Series 6 Practice Questions – Mutual Funds and Insurance

🧾 Series 6 Practice Questions – Mutual Funds and Insurance
📘 Sharpen Your Knowledge with These Key Topic Questions

The Series 6 exam focuses heavily on mutual funds, variable contracts, and insurance products. Below are 10 practice questions specifically designed to test your understanding of these topics. These align with real Series 6 exam standards and include answer choices and explanations.

🎯 1. Which of the following is true about mutual fund Class A shares?

A) They have back-end loads
B) They offer breakpoints for large purchases
C) They charge higher 12b-1 fees than Class C shares
D) They are suitable for short-term investors

✅ Answer: B – Class A shares include front-end sales charges but offer breakpoints for larger investments, making them ideal for long-term investors.

🎯 2. What is the main advantage of investing in a mutual fund?

A) Tax deferral of dividends
B) Guaranteed returns
C) Professional management and diversification
D) Government guarantee on principal

✅ Answer: C – Mutual funds offer diversification and professional management, two of their main selling points.

🎯 3. A client wants to invest in a variable annuity. What must be provided before or at the time of sale?

A) A tax withholding form
B) The mutual fund prospectus
C) The variable annuity’s prospectus
D) The client’s credit report

✅ Answer: C – The prospectus for a variable annuity must be delivered before or at the time of sale.

🎯 4. Which feature is unique to variable life insurance policies?

A) Fixed premium and guaranteed cash value
B) Investment options tied to a separate account
C) Guaranteed death benefit and fixed interest
D) Premium flexibility and a general account

✅ Answer: B – Variable life policies offer investment options through a separate account, and cash value can fluctuate with market performance.

🎯 5. What happens to mutual fund shares purchased under a letter of intent if the full amount is not invested?

A) The investor is charged a redemption fee
B) The sales charge is retroactively adjusted
C) The shares are canceled
D) The fund withholds all dividends

✅ Answer: B – If the full amount isn’t invested within the stated period, the discount is reversed and the appropriate sales charges are applied retroactively.

🎯 6. Which of the following is NOT true about variable annuities?

A) They offer a guaranteed minimum return
B) Earnings grow tax-deferred
C) They include investment risk
D) They are registered as securities

✅ Answer: A – Variable annuities do not offer guaranteed returns; the performance depends on the investments in the separate account.

🎯 7. A mutual fund has a net asset value (NAV) of $9.80 and a public offering price (POP) of $10.30. What type of shares are these likely to be?

A) Class C
B) Class A
C) Class B
D) No-load

✅ Answer: B – Class A shares typically include a front-end sales charge, which is the difference between POP and NAV.

🎯 8. An investor in a variable annuity chooses the annuitization option of “life with 10-year period certain.” What does this mean?

A) The investor receives payments for 10 years only
B) Payments will continue for life or 10 years, whichever is longer
C) Payments are fixed for 10 years
D) Payments are reduced if the investor lives longer than 10 years

✅ Answer: B – This guarantees payments for life, and if the investor dies early, payments continue to the beneficiary for the remainder of the 10-year period.

🎯 9. Which of the following would be considered a primary sales charge expense in a mutual fund?

A) 12b-1 fee
B) Management fee
C) Sales load
D) Redemption fee

✅ Answer: C – The sales load is a primary sales charge paid by investors when buying into a mutual fund.

🎯 10. What is the key difference between whole life and variable life insurance?

A) Whole life offers tax-free cash value growth
B) Variable life has a guaranteed cash value
C) Whole life is considered a security
D) Variable life includes investment choices and market risk

✅ Answer: D – Variable life is a security product tied to a separate account, so the cash value is not guaranteed and is subject to market risk.

🚀 Score Yourself

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