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

Suitability is based on the customer's own profile — financial situation, objectives, risk tolerance, and tax status — not on competitor pricing or external market factors.

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

Reg BI requires broker-dealers to act in the retail customer's best interest at the time of recommendation, not favoring the firm's own financial interests.

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

Recommending an aggressive growth product to a customer who has stated low risk tolerance and income needs directly violates the suitability obligation.

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

Income and capital preservation aligns with a retiree's need for steady cash flow and protection against loss of principal.

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

CIP requires collecting name, date of birth, address, and a taxpayer identification number (such as SSN) from individual customers to verify identity.

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

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

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