Series 6 – Investment Company and Variable Contract Products Representation Qualification Exam Series 6 – Investment Company and Variable Contract Products Representation Qualification Exam Mutual Funds & Investment Companies 2

Question 1

Which of the following is NOT a characteristic of a closed-end investment company?

Accepted Answer

Investors redeem shares directly with the fund at NAV

Answer

Closed-end funds do not redeem shares directly; investors must sell their shares on a stock exchange.

Question 2

A letter of intent (LOI) in mutual fund investing allows a customer to:

Accepted Answer

Receive a breakpoint discount based on a commitment to invest a specified amount over 13 months

Answer

An LOI allows investors to qualify for reduced sales charges by committing to reach a breakpoint within a 13-month period.

Question 3

Which fund share class typically has no front-end load but charges a contingent deferred sales charge (CDSC) if redeemed early?

Accepted Answer

Class B shares

Answer

Class B shares have no upfront load but impose a CDSC that declines over time and eventually disappears.

Question 4

Rights of accumulation in mutual funds allow investors to:

Accepted Answer

Combine the current purchase value with existing fund holdings to qualify for a breakpoint

Answer

Rights of accumulation let investors use the total value of their existing fund holdings plus the new purchase to qualify for breakpoint discounts.

Question 5

A mutual fund that invests primarily in long-term U.S. Treasury securities and high-grade corporate bonds would be classified as a:

Accepted Answer

Bond fund

Answer

A fund focusing on long-term Treasury and high-grade corporate bonds is a bond (fixed income) fund.

Series 6 – Investment Company and Variable Contract Products Representation Qualification Exam Practice Test