Master Finra Series-6 Exam with Reliable Practice Questions
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Your client is trying to choose between a variable annuity and a fixed annuity. You can tell him that:
i. the fixed annuity will make guaranteed monthly payments, but has more purchasing power risk than a variable annuity.
ii. he can expect higher monthly payments from his fixed annuity during a bear market than he would get from a variable annuity.
iii. the earnings on both variable and fixed annuities grow tax-deferred.
Correct : C
Only Statements I and III are accurate. When your client is trying to choose between a variable annuity and a fixed annuity, you can tell him that the fixed annuity will make guaranteed monthly payments, but has more purchasing power risk than a variable annuity, and that the earnings on both variable and fixed annuities grow tax-deferred. You cannot tell him that he can expect higher monthly payments from his fixed annuity during a bear market than he would get from a variable annuity. This will depend on various factors, such as the amount of the fixed annuity payment, the assumed interest rate, and the actual returns earned on the variable annuity investment portfolio.
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One difference between investing in a variable annuity and in a mutual fund is that:
Correct : B
A difference between investing in a variable annuity and in a mutual fund is that the premiums invested in a variable annuity grow tax-deferred. The variable annuity contract does not guarantee a minimum rate of return on your investment, and the fees associated with a variable annuity contract are significantly higher than those associated with an investment in a mutual fund. Owners of variable annuity contracts have voting rights, just like mutual fund investors.
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Mr. R. Retired recently turned 61 and has decided to annuitize a variable annuity contract in which he had been investing. When he does so:
Correct : B
When Mr. R. Retired decides to annuitize his variable annuity contract at the age of 61, his accumulation units will be converted into a fixed number of annuity units. The value of these units will depend on the actual returns earned by the account and the actuarially-determined assumed interest rate; it is not fixed. Mr. Retired will not be subject to a 10% penalty since he is over 59 years old.
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Your 53-year-old client, Ms. Antsy, just inherited $80,000 from her aunt and has decided to retire immediately. She wants to invest in something that will allow her to begin making withdrawals immediately, and she wants to be certain that she will continue to receive payments at least until she turns 62 and begins drawing social security. You should recommend Ms. Antsy invest in:
Correct : D
If Ms. Antsy is 53 years old and wants to invest in something that will allow her to begin making immediate withdraws and continue to make withdrawals until she turns 62 , you should recommend none of the choices provided. They are all annuities, and Ms. Antsy will be subject to a 10% penalty for withdrawing any amount prior to turning 59 .
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Chandler is a registered representative with GetErDone Broker-Dealers, a FINRA member-firm. His friend, Phoebe, is employed by FlyByNight Investments, which is not a member of FINRA, or any other securities association for that matter. Given these facts:
Correct : D
Given that Chandler is a representative with a member firm while Phoebe's employer is not a member of any known securities association, he is required to charge Phoebe the same commission that he charges any member of the general public when executing a transaction for her and is prohibited from splitting commissions with her. He is not prohibited from engaging in any financial transactions with her; he simply must do so ''for the same commissions or fees, and on the same terms and conditions as are. . .accorded to the general public,'' according to FINRA.
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