FINRA Series 6 — All Questions

In the creation and redemption process for an ETF, who may deal directly with the fund in creation units?

• a.Authorized participants, which exchange a basket of securities or assets for creation units✓
• b.Any retail investor, who exchanges cash for creation units through a broker-dealer
• c.The fund's investment adviser, which sets the number of creation units each day
• d.The exchange where the ETF is listed, which issues the creation units on request

Only authorized participants place orders for creation units with the ETF, usually delivering a basket of securities. Retail investors buy and sell shares on an exchange from other investors.17 CFR 270.6c-11

For which kind of bond is the interest not excluded from federal gross income, even though the issuer is a state or local government?

• a.A bond issued at a discount by a school district
• b.A general obligation bond of a county
• c.An arbitrage bond✓
• d.A revenue bond that finances a municipal water system

Section 103(a) excludes interest on state and local bonds, but Section 103(b) denies the exclusion for arbitrage bonds, among others. Governmental general obligation bonds, essential-service revenue bonds and original issue discount bonds can all qualify for the exclusion.Internal Revenue Code Section 103(b)(2)

A convertible bond is convertible at $50 a share, and the bond is trading at 110 ($1,100). What stock price makes the stock equal in value to the bond (the parity price)?

• a.$55, found by dividing the $1,100 bond price by the 20 shares the bond converts into✓
• b.$50, which is the conversion price stated in the indenture
• c.$110, which is the bond's price quoted as a percentage of par
• d.$22, found by dividing the $1,100 bond price by the $50 conversion price

The conversion ratio is $1,000 divided by $50, or 20 shares. Parity is the bond price divided by the ratio: $1,100 divided by 20 is $55. If the stock trades below $55, the bond is priced at a premium to its conversion value.

What is the key feature that distinguishes an open-end management company from a closed-end management company?

• a.An open-end company invests only in bonds and a closed-end company invests only in stock
• b.An open-end company sells shares on an exchange and a closed-end company sells directly to investors
• c.An open-end company offers, or has outstanding, redeemable securities and a closed-end company does not✓
• d.An open-end company has a board of directors and a closed-end company has a trustee

The Act defines an open-end company as a management company that offers for sale or has outstanding redeemable securities, and a closed-end company as any other management company. Open-end funds redeem at NAV and closed-end funds typically trade in the secondary market.Investment Company Act of 1940 Section 5(a)

Which expense may a fund pay out of assets under a Rule 12b-1 plan?

• a.The investment adviser's management fee
• b.Brokerage commissions on the fund's portfolio trades, which are paid out of the fund's assets whenever it buys or sells securities
• c.The custodian's fee for safekeeping the fund's assets
• d.Advertising, compensation of dealers and sales personnel, and printing and mailing of sales literature✓

Rule 12b-1 covers financing of any activity primarily intended to result in the sale of fund shares, including advertising, compensation of dealers and sales personnel, and printing and mailing of prospectuses to new investors and sales literature. Portfolio brokerage, custody and advisory fees are operating costs.17 CFR 270.12b-1

A fund has a net asset value of $20.00 a share and pays a $1.00 per-share distribution that is not reinvested. Ignoring market movement, what is the NAV on the ex-dividend date?

• a.$20.50
• b.$20.00
• c.$21.00
• d.$19.00✓

The distribution leaves the fund, so assets per share fall by the amount paid, from $20.00 to $19.00. The shareholder holds the same total value in a lower NAV plus the cash distribution, which is taxable even though the NAV dropped.

A closed-end fund has a net asset value of $20.00 a share and its shares trade at $18.00. How should the shares be described?

• a.They trade at a 90% discount to NAV
• b.They trade at a 10% discount to NAV✓
• c.They trade at a 10% premium to NAV
• d.They trade at an 11.1% discount to NAV

The discount is the NAV minus the price, divided by NAV: $2.00 divided by $20.00 is 10%. Dividing by the market price instead gives 11.1%, which is the common error.

During the accumulation phase of a variable annuity, how does the owner's account value change?

• a.The account value is guaranteed by the insurer, so it cannot fall below the premiums paid
• b.The value of each accumulation unit is fixed and the number of units changes with performance
• c.The number of accumulation units is fixed at purchase and the value of each unit is guaranteed by the insurer, whatever the separate account earns
• d.The number of accumulation units grows with purchases, and the value of each unit changes with the separate account's performance✓

In the accumulation phase, premiums buy accumulation units whose value rises and falls with the separate account's investments. Investment risk is borne by the owner, and only separately purchased guarantees would provide a floor.

