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FINRA Investment Company and Variable Contracts Products Representative Examination (IR) Sample Questions:
1. Mary is interested in buying shares of the Lambchops Corporation, which sells over-the-counter. The
market maker with the best bid price--$3.15--is Veggie Investments. The market maker with the best ask
price--$3.27-is Carnivor Investments. Mary conducts trades in NYSE-listed stocks through her broker,
Omnivor and Associates. Given this scenario, which of the following statements is true?
A) Mary can buy shares of Lambchops Corporation at the bid price of $3.15 by contacting Veggie
Investments directly.
B) Mary can buy shares of Lambchops Corporation at the ask price of $3.27 by contacting Carnivor
Investments directly.
C) Mary can buy shares of Lambchops Corporation at the ask price of $3.27 by contacting Omnivor and
Associates.
D) Mary can buy shares of Lambchops Corporation at the bid price of $3.15 by contacting Omnivor and
Associates.
2. Which of the following correctly describes a difference between closed-end and open-end investment
companies?
A) Open-end investment companies have a fixed number of shares; closed-end companies can create
new shares if there are more buyers than sellers.
B) Open-end investment company shares will never be offered at a price below the net asset value per
share of the fund; this is not true of closed-end companies.
C) Open-end companies may invest in non-diversified portfolios; closed-end companies are required to
invest only in diversified portfolios.
D) Shares of open-end companies sell on exchange floors; shares of closed-end companies are bought
and sold through the company itself.
3. Pete Prophet, the manager of a bond mutual fund, is expecting interest rates to increase. All else equal,
which of the following bonds would be the best investment under this assumption?
A) a bond with a 10% coupon and 5 years to maturity
B) a zero-coupon corporate bond with 12 years to maturity
C) a bond with a 5% coupon and 10 years to maturity
D) a Treasury strip with 15 years to maturity
4. Annie Vestor owns shares of the URMoney Mutual Fund. Annie lives on the west coast in Seattle,
Washington. URMoney reported a net asset value per share of $10.10 on October 9th. On October 10th,
its reported net asset value per share was $10.20. Upon arriving home at 12 P.M. (her time) on October
9 th, Annie logged into the URMoney website and entered an order to redeem 500 shares of her holdings
in the fund. This order will be transacted at:
A) the net asset value of the fund at the end of the trading day on October 11th.
B) $10.10
C) $10.20
D) The price at which this order will be transacted cannot be estimated based on the information provided.
5. Which of the following pieces of information may not be contained in a tombstone advertisement under
SEC rules?
A) the name and address of a place where a prospectus can be obtained
B) the price of the offering
C) the type of business in which the issuing firm is engaged
D) the name of the issuer
Solutions:
| Question # 1 Answer: C | Question # 2 Answer: B | Question # 3 Answer: A | Question # 4 Answer: B | Question # 5 Answer: B |



