FINRA Investment Company and Variable Contracts Products Representative Examination (IR) Sample Questions:

1. Joel has a 28-year-old client who has been promoted to the elevated position of senior software engineer
with a large, well-known, software company at her relatively young age. She has come to Joel for
investment advice, explaining to him that she is risk-averse, having been influenced by parents who grew
up in a foreign country and had little, prior to immigrating to America and working hard to achieve their
dreams for themselves and their children. She has $50,000 that she wants him to invest for her, and her
primary goal is to be able to have enough
money, beyond what she expects to have in her employer's retirement program, to return to her home
country and help others achieve their dreams. Joel explains to her that she may have to invest in riskier
securities in order to achieve her goal, but his client is adamant that she wants her portfolio to be invested
to target growth with the least risk exposure possible. Given the facts:

A) Joel should invest his client's monies in a fund that specializes in stocks of his client's home country to
avoid the exchange rate risk that she will be exposed to when she returns.
B) Joel should invest his client's monies in a growth fund to target her growth objective.
C) Joel should invest his client's monies in a U.S. government bond fund since she is risk-averse.
D) Joel should divide his client's monies among growth, aggressive growth, and foreign stock funds.
Regardless of what she says, she has a long investment horizon and can afford to take on more risk.

2. A general decrease in price levels in the economy is referred to as:

A) disinflation.
B) deflation.
C) stagflation.
D) recession.

3. Which of the following share classes do not have front-end loads?

A) Class A
B) Neither Class B nor Class C shares have front-end loads.
C) Class B
D) Class C

4. In 2004, your Uncle Oscar purchased 300 shares of Hasbro, Inc. for $19 a share. Uncle Oscar died earlier
year and left his Hasbro stock to you. The stock was selling for $44 on the day he died, but by the time
you learned that you were the beneficiary of the stock, the price was $47. A month later, you notice that
the stock is selling for $55 and decide to sell it. What is the tax consequence of this sale to you?

A) None of the above is the correct tax consequence of this sale.
B) $3,300, taxed as long-term capital gain income
C) $10,800, taxed as long-term capital gain income
D) $2,400 taxed as short-term capital gain income

5. Which of the following would offer an investor the most protection against purchasing power risk?

A) a government bond fund
B) a high-yield bond fund
C) a stock mutual fund
D) a money market fund

Solutions: