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

1. Phil Anthropy wrote his cousin a $15,000 check to pay for medical bills the cousin had accumulated. He
also distributed $5,000 checks to three nephews who were in college, and gave his mother a check for
$ 12,000. Have Phil's actions triggered any gift taxes?

A) Yes, $19,000 of his total distributions is subject to the gift tax.
B) Yes, $2,000 of his total distributions is subject to the gift tax.
C) Yes, $7,000 in distributions is subject to the gift tax.
D) No. None of Phil's distributions is subject to the gift tax.


2. Noah Mete is interested in selling his shares of the Lambchops Corporation, which trades
over-the-counter. The market maker with the best bid price--$3.15--is Veggie Investments. The market
maker with the best ask price--$3.27-is Carnivor Investments. Noah conducts trades in NYSE-listed
stocks through his broker, Omnivor and Associates. Given this scenario, which of the following
statements is true?

A) Noah can sell his shares of Lambchops Corporation at the bid price of $3.15 by contacting Omnivor
and Associates.
B) Noah can sell his shares of Lambchops Corporation at the ask price of $3.27 by contacting Omnivor
and Associates.
C) Noah can sell his shares of Lambchops Corporation at the ask price of $3.27 by contacting Carnivor
Investments directly.
D) Noah can sell his shares of Lambchops Corporation at the bid price of $3.15 by contacting Veggie
Investments directly.


3. As her college graduation present, Jennifer's grandmother gave her 200 shares of the stock of IBM. Her
grandmother had purchased the shares for $54 a share in October 2002, and the stock was selling for
$ 132 a share on the day of Jennifer's graduation eight years later. Eight months after her graduation,
Jennifer decides to sell the shares to get money to help with the down payment on a condo she is
purchasing. If IBM is selling for $125 on the day of the sale, what are the tax consequences of this sale for
Jennifer?

A) Jennifer will have a loss of $1,400, which will be treated as a short-term capital loss for tax purposes.
B) Jennifer will have taxable income of $14,200, which will be taxed as long-term capital gain income at a
tax-preferred rate.
C) Jennifer will have taxable income of $15,600, which will be taxed as long-term capital gain income at a
tax-preferred rate.
D) Jennifer will have taxable income of $14,200, which will be taxed as long-term capital gain income at a
tax-preferred rate.


4. Mr. Donald is the owner and CEO of Just Ducky Broker-Dealers. His wife, Ms. Daisy handles all the
ministerial duties for the firm. The firm has three other employees. Huey is the municipal bond specialist
and handles client trades in municipal securities only; Dewey handles only mutual fund sales for clients;
Louie handles all aspects of client trading in stocks, corporate bonds, and options. Which of the following
statements regarding the minimum FINRA registration requirements for these individuals is true?

A) Mr. Donald, Huey, Dewey and Louie must all be registered as general securities representatives in
accordance with FINRA rules.
B) Under FINRA rules, Mr. Donald must register as a principal, Dewey must be registered as a limited
securities representative, and Louie must be registered as a general securities representative. Daisy and
Huey need not be registered.
C) Mr. Donald, Ms. Daisy, Dewey and Louie must be registered as general securities representatives, and
Huey must be registered as a limited securities representative under FINRA rules.
D) Mr. Donald and Ms. Daisy must be registered as principals, and the other three must be registered as
general securities representatives under FINRA rules.


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) none of the above.
C) Friday, August 6th.
D) Tuesday, September 21st.


Solutions:

Question # 1
Answer: B
Question # 2
Answer: A
Question # 3
Answer: B
Question # 4
Answer: B
Question # 5
Answer: B

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