Series 6 – Investment Company and Variable Contract Products Representation Qualification Exam Customer Accounts & Suitability 1 — Questions and Answers
Question 1: When opening a new customer account, which document is the representative primarily responsible for completing?
- The prospectus acknowledgment form
- The new account form (customer profile) (Correct answer)
- The trade confirmation slip
- The 1099 tax form
Correct answer: The new account form (customer profile)
The new account form captures essential customer information including identity, financial status, investment objectives, and risk tolerance required by FINRA rules.
Question 2: In a Joint Tenants with Right of Survivorship (JTWROS) account, what happens to the account assets when one owner dies?
- Assets are split equally among the surviving owners and the deceased's estate
- Assets pass entirely to the surviving joint owner(s) without going through probate (Correct answer)
- Assets are frozen until the estate is settled
- Assets revert to the broker-dealer
Correct answer: Assets pass entirely to the surviving joint owner(s) without going through probate
In a JTWROS account, the right of survivorship means the deceased owner's share automatically transfers to the surviving owner(s), bypassing probate.
Question 3: Which type of joint account allows each owner to hold unequal shares that can be passed to heirs through their estate?
- Joint Tenants with Right of Survivorship (JTWROS)
- Tenants in Common (TIC) (Correct answer)
- Community Property account
- Partnership account
Correct answer: Tenants in Common (TIC)
Tenants in Common allows owners to hold specified, unequal shares, and each owner's share is passed to their designated heirs rather than automatically to the surviving co-owner.
Question 4: A Uniform Gifts to Minors Act (UGMA) account is best described as:
- A retirement account for minors that converts at age 59½
- A custodial account where an adult manages assets for a minor until the minor reaches majority (Correct answer)
- A trust account requiring court supervision
- A joint account between a parent and child with equal ownership rights
Correct answer: A custodial account where an adult manages assets for a minor until the minor reaches majority
An UGMA account is a custodial account where a custodian manages the assets on behalf of the minor, and the assets irrevocably belong to the minor upon reaching the age of majority.
Question 5: When a corporation opens a brokerage account, which document authorizes specific individuals to trade on behalf of the corporation?
- Articles of Incorporation
- Corporate Resolution (Correct answer)
- Certificate of Good Standing
- Annual Report
Correct answer: Corporate Resolution
A Corporate Resolution is a formal document passed by the board of directors that identifies who is authorized to act on the corporation's behalf in financial matters.
Question 6: Under FINRA rules, how frequently must a broker-dealer send account statements to customers with activity or positions?
- Weekly
- Monthly
- Quarterly (Correct answer)
- Annually
Correct answer: Quarterly
FINRA rules require that customers with positions or activity in their accounts receive account statements at least quarterly, though monthly statements are sent when there is activity.
Question 7: Which of the following is NOT required information on a new account form for a Series 6 registered representative?
- Customer's investment objectives
- Customer's tax identification number
- Customer's employer's annual revenue (Correct answer)
- Customer's financial situation and needs
Correct answer: Customer's employer's annual revenue
The employer's annual revenue is not required on a new account form; the form requires the customer's own financial situation, investment objectives, tax ID, and other personal financial information.
Series 6 – Investment Company and Variable Contract Products Representation Qualification Exam Customer Accounts & Suitability 1
When opening a new customer account, which document is the representative primarily responsible for completing?