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Series 26 Practice Exam 4

Series 26 Practice Exams

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Series 26 Practice Exam 4

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Question 1 of 10

1. Question

Under SEC Rules, all registered broker-dealers must prepare a trial balance at least:

Monthly
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Quarterly
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Daily
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At the end of each business week
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Question 2 of 10

2. Question

A fund prospectus calls for a 4% sales charge for purchases up to $25,000 with a reduction to 2 ½ % for purchases of $ 25,000 to $50,000, at which the sales charge is further reduced to 1 ½% above $ 50,000. A customer of your firm deposits $ 45,000 in their account with instructions to buy the fund. Which of the below is your most likely response as Branch Manager?

“Why is there no Letter of Intent for this transaction?”
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You congratulate your RR for exceeding their monthly quote.
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You ask the RR why they sold Class A shares to this customer rather than other classes of fund shares.
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This may call for a suspicious activity report to be filed (SAR)
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Question 3 of 10

3. Question

A client currently owns the ABC Growth fund shares and tells their RR they want to take advantage of the ‘exchange privilege’ offered by the ABC family of funds. They want to exchange their growth fund for the ABC Balanced fund. If the exchange does not take place until two months later, and the Growth fund shares have declined during this period substantially more than the Balance fund shares have declined, what is the proper procedure?

File a formal complaint against the ABC fund.
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File a lawsuit against the ABC fund family.
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Contact the fund’s transfer agent for an explanation of the delay in processing the exchange.
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Exchanges of this type often take months – there is no remedy unless you have evidence of willful delay.
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Question 4 of 10

4. Question

Under the federal securities laws and other regulations pertaining to fraud and related illegal activities, a person convicted of an insider trading violation may be subject to any of the following with the exception of:

A freeze on that person’s assets
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Incarceration
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A freeze only on that person’s assets derived from the illegal trading activities
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Substantial monetary fine
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Question 5 of 10

5. Question

Under the Investment Company Act of 1940, an affiliate would include each of the following except:

An individual whose only connection to the fund is as a Director
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An individual whose only connection to the fund is as an Officer
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An individual with 1% of the outstanding shares of a fund
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None of these is an exception
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Question 6 of 10

6. Question

FINRA’s Code of Procedure (COP ) is designed to handle which of the following situations?

Disputes over day to day practices among members
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How a complaint by FINRA against a member firm shall be adjudicated
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Enforcement of the FINRA uniform practice code
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Mediation of disputes between customers and member firms
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Question 7 of 10

7. Question

A member firm which is the subject of a customer complaint may opt to settle with the customer. However, FINRA will not permit the settlement offer to become official

If the member firm has obtained an agreement from the customer to not object to the firm’s request for an expungement at a time in the future.
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If FINRA is not financially part of the settlement.
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If the member firm has not signed an AWC form.
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All of the above
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Question 8 of 10

8. Question

The right of accumulation offered by most open-end investment companies allows an investor to make investments over time which are given a sales charge discount (breakpoint) at the point at which:

Only new money invested has reached or exceeded the breakpoint.
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All new money plus reinvested dividends have reached or exceeded the breakpoint.
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All new money plus reinvested dividends and capital gains distributions have reached or exceeded the breakpoint.
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All new money plus reinvested dividends and capital gains distributions plus returns of capital have reached or exceeded the breakpoint.
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Question 9 of 10

9. Question

The Carbon Footprint Fund, a diversified open-end fund, has a basic sales charge of 5.25% as stated in its prospectus. The fund offers a breakpoint at $ 15,000 and again at $ 25,000 of 4.25% and 3.75% respectively. The latest reported POP was $ 22.78. If the client liquidated $ 2,500 worth of fund shares based upon that latest report figure, how many shares would have been liquidated?

109.7454
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115.8480
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103.9933
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Not enough data to compute
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Question 10 of 10

10. Question

The Affluent Fund has an offering price of $ 13.55 while its Net Asset Value is $ 12.20. The Phoenix Fund has an offering price of $ 9.85 while its Net Asset Value is $ 9.42. Which of these funds is an open-end investment company?

Neither
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Both
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Affluent
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Phoenix
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