Series 6 – Investment Company and Variable Contract Products Representation Qualification Exam Customer Accounts & Suitability 2

Question 1

Under FINRA's suitability rule, a representative must have a reasonable basis to believe a recommended transaction is suitable based on all of the following EXCEPT:

Accepted Answer

The competitor firm's commission rates

Answer

The customer's financial situation

Answer

The customer's investment objectives

Answer

The customer's tax status

Question 2

Under Regulation Best Interest (Reg BI), broker-dealers must act in the best interest of retail customers. This standard is BEST described as:

Accepted Answer

Placing the customer's interests above the firm's own financial interests when making recommendations

Answer

Recommending any product the customer is willing to purchase

Answer

Recommending products only from the firm's preferred product list

Answer

Disclosing all conflicts but still prioritizing profitable products

Question 3

A customer tells their representative they have a low risk tolerance and need income for living expenses. The representative recommends an aggressive growth variable annuity. This recommendation is MOST likely a violation of:

Accepted Answer

The suitability obligation

Answer

Anti-money laundering rules

Answer

The prospectus delivery rule

Answer

The margin account rule

Question 4

Which of the following investment objectives is MOST consistent with a retiree seeking to preserve capital and generate steady income?

Accepted Answer

Income and capital preservation

Answer

Aggressive growth

Answer

Speculation

Answer

Maximum capital appreciation

Question 5

Under FINRA's Customer Identification Program (CIP) requirements, broker-dealers must collect which minimum identifying information from individual customers?

Accepted Answer

Name, date of birth, address, and taxpayer identification number

Answer

Name, Social Security number, employer name, and bank account number

Answer

Name, address, net worth, and annual income

Answer

Name, date of birth, investment objectives, and risk tolerance

Question 6

If a customer's financial situation materially changes after an account is opened, what is the representative's obligation?

Accepted Answer

Update the customer's account information and review whether existing holdings remain suitable

Answer

No action is required until the customer requests a change

Answer

Immediately liquidate all existing positions

Answer

Transfer the account to a different representative

Question 7

A customer who is classified as an 'accredited investor' under SEC rules typically meets which criterion?

Accepted Answer

Annual income of at least $200,000 (or $300,000 joint) or net worth over $1,000,000 excluding primary residence

Answer

Annual income of at least $50,000 or net worth of $200,000

Answer

Any customer with a brokerage account open for more than two years

Answer

Any customer who has passed the Series 7 examination