Archive for the ‘Financial Services’ Category

Series6 Pdf Download}

Submitted by: Richard Mills

Question: 1

Which of the following statements regarding closed-end investment companies is false?

A. A closed-end investment company may not issue preferred stock.

B. Shares of a closed-end company may sell for below the fund’s net asset value.

C. Closed-end companies may be either diversified or non-diversified.

D. The closed-end investment company does not pay taxes on the dividend and capital gain income it earns and distributes to its shareholders.

Answer: A



The false statement is that a closed-end investment company may not issue preferred stock. Although open-end companies (mutual funds) are prohibited from doing so, this is not a restriction governing closed-end companies. Closed-end companies shares sell on exchange floors and may trade below net asset value. Closed-end companies may be either diversified or non-diversified, and the income earned by the company and distributed to its shareholders is not taxed at the investment company level. It is taxed at the shareholder level only.

Question: 2

Pete Prophet, the manager of a bond mutual fund, is expecting interest rates to increase. All

else equal,

which of the following bonds would be the best investment under this assumption?

A. a Treasury strip with 15 years to maturity

B. a bond with a 10% coupon and 5 years to maturity

C. a bond with a 5% coupon and 10 years to maturity

D. a zero-coupon corporate bond with 12 years to maturity

Answer: B



If Pete is expecting interest rates to increase, the bond with a 10% coupon and 5 years to maturity is the best investment. If interest rates increase, bond prices fall, so he will want to invest in the bond that will have the lowest percentage decrease in price. This will be the bond with the shortest duration, which is the bond described in Choice B. It has the highest coupon and the fewest years to maturity.

Question: 3

Which of the following do not fall under the category of “advertisement,” as defined by FINRA?

I. scripts used in telemarketing the products of the member firm

II. a website maintained by the member firm

III. research reports that the member firm distributes to both its existing clients and its prospective clients

IV. sales material that a member firm distributes only to its institutional clients


I only


IV only


I, III, and IV only


III and IV only

Answer: C



Only the materials described in Selections I, III, and IV do not fall under the category of “advertisement,” as defined by FINR

A. Scripts (Selection I) and research reports (Selection II) are considered to be “sales literature,” not advertisements. Sales material that is distributed only to

institutional investors (Selection IV) is in a category all by itself.

Question: 4

Which of the following statements regarding a Coverdell Education Savings Plan (ESA) are true?

I. There are income limitations regarding those who may contribute to an ESA.

II. There is a maximum annual aggregate amount that can be contributed to a single beneficiary’s account.

III. Contributions to an ESA are tax deductible.


The monies must be used prior to the beneficiary’s 30th birthday for education-related expenses in order to avoid paying both taxes and a penalty.


I and II only


I and III only


I, II, and IV only


I, II, III, and IV

Answer: C



Only Statements I, II, and IV regarding an ESA are true. The ability to establish one is limited to those with an adjusted gross income specified by government guidelines, and there is a maximum annual aggregate amount that can be contributed to a single beneficiary’s account regardless of how many contributors there are to that account. If the monies are not used for education-related expenses prior to the beneficiary’s 30th birthday, there is a mandatory distribution requirement, at which point the distribution will be taxed as ordinary income and a 10% penalty will be assessed.

Question: 5

In mid-September, the stock of, Inc. (AMZN) is selling for $147.A January call option on the stock is selling for $6.10 and has a strike price of $160. This call option is:

A. at the money.

B. in the money.

C. out of the money.

D. overpriced. No one should pay $6.10 for the right to buy a share of stock for $160 when its current market price is only $147.

Answer: C



If is selling for $147 and the strike price on the option is $160, the call option is said to be out of the money since, even if an investor were given the option free, he would not benefit from exercising it at this time. If he did so, he would be paying $160 for a stock that is selling for only $147 on the open market. Even so, the option is not necessarily overpriced at $6.10 because the option has what is known as “time value” on it. The stock of has several months during which it could rise well above the $160 strike price on the option.

Question: 6

Mr. Cashout recently sold some mutual fund shares that he owned. The sale resulted in longterm capital gain income of $6,000. He also sold some shares of a stock he had purchased during the year and realized a short-term capital gain on the sale of $2,000. The sale of another individual stock resulted in a short-term capital loss of $3,500. Mr. Cashout also had some bonds that he had bought at a premium mature, resulting in a long-term capital loss of $500. What is Mr. Cashout’s net capital gain or loss from these transactions?

A. a net long-term capital gain of $4,500

B. a net long-term capital gain of $4,000

C. a net short-term capital loss of $4,000

D. a net long-term capital gain of $8,000

Answer: B



If Mr. Cashout sold mutual fund shares for a long-term capital gain of $6,000, had bonds that matured that resulted in a short-term capital loss of $500, and realized a short-term capital gain of $2,000 and a short-term capital loss of $3,500 on the sale of shares of individual stocks that he owned, he has a net long-term capital gain of $4,000. The long-term gains and losses are netted first: $6,000 – $500 = $ 5500 long-term gain. Then the short-term gains and losses are netted: $2,000 – $3,500 = -$1,500. The short-term capital loss can be used to offset part of the long-term capital gain, resulting in a ($5500 $ 1,500 =) $4,000 long-term capital gain.