A money market fund is evaluating a security for purchase. What is the longest remaining maturity that Rule 2a-7 allows for an eligible security?

• a.397 calendar days✓
• b.120 calendar days
• c.60 calendar days
• d.13 months measured from the date of the security's issue

An eligible security under Rule 2a-7 has a remaining maturity of 397 calendar days or less. Sixty days is the limit on the portfolio's weighted average maturity and 120 days is the limit on weighted average life.17 CFR 270.2a-7

A grandmother, a father and an aunt each want to contribute to one child's Coverdell education savings account in the same year. What is the most that may be contributed in total for that beneficiary?

• a.$18,000 from all contributors combined, matching the annual gift tax exclusion
• b.$2,000 from all contributors combined✓
• c.$2,000 from each contributor, for $6,000 in total
• d.$5,000 from all contributors combined

The Coverdell limit applies per beneficiary, not per contributor: aggregate contributions for the taxable year may not exceed $2,000. Excess contributions are not allowed, and contributions also stop when the beneficiary reaches age 18 unless the beneficiary has special needs.Internal Revenue Code Section 530(b)(1)(A)

A Coverdell account distribution is included in income because it is not used for qualified education expenses. What additional tax applies?

• a.An additional 10% tax on the amount includible in income✓
• b.An additional 20% tax on the full amount of the distribution
• c.An additional 6% excise tax on the amount of the excess contribution
• d.No additional tax, because the earnings are simply taxed as ordinary income

Section 530(d)(4) increases the tax on a taxable Coverdell distribution by 10% of the amount includible in income, subject to exceptions such as death or disability. The tax applies to the taxable part, not to the full distribution.Internal Revenue Code Section 530(d)(4)

For a Roth IRA distribution to be a qualified distribution, which two conditions must be met?

• a.The 5-taxable-year period has passed since the most recent Roth contribution, and the owner is at least 59½
• b.The owner is at least 59½ and has not made a contribution in the last three years
• c.The account has been open for two years, and the owner is at least 55, disabled, deceased, or buying a first home with the funds
• d.The 5-taxable-year period has passed since the first Roth contribution, and the owner is at least 59½, disabled, or deceased✓

A qualified Roth distribution must be made after the 5-taxable-year period beginning with the first year the owner contributed to a Roth IRA, and must meet one of the listed events such as age 59½, death, disability, or a qualified special purpose distribution. The clock starts at the first contribution, not the latest.Internal Revenue Code Section 408A(d)(2)

A customer receives a check from her traditional IRA to move the funds to another IRA. To avoid taxation, by when must the full amount be deposited into the new IRA?

• a.Within 30 days after the day the distribution is received
• b.Within 60 days after the day the distribution is received✓
• c.Within 90 days after the end of the tax year of the distribution
• d.By the next April 15 following the year of the distribution

An IRA rollover is tax-free only if the amount is paid into an eligible plan for the individual's benefit not later than the 60th day after the distribution is received. A direct trustee-to-trustee transfer avoids this deadline.Internal Revenue Code Section 408(d)(3)

A 76-year-old IRA owner fails to take a required minimum distribution and corrects the shortfall within the correction window. What is the excise tax on the shortfall?

• a.50% of the amount not distributed
• b.25% of the amount not distributed
• c.10% of the amount not distributed✓
• d.6% of the amount not distributed

After SECURE 2.0, the excise tax on a missed RMD is 25% of the shortfall, reduced to 10% when the shortfall is corrected within the correction window. The 50% rate was the earlier penalty.Internal Revenue Code Section 4974(a), (e)

To receive incentive stock option treatment on the sale of the stock, an employee must avoid disposing of the shares within what periods?

• a.Two years from the grant of the option and one year from the transfer of the shares to the employee✓
• b.Six months from the grant of the option and one year from the transfer of the shares to the employee
• c.One year from the grant of the option and two years from the transfer of the shares to the employee
• d.Two years from the date the shares are transferred to the employee, and nothing is required from the grant date

Section 422 requires that the shares not be disposed of within two years from the option grant nor within one year after the shares are transferred to the employee. Failing either test makes the sale a disqualifying disposition.Internal Revenue Code Section 422(a)

Under an employee stock purchase plan qualifying under Section 423, what is the lowest permitted purchase price?

