Free FINRA Series 6 (Investment Company and Variable Contracts Products Representative) Obtains and Verifies Customers' Purchase and Sales Instructions; Processes, Completes and Confirms Transactions Practice Questions
Processing and confirming transactions on the FINRA Series 6 exam covers purchase and sale instructions, order handling and confirmations, settlement and delivery, dividend and capital gains treatment, and the handling of customer complaints and errors (FINRA).
Sample Questions
Question 1
Easy
A customer's trade confirmation must disclose all of the following EXCEPT:
Solution
D is correct. A confirmation is the firm's written record of the transaction's terms, so it must show the trade date, the quantity and price, and the capacity in which the firm acted (agent or principal). A customer's marginal income tax bracket is personal financial information that does not describe the transaction and is never a required confirmation disclosure.
Question 2
Medium
All of the following are consistent with a firm's duty of best execution under FINRA Rule 5310 EXCEPT:
Solution
D is correct. Best execution requires reasonable diligence to ascertain the best market, weighing factors such as competing market-center prices, the size and type of the transaction, and the speed and likelihood of execution. Placing an additional broker-dealer between the customer and the best market that adds cost without benefit is prohibited interpositioning, which is inconsistent with the duty rather than part of it.
Question 3
Hard
An equity trade is executed regular-way for a customer on a Monday with no intervening holidays. Which statement about processing, confirming, and settling the trade is LEAST accurate?
Solution
D is correct. SEC Rule 10b-10 requires the confirmation to disclose whether the firm acted as principal or agent, so a statement that capacity may be omitted is inaccurate. By contrast, Rule 15c6-1 sets a T+1 cycle (settlement the next business day after a Monday trade), the confirmation must be given at or before completion of the transaction, and Regulation T permits customer payment within two business days after settlement; those statements are accurate.