Question: 7

Your nephew has asked you to help him formulate a financial plan for his family. Scott is 27 years old and has been employed as an associate with a law firm for two years. Sarah, his wife, is 26 years old and works in the human resources department of a large corporation. The couple is childless now, but they plan to begin a family in a few years. Together, they have accumulated $10,000 in a savings account and recently inherited $40,000 cash. They expect to be able to start saving at least $5,000 annually since their incomes more than meet their current needs. They each have employer-provided health insurance and retirement plans. Both have excellent upward mobility potential in their careers. They currently pay taxes at the marginal rate of 15%. Scott tells you that although they regularly read some of the more popular financial investment magazines, neither feels particularly knowledgeable about the world of investments. Based on this information, which of the following statements is true?

A. A greater than average percentage of their money should be invested in money market mutual funds to meet their needs for liquidity.

B. A greater than average percentage of their money should be invested in municipal bonds to minimize their currently high tax bill.

C. Although some money should be allocated to bond funds for diversification purposes, bond funds should be underweighted in favor of stock funds.

D. Purchasing power risk is not an issue in their situation.

Answer: C



Given that Scott and Sarah already have a nice nest egg started at their relatively young ages and are expecting to be able to contribute more to it, with no obvious need for current income, some of their money should be allocated to bond funds for diversification purposes, but bond funds should be underweighted in favor of stock funds. Purchasing power risk is an issue for them, and bond funds do not provide the inflation hedge that stock funds do. At the current time, municipal bond funds should not be selected since they pay taxes at a low marginal tax rate. This allocation may need to be changed down the road a bit as their tax rate (and other circumstances) change. Only a minimal amount of money should be allocated to a money market fund since the couple has no need for current income, and money market funds offer low returns.

About the Author: Test Information:Total Questions 325Test Number: SERIES6Vendor Name: FINRACert Name: FINRA CertificationTest Name: Investment Company and Variable Contracts Products Representative Examination (IR)Official Site:

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Should You Own A Home Health Care Franchise? Some Advice From A Home Health Care Franchises Expert

By Matthew Franchise Anderson

If the idea of becoming a franchise owner in the burgeoning Home Health Care (HHC) industry is beckoning to you, there are some major questions you will want to consider. First, take an honest look at your own attributes. Secondly, assess whether franchising is the best option for you. And lastly, if it is, take time determining what franchise you will choose.

To begin with, measure your own temperament and personality against the business philosophy of particular franchise you are considering, and the HHC industry overall.

‘This is a life-changing decision, and for some, it’s not the right fit,’ says Eric Little, Senior Vice President of Franchise Development for Right At Home Healthcare Providers. ‘It has to be right on both ends of the equation.’ Scrupulous franchise managers screen carefully for the attributes they consider vital to a successful franchise owner. Mr. Little says Right At Home works hard to make sure the expectations of potential franchisees are in line with the reality of the challenges and rewards they will encounter, especially in the first few years. They also require prospective owners to interview a minimum of 3 Right At Home franchise owners, usually more, so they can talk to both new and seasoned business owners.

‘It’s important to figure out your tolerance for risk and how committed you are,’ he says. Since the first year will be all business building, you need to be comfortable with the up and down income stream during the startup period.

Although owning your own franchise can be financially rewarding, most Right At Home franchise owners don’t come to it primarily for the money. Many want more control and flexibility in their work lives, but in addition, ‘we naturally attract those who care about others,’ says Mr. Little, and often those people have personal experience as caregivers. Little says that the average Right At Home franchise owner is between 40 and 50 years old, has peaked in an earlier career and/or is not fulfilled there, and is entering the next phase of life with a desire to give something back to his/her community.

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After a long search, and after investigating ten to fifteen other Home Health Care franchises in New Jersey, Brian Maroney chose Right At Home. He fits the profile above – in fact, he had owned another franchise previously, unrelated to health care, and says he ‘Swore I’d never do franchises again.’ But as the father of a young family, he says, ‘I wanted to make a difference, not just make money,’ and so he began looking into home health care. After attending Right At Home’s Discovery Days with his wife, Mr. Maroney says they knew they had found the right partnership. ‘They had a really solid plan. Everything they told me has come true, and right from the beginning, they’ve been there.’

Why choose to own a franchise instead of working for a corporation, or starting your own HHC business from scratch? Owning a HHC franchise may be right for you if:

You want to work for yourself, are motivated and community-minded.

You are relationship-oriented. ‘If you’d rather relate to someone over the phone or through your computer, this business is not for you,’ says Eric Little. Brian Maroney, now in his fifth month as a Right At Home franchise owner, describes his average day as ‘getting out and building relationships.’