• a.90% of the stock's fair market value, measured at the grant or exercise date
• b.100% of the stock's fair market value, since any discount is taxed as compensation
• c.75% of the stock's fair market value, measured at the grant or exercise date
• d.85% of the stock's fair market value, measured at the grant or exercise date✓

A qualifying ESPP may not set the option price below the lesser of 85% of fair market value at grant or 85% of fair market value at exercise. There is also a limit of $25,000 of stock value accruing per calendar year.Internal Revenue Code Section 423(b)

Which exchange can be completed without recognizing gain under Section 1035?

• a.An annuity contract for shares of a mutual fund
• b.A life insurance contract for an annuity contract✓
• c.A life insurance contract for shares of a variable annuity subaccount held outside the contract
• d.An annuity contract for a life insurance contract

Section 1035 allows a life insurance contract to be exchanged for another life contract, an endowment or an annuity contract, and an annuity for another annuity. It does not run in the other direction, so an annuity cannot be exchanged tax-free for a life insurance contract.Internal Revenue Code Section 1035(a)

A life insurance policy fails the 7-pay test. How are loans and withdrawals from the policy taxed?

• a.As a modified endowment contract, with gains taxed first and a possible 10% additional tax before age 59½✓
• b.As a normal life policy, with withdrawals taxed only after the cost basis is recovered
• c.As tax-free, because a life insurance policy loan is never a taxable distribution
• d.As an annuity, with each payment split between return of basis and earnings

A contract that fails the 7-pay test is a modified endowment contract. Distributions, including loans, are taxed gain-first, and a 10% additional tax can apply before age 59½. Death benefits remain income tax free.Internal Revenue Code Sections 7702A, 72(e)(10)

For tax years beginning after 2025, an individual qualifies as an eligible individual for an ABLE account if the blindness or disability began before the individual reached what age?

• a.Age 36
• b.Age 55
• c.Age 46✓
• d.Age 26

The ABLE Age Adjustment Act raised the onset age from before 26 to before 46 for tax years beginning after December 31, 2025. The age 26 limit is the older rule.Internal Revenue Code Section 529A(e)(1)

How is the annual contribution limit for an ABLE account set?

• a.It equals the amount the beneficiary earned that year, up to the standard deduction
• b.It equals the annual gift tax exclusion amount, applied to all contributors combined✓
• c.It is set by the state that sponsors the program, up to a lifetime limit only
• d.It is a flat $2,000 a year, applied to each contributor separately

Total contributions from all contributors for the year may not exceed the Section 2503(b) gift tax exclusion for that calendar year. A beneficiary who works may contribute additional amounts, subject to separate limits.Internal Revenue Code Section 529A(b)(2)(B)

A broker-dealer has an ongoing customer relationship with a client. How often must it provide its privacy notice to customers under Regulation S-P (where no exception applies)?

• a.At least once in every calendar quarter
• b.Only when the account is opened or the policy changes
• c.Once every three years, together with the account agreement
• d.At least once in any period of 12 consecutive months✓

Regulation S-P requires a clear and conspicuous notice to customers not less than annually, meaning at least once in any 12 consecutive months, unless the firm qualifies for the exception for firms that do not share information in ways requiring an opt-out.17 CFR 248.5

A customer sells shares of XYZ at a loss on June 15. To avoid a wash sale, she must not buy substantially identical securities during which period?

• a.Within the 31-day period from June 15 through July 15, and not before June 15, which is when the sale occurred
• b.Within the 61-day period from 30 days before to 30 days after June 15✓
• c.Within 30 days before June 15 only
• d.Within 90 days after June 15 only

A wash sale arises when substantially identical securities are acquired within 30 days before or 30 days after the sale, a window of 61 days including the sale date. Buying within the window disallows the loss and adds it to the basis of the new shares.Internal Revenue Code Section 1091(a)

A single investor has $9,000 of net capital losses and no capital gains for the year. What is the most she may deduct against other income in that year?

• a.$9,000, since losses are fully deductible
• b.$6,000, with the remaining $3,000 carried forward
• c.$1,500, with the remaining $7,500 carried forward
• d.$3,000, with the remaining $6,000 carried forward✓

Net capital losses offset capital gains and then up to $3,000 of other income ($1,500 if married filing separately). The remainder carries forward to later years.Internal Revenue Code Section 1211(b)

A customer buys 100 shares of ABC and holds them for 8 months. She then sells short 100 shares of ABC at a profit and closes the short sale 6 months later. How is the gain taxed?

