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FINRA Investment Company and Variable Contracts Products Representative Examination (IR) Sample Questions:
1. Mr. A. D. Venturer owns 10,000 shares of Risky Corporation, which is currently selling for $8 a share. He
is leaving shortly for an extended trip to Antarctica and will be out of communication for that time. He
doesn't want to liquidate his investment in Risky before he goes, but he doesn't want to return to find that
his $80,000 investment is worth little to nothing. Which of the following options would make sense for Mr.
Venturer?
A) buy a call option on Risky stock with an $8 strike price and an expiration date that occurs after his
return
B) place a limit order to sell Risky at either $8 a share or a price slightly less than $8 a share
C) place a stop sell order at a price less than $8 a share-perhaps $6 or $7 a share
D) enter a good 'til cancelled (GTC) market order to sell Risky
2. Which of the following correctly describes a difference between closed-end and open-end investment
companies?
A) Open-end investment companies have a fixed number of shares; closed-end companies can create
new shares if there are more buyers than sellers.
B) Open-end companies may invest in non-diversified portfolios; closed-end companies are required to
invest only in diversified portfolios.
C) Open-end investment company shares will never be offered at a price below the net asset value per
share of the fund; this is not true of closed-end companies.
D) Shares of open-end companies sell on exchange floors; shares of closed-end companies are bought
and sold through the company itself.
3. In 2008, Mr. Conservative bought a 1-year Treasury bill that was yielding 1.63%.The average annual rate
of inflation in 2008 was 3.85%.In this case:
A) Mr. Conservative earned a real return of +1.63% on his investment.
B) Mr. Conservative earned a nominal return of +3.85% on his T-bill investment.
C) Mr. Conservative earned a real return of -2.22% on his investment.
D) Mr. Conservative earned a nominal return of +2.22% on his investment.
4. Which of the following is not a secured debt issue?
A) a subordinated debenture
B) a mortgage bond
C) an equipment trust receipt
D) a collateral trust receipt
5. On Friday, August 6th, the Board of Directors of Ecolab (ECI) announced that it would pay a dividend of
$ 0.155 a share to shareholders of record as of Tuesday, September 21st.The dividend checks were
scheduled to be mailed on Friday, October 15th. In this scenario, the payment date is:
A) Friday, September 17th.
B) Friday, August 6th.
C) Tuesday, September 21st.
D) none of the above.
Solutions:
| Question # 1 Answer: C | Question # 2 Answer: C | Question # 3 Answer: C | Question # 4 Answer: A | Question # 5 Answer: D |
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