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Series 6 Investment Company and Variable Contracts (Series6 ) Practice Tests & Test Prep by Exam Edge - FAQ


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Why should I use Exam Edge to prepare for the Series 6 Invest Company Variable Contracts Exam Exam?


FAQ's for Exam Edge Series 6 Invest Company Variable Contracts Exam practice tests

We have ten great reasons why Exam Edge is the #1 source on the internet when it comes to preparing for Series 6 Invest Company Variable Contracts Exam test:

  • Comprehensive content: Exam Edge's Series 6 Invest Company Variable Contracts Exam practice tests are created specifically to prepare you for the real exam. All our Series 6 Investment Company and Variable Contracts practice test questions parallel the topics covered on the real test. The topics themselves are covered in the same proportions as the real test too, based on outlines provided by the Financial Industry Regulatory Authority in their Series 6 Investment Company and Variable Contracts test guidelines.

  • Realistic practice: Our Series 6 Investment Company and Variable Contracts practice exams are designed to help familiarize you with the real test. With the same time limits as the real exam, our practice tests enable you to practice your pacing and time management ahead of test day.

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What score do I need to pass the Series 6 Investment Company and Variable Contracts Exam?

To pass the Series 6 Invest Company Variable Contracts Exam test you need a score of 70.

The range of possible scores is 0 to 100.

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Do you offer practice tests for other Financial Industry Regulatory Authority subjects?

Yes! We offer practice tests for 5 different exam subjects, and there are 35 unique exams utilizing 3300 practice exam questions. Every subject has a free sample practice test you can try too!
Series 6 Invest Company Variable Contracts Exam (Series6 ) Practice Tests
Series 63 Uniform Securities Agent State Law Exam (Series63) Practice Tests
Series 65 RIA (Series65) Practice Tests
Series 66 NASAA Uniform Combined State Law Examination (Series66) Practice Tests
Series 7 General Securities Representative Exam (Series7 ) Practice Tests

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Series 6 Invest Company Variable Contracts Exam - FAQ Sample Questions

Which of the following statements about tax treatment of distributions for TSAs/TDAs is not accurate?





Correct Answer:
distributions from a tsa/tda must begin by age 65 ½.


tax-sheltered annuities (tsas) or tax-deferred annuities (tdas) are retirement savings vehicles commonly used by employees of public schools and certain tax-exempt organizations. understanding the tax treatment of distributions from these accounts is crucial for planning purposes. here is an expanded explanation of the statements regarding their tax treatment, focusing on the accuracy of each statement based on standard irs rules.

the first statement, "distributions from a tsa/tda prior to age 59 ½ are subject to a 10% penalty tax," is accurate. according to irs guidelines, early withdrawals from retirement accounts such as tsas and tdas generally incur a 10% early withdrawal penalty if taken before the age of 59 ½. this is similar to the treatment of early distributions from other retirement accounts like 401(k)s and iras.

the subsequent repeated statement across several lines, "distributions from a tsa/tda must begin by age 65 ½," is not accurate. the irs requires that distributions from tsas/tdas, like other retirement accounts, must generally begin by april 1 of the year following the year in which the account holder reaches age 70 ½. this is known as the required minimum distribution (rmd).

correctly, other statements in the question note, "distributions from a tsa/tda must begin by age 70 ½. if they are not begun by age 70 ½ they are subject to an excess accumulation tax." this is accurate and aligns with irs requirements for rmds. the excess accumulation tax refers to a 50% excise tax on the amount not distributed as required by rmd rules.

finally, the statement, "all distributions for tsas/tdas are taxed as ordinary income in the year in which the distribution is made," is correct. withdrawals from these types of accounts are included in the account holder's income and taxed at their ordinary income tax rate, reflecting the tax-deferred nature of the contributions and the earnings in the account.

in summary, the incorrect statement among those given is that distributions from a tsa/tda must begin by age 65 ½. the correct age for required beginning of distributions, according to irs rules, is 70 ½. understanding these nuances is essential for proper financial planning and avoiding unnecessary penalties.

Insider trading is trading on “material inside information.” All of the following are considered insiders EXCEPT:





Correct Answer:
owner of 20% of the bonds of a company


insider trading is a term used to describe the trading of a public company's stock or other securities (such as bonds or stock options) by individuals with access to non-public information about the company. in many cases, it is illegal, as it gives the insider an unfair advantage in the market.

the definition of an "insider" can include a variety of individuals connected to the company, such as officers, directors, or significant shareholders. typically, these insiders are expected to possess material, non-public information which can impact the company's stock price upon becoming public. for example, knowledge about upcoming financial results, merger plans, or significant contracts would be considered material.

according to securities regulations, insiders are often required to disclose their trades to the relevant regulatory authority, which helps maintain transparency and fairness in the markets. these rules are designed to prevent insiders from profiting unfairly from their advanced knowledge of company matters, which, if leveraged, could hurt ordinary investors who do not have access to the same information.

the choices listed in the question highlight different roles or relationships to a company: 1. an officer of the company is typically considered an insider because they are likely to have material, non-public information about the company. 2. an owner of 20% of the bonds of a company, however, is not typically classified as an insider solely based on this ownership. holding bonds, which are a form of debt investment, does not necessarily provide access to privileged corporate information. insider status generally relates to equity ownership (stocks) rather than debt holdings (bonds), as equity holders have a direct stake in the company's performance and governance. 3. a 10% or more owner of the company’s stock is considered an insider due to their substantial stake in the company and potential access to material information. 4. immediate family members of a director of the company are often considered insiders because they might be privy to sensitive information through their familial relationship.

therefore, in the context of the question, all listed roles except for the "owner of 20% of the bonds of a company" would generally be considered insiders. this distinction is crucial for understanding who is subject to insider trading regulations and must adhere to specific guidelines about disclosing trades and handling confidential information.