Series 6 Example Questions

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Sample Questions


Kurt Kendell is a long-term, 41-year-old client with $100,000 in income who routinely maximizes his 401(k) contributions. He wants to add to his retirement nest egg and wants a recommendation of some growth investments. The client believes he will likely have an additional $5,000 per year to invest. What’s the BEST recommendation for this client?

A ) Buy a US T-bill fund
B ) Consider a variable annuity
C ) Establish a traditional IRA
D ) Establish a Roth IRA

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Answer: The Best Answer is D

Rationale: The client needs equity exposure to target growth. The Roth IRA grows tax-deferred, and qualifying distributions would be tax-free. Although investments could be similar to those held in a Roth IRA, both a traditional IRA and a variable annuity would create tax liabilities upon distribution. Plus, the annuity would be more expensive. Kurt’s investment window is long, and he wants growth, so the T-bill fund is a totally unsuitable choice.


An investor believes that interest rates will be flat or falling into the future; and that prices may deflate. The MOST appropriate investment is a:

A ) Long-term US government bond fund
B ) Short-term corporate bond fund
C ) Sector fund focused on real estate companies
D ) Large capitalization stock fund

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Answer: The Best Answer is A

Rationale: In periods of deflation, interest rates fall. A fixed income security’s price will go up as interest rates fall. Long-duration securities, such as T-bonds, will rise in value dramatically. Also, since prices are deflating, the fixed interest payments received will buy more and more over time. In times of deflation, real estate and gold prices fall. Stock prices tend to fall as well, since companies are forced to cut their prices, which will impact profitability.


What portfolio construction is MOST appropriate for a retired schoolteacher who is age 60?

A ) 100% common stock funds since the client could easily live for 20 more years and needs to grow her nest egg B ) 40% common stock funds/60% bond funds
C ) 60% common stock funds/40% bond funds
D ) 100% bond funds since the client needs to maximize income

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Answer: The Best Answer is B

Rationale: As an investor gets older, portfolio composition should shift to safer assets that generate reliable income. The general rule is to take 100 minus the investor’s age to identify the appropriate investment portion for stocks. Since this investor is age 60, 40% of the portfolio should be held in stocks, and the remaining 60% should be held in bonds. Note that a 100% bond holding is not appropriate because people are living much longer, and they need the extra return that is provided by stocks that can grow in value, in addition to the somewhat lower fixed return provided by bonds.

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