Last Updated: Jun 05, 2026
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1. Yvette is a recently-widowed 63-year-old. The couple had no children, and when her husband died, she
was the beneficiary of his $45,000 life insurance policy. She also receives benefits from his retirement
plan and social security, but this income falls about $300 short of covering her regular monthly expenses,
which includes a sizeable amount for health insurance. In the months since her husband's death, she sold
their larger home and purchased a condominium, netting $80,000 from the combined transactions. Yvette
was a homemaker all her life, and her husband handled all their finances, so Yvette is just learning how to
balance her checkbook. One thing she does know is that she is going to have to purchase a new car
within the next few months. Yvette is in good health and expects to live at least another 25 years. Which
of the following types of investments should be included in recommending an asset allocation to Yvette?
A) life insurance policy
B) money market fund
C) aggressive growth stock fund
D) municipal bond fund
2. Ms. Fortune died at the relatively young age of 60. Which of the following options are available to her
6 5-year-old spouse, the beneficiary of her IRA?
I. withdraw the entire balance in a single lump sum
II. continue to make contributions to the IRA as if it were his own
III. roll his deceased wife's IRA into an existing IRA that he owns
A) I and II only
B) I and III only
C) I only
D) I, II, and III
3. Any person who willfully acts in violation of the Securities Act of 1933, or any SEC rule, is subject to a
penalty of:
A) 5 years in prison or a $5,000 fine, or both.
B) 10 years in prison or a $25,000 fine, or both.
C) 10 years in prison or a $10,000 fine, or both.
D) 5 years in prison or a $10,000 fine, or both.
4. NewWave Investments, a family of mutual funds, hires the star of a new motion picture about the
workings of Wall Street to provide a testimonial as part of NewWave's new television ad campaign. The
actor's financial adviser has, in fact, invested some of the actor's monies in NewWave's funds. NewWave
provides the actor with a script in which the actor explains the concept of dollar cost averaging to the
viewers. At the conclusion of the actor's explanation, the viewers are informed that the actor has been
paid for his testimonial, that his experience may not be representative of that of other clients, and that past
performance is no guarantee of future performance. Based on these facts:
A) NewWave has violated a FINRA rule that prohibits testimonials of public figures from being used in
advertisements.
B) NewWave has violated a FINRA rule requiring that any testimonial that contains a technical aspect
related to investing must be given by someone who has both the knowledge and experience to hold a
valid opinion on the topic.
C) NewWave has violated a FINRA rule stipulating that testimonial providers can receive no payment for
their testimonies.
D) NewWave has violated no rules; it has complied with all of FINRA's disclosure requirements.
5. The primary difference between dealers and brokers is that:
A) dealers operate only in the bond market, while brokers conduct trades in stocks, bonds and options.
B) dealers are market makers, who buy and sell out of their own inventory of securities, while brokers are
matchmakers, who match buyers with sellers.
C) Both Choices B and C describe differences between dealers and brokers.
D) dealers operate exclusively in the primary market whereas brokers operate only in the secondary
market.
Solutions:
| Question # 1 Answer: B | Question # 2 Answer: D | Question # 3 Answer: D | Question # 4 Answer: B | Question # 5 Answer: B |
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