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

1. Upon receiving a complaint about one of its member firms, FINRA may:
I. require any person associated with the member firm to provide information to FINRA and to testify under
oath.
II. inspect and copy the books, records and accounts of the member firm.
III. share information obtained from its investigation of a member firm with a foreign regulatory agency.

A) I and II only
B) II only
C) I, II, and III
D) II and III only

2. Mr. Schaker hasn't been seeing a lot of clients these days with the recent market downturn-which means
he hasn't been generating any commissions, and commissions are his bread and butter. So, Mr. Schaker
does some Googling on his computer and notes that a prominent family of load funds has just introduced
a new global fund. Scribbling the name and contact information of the fund family on his notepad, he
begins calling his existing clients and promoting the new fund, encouraging his clients to redeem some
shares in their existing funds to invest in this fund. Has Mr. Schaker violated any securities laws?

A) No. Research indicates that new funds tend to offer abnormally high returns for the first 12 months of
their existence, so Mr. Schaker is doing his clients a favor even if he himself stands to profit.
B) No. In FINRA's rules regarding fair dealing with customers, the SRO clearly states that "This does not
mean that legitimate sales efforts in the securities business are to be discouraged. . . "
C) Yes. A registered representative should always refrain from recommending shares of a load fund;
trades involving load funds should always be "unsolicited."
D) Yes. Mr. Schaker is recommending the fund to his existing clients to benefit himself, not them.

3. Which of the following do not fall under the category of "advertisement," as defined by FINRA?
I. scripts used in telemarketing the products of the member firm
II. a website maintained by the member firm
III. research reports that the member firm distributes to both its existing clients and its prospective clients
IV. sales material that a member firm distributes only to its institutional clients

A) I only
B) IV only
C) III and IV only
D) I, III, and IV only

4. Joan is a customer of GetErDone Broker-Dealers. Her twin sister, Jean, has accompanied her to
GetErDone's office and has gathered some information regarding opening an account with the firm, giving
it her contact information at the same time. Under Regulation S-P, which of the following statements
regarding GetErDone's handling of Joan's and Jean's personal information is true?

A) GetErDone must provide Joan with a notification of its privacy policies annually and provide her with
information on how to mandate that it not share her nonpublic personal information with nonaffiliated third
parties.
B) GetErDone can disclose any information that Jean provided them to nonaffiliated third parties since
Jean is not a customer of the broker-dealer.
C) GetErDone is required to have provided Jean with a copy of its privacy policy when she inquired about
opening an account with the broker-dealer.
D) All of the above are true statements.

5. The dividends distributed by which of the following are taxed as ordinary income?

A) closed-end investment companies
B) IBM
C) real estate investment trusts
D) mutual funds

Solutions: