ market makers provide investors with assurance that there is a market for the listed security by posting bid and ask prices for it. There is no guarantee, however, that the investor will be able to buy or sell the security at the price he desires or that the investment is high quality and low risk.
NASDAQ market makers provide investors with assurance that there is a market for the listed security by posting bid and ask prices for it. There is no guarantee, however, that the investor will be able to buy or sell the security at the price he desires or that the investment is high quality and low risk.
Question 6
SuperDOT is:
  1. an electronic communication network (ECN).
  2. an electronic system whereby trades are executed on NASDAQ.
  3. an electronic system used to place orders on the NYSE.
  4. both A and C.
Correct answer: C
Explanation:
SuperDOT is an electronic system used to place market and limit orders on the NYSE whereby the orders are routed directly to the specialist in the assigned stocks. It is not an ECN, which is an electronic network that is designed to allow buyers and sellers to interact directly with each other, thereby bypassing the middlemen.
SuperDOT is an electronic system used to place market and limit orders on the NYSE whereby the orders are routed directly to the specialist in the assigned stocks. It is not an ECN, which is an electronic network that is designed to allow buyers and sellers to interact directly with each other, thereby bypassing the middlemen.
Question 7
GoForBroke Investments has registered with the SEC to be a market maker in certain NASDAQ-listed securities. In order to be able to enter bid and ask quotes for the securities in which it is going to make a market, GoForBroke must subscribe to which level of NASDAQ?
  1. Level I
  2. Level II
  3. Level III
  4. Level IV
Correct answer: C
Explanation:
In order to enter bid and ask quotes, GoForBroke must subscribe to NASDAQ’s Level II I. Level I simply allows the user to view the highest bid and lowest ask price for a security, and Level II allows the user to view all the bid and ask quotes from all the market makers in a security, but only Level III allows the subscriber to enter quotes. There is no Level IV.
In order to enter bid and ask quotes, GoForBroke must subscribe to NASDAQ’s Level II I. Level I simply allows the user to view the highest bid and lowest ask price for a security, and Level II allows the user to view all the bid and ask quotes from all the market makers in a security, but only Level III allows the subscriber to enter quotes. There is no Level IV.
Question 8
Which of the following is not a characteristic of all auction stock exchanges in the U.S.?
  1. There is a central marketplace.
  2. Stocks that are traded on the exchange must meet certain listing requirements, determined by the exchange.
  3. In order to conduct a trade on the exchange, a broker must be a member of the exchange or hold a license to trade on the exchange.
  4. If a stock is listed on one of these exchanges, it is not permitted to be listed on any other exchange.
Correct answer: D
Explanation:
The statement that does not describe a characteristic of all U.S. auction stock exchanges is D. Dual listing is permitted. Stocks listed on one exchange may also be listed on another. In fact, most of the trading on U.S. regional exchanges is in dual-listed stocks. All of the auction exchanges do have a central marketplace, listed stocks must meet listing requirements, and brokers wishing to conduct trades on the exchange must be members of the exchange or hold a license to trade on the exchange.
The statement that does not describe a characteristic of all U.S. auction stock exchanges is D. Dual listing is permitted. Stocks listed on one exchange may also be listed on another. In fact, most of the trading on U.S. regional exchanges is in dual-listed stocks. All of the auction exchanges do have a central marketplace, listed stocks must meet listing requirements, and brokers wishing to conduct trades on the exchange must be members of the exchange or hold a license to trade on the exchange.
Question 9
Which of the following is an example of a primary market transaction?
  1. Exco Resources (XCO) sells a new issue of 7.5%, 8-year notes.
  2. Ms. Talker calls her broker and places a market order to sell shares of AT&T (T) on the NYSE.
  3. Mr. Safe purchases a Treasury bill with two weeks remaining to maturity.
  4. Mr. Green places an order to buy shares of Sunvalley Solar, Inc. (SSOL), a stock selling on the OTC Bulletin Board.
Correct answer: A
Explanation:
Exco Resources’ new bond issue is a primary market transaction. The primary market refers to the market for new issues. The other three scenarios describe transactions in securities that are already being traded and are secondary market transactions.
Exco Resources’ new bond issue is a primary market transaction. The primary market refers to the market for new issues. The other three scenarios describe transactions in securities that are already being traded and are secondary market transactions.
Question 10
NASDAQ is:
  1. an acronym for Norway’s major stock exchange.
  2. the government organization that insures accounts at U.S. brokerage firms.
  3. a computerized system that links together the U.S. regional exchanges.
  4. a computerized quotation system used in the over-the-counter market.
