Investment Company and Variable Contracts Products Representative Exam (Series 6) Flashcards
Browse all 12 cards
How many scored questions are on the Series 6 exam, and what is the time limit?
50 scored questions, with a 90-minute (1 hour 30 minutes) time limit.
What score do you need to pass the Series 6, and what does the exam cost?
You must score 70% to pass, and the exam fee is $100.
What products can a Series 6 representative sell?
Mutual funds, closed-end fund shares at the IPO, unit investment trusts (UITs), and variable contracts (variable annuities and variable life insurance).
What is an open-end investment company?
A mutual fund that continuously issues and redeems shares at net asset value (NAV); shares are not traded on the secondary market.
How is a mutual fund's Net Asset Value (NAV) per share calculated?
(Total assets − total liabilities) ÷ number of shares outstanding, computed at least once per business day using forward pricing.
What is forward pricing?
Mutual fund orders are executed at the next NAV calculated after the order is received, not the last posted price.
What is a breakpoint in a mutual fund?
A discounted sales charge given for investing larger dollar amounts; a 'breakpoint sale' (steering a client just below a breakpoint) is a prohibited practice.
Class A vs. Class B vs. Class C mutual fund shares?
Class A: front-end sales load. Class B: back-end load (contingent deferred sales charge) that declines over time. Class C: level load with a small ongoing 12b-1 fee, best for short horizons.
What is a 12b-1 fee?
An annual fee deducted from fund assets to cover distribution and marketing costs; a fund charging over 0.25% cannot call itself 'no-load.'
Accumulation units vs. annuity units in a variable annuity?
During the pay-in (accumulation) phase, contributions buy accumulation units. At annuitization these convert to a fixed number of annuity units, whose value fluctuates with the separate account to determine each payment.
What is the separate account in a variable contract?
The investment account, kept separate from the insurer's general account, where variable annuity/variable life premiums are invested; it bears the investment risk and is regulated as a security.
What is the AIR (Assumed Interest Rate) in a variable annuity?
A benchmark used to calculate variable annuity payments; if actual separate-account performance exceeds the AIR the next payment rises, if it falls short the payment declines.