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Question 1 of 10
1. Question
Which of the following statement(s) is(are) true about Variable annuity?
I. Variable annuities provide a mortality guarantee, which specifies a minimum death benefit that will be paid to the investor’s beneficiary if he should die before he begins receiving payments from the contract.
II. A variable annuity specifies the minimum charges that the issuing company can impose within the contract.
III. Variable annuities provide for a death benefit that is payable to the contract holder’s beneficiary before he begins receiving the benefit distributions.
IV. A variable annuity has a surrender value equal to the contributions into the contract plus investment earnings less expenses and charges.Correct
Variable annuities provide a mortality guarantee, which specifies a minimum death benefit that will be paid to the investor’s beneficiary if he should die before he begins receiving payments from the contract. Additionally, a variable annuity also specifies the maximum charges that the issuing company can impose within the contract. These minimum guaranteed expenses are important for investors to consider given the long-term nature of investments in variable annuities. Variable annuities provide for a death benefit that is payable to the contract holder’s beneficiary before he begins receiving the benefit distributions. As mentioned above, the death benefit will be guaranteed to be at or equal to a given level, but may also be higher depending on the investment performance of the contract. Finally, a variable annuity also has a surrender value equal to the contributions into the contract plus investment earnings less expenses and charges.
Incorrect
Variable annuities provide a mortality guarantee, which specifies a minimum death benefit that will be paid to the investor’s beneficiary if he should die before he begins receiving payments from the contract. Additionally, a variable annuity also specifies the maximum charges that the issuing company can impose within the contract. These minimum guaranteed expenses are important for investors to consider given the long-term nature of investments in variable annuities. Variable annuities provide for a death benefit that is payable to the contract holder’s beneficiary before he begins receiving the benefit distributions. As mentioned above, the death benefit will be guaranteed to be at or equal to a given level, but may also be higher depending on the investment performance of the contract. Finally, a variable annuity also has a surrender value equal to the contributions into the contract plus investment earnings less expenses and charges.
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Question 2 of 10
2. Question
Which of the following statement(s) is(are) true about variable universal life insurance policy?
I. A variable universal life insurance policy allows policyholders the same premium and death benefit flexibility as with a universal life insurance policy.
II. In a variable life insurance policy, the crediting of cash value is based on a menu of available fund managers and asset classes and styles.
III. Variable universal life insurance policies are particularly attractive to investors who utilize insurance as a way to achieve tax-deferred growth of assets.
IV. In a variable life insurance policy, the policyholder can end up receiving a higher death benefit as insurance laws mandate ratios between cash values and death benefits for given age/gender combinations.Correct
A variable universal life insurance policy allows policyholders the same premium and death benefit flexibility as with a universal life insurance policy. The primary difference is in the crediting of cash values, which in a variable life insurance policy is based on a menu of available fund managers and asset classes and styles. Variable universal life insurance policies are particularly attractive to investors who utilize insurance as a way to achieve tax-deferred growth of assets. Additionally, with exceptional investment performance, the policyholder can also end up receiving a higher death benefit as insurance laws mandate ratios between cash values and death benefits for given age/gender combinations. Along with this increased reward comes increased risk. In addition to the cost of insurance charges, a policyholder is also subject to investment losses that can result in additional premium payments or lowered coverage amounts.
Incorrect
A variable universal life insurance policy allows policyholders the same premium and death benefit flexibility as with a universal life insurance policy. The primary difference is in the crediting of cash values, which in a variable life insurance policy is based on a menu of available fund managers and asset classes and styles. Variable universal life insurance policies are particularly attractive to investors who utilize insurance as a way to achieve tax-deferred growth of assets. Additionally, with exceptional investment performance, the policyholder can also end up receiving a higher death benefit as insurance laws mandate ratios between cash values and death benefits for given age/gender combinations. Along with this increased reward comes increased risk. In addition to the cost of insurance charges, a policyholder is also subject to investment losses that can result in additional premium payments or lowered coverage amounts.
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Question 3 of 10
3. Question
In which of the following area(s) the Securities Exchange Act of 1934 provided additional guidance and enforcement?
