Title Details

Preface ix

Series 6 Test Preparation 1

Introduction 3

1 Investment Securities 9

Introduction 9

Money and Capital Markets 9

Common Stock 10

Preferred Stock 10

Corporate Bonds 11

Other Types of Corporate Bonds 12

Convertible Bonds 12

Zero Coupon Bonds 12

Interest Rate Risk 13

Yields 13

Rights 13

Warrants 14

Collateralized Mortgage Obligations 14

Interest Rates and Bond Concepts 14

US Government Securities. 15

Municipal Bonds 16

Money Market Instruments 16

Bankers’ Acceptances 16

Commercial Paper 16

Negotiable Certificates of Deposit 17

Interbank Market for Foreign Currencies 17

Eurodollar Bonds 17

Additional Concepts 17

Review Questions 19

Answers to Review Questions 22

2 Securities Markets 23

Introduction 23

Types of Investment Risk 23

Economic Factors 25

Suitability and Risk Factors 25

Review Questions 27

Answers to Review Questions 29

3 Open-End Investment Companies 31

Introduction 31

Types of Funds 32

Classes of Shares 33

Mutual Fund Accounts. 34

Distributions by Funds 35

Taxation of Mutual Funds. 36

Mutual Fund Expenses. 36

Review Concepts 37

Important Points 37

Additional Concepts 38

Review Questions 40

Answers to Review Questions 44

4 Regulation of Investment Companies 45

Introduction 45

Sales Charges 46

Breakpoints 46

Advertising by Funds 47

Mutual Fund Sales Literature 48

Dollar Cost Averaging 48

NASD Rules Concerning Investment Companies 48

Mutual Fund Sales by Banks 50

Additional Concepts 51

Review Questions 53

Answers to Review Questions 57

5 Variable Annuities and Retirement Plans 59

Introduction 59

Fixed Annuities 59

Variable Annuities 59

Additional Concepts—Variable Annuities 61

Variable Life Insurance 62

Main Points—Variable Life Insurance Contracts 63

Employee Retirement Income Security Act of 1974 64

Keogh Plans 64

Individual Retirement Accounts 64

Simplified Employee Pension Plan 66

Pension and Profit Sharing Plans 66

401(k) Plans 66

403(b) Plans 67

Review Questions 68

Answers to Review Questions 72

6 NASD Rules and Regulations 73

Certificate of Incorporation 73

Bylaws of the NASD 73

Advertising Rules 74

Broker/Dealers 75

Recommendations Made to Customers 75

Private Securities Transactions 76

Prompt Receipt and Delivery of Securities 76

Proxy Material 76

NASD Hot-Issue Rules 76

Charges for Services 77

Confirmations 77

Discretionary Accounts. 78

Dealing with Nonmembers 78

Other Provisions of NASD Rules 78

NASD Code of Procedure. 80

Uniform Practice Code 80

Confirmations or Comparisons 80

Good Delivery of Securities 80

Trade Date and Settlement Date 80

Investment Companies and NASD Rules of Fair Practice 81

Review Questions 82

Answers to Review Questions 87

7 Federal and State Regulations 89

Securities Act of 1933 89

Exempted Securities under the 1933 Act 89

Red Herring Prospectus 90

Final Prospectus90

Effective Date of Registration Statement90

Liabilities under the 1933 Act 90

The Securities Exchange Act of 1934 91

Insider Transactions 91

Market Manipulation 92

Securities Investor Protection Act of 1970 92

State Securities Laws 93

Uniform Gifts to Minors Act—Uniform Transfer to Minors Act 93

Review Questions 95

Answers to Review Questions 97

Glossary 99

Series 6 Final Examination 105

Additional Practice Questions 1 119

Answers to Additional Practice Questions 1 122

Additional Practice Questions 2 123

Answers to Additional Practice Questions 2 126

Additional Practice Questions 3 127

Answers to Additional Practice Questions 3 130

Series 63 Test Preparation 131

Introduction 133

Important Terms 134

Licensing/Registration Requirements 138

Capital Requirements 139

Recordkeeping 139

Administrative Sanctions 140

Registration of Securities 141

Notification (Filing) 141

Coordination 141

Qualification 142

Registration Provisions 142

Denial of Registration 142

Exempt Securities 142

Exempt Transactions 143

Fraudulent and Other Prohibited Practices 144

Suitability 146

Regulatory Oversight 146

Criminal Penalties 147

Civil Liabilities 147

Judicial Review of Administrative Orders 147

Scope of the Act 148

Consent to Service of Process 148

Additional Concepts—Uniform Securities Act 149

Series 63 Practice Questions and Answer Explanations 151

Practice Questions 1 151

Practice Questions 1—Answer Explanations 158

Practice Questions 2 160

Practice Questions 2—Answer Explanations 167

Practice Questions 3 169

Practice Questions 3—Answer Explanations 176

Practice Questions 4 178

Practice Questions 4—Answer Explanations 182

Index 183