Series 6 F4: Transaction instructions and processing

1. A mutual fund calculates NAV once daily at 4 p.m. A valid purchase order reaches its designated agent at 3 p.m. Tuesday. Which NAV determines the price basis?

1. Tuesday's 4 p.m. NAV
2. Monday's 4 p.m. NAV
3. Wednesday's 4 p.m. NAV
4. The average of Monday's and Tuesday's NAVs

2. A fund computes NAV only at 4 p.m. on business days. Its designated agent receives a valid purchase order at 4:15 p.m. Tuesday. Wednesday is a normal business day. Which NAV is used?

1. Tuesday's 4 p.m. NAV
2. Monday's 4 p.m. NAV
3. Wednesday's 4 p.m. NAV
4. The higher of Tuesday's and Wednesday's NAVs

3. A fund's designated agent receives a valid redemption of 200 shares before the next NAV calculation. That NAV is $18. With no redemption fee or other adjustment, what are the proceeds?

1. $3,400
2. $3,600
3. $3,800
4. $4,000

4. Absent a statutory exception, an open-end fund may not postpone payment for more than how long after shares are tendered to its designated agent for redemption?

1. Seven days
2. One business day
3. Ten business days
4. Thirty days

5. Which circumstance is a statutory exception to the normal seven-day redemption-payment limit?

1. The investor has held the fund for less than one year
2. The selling representative is away on vacation
3. The fund would prefer to avoid realizing a capital loss
4. An emergency makes fair valuation of fund net assets impracticable

6. A mutual fund transaction has a stated T+1 settlement cycle. It trades Friday and Monday is a market holiday. When does it settle?

1. Saturday
2. Monday
3. Tuesday
4. Wednesday

7. A customer asks whether every mutual fund transaction necessarily settles T+1. Which response best reflects FINRA's settlement guidance?

1. T+1 covers every fund without any product-specific exceptions
2. Every mutual fund must instead use a seven-business-day cycle
3. T+1 covers certain mutual funds; verify the particular fund's terms
4. Mutual fund purchases have no settlement or payment requirements

8. A customer buys shares in a fund that settles T+1 and plans to initiate an ACH transfer on settlement day. What payment issue should the representative explain?

1. An ACH request automatically supplies settled funds immediately
2. The fund must postpone settlement until the ACH transfer arrives
3. Funds must arrive by settlement; an ACH request may be too late
4. The trade date changes to the date the ACH transfer is completed

9. A broker executes a mutual fund trade for which no periodic-reporting exception applies. By when must it give or send the required written confirmation?

1. Only when the customer requests it in writing
2. At or before completion of the transaction
3. Only with the next annual account statement
4. Within thirty days after the transaction is completed

10. A mutual fund trade confirmation gives the trade date but omits the execution time. Which additional disclosure can satisfy Rule 10b-10's time requirement?

1. A statement that the trade price was approved by the SEC
2. A statement that execution time is available on written request
3. A statement that execution times are confidential firm records
4. A statement that the fund has never missed a distribution

11. A mutual fund confirmation describes the broker as acting as agent for the customer. Which required item does that statement address?

1. The broker's capacity in the transaction
2. The fund's federal income tax classification
3. The customer's approved investment time horizon
4. The fund portfolio manager's valuation method

12. A broker uses Rule 10b-10's alternative reporting for a qualifying investment company plan and satisfies all its conditions. When must it send the plan's periodic statement?

1. Within fifteen calendar days after every purchase
2. Within thirty business days after each calendar year
3. Within five business days after each quarterly period
4. Only after the plan terminates or the customer complains

13. A receiving firm obtains an authorized customer instruction to transfer a brokerage account through ACATS. What does FINRA Rule 11870(b)(1) require it to do next?

1. Wait until the customer receives the next monthly statement
2. Ask the customer to liquidate every mutual fund before proceeding
3. Send only an informal forecast of the future account balance
4. Immediately establish the transfer instruction in ACATS

14. A transferring account holds a third-party mutual fund that the receiving firm cannot carry because it lacks the necessary arrangement. What should happen to that nontransferable holding?

