Try our free Series 26 practice exam. The formal name of the Series 26 is the Investment Company and Variable Contracts Products Principal Exam. It is a licensing exam for professionals who wish to supervise employees who sell mutual funds, variable annuities, and variable life insurance. The exam tests candidates’ knowledge of regulatory requirements, sales practices, and financial instruments.
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According to FINRA rules regarding associated persons, what would be the registration status of a registered representative who has been called up for active duty service in the US Military?
Special inactive status
Designated military exclusion
U-5 Military Termination
In instances in which a customer will be engaging in a viatical settlement of their insurance policy, with which policy will FINRA have a compliance concern?
Ordinary life policy
Variable annuity policy
Variable Life policy
Term insurance with the viatical ‘rider’
Under updated FINRA rules pertaining to communications with the public, these communications fall into which of the following categories?
I. Retail communication
II. Institutional communication
III. 3rd party material supplied to the member firm
All of these
I and II only
III and IV only
I, II and IV only
With regard to prospectuses to be furnished to public customers purchasing open-end investment companies, which of the following descriptions of the rules are most accurate?
Furnish a summary prospectus
Furnish a summary prospectus, and furnish the SAI if requested
Furnish the omitting prospectus
Furnish a prospectus upon the request of the customer
Your member firm may become subject to FINRA's Taping Rule under which of the following circumstances?
When your firm has filed a quarterly complaint report containing more than 3 allegations of unauthorized trading by registered representatives in your office.
When your firm has 20% of more of your sales agents having been hired from disciplined firms.
When your firm is in its first year of business
None of the above
FINRA rules require that a member firm must, at a minimum, retain its complaint file for how long?
Lifetime of the brokerage firm
Your firm is engaged in offering retirement plan services to the public. You often recommend open-end investment company shares to your clientele as the most suitable way to begin investing in securities. Which of the following plans are considered non-qualified plans?
Individual Retirement Arrangements
Deferred compensation plans
When more than one individual wishes to open an account at a B/D, and the owners of the account shall have their share of the account pass to their estate in the event of death, the proper account type they’ll be directed to open is the:
Joint Account with rights of survivorship
Joint Account with Individual designation upon death
Tenancy in Common
Tenancy with rights of survivorship
A registered rep is contacted by a client who instructs the RR to purchase $5,000 worth of the best performing growth fund which your firm makes available for sale. The rep can write up the order ticket for this client:
Only if the client puts the order in writing
Only if the order is approved by the Branch Manager
Only if the client has a discretionary account
Only if the RR explains breakpoints to this client before placing the order
None of the following qualify as securities as defined by the Securities & Exchange Commission with the exception of:
All of the above plans are qualified
Section 19 of the Investment Company Act of 1940 specifies that the net capital gains from portfolio transactions shall be distributed to a mutual fund’s shareholders:
At least quarterly
At least semi-annually
At the same frequency as mutual fund dividends are paid
The Securities & Exchange Act of 1934 contains a number of requirements for the contents of customer confirmations. Among them is the requirement to disclose:
Capacity of the B/D
Any conflicts of interest between the B/D and the security being sold
The rationale for recommending that particular security to the customer
All of these
One of your long-time reps has informed you that they have someone who wants to transfer their account to your firm. FINRA rules set forth the requirements as follows:
1 day for validation of the account and then 3 days to effect the transfer
1 day for validation of the account and then 5 days to effect the transfer
3 days for validation of the account and then 1 day to effect the transfer
5 days for validation of the account and then 1 day to effect the transfer
According to the SEA of 1934, Regulation T, none of the below is eligible to be purchased on margin except:
Mutual fund shares
Regulation D private placement shares
Closed-end fund shares
None of these may be purchased on margin
One of your registered reps has had a written customer complaint filed against them. The complaint alleges the rep made an unsuitable recommendation of some $50,000 in the client’s account. How should the incident be handled, according to FINRA’s Code of Arbitration?
It will be handled through non-binding mediation
It will be handled by simplified arbitration with one arbitrator
It will be handled by an arbitration hearing with 3 arbitrators
It will be handled by a court of competent jurisdiction
By signing Form U-4, each of your newly-hired agents have agreed to which of the following?
To submit all complaints to FINRA
To agree to consent to service of process
To have disclosed all prior employers
To have disclosed all prior residences
When one of your reps appears to have numerous customers purchasing mutual fund shares on the day prior to the ex-date, you are likely looking at which of the following violations of FINRA regulations?
Short-term trading of mutual funds
As an Investment Company/Variable Contract member firm engaging in subscription selling exclusively, SEC rules set a minimum net capital for the firm of:
At the time of new account opening, your firm’s AML registered principal will ordinarily be the individual who will check the client’s identity against which of the following?
The Department of Justice list of known criminals
The FBI list of known financial criminals
The OFAC list
The FINRA list of known financial criminals
One of your reps has a mutual fund client who wishes to invest $15,000 into one of the funds you are recommending. The one they want to buy has a $25,000 breakpoint. Your rep writes the order ticket for the $15,000; however, when you get the executed ticket for managerial review, you would be looking to make sure your rep isn’t engaging in:
A breakpoint sale
A below breakpoint sale
Mutual fund short-term trading
Excessively sized transactions