Series 6 Exam

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History

The Investment Company Products/Variable Contracts Representative Examination (known as the Series 6) was first implemented in 1980.[1] The examination was adopted by the National Association Of Securities Dealers (NASD) in 1980 as part of the process of phasing out the Series 1 exam.[2] The intention was to replace the broadly-written Series 1 exam with a number of smaller, more focused examinations so that securities representatives did not have to study the full gamut of financial products if they only wished to add a subset of financial products to their qualifications.[2]

Administration of the Series 6 has continued under the successor organization of the NASD, the Financial Industry Regulatory Authority (FINRA), since FINRA was organized in 2007.[3]

The Series 6 is periodically updated to ensure it covers the most up-to-date job functions and knowledge required by Investment Company and Variable Contracts Products Representatives. The most recent revision to the examination's content outline was published in 2014. The content outline was revised based on a job analysis study which included surveying practicing representatives.[4] Due to the fact that the financial industry changes rapidly over time and that laws and regulations are continually revised, the pool of questions for the Series 6 exam is also constantly under revision, with new test items being created, assessed, and implemented and old items being revised or removed every year.[4]

Function of the Test

Series 6 Study Guide

The Series 6 is a qualification exam for Investment Company and Variable Contracts Products Representatives, who are a subset of FINRA's Limited Representative category. The examination tests candidates on knowledge, skills, and competencies related to solicitation, purchase, and/or sale of financial products such as redeemable securities, securities of closed-end companies, or variable contracts and insurance premium funding programs.[4][5]

Candidates for the Series 6 examination must be sponsored by and associated with a FINRA member firm. There are no prerequisites for the examination.[4]

FINRA does not appear to publish statistics regarding how many candidates take the Series 6 each year or how many candidates pass the examination.

Test Administration

Series 6 Flashcards

The Series 6 is administered year-round at Pearson VUE and Prometric test centers.[6][7] The fee to take the examination is $95.[8] Candidates must be directly sponsored by a FINRA member firm in order to take the examination; independent candidates cannot take the exam.[4]

The time limit for the 105-question exam is two hours and fifteen minutes. Upon completing the examination, candidates receive both on-screen test results as well as a paper copy of the test results. The score report includes a breakdown of performance by content area to help candidates identify their areas of relative strength and weakness.[4]

Unsuccessful candidates who wish to retake the examination must wait 30 days before retaking the exam. Candidates who fail the exam three or more times must wait 180 days between test administrations. There is no limit to the number of times a candidate may take the Series 6; however, for all retakes, the candidate's firm must re-request the examination, and another examination fee will be charged.[9]

Candidates with disabilities who require special testing accommodations must contact FINRA directly and submit FINRA's Special Accommodations Eligibility Questionnaire and Special Accommodations Verification Request Form.[6]

Test Format

Sections of the Series 6 Test
Job Functions # of Questions
Regulatory fundamentals and business development 22
Evaluates customers' financial information, identifies investment objectives, provides information on investment products, and makes suitable recommendations 47
Opens, maintains, transfers and closes accounts and retains appropriate account records 21
Obtains, verifies, and confirms customer purchase and sale instructions 10
Total 100

Test Environment

The Series 6 exam is computer-based, and allows 135 minutes to complete all 105 questions. Scratch paper and calculators are allowed, but provided by the testinc center, and must be returned at the end of the testing session. Test-takers will receive their score at the end of the test session.

Test Structure

The Series 6 exam contains questions that have to do with four major job functions: Regulatory fundamentals and business development; Evaluating customers' financial information, indentifying investment objectives, providing information on investment products, and making suitable recommendations; Opening, maintaining, transfering, and closing accounts and retaining appropriate account records; and obtaining, verifying, and confirming customer purchases and sale instructions. There are a total of 100 multiple choice questions with an additional five pretest questions that are unscored.[10]

Test Content

  1. Which of the following FINRA rules is associated with continuing education requirements?
    A. FINRA Rule 2266
    B. FINRA Rule 11870
    C. FINRA Rule 1250
    D. FINRA 1122
  2. In a rights offering, all of the following are true EXCEPT:
    A. Shareholders may "exercise" their right by buying new additional shares.
    B. Rights may "expire" if market conditions regarding the stock make buying new additional shares unfavorable to the shareholder.
    C. The right to purchase new shares is at the stock's book value
    D. Shareholders may "sell" their rights to purchase new shares.
  3. All of the following statements are true of options EXCEPT:
    A. The option premium is the payment made by the buyer of an option contract to a seller.
    B. A put option offers its buyer the right to sell a specific security for a specific price and only for a specific period of time.
    C. The seller of an option contract always retains the right to decline proceeding with the transaction to buy or sell.
    D. A call option offers its buyer the right to buy a specific security for a specific price and only for a specific period of time.
  4. For a bond investment, as the price of the bond rises, the yield will:
    A. Fall
    B. Stay constant
    C. Be unknown, depending on other factors
    D. Rise
  5. Which of the following is the only agency with securities that are backed by the full faith and credit of the U.S. government?
    A. FHLMC
    B. GNMA
    C. FNMA
    D. None of the above
  6. All of these can be categorized as government money market instruments EXCEPT:
    A. Federal funds loans
    B. Short-term discount notes
    C. Treasury securities with less than one year left
    D. Treasury bills
  7. Which type of dispute resolution concludes as an agreement, an impasse, or withdrawal from the process?
    A. Simplified arbitration
    B. Panel arbitration
    C. Mediation
    D. None of the above
  8. A representative is required to obtain certain information from a customer upon opening an account for him. Which of the following is the representative required to update on a regular basis?
    A. Customer's net worth
    B. Customer's investment objectives
    C. Customer bank reference
    D. Customer's annual income
  9. Choose which of the following statements is TRUE of retail communications.
    A. All online interactions made by registered members that have any connection to the securities industry cannot be initiated without first getting a principal's approval.
    B. Advertisements are not included in this category of communications.
    C. A registered principal must approve this type of communication before its initial distribution to the public.
    D. This type of communication must be maintained by the registered member for two years.

More free Series 6 practice test questions.

Scoring

The Series 6 consists of 100 scored multiple-choice questions. The content on the Series 6 is distributed as follows:

Distribution of questions on the Series 6[4]
Job Function # of Items
Regulatory fundamentals and business development 22
Evaluates customers' financial information, identifies
investment objectives, provides information on
investment products, and makes suitable
recommendations
47
Opens, maintains, transfers and closes accounts and
retains appropriate account records
21
Obtains, verifies, and confirms customer purchase and
sale instructions
10
Total 100

In addition to the 100 scored questions, every exam contains five unmarked, unscored pretest questions which are being assessed for inclusion on future versions of the Series 6.[4]

Scoring on the Series 6 is very simple: a candidate must answer at least 70 scored questions correctly (70%) to pass the exam. Guessing is not penalized. Although the score report for the Series 6 breaks down candidates' performance on each of the four content areas of the examination, candidates do not need to "pass" every content area to pass the full examination. Poor performance in one content area may be offset by good performance in other content areas to yield a passing score.[4]

Recent Developments

The most recent content outline for the Series 6 exam was implemented in December 2013.[11] Whereas the previous content outline was divided into six content areas divided by topic, the current content outline is divided into four job functions.[12][4]

Answers to Sample Questions

1;C 2;C 3;C 4;A 5;B 6;A 7;C 8;B 9;C

References

  1. ^ FINRA: Implementation Dates of Qualification Examinations January 29 2015
  2. ^ a b NASD - 88-38 SEC Approves New Category of Limited Representative Registration — Corporate Securities Examination (Series 62); Study Outline Available January 29 2015
  3. ^ FINRA - NASD and NYSE Member Regulation Combine to Form the Financial Industry Regulatory Authority - FINRA January 29 2015
  4. ^ a b c d e f g h i j FINRA - Investment Company And Variable Contracts Products Representative Qualification Examination (Series 6) Content Outline January 27 2015
  5. ^ FINRA - NASD Rules - 1022(d)(1) January 29 2015
  6. ^ a b FINRA - Registration, Testing and Qualifications January 29 2015
  7. ^ Prometric - FINRA Policies and Procedures January 29 2015
  8. ^ FINRA - FINRA Administered Qualification Examinations January 29 2015
  9. ^ FINRA - Qualifications Frequently Asked Questions (FAQ) – Examinations January 29 2015
  10. ^ Exam Content 2 March 2015
  11. ^ FINRA - Regulatory Notice 13-36 January 29 2015
  12. ^ Investopedia - Tips For Passing The Series 6 Exam January 29 2015