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FINRA Investment Company and Variable Contracts Products Representative Examination (IR) Sample Questions:
1. Which of the following are fiscal policy tools under the jurisdiction of the U.S. Congress?
A) the decision on whether to raise or lower effective tax rates
B) the decision on whether to raise or lower the rate at which banks can borrow money from the Federal
Reserve.
C) the decision on the amount of cash reserves that a bank must hold
D) Both A and B are fiscal policy tools.
2. Which of the following must be true for a fund to be called a "no load" fund?
I. The fund can have no front-end load.
II. The fund can have no contingent deferred sales charge.
III. The fund can charge no 12b-1 fees.
IV. The fund cannot charge investors an exchange fee.
A) I, II, III, and IV must all be true.
B) Only I must be true.
C) I, II, and III must all be true.
D) Only I and II must be true.
3. Tex Payor is an investor in the Invest4U Mutual Fund. The manager of the fund, fearing a substantial
decline in the stock market, sold a lot of the fund's holdings to lock in profits. As a result, the fund earned a
lot of long-term capital gain income. Which of the following statements is true regarding the tax treatment
of this income?
A) Tex must pay taxes on his proportionate share of the long-term capital gain income earned by Invest4U,
whether distributed or not.
B) Tex must pay taxes on that portion of the long-term capital gain income that Invest4U distributes to
him.
C) None of the above is a true statement.
D) Tex must pay taxes only on dividend income distributed by Invest4U.The mutual fund itself pays tax on
any capital gains it earns.
4. A general decrease in price levels in the economy is referred to as:
A) disinflation.
B) recession.
C) stagflation.
D) deflation.
5. Which of the following describes a difference between a unit investment trust (UIT) and a mutual fund?
A) UITs have a fixed number of shares; mutual funds do not.
B) UITs must hold non-diversified portfolios; mutual funds may be either non-diversified or diversified.
C) UITs are not required to distribute dividends and capital gains to their shareholders as mutual funds
must.
D) All of the above describe differences between a UIT and a mutual fund.
Solutions:
| Question # 1 Answer: A | Question # 2 Answer: D | Question # 3 Answer: B | Question # 4 Answer: D | Question # 5 Answer: A |