You can be comfortable following a proven program. Following a franchise’s time-tested business plan can keep you from re-inventing the wheel or making costly mistakes. But when you run a franchise, your decisions affect other branches as well as your own. You need a balance between an entrepreneurial spirit and the willingness to follow guidance to the letter. So, if you want to minimize risk and go where you can see that others have been successful, franchising may be for you. But if having to do things the same way as every other franchise makes you feel like you’re in a cage, then going your own route might be a better choice.

But even for those with experience in the business, navigating the ever-changing tides of regulation can be daunting. Eric Little says the future trend in Home Healthcare is toward greater and greater regulation at both state and Federal levels. Right At Home has a department devoted to staying abreast of compliance issues and communicating with national and local regulators. Without that kind of knowledge behind him, ‘I would have been a fish out of water,’ says Mr. Maroney.

What sets a good franchise apart from its competitors?

Proven track record – A company like Right At Home, founded in 1995 by Allen Hager, fine-tuned its business and didn’t start its franchises till 2000. It now manages 155 offices in 41 states.

Look at what kind of training they offer. A two-week intensive training period is the minimum at any Right At Home franchise, plus there are on-going learning opportunities.

Do they have a training staff and ongoing support? Solid companies like Right At Home offer multi-tiered support structures ranging from financial to operational planning teams, regional meetings once a year, and an annual conference.

How much access do you have to the corporate office? According to Mr. Maroney, communication with Right At Home headquarters is transparent and accessible: ‘I could get anyone from an assistant to the founder himself, and they call right back.’

Brian Maroney says the future in Home Health Care franchising is bright for those who have a true vocation. ‘It’s a real need that will get bigger – so many people need the help that it’s almost as though home health care businesses are not even competing, they’re just all in it together, trying to meet the need.’

About the Author: Matthew Anderson is a franchise article author and advertising manager for

Care Franchises

on te UK’s largest franchise directory


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Avoiding Reverse Mortgage Scams

By Charles Kirkendall

Reverse mortgages are gaining in popularity as more senior’s start looking for ways to supplement their retirement incomes. And as the interest in reverse mortgages increase, so are the cases of reverse mortgage fraud and scams. Many seniors are finding that they have lost thousands dollars of their hard earned equity to these reverse mortgages scams. Since reverse mortgages typically involve our largest asset (your home), this type of fraud can have a serious negative impact on your retirement. The following reverse mortgage fraud information will help you avoid becoming a victim of a reverse mortgage scam.

Reverse Mortgage Scams

The are several types of reverse mortgage scams that can end up costing you thousands and even tens of thousands of dollars in equity in your home if you become a victim.

Charging for free information on reverse mortgages

Several estate planning companies have been charging thousands of dollars for information provided free from HUD. Typically these companies charge for this information as part of an estate planning program. Seniors that sign up for these programs are unaware that these firms are collecting thousands of dollars by charging a fee of 6 to 10 percent of the total amount borrowed. These fees costs the victims $6,000 to $10,000 on a $100,000 reverse mortgage. HUD has recently issued a directive to lenders that issued reverse mortgages insured by the Federal Housing Administration (FHA) to stop doing business with these companies.

Pushing reverse mortgages as a way to pay for purchases

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Some companies that sell large ticket items or services, like annuities or insurance products, may try to suggest using a reverse mortgage as a way fund these purchases. When the additional cost of the reverse mortgage is factored into the purchase, it ends up costing the homeowner much more than the benefit provided by the product or service.

Unethical reverse mortgage terms

Some lenders slip in excessive fees and terms into their contracts. These terms can have a serious effect a Seniors equity. In some cases, lenders have used shared equity or shared appreciation terms, which gives the lender the right to collect a portion of the appreciation when the home is sold or refinanced. The cost of these type provisions can run into the tens of thousands as the home appreciates. These rising cost provisions eat up equity without providing any additional benefit to the homeowner.

Protecting yourself from reverse mortgage scams

If you are looking into reverse mortgages, there are several things that you can do to protect yourself from falling victim to these types of scams.

1. Speak with a HUD approved reverse mortgage counselor. The counselor will help you understand reverse mortgages and help you evaluate your situation.

2. Obtain several offers from different reverse mortgage lenders in order to compare different options. The rule of thumb is to get at least three

separate offers so that you have a good comparison of the terms offered.

3. Make sure you understand all the terms and conditions within the reverse mortgage contracts. Your reverse mortgage counselor can guide you through

the contracts.

4. You generally have three business days after signing the loan document to cancel it for any reason.

If you suspect that a company is operating in violation of the law, let your reverse mortgage counselor know and then file a complaint with your State Attorney General’s office or banking regulatory agency and the Federal Trade Commission (FTC) at

About the Author: Resource Box: Charles Kirkendall writes on a variety of senior financial issues. For more information visit

reverse mortgages

or the

reverse mortgage blog



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