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


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Series 6 Invest Company Variable Contracts Exam Exam Blueprint

Understanding the exact breakdown of the Series 6 Invest Company Variable Contracts Exam test will help you know what to expect and how to most effectively prepare. The Series 6 Invest Company Variable Contracts Exam has multiple-choice questions The exam will be broken down into the sections below:

Series 6 Invest Company Variable Contracts Exam Exam Blueprint
Domain Name % Number of
Questions
Regulatory fundamentals and business development 22% 22
Evaluates customers’ financial information, identifies investment objectives, provides information on investment products, and makes suitable recommendations 47% 47
Opens, maintains, transfers and closes accounts and retains appropriate account records 21% 21
Obtains, verifies, and confirms customer purchase and sale instructions 10% 10

Series 6 Invest Company Variable Contracts Exam - Exam Topics Sample Questions

The payout phase of a variable annuity is known as which of the following?

Correct Answer:
annuity phase


the correct answer to the question, "the payout phase of a variable annuity is known as which of the following?" is "annuity phase."

the annuity phase, often also referred to as the distribution phase, is the period during which the accumulated funds in the annuity are paid out to the annuitant. this phase contrasts with the accumulation phase, where the annuitant makes contributions to the annuity, which are then invested by the annuity provider. the annuity phase begins when the annuitant decides to start receiving payments, which can be structured in various ways depending on the terms of the contract and the choices of the annuitant.

during the annuity phase, the annuitant typically has several options for how the payments are received. these can include life annuity, which provides payments for the remainder of the annuitant's life; joint and survivor annuity, offering payments that continue to a spouse after the annuitant's death; or fixed period annuity, which pays out over a set number of years. the specific type of annuity chosen will affect the amount and duration of the payments.

it's important to note that when an annuitant chooses to annuitize the contract, they generally enter into an irrevocable agreement with the annuity provider, in which the terms cannot be altered after the annuity phase has begun. this decision should be made with careful consideration of the annuitant's financial needs and goals for retirement.

other terms such as "accumulation phase," "performance phase," and "termination phase" refer to different aspects of an annuity or investment lifecycle but do not describe the payout phase of a variable annuity. the accumulation phase is when contributions are made and invested, the performance phase could informally refer to how the investments within the annuity are performing during the accumulation phase, and the termination phase might be used colloquially to refer to the end of the annuity contract, typically after all payments have been made. however, the precise term for the payout period is the "annuity phase."

The custodian of minor child’s account has a fiduciary duty to manage the account prudently for the benefit of the minor child. Which of the following would NOT be an appropriate guideline?

Correct Answer:
the custodian may borrow from the account.


the role of a custodian for a minor child’s account involves a high level of responsibility and ethical consideration. the custodian is required to manage the account not only with diligence but also with the primary focus of benefiting the minor, who is the ultimate beneficiary of the account. given this fiduciary duty, certain guidelines are set to ensure that the custodian’s actions are aligned with the best interests of the minor.

first, the guideline that states the custodian must provide support for all withdrawals from the account is indeed an appropriate guideline. this requirement ensures transparency and accountability, compelling the custodian to justify each withdrawal by demonstrating that it directly benefits the minor, or is necessary for managing the account effectively on behalf of the minor.

the guideline that the custodian may not let rights or warrants expire is also fitting. rights and warrants can be valuable financial opportunities, and allowing them to expire unused could mean a missed opportunity to enhance the value of the minor's account. the custodian’s duty includes taking all reasonable steps to increase or preserve the account's value, where feasible.

however, the statement that the custodian may borrow from the account stands out as inappropriate and contrary to the fiduciary duty owed. borrowing from the minor's account can create a conflict of interest, and it risks the assets which are meant to secure the minor's future. any such act could compromise the integrity of the account and potentially deplete the resources meant for the benefit of the minor.

furthermore, the guideline stating that the custodian may not give discretion to a third party is generally prudent. this maintains the control and responsibility solely with the appointed custodian, who is vetted and trusted to manage the account. delegating this authority could dilute the oversight and personal accountability expected of a custodian, potentially leading to mismanagement or neglect of the account.

in conclusion, among the guidelines provided, the statement that the custodian may borrow from the account is notably inappropriate. it contradicts the fundamental principle of fiduciary duty, which is to act entirely in the interest of the beneficiary – in this case, the minor child. the custodian must avoid any actions that could jeopardize the child's financial welfare or that represent a conflict of interest. ensuring strict adherence to guidelines that prohibit borrowing from the account is essential in upholding the trust placed in the custodian’s role.