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FINRA Investment Company and Variable Contracts Products Representative Examination (IR) Sample Questions:
1. Which of the following statements about 1035 exchanges are true?
I. A 1035 exchange refers to the exchange of all of the shares owned in one mutual fund for shares of
another mutual fund in the same family of funds.
II. A 1035 exchange refers to the exchange of one variable annuity contract for another variable annuity
contract without the need to pay tax on any of the income or capital appreciation associated with the
original contract.
III. A 1035 exchange refers to the exchange of a variable annuity contract for a whole life insurance policy
offered by the same company with no tax consequences to the transaction.
A) I only
B) II only
C) I and II only
D) I, II, and III
2. SuperDOT is:
A) both A and C.
B) an electronic communication network (ECN).
C) an electronic system used to place orders on the NYSE.
D) an electronic system whereby trades are executed on NASDAQ.
3. A preemptive right:
A) entitles its owner to buy shares of stock at a specified price within a specified time period in order to
maintain his proportionate ownership in the firm.
B) gives a bond owner the option to sell the bond back to the issuer at a pre-specified price.
C) is a feature on some preferred stock issues that allows the preferred shareholders to exchange their
preferred shares for shares of the common stock of the firm.
D) is a call option that is usually attached to a bond as a sweetener.
4. Cliff places an order to sell 500 shares of the stock of Gap, Inc. (GPS) via his broker's website. Cliff does
not currently own any shares of GPS. This order is:
A) indicating that Cliff expects the price of Gap, Inc. to rise.
B) illegal, and the broker's website will reject it.
C) referred to as a short sale.
D) an example of a stop loss order.
5. Which of the following is not a characteristic of all auction stock exchanges in the U.S.?
A) There is a central marketplace.
B) If a stock is listed on one of these exchanges, it is not permitted to be listed on any other exchange.
C) In order to conduct a trade on the exchange, a broker must be a member of the exchange or hold a
license to trade on the exchange.
D) Stocks that are traded on the exchange must meet certain listing requirements, determined by the
exchange.
Solutions:
| Question # 1 Answer: B | Question # 2 Answer: C | Question # 3 Answer: A | Question # 4 Answer: C | Question # 5 Answer: B |





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