Correct answer: D
Explanation:
NASDAQ is a computerized quotation system that is used in the over-the-counter market. It allows NASDAQ market makers to enter bid and ask quotes and allows subscribers at lower levels to view the bid and ask quotes available.
NASDAQ is a computerized quotation system that is used in the over-the-counter market. It allows NASDAQ market makers to enter bid and ask quotes and allows subscribers at lower levels to view the bid and ask quotes available.
Question 11
Which of the following statements about the over-the-counter market is true?
  1. Only penny stocks are traded in the over-the-counter market.
  2. Trades in the over-the-counter market are conducted via the auction process.
  3. Only bonds and other debt instruments are traded in the over-the-counter market.
  4. Stocks that are listed on exchange floors are also traded in the over-the-counter market.
Correct answer: D
Explanation:
Stocks that are listed on exchange floors are also traded in the over-the-counter market. The term “third market” refers to over-the-counter trading of listed stocks. All types of securities-stocks, bonds, options, warrants, rights-trade over the counter. The over-the-counter market is a negotiated market, not an auction market.
Stocks that are listed on exchange floors are also traded in the over-the-counter market. The term “third market” refers to over-the-counter trading of listed stocks. All types of securities-stocks, bonds, options, warrants, rights-trade over the counter. The over-the-counter market is a negotiated market, not an auction market.
Question 12
Which of the following is not an auction market?
  1. NASDAQ
  2. NYSE
  3. CHX
  4. All of the above are auction markets
Correct answer: A
Explanation:
NASDAQ is not an auction market. NASDAQ is a computerized system of geographically dispersed securities’ dealers. As such, it is a negotiated market. The NYSE (New York Stock Exchange) and the CHX (Chicago Stock Exchange) are both auction markets.
NASDAQ is not an auction market. NASDAQ is a computerized system of geographically dispersed securities’ dealers. As such, it is a negotiated market. The NYSE (New York Stock Exchange) and the CHX (Chicago Stock Exchange) are both auction markets.
Question 13
The entity that serves as the auctioneer for trades conducted on an organized exchange floor is known as a:
  1. registered trader.
  2. specialist.
  3. floor broker.
  4. commission broker.
Correct answer: B
Explanation:
The entity that serves as the auctioneer for trades conducted on an organized exchange floor is known as a specialist. The specialist is assigned stocks by the exchange and is a market maker in those stocks. A registered trader is a private individual who buys and sells on his own account only. Floor brokers and commission brokers execute trades for other investors.
The entity that serves as the auctioneer for trades conducted on an organized exchange floor is known as a specialist. The specialist is assigned stocks by the exchange and is a market maker in those stocks. A registered trader is a private individual who buys and sells on his own account only. Floor brokers and commission brokers execute trades for other investors.
Question 14
Which of the following statements about specialists is false?
  1. Specialists are market makers in assigned stocks and, as such, can profit from these investments.
  2. Specialists are required to maintain a fair and orderly market in their assigned stocks, meaning that they must buy if there is an excess of sell orders and sell out of their own portfolios if there is an excess of buy orders.
  3. Specialists are employees of the exchange on which they oversee trades.
  4. In addition to acting as market makers, specialists also act as agents and execute limit orders placed by commission brokers for their clients if the specified price is reached.
Correct answer: C
Explanation:
The statement that specialists are employees of the exchange on which they oversee trades is false. Specialists are separate firms that are members of the exchange. Specialists are market makers in the stocks that are assigned them by the exchange and can earn profits (or losses) on these investments, just like any other market maker. They are required to maintain a fair and orderly market in their assigned stocks, however, which means they sometimes must trade against the market. They also maintain a central limit order “book” in their assigned stocks.
The statement that specialists are employees of the exchange on which they oversee trades is false. Specialists are separate firms that are members of the exchange. Specialists are market makers in the stocks that are assigned them by the exchange and can earn profits (or losses) on these investments, just like any other market maker. They are required to maintain a fair and orderly market in their assigned stocks, however, which means they sometimes must trade against the market. They also maintain a central limit order “book” in their assigned stocks.
Question 15
NASDAQ market makers provide investors with assurance that:
  1. there is a market for the listed security.
  2. the investor will be able to buy or sell the security at a price he desires.
  3. the investor will be investing in a high quality investment with relatively low risk.
  4. NASDAQ market makers provide investors with no assurance whatsoever. It is “buyer beware.”
Correct answer: A
Explanation:
NASDAQ market makers provide investors with assurance that there is a market for the listed security by posting bid and ask prices for it. There is no guarantee, however, that the investor will be able to buy or sell the security at the price he desires or that the investment is high quality and low risk.
NASDAQ market makers provide investors with assurance that there is a market for the listed security by posting bid and ask prices for it. There is no guarantee, however, that the investor will be able to buy or sell the security at the price he desires or that the investment is high quality and low risk.
Question 16
SuperDOT is:
  1. an electronic communication network (ECN).
  2. an electronic system whereby trades are executed on NASDAQ.
  3. an electronic system used to place orders on the NYSE.
  4. both A and C.
Correct answer: C
Explanation:
SuperDOT is an electronic system used to place market and limit orders on the NYSE whereby the orders are routed directly to the specialist in the assigned stocks. It is not an ECN, which is an electronic network that is designed to allow buyers and sellers to interact directly with each other, thereby bypassing the middlemen.
SuperDOT is an electronic system used to place market and limit orders on the NYSE whereby the orders are routed directly to the specialist in the assigned stocks. It is not an ECN, which is an electronic network that is designed to allow buyers and sellers to interact directly with each other, thereby bypassing the middlemen.
Question 17
GoForBroke Investments has registered with the SEC to be a market maker in certain NASDAQ-listed securities. In order to be able to enter bid and ask quotes for the securities in which it is going to make a market, GoForBroke must subscribe to which level of NASDAQ?
  1. Level I
  2. Level II
  3. Level III
  4. Level IV
Correct answer: C
Explanation:
In order to enter bid and ask quotes, GoForBroke must subscribe to NASDAQ’s Level II I. Level I simply allows the user to view the highest bid and lowest ask price for a security, and Level II allows the user to view all the bid and ask quotes from all the market makers in a security, but only Level III allows the subscriber to enter quotes. There is no Level IV.
In order to enter bid and ask quotes, GoForBroke must subscribe to NASDAQ’s Level II I. Level I simply allows the user to view the highest bid and lowest ask price for a security, and Level II allows the user to view all the bid and ask quotes from all the market makers in a security, but only Level III allows the subscriber to enter quotes. There is no Level IV.
Question 18
Which of the following is not a characteristic of all auction stock exchanges in the U.S.?
  1. There is a central marketplace.
  2. Stocks that are traded on the exchange must meet certain listing requirements, determined by the exchange.
  3. In order to conduct a trade on the exchange, a broker must be a member of the exchange or hold a license to trade on the exchange.
  4. If a stock is listed on one of these exchanges, it is not permitted to be listed on any other exchange.
Correct answer: D
Explanation:
The statement that does not describe a characteristic of all U.S. auction stock exchanges is D. Dual listing is permitted. Stocks listed on one exchange may also be listed on another. In fact, most of the trading on U.S. regional exchanges is in dual-listed stocks. All of the auction exchanges do have a central marketplace, listed stocks must meet listing requirements, and brokers wishing to conduct trades on the exchange must be members of the exchange or hold a license to trade on the exchange.
The statement that does not describe a characteristic of all U.S. auction stock exchanges is D. Dual listing is permitted. Stocks listed on one exchange may also be listed on another. In fact, most of the trading on U.S. regional exchanges is in dual-listed stocks. All of the auction exchanges do have a central marketplace, listed stocks must meet listing requirements, and brokers wishing to conduct trades on the exchange must be members of the exchange or hold a license to trade on the exchange.
Question 19
Which of the following is an example of a primary market transaction?
  1. Exco Resources (XCO) sells a new issue of 7.5%, 8-year notes.
  2. Ms. Talker calls her broker and places a market order to sell shares of AT&T (T) on the NYSE.
  3. Mr. Safe purchases a Treasury bill with two weeks remaining to maturity.
  4. Mr. Green places an order to buy shares of Sunvalley Solar, Inc. (SSOL), a stock selling on the OTC Bulletin Board.
Correct answer: A
Explanation:
Exco Resources’ new bond issue is a primary market transaction. The primary market refers to the market for new issues. The other three scenarios describe transactions in securities that are already being traded and are secondary market transactions.
Exco Resources’ new bond issue is a primary market transaction. The primary market refers to the market for new issues. The other three scenarios describe transactions in securities that are already being traded and are secondary market transactions.
Question 20
NASDAQ is:
  1. an acronym for Norway’s major stock exchange.
  2. the government organization that insures accounts at U.S. brokerage firms.
  3. a computerized system that links together the U.S. regional exchanges.
  4. a computerized quotation system used in the over-the-counter market.
Correct answer: D
Explanation:
NASDAQ is a computerized quotation system that is used in the over-the-counter market. It allows NASDAQ market makers to enter bid and ask quotes and allows subscribers at lower levels to view the bid and ask quotes available.
NASDAQ is a computerized quotation system that is used in the over-the-counter market. It allows NASDAQ market makers to enter bid and ask quotes and allows subscribers at lower levels to view the bid and ask quotes available.
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