I. Increasing potential criminal penalties and jail time for violations.
II. Clarification around those traders who were impacted by violations and classified as contemporaneous traders.
III. Providing that the SEC can award bounty payments of up to 10 percent of the civil penalty for providing information.
IV. Enacting a five-year statute of limitations after the date of the last transaction.Correct
The Securities Exchange Act of 1934. The Act provided additional guidance and enforcement in a number of areas, including all of the following:
1. Increasing potential criminal penalties and jail time for violations
2. Clarification around those traders who were impacted by violations and classified as contemporaneous traders
3. Providing that the SEC can award bounty payments of up to 10 percent of the civil penalty for providing information
4. Enacting a five-year statute of limitations after the date of the last transactionIncorrect
The Securities Exchange Act of 1934. The Act provided additional guidance and enforcement in a number of areas, including all of the following:
1. Increasing potential criminal penalties and jail time for violations
2. Clarification around those traders who were impacted by violations and classified as contemporaneous traders
3. Providing that the SEC can award bounty payments of up to 10 percent of the civil penalty for providing information
4. Enacting a five-year statute of limitations after the date of the last transaction -
Question 4 of 10
4. Question
As stated in FINRA Rule 3240, borrowing from or lending to customers is prohibited unless:
I. The member maintains written procedures for such transactions
II. The customer is a registered person with the different member firm
III. The lending arrangement is based on a personal relationship with the customer
IV. The lending arrangement is based on a business relationship outside of the broker-customer relationship.Correct
As stated in FINRA Rule 3240, borrowing from or lending to customers is prohibited unless:
1. The member maintains written procedures for such transactions
2. The borrowing or lending arrangement is with a customer who is immediate family or with a customer who is a financial institution in the business of providing credit or loans
3. The customer is a registered person with the same member firm
4. The lending arrangement is based on a personal relationship with the customer
5. The lending arrangement is based on a business relationship outside of the broker-customer relationship.Incorrect
As stated in FINRA Rule 3240, borrowing from or lending to customers is prohibited unless:
1. The member maintains written procedures for such transactions
2. The borrowing or lending arrangement is with a customer who is immediate family or with a customer who is a financial institution in the business of providing credit or loans
3. The customer is a registered person with the same member firm
4. The lending arrangement is based on a personal relationship with the customer
5. The lending arrangement is based on a business relationship outside of the broker-customer relationship. -
Question 5 of 10
5. Question
MSRB Rule G-19 requires that, prior to trading in a retail customer’s account, the registered individual must collect suitability information regarding the customer’s-
I. Financial status
II. Tax status
III. Educational qualifications
IV. Investment objective concerning the municipal security being tradedCorrect
MSRB Rule G-19 requires that, prior to trading in a retail customer’s account, the registered individual must collect suitability information regarding the customer’s financial status, tax status, investment objective concerning the municipal security being traded, and any other information that might be required to ensure that the transaction meets the customer’s suitability needs
Incorrect
MSRB Rule G-19 requires that, prior to trading in a retail customer’s account, the registered individual must collect suitability information regarding the customer’s financial status, tax status, investment objective concerning the municipal security being traded, and any other information that might be required to ensure that the transaction meets the customer’s suitability needs
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Question 6 of 10
6. Question
The Investment Company Act of 1940 intends to regulate investment companies, as such companies are considered to:
I. Issue securities through international commerce, which represent a large portion of all securities offered and traded and the national securities exchanges
II. Invest, reinvest, and trade securities through the national securities exchanges and interstate commerce, which comprises a significant portion of all trading activity
III. Invest and trade in significant portions of securities issued by companies who engage in interstate commerce
IV. Act as a potential investment for a substantial part of the national savings, which impacts the national economy and the flow of savings into the capital marketsCorrect
The Investment Company Act of 1940 intends to regulate investment companies, as such companies are considered to:
1. Issue securities through interstate commerce, which represent a large portion of all securities offered and traded and the national securities exchanges
2. Invest, reinvest, and trade securities through the national securities exchanges and interstate commerce, which comprises a significant portion of all trading activity
3. Invest and trade in significant portions of securities issued by companies who engage in interstate commerce
4. Act as a potential investment for a substantial part of the national savings, which impacts the national economy and the flow of savings into the capital marketsIncorrect
The Investment Company Act of 1940 intends to regulate investment companies, as such companies are considered to:
1. Issue securities through interstate commerce, which represent a large portion of all securities offered and traded and the national securities exchanges
2. Invest, reinvest, and trade securities through the national securities exchanges and interstate commerce, which comprises a significant portion of all trading activity
3. Invest and trade in significant portions of securities issued by companies who engage in interstate commerce
4. Act as a potential investment for a substantial part of the national savings, which impacts the national economy and the flow of savings into the capital markets -
Question 7 of 10
7. Question
Which of the following statement(s) is(are) true about an individual retirement account (IRA)?
