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FINRA Investment Company and Variable Contracts Products Representative Examination (IR) Sample Questions:
1. Which of the following is an example of market risk?
A) the risk that an automobile manufacturer will have to undertake a massive recall of its cars
B) the risk that a drug company will produce a pill that will cure cancer
C) the risk that the nation will enter a recession
D) the risk that competing firms will enter the market when a firm's patent protection expires
2. Mr. Big of HiGrow Corporation needs more money to support the exceptional growth rate that his firm is
enjoying. He meets with BigFee Investment Banker, who agrees to handle the IPO for HiGrow. As part of
the process, BigFee's staff works with HiGrow's accountants to prepare the registration statement that is
filed with the SEC. After the issue has been sold to the public, Mr. Sharp, a CPA who has invested in the
stock of HiGrow, discovers that there are some accounting irregularities in the financial statements
provided in HiGrow's prospectus. Who can be sued for the misleading statements?
I. Mr. Big
II. Big Fee Investment Banker
III. HiGrow's accountants
IV. HiGrow's attorneys
A) II and III only
B) I, II, III, and IV
C) I, III, and IV only
D) I and II only
3. Mr. A. D. Venturer owns 10,000 shares of Risky Corporation, which is currently selling for $8 a share. He
is leaving shortly for an extended trip to Antarctica and will be out of communication for that time. He
doesn't want to liquidate his investment in Risky before he goes, but he doesn't want to return to find that
his $80,000 investment is worth little to nothing. Which of the following options would make sense for Mr.
Venturer?
A) place a stop sell order at a price less than $8 a share-perhaps $6 or $7 a share
B) buy a call option on Risky stock with an $8 strike price and an expiration date that occurs after his
return
C) place a limit order to sell Risky at either $8 a share or a price slightly less than $8 a share
D) enter a good 'til cancelled (GTC) market order to sell Risky
4. Phil Anthropy wrote his cousin a $15,000 check to pay for medical bills the cousin had accumulated. He
also distributed $5,000 checks to three nephews who were in college, and gave his mother a check for
$ 12,000. Have Phil's actions triggered any gift taxes?
A) Yes, $2,000 of his total distributions is subject to the gift tax.
B) Yes, $7,000 in distributions is subject to the gift tax.
C) No. None of Phil's distributions is subject to the gift tax.
D) Yes, $19,000 of his total distributions is subject to the gift tax.
5. A type of preferred stock for which any dividends missed in prior years must be paid before common
shareholders may receive any dividends is referred to as:
A) participating preferred.
B) cumulative preferred.
C) convertible preferred.
D) adjustable rate preferred.
Solutions:
| Question # 1 Answer: C | Question # 2 Answer: B | Question # 3 Answer: A | Question # 4 Answer: A | Question # 5 Answer: B |







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