• a.As ordinary income, because short sale gains are never capital gains
• b.As long-term, because the short position was open for more than 1 year in total
• c.As short-term, because she held substantially identical property for one year or less on the date of the short sale✓
• d.As long-term, because she held the long shares for 14 months in total when the short sale was closed, which is more than one year

Section 1233(b) treats a short sale gain as short-term if, on the date of the short sale, substantially identical property had been held for one year or less. Time spent with the short position open does not turn the gain into a long-term gain.Internal Revenue Code Section 1233(b)

An investor in a taxable account buys a newly issued corporate zero-coupon bond. How is the investor taxed while holding it?

• a.Only the cash interest actually received is taxable each year
• b.The discount is taxed as a capital gain in the year the bond matures, with no tax on any accrual before the maturity date
• c.The accrued original issue discount is taxable each year as interest, though no cash is received✓
• d.Nothing is taxed until the bond matures or is sold

Original issue discount accrues and is included in income each year as interest under Section 1272, so a zero-coupon holder pays tax on income that is not received until maturity. That is why zeros are often held in tax-deferred accounts.Internal Revenue Code Section 1272(a)

A 45-year-old owner takes a withdrawal from a nonqualified deferred annuity, and part of it is taxable earnings. What additional tax can apply to the taxable part?

• a.A 20% additional tax, unless the owner reinvests the money within 60 days
• b.A 6% excise tax on the amount of the earnings withdrawn
• c.A 10% additional tax, unless an exception such as disability or a life annuity applies✓
• d.No additional tax, because the 10% tax applies only to qualified plans

Section 72(q) adds 10% to the taxable part of an early distribution from an annuity contract, with exceptions such as age 59½, death, disability, or substantially equal periodic payments. It applies to nonqualified annuities too.Internal Revenue Code Section 72(q)

A customer buys the same stock in three lots at different prices, then sells part of the position without identifying which lot is sold. Which lots are treated as sold?

• a.The shares most recently acquired, on a last-in, first-out basis
• b.The shares with the highest cost, to minimize the gain
• c.The shares first acquired, on a first-in, first-out basis✓
• d.The shares with the lowest cost, to maximize the deduction

When a taxpayer does not adequately identify the lot sold, the stock is treated as coming from the earliest acquired shares. Specific identification, or average basis for mutual funds where permitted, requires an election.Treasury Regulation Section 1.1012-1(c)

A mutual fund shareholder has owned shares for 3 months when the fund pays a capital gain distribution. How must the shareholder treat the distribution?

• a.As short-term capital gain, because the shares were held for less than a year
• b.As ordinary dividend income, because it was paid by a fund
• c.As long-term capital gain, regardless of how long the shareholder has owned the shares✓
• d.As a return of capital, which reduces the shareholder's basis

A capital gain dividend is treated by shareholders as gain from the sale of a capital asset held for more than one year, whatever their own holding period in the fund shares. The fund's holding period for the underlying securities does not control it either.Internal Revenue Code Section 852(b)(3)(B)

An investor in the 32% federal tax bracket owns a municipal bond yielding 4.5% that is exempt from federal tax. What is its tax-equivalent yield?

• a.About 6.62%✓
• b.About 4.50%
• c.About 5.94%
• d.About 3.06%

The tax-equivalent yield is the tax-free yield divided by one minus the tax rate: 4.5% divided by 0.68 is about 6.62%. Multiplying 4.5% by 1.32 gives about 5.94%, and multiplying by 0.68 gives 3.06%, which goes the wrong way.

A customer buys a stock at $50, receives $2 in dividends during the year, and sells at $53. What is her total return for the year?

• a.10.0%✓
• b.4.0%
• c.5.0%
• d.6.0%

The total return is the price gain of $3 plus the $2 in dividends, divided by the $50 cost: $5 divided by $50 is 10%. Price appreciation alone is 6%, and dividends alone are 4%.

A fund has $120 million in assets, $15 million in liabilities and 5 million shares outstanding. What is its net asset value per share?

• a.$3.00
• b.$21.00✓
• c.$24.00
• d.$22.50

NAV per share is total assets minus liabilities, divided by shares outstanding: $105 million divided by 5 million is $21.00. Using assets alone gives $24.00, which ignores the liabilities.

A broker-dealer wants to share a consumer's nonpublic personal information with a nonaffiliated third party. It mails the initial notice and an opt-out form. Which wait is an example of a reasonable opportunity to opt out?