1. The carrying firm automatically sells it without contacting the customer
2. Identify the holding in writing and request disposition instructions
3. The receiving firm silently substitutes shares of a similar fund
4. The holding becomes the receiving firm's proprietary investment

15. For an account transfer involving mutual fund shares, which method can constitute adequate delivery under Rule 11870(f)(9)?

1. A photocopy of the customer's original fund sales brochure
2. An unsigned note stating that the receiving firm expects the shares
3. A replacement recommendation naming a fund in the same category
4. A fund re-registration form with the new account number for the shares

16. An insurer receives a complete variable annuity application and initial purchase payment. Under Rule 22c-1(c)(1), the initial payment must be priced using the NAV next computed no later than when?

1. Seven calendar days after the representative's first recommendation
2. Thirty days after the policyowner receives the first statement
3. The next contract anniversary after receipt of the application
4. Two business days after receipt of the complete application

17. A variable annuity application remains incomplete five business days after the insurer receives it. Under Rule 22c-1(c)(2), after explaining the delay, what must the insurer do about the initial payment?

1. Return it in full unless the purchaser specifically consents to retention
2. Keep it indefinitely until the purchaser sends a written cancellation
3. Invest it immediately in whichever subaccount performed best yesterday
4. Deduct a surrender charge and return only the remaining account value

18. A dealer confirms a 529 savings plan purchase involving municipal fund securities. Which pricing and quantity information does MSRB Rule G-15 require?

1. The price per unit excluding commission and the number of units
2. Only the plan's projected value when the beneficiary reaches college
3. Only the current tuition charge at the beneficiary's chosen school
4. The unit price including estimated future taxes and no unit count

19. A dealer acting as agent for a 529 plan issuer accepts a customer's redemption order for 529 municipal fund securities. What does MSRB Rule G-15 say about confirmation of this activity?

1. Redemptions are exempt because only purchases require confirmation
2. Accepting the redemption order is a transaction requiring confirmation
3. A confirmation is required only if the redemption produces a gain
4. The dealer can replace confirmation with an oral estimate of proceeds

20. A fund has a declining contingent deferred sales load. A customer redeems some shares. Unless another order lowers the charge, which redemption order does FINRA Rule 2341 require when calculating the load?

1. The newest shares first, even when that produces a higher load
2. The shares with the largest unrealized gains first in every case
3. All share lots proportionately, regardless of the resulting load
4. Load-free shares first, then other shares in purchase order

21. A customer redeems $5,000 from a fund with a declining deferred load. Of that amount, $2,000 is load-free; the remaining $3,000 is subject to a stated 2% charge. With no other fees, what are net proceeds?

1. $4,940
2. $4,900
3. $4,960
4. $4,840

22. A customer cancels a mutual fund brokerage order before execution. Under SEC Rule 17a-3(a)(6), what happens to the order memorandum requirement?

1. The firm may discard the order because no money changed hands
2. The firm must keep a memorandum even though the order was unexecuted
3. The firm keeps a memorandum only if the customer files a complaint
4. The firm replaces the order record with a hypothetical confirmation

23. A representative receives a customer's mutual fund brokerage order and later enters it into the trading system. Which time information belongs on the order memorandum under Rule 17a-3(a)(6)?

1. Only the scheduled settlement time
2. Only the time the customer opened the account
3. Both the order receipt time and the order entry time
4. Only the time the next monthly statement is generated

24. A representative delays submitting a customer's mutual fund purchase order so the representative can profit from the delay. How does FINRA Rule 2341 treat this?

1. The delay is permitted if the customer ultimately earns a profit
2. The delay is permitted whenever the order is smaller than $10,000
3. Withholding the order is required before every distribution date
4. Withholding the order for that purpose is prohibited

25. A customer's authorized representative submits a written grievance about disposal of the customer's fund shares. What should the firm's Rule 4513 complaint record include?

1. The complaint and any action the firm took in response
2. Only the employee's opinion about whether the grievance is valid
3. Only a notation that the customer used a representative
4. A replacement trade ticket with the original complaint removed