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FINRA Investment Company and Variable Contracts Products Representative Examination (IR) Sample Questions:
1. The stock of Nutrisystem, Inc. (NTRI) is selling for $17.70 when Miss Piggy places a limit order to buy the
stock at $17.65. During the period the order is open, NTRI falls to $17.60 and then increases to
$ 17.67.Which of the following statements is most likely to be true in this scenario?
A) Miss Piggy bought the stock for no more than $17.65 a share.
B) Miss Piggy bought the stock for $17.66 a share.
C) Miss Piggy bought the stock for no more than $17.60 a share.
D) Miss Piggy bought NTRI at $17.67 a share.
2. When a mutual fund is valuing your pre-existing holdings to see if you qualify for a reduced sales charge
under its rights of accumulation program, it must use:
A) none of the above.
B) the price you paid when you purchased the shares originally.
C) the current NAV of your holdings.
D) the current public offering price (POP) of your holdings.
3. Mr. Walt Street has observed that a Treasury note maturing in November of 2019 and paying a 3.375%
coupon has a bid price of 105:25 and an ask price of 105:26.In this instance, what is the dealers' spread
for every $1,000 of par value?
A) $0.03375
B) $0.10000
C) $0.31250
D) $0.03125
4. Tex Payor bought shares of the Stocks4U Mutual Fund on February 26th.During the year, the fund sold
some of the stocks in which it was invested, generating long-term capital gain income for the fund. Tex
received a distribution of some of these gains at the end of the year, based on his proportionate
ownership of the fund. Which of the following statements is true regarding the tax consequences of this
distribution to Tex?
A) There are no tax consequences to Tex. Mutual fund investors are taxed only on dividend distributions
and on capital gains realized when they sell shares of a fund that they own. Capital gains earned by the
fund when securities are bought and sold by the fund's manager are taxed to the fund.
B) Tex will have to pay tax on the distribution at the tax rate for long-term capital gains, which are currently
taxed preferentially.
C) Tex will have to pay tax on the distribution unless he opts to reinvest the distribution in the fund, in
which case the income will not be taxable.
D) Tex will have to pay tax on the distribution at his marginal tax rate. Since Tex had not been invested in
the fund for over 12 months when the distribution occurred, it is considered to be short-term capital gain
income for him, which is taxed as ordinary income.
5. Mr. Cashout recently sold some mutual fund shares that he owned. The sale resulted in long-term capital
gain income of $6,000. He also sold some shares of a stock he had purchased during the year and
realized a short-term capital gain on the sale of $2,000. The sale of another individual stock resulted in a
short-term capital loss of $3,500. Mr. Cashout also had some bonds that he had bought at a premium
mature, resulting in a long-term capital loss of $500. What is Mr. Cashout's net capital gain or loss from
these transactions?
A) a net long-term capital gain of $4,500
B) a net long-term capital gain of $4,000
C) a net short-term capital loss of $4,000
D) a net long-term capital gain of $8,000
Solutions:
Question # 1 Answer: A | Question # 2 Answer: A | Question # 3 Answer: C | Question # 4 Answer: B | Question # 5 Answer: B |