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FINRA Investment Company and Variable Contracts Products Representative Examination (IR) Sample Questions:
1. Which of the following bonds would not be considered investment grade?
A) a debenture with an A rating.
B) a municipal bond with a BB rating.
C) a corporate bond with a BBB rating.
D) a general obligation bond with an AA rating.
2. A bond issued by the Needy Corporation pays an 8% coupon, matures in ten years, and is selling for its
face value of $1,000.The yield-to-maturity on this bond is:
A) equal to its coupon rate of 8%.
B) greater than its coupon rate of 8%.
C) less than its coupon rate of 8%.
D) indeterminable with the information provided.
3. Which of the following statements regarding both a Uniform Gifts to Minors account (UGMA) and a
Uniform Transfers to Minors account (UTMA) is false?
A) The assets must be re-registered in the minor child's name when the child turns 18.
B) The account must be established in the name of one minor child only.
C) Once established, the account is irrevocable.
D) There can be only one custodian named on the account.
4. Which of the following investments would have the least interest rate risk?
A) a 20-year, AAA-rated municipal bond
B) a 15-year, AAA-rated corporate bond
C) a 6-month Treasury bill
D) a 3-year Treasury STRIP
5. Ms. Ears is an investment adviser representative. During lunch today, she overheard two men talking
about a hostile takeover that their firm was preparing to undertake. Based on this information, Ms. Ears
does not hesitate to advise the client she meets with immediately after lunch-Mrs. Clueless-- to invest a
sum of money in the firm the men had named as the target firm. Ms. Ears remembers that the price of
target firms, on average, increases significantly with an announcement of this sort, but she does not
inform Mrs. Clueless of the reason underlying her recommendation. Has there been any violation of
insider trading laws in this scenario, as described?
A) No. The scenario does not suggest that Ms. Ears herself made any investment in the target firm, and
Mrs. Clueless was not made aware of the basis for Ms. Ears' recommendation.
B) Yes. Both Ms. Ears and the two men have violated insider trading laws. The two men are prohibited
from discussing such private information in a public setting, and Ms. Ears is prohibited from making a
recommendation based on that information.
C) Yes. In making a recommendation based on information that was not publicly available, Ms. Ears has
violated insider trading laws and is subject to both civil and criminal penalties.
D) No. Ms. Ears is not considered to be an insider of the company preparing the hostile takeover.
Solutions:
| Question # 1 Answer: B | Question # 2 Answer: A | Question # 3 Answer: A | Question # 4 Answer: C | Question # 5 Answer: C |




