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

Question 1

Under the Investment Company Act of 1940, a mutual fund is classified as which type of investment company?

Accepted Answer

Open-end management company

Answer

Mutual funds are classified as open-end management companies because they continuously issue and redeem shares at NAV.

Question 2

A mutual fund's net asset value (NAV) per share is calculated by:

Accepted Answer

Dividing (total assets minus total liabilities) by total shares outstanding

Answer

NAV equals total fund assets minus liabilities, divided by the number of shares outstanding.

Question 3

Which type of mutual fund sales charge is deducted at the time of purchase?

Accepted Answer

Front-end load

Answer

A front-end load is a sales charge collected at the time of purchase, reducing the amount invested.

Question 4

What is the maximum sales charge permitted on a mutual fund under FINRA rules?

Accepted Answer

8.5%

Answer

FINRA limits mutual fund sales charges to a maximum of 8.5% of the public offering price.

Question 5

A breakpoint in mutual fund sales is best described as:

Accepted Answer

A reduced sales charge available when purchases reach a certain dollar threshold

Answer

Breakpoints are investment thresholds at which investors qualify for reduced front-end sales charges.

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