• a.Allowing the consumer to opt out within 5 business days after the notices were mailed
• b.Allowing the consumer to opt out by any reasonable means within 30 days after the notices were mailed✓
• c.Allowing the consumer to opt out only by returning a paper form, within 10 days of mailing
• d.Treating the consumer's silence at account opening as consent, with no waiting period at all

Regulation S-P gives as an example of a reasonable opportunity to opt out a 30-day period after mailing the notices, during which the consumer may opt out by mail, toll-free telephone or another reasonable means. Sharing may begin only if the consumer does not opt out.17 CFR 248.10

Which investor qualifies as an accredited investor on the basis of net worth alone, not counting any joint income?

• a.An individual with a net worth of $1.3 million, of which $200,000 is the value of her home✓
• b.An individual with a net worth of $1.2 million, of which $400,000 is the value of his home with no mortgage
• c.An individual with a net worth of $950,000 that does not include the value of his home
• d.An individual with a net worth of $1.5 million, of which $600,000 is the value of her home

The net worth test is more than $1,000,000, either alone or with a spouse, and the primary residence is excluded. Subtracting the home leaves $1.1 million in the first case, while the others leave $800,000, $900,000 and $950,000.17 CFR 230.501

Under the Investment Company Act, which feature defines a redeemable security?

• a.The holder may present it to the issuer at any time and receive its original offering price in cash
• b.The holder may present it to the issuer and receive approximately a proportionate share of the issuer's current net assets or the cash equivalent✓
• c.The holder may sell it to the issuer at the price it paid, with the issuer guaranteeing that price
• d.The holder may exchange it for a share of any other fund managed by the same adviser at par

A redeemable security entitles its holder, on presentation to the issuer, to approximately a proportionate share of the issuer's current net assets or the cash equivalent. The amount depends on NAV, not on what the holder paid.Investment Company Act of 1940 Section 2(a)(32)

Which money market fund must compute its price per share using a floating NAV rounded to at least the fourth decimal place for a $1.0000 share price?

• a.A fund that is open only to natural persons and holds tax-exempt securities
• b.Any fund that invests exclusively in U.S. Treasury securities
• c.A fund that is neither a government money market fund nor a retail money market fund✓
• d.Any fund that has a weighted average maturity of under 30 days

Rule 2a-7 lets government and retail money market funds use a stable price through amortized cost or penny rounding, but other funds must price at current NAV rounded to the fourth decimal place for a $1.0000 fund. Institutional prime and tax-exempt funds are the usual examples.17 CFR 270.2a-7

Which description fits a face-amount certificate company?

• a.An investment company with no board of directors that issues redeemable units of a fixed portfolio
• b.An investment company that continuously offers redeemable shares of a managed portfolio
• c.An investment company that sells a fixed number of shares that trade in the secondary market
• d.An investment company that issues face-amount certificates of the installment type✓

The Act divides investment companies into three classes: face-amount certificate companies, unit investment trusts and management companies. The first issues face-amount certificates of the installment type, which are debt-like obligations to pay a stated amount at maturity.Investment Company Act of 1940 Section 4(1)

A bond with a 5% coupon and a $1,000 par value is bought at 80. What is its current yield?

• a.6.25%✓
• b.25.00%
• c.5.00%
• d.4.00%

Current yield is the annual interest divided by the market price: $50 divided by $800 is 6.25%. Dividing by par gives the 5% coupon rate, and 4% comes from dividing the coupon by the price in the wrong order.

A customer buys a stock on June 3, 2025 and sells it at a gain on June 3, 2026. How is the gain taxed?

• a.As a long-term capital gain, because the stock was held for one full year
• b.As a short-term capital gain, because the stock was not held for more than one year✓
• c.As a long-term capital gain, because a sale on the anniversary date counts as one year plus a day
• d.As ordinary income, because a gain on a sale after exactly one year is not a capital gain

A gain is long-term only if the asset was held more than one year. The holding period starts the day after the purchase and includes the sale date, so a sale on the first anniversary is short-term and a sale on June 4, 2026 would be long-term.Internal Revenue Code Section 1222; IRS Publication 550

A 45-year-old employee takes a taxable lump-sum distribution from her 401(k) plan after leaving her job at age 45, with no exception applying. What is the tax result?

• a.The taxable amount is added to income with no additional tax, because she separated from service
• b.A 20% additional tax applies, which replaces ordinary income tax
• c.The taxable amount is added to income and a 10% additional tax applies✓
• d.The taxable amount is taxed at long-term capital gain rates because it is a lump sum

Section 72(t) adds 10% to the taxable part of early distributions from qualified retirement plans unless an exception applies. A separation from service exception applies only if it occurs in or after the year the employee reaches age 55, so age 45 does not qualify.Internal Revenue Code Section 72(t)

An exchange-traded fund's shares trade at a premium of more than 2% to NAV for eight consecutive trading days. What must the fund do under Rule 6c-11?

