Series 26 Sample Questions

Series 26 Sample Questions

A customer has $ 24,000 invested in a growth fund offered by ABX, a large fund family. The investor would like to move the money into a balanced portfolio. Her representative immediately recommends a balanced fund offered by the HMV fund family, which of the following is true:

A) As long as the fund offered by HMV has a history of solid performance the representative has made the right recommendation
B) This is an example of switching funds and is a violation
C) If the sales charge assessed by HMV is lower than that charged by ABX this is a food recommendation
D) The recommendation is suitable based on the client’s objective to invest in a balanced fund

A mutual fund has a POP of 27.45 and a NAV of 26.20. It has paid out $ 1.25 in dividends and $ 1 as a capital gain distribution. What is its current yield?

A) 8.2%
B) 4.55%
C) 8.58%
D) 4.77%

An investor who owns a fixed annuity is subject to:

A) Investment risk
B) Expense risk
C) Mortality risk
D) Purchasing power risk

After the first year of operations, a broker/dealer who promptly transmits all customer securities and funds, must maintain a minimum net capital of:

A) $25,000 or aggregate indebtedness not exceeding 800% of net capital, whichever is greater.
B) $250,000 or aggregate indebtedness not exceeding 1500% of net capital, whichever is greater.
C) $50,000 or aggregate indebtedness not exceeding 1500% of net capital, whichever is greater.
D) $25,000 or aggregate indebtedness not exceeding 1500% of net capital, whichever is greater.

A broker/dealer purchases open-end investment companies shares for a customer at $21.50. This includes the sales charge of 8 ½%. The broker/dealer receives a selling concession of 7 ½%. He may confirm the sale to his customer at:

A) $21.50 less 8 ½%.
B) $21.50.
C) 21.50 less 1%
D) $21.50 less 7 ½%.

A broker dealer who executes customer mutual fund orders on a wire basis only may execute how many transactions for its own account and not be subject to an increase in its net capital requirement ?

A) 15 in any 12 month period
B) 10 in any 12 month period
C) 6 in any 12 month period
D) 3 in any twelve month period

The maximum allowable sales charge for an open end mutual fund that pays a service fee to broker dealers is:

A) 7.5%
B) 6.25%
C) 8.5%
D) 7.25%