I. An individual retirement account (IRA) is a form of retirement savings account.
II. IRAs are a very popular retirement savings tool.
III. IRAs allow investors the opportunity to save for retirement while reducing non-taxable income, as deferrals into an IRA are tax-deductible to the investor.
IV. IRAs allow investors the opportunity to supplement their 401(k) retirement savings with an additional source of tax-deferred retirement savings.Correct
An individual retirement account (IRA) is a form of retirement savings account. IRAs are a very popular retirement savings tool as they allow investors the opportunity to save for retirement while reducing taxable income, as deferrals into an IRA are tax-deductible to the investor. Additionally, IRAs allow investors the opportunity to supplement their 401(k) retirement savings with an additional source of tax-deferred retirement savings.
Incorrect
An individual retirement account (IRA) is a form of retirement savings account. IRAs are a very popular retirement savings tool as they allow investors the opportunity to save for retirement while reducing taxable income, as deferrals into an IRA are tax-deductible to the investor. Additionally, IRAs allow investors the opportunity to supplement their 401(k) retirement savings with an additional source of tax-deferred retirement savings.
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Question 8 of 10
8. Question
Investors are limited to only contributing $18,500 to a 401(k) account in 2018 ($24,500 if age 50 or older).
Which of the following additional amount an IRA allows an investor of 50years older to invest on a tax-deferred basis?Correct
Investors are limited to only contributing $18,500 to a 401(k) account in 2018 ($24,500 if age 50 or older), so an IRA allows that investor to invest an additional $5,500 ($6,500 if age 50 or older) on a tax- deferred basis.
Incorrect
Investors are limited to only contributing $18,500 to a 401(k) account in 2018 ($24,500 if age 50 or older), so an IRA allows that investor to invest an additional $5,500 ($6,500 if age 50 or older) on a tax- deferred basis.
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Question 9 of 10
9. Question
Which of the following is(are) the correct form(s) of IRAs?
I. Traditional IRAs
II. Roth IRAs
III. Local IRAs
IV. International IRAsCorrect
There are two different forms of IRAs: traditional IRAs and Roth IRAs.
Incorrect
There are two different forms of IRAs: traditional IRAs and Roth IRAs.
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Question 10 of 10
10. Question
Which of the following statement(s) is(are) true about a traditional IRA?
I. In a traditional IRA, the investor does not receive a tax deduction for contributions to the plan.
II. In a traditional IRA, the investor is able to receive tax-free distributions from the plan.
III. A traditional IRA allows an investor to invest on a tax-deferred basis.
IV. In a traditional IRA, the investor receive the tax deduction for contributions to the account and paying income taxes.Correct
A traditional IRA allows an investor to invest on a tax-deferred basis, receiving the tax deduction for contributions to the account and paying income taxes when distributions are paid from the plan. A Roth IRA also allows investors to invest on a tax-deferred basis, but the investor does not receive a tax deduction for contributions to the plan and instead is able to receive tax-free distributions from the plan.
Incorrect
A traditional IRA allows an investor to invest on a tax-deferred basis, receiving the tax deduction for contributions to the account and paying income taxes when distributions are paid from the plan. A Roth IRA also allows investors to invest on a tax-deferred basis, but the investor does not receive a tax deduction for contributions to the plan and instead is able to receive tax-free distributions from the plan.