• a.Do nothing further, because the website must show premiums only on the days they exceed 5%
• b.Suspend creations and redemptions with authorized participants until the premium has fallen back under 2%
• c.Post on its website a statement of the premium and a discussion of the factors believed to have contributed to it, and keep it there for at least one year✓
• d.File a current report with the SEC and mail a notice of the premium to each registered shareholder

Rule 6c-11 requires an ETF whose premium or discount exceeds 2% for more than seven consecutive trading days to say so on its website, explain the contributing factors, and keep the statement for at least one year. The rule does not suspend creations or require a mailing.17 CFR 270.6c-11

A retail investor asks a broker-dealer for its current Form CRS. How quickly must the firm deliver it?

• a.Within 60 days of the request, or with the next account statement if sooner
• b.Within 30 days of the request✓
• c.Only when the investor opens a new account, since the form is not given on request
• d.Within 5 business days of the request

A broker-dealer must deliver a current Form CRS to each retail investor within 30 days upon request. The form is also due at or before the start of a recommendation, not only at account opening.17 CFR 240.17a-14

An exchange-traded fund holds a foreign security in its redemption basket, and a local market holiday delays delivery. Under Rule 6c-11, by when must the fund deliver that security to a redeeming authorized participant?

• a.On the next business day after the local market reopens, with no outside limit
• b.Within 30 days after the tender, provided the fund first notifies the SEC
• c.Within 7 days after the tender of the ETF shares, with no exemption for holidays
• d.As soon as practicable, and no later than 15 days after the tender of the ETF shares✓

Section 22(e) bars postponing redemption payment for more than seven days. Rule 6c-11 gives an ETF relief for foreign basket securities delayed by holidays or long delivery cycles, but delivery must still occur as soon as practicable and within 15 days of tender.17 CFR 270.6c-11

A mutual fund introduces a new scheduled sales load reduction for purchases above a stated amount, relying on Rule 22d-1. By when must it advise existing shareholders of the new variation?

• a.Within one year of the date the variation is first made available to purchasers✓
• b.Within 30 days of the date the variation is first made available to purchasers
• c.Before the variation is first made available, in a separate mailing to each holder
• d.It need not advise existing holders, because the reduction applies only to new buyers

Rule 22d-1 allows scheduled load variations if the schedule is applied uniformly to the class, the prospectus is revised before the variation is offered, and existing shareholders are told within one year of its first availability.17 CFR 270.22d-1

Which measure of trading cost must an exchange-traded fund publish on its website each business day under Rule 6c-11?

• a.Its creation and redemption fee per unit, shown for the current day only
• b.Its average commission per round lot over the last 12 months, shown in dollars
• c.Its median bid-ask spread over the last 30 calendar days, shown as a percentage✓
• d.Its highest bid-ask spread on any day of the prior quarter, shown in cents

Rule 6c-11 requires daily website disclosure of the ETF's median bid-ask spread, built from the national best bid and offer at 10-second intervals over the last 30 calendar days and rounded to the nearest hundredth of a percent.17 CFR 270.6c-11

A broker-dealer arranges a loan for a customer in connection with the customer's purchase of a security. Under Rule 15c2-5, what must it do before the purchase or loan is entered into?

• a.File a notice of the loan with the SEC and wait ten days before executing the order
• b.Give the customer a copy of the firm's financial statements and confirm the loan only after settlement
• c.Obtain the customer's verbal consent to the loan and record it in the customer file within 30 days
• d.Give a written statement of the loan obligations, risks and all remuneration received, and determine that the whole transaction is suitable✓

Rule 15c2-5 requires written disclosure of the loan terms, the risks and all compensation, plus a documented suitability determination for the whole transaction, before any purchase or loan is entered into.17 CFR 240.15c2-5

Under Rule 30e-1, by when must a mutual fund make its complete portfolio holdings for the first and third fiscal quarters publicly accessible on the website named in its shareholder report?

• a.Within 5 business days after the board approves the quarter's financial statements
• b.No later than 60 days after the close of the quarter✓
• c.No later than 90 days after the close of the quarter
• d.No later than 30 days after the close of the quarter

Rule 30e-1 lets a fund keep its shareholder report short only if the full holdings for the first and third fiscal quarters are posted free of charge no later than 60 days after each quarter closes, and remain until 60 days after the next such quarter.17 CFR 270.30e-1