FINRA Investment Company and Variable Contracts Products Representative Examination (IR) Sample Questions:

1. Joan is a customer of GetErDone Broker-Dealers. Her twin sister, Jean, has accompanied her to
GetErDone's office and has gathered some information regarding opening an account with the firm, giving
it her contact information at the same time. Under Regulation S-P, which of the following statements
regarding GetErDone's handling of Joan's and Jean's personal information is true?

A) GetErDone must provide Joan with a notification of its privacy policies annually and provide her with
information on how to mandate that it not share her nonpublic personal information with nonaffiliated third
parties.
B) GetErDone can disclose any information that Jean provided them to nonaffiliated third parties since
Jean is not a customer of the broker-dealer.
C) GetErDone is required to have provided Jean with a copy of its privacy policy when she inquired about
opening an account with the broker-dealer.
D) All of the above are true statements.

2. 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) buy a call option on Risky stock with an $8 strike price and an expiration date that occurs after his
return
B) place a stop sell order at a price less than $8 a share-perhaps $6 or $7 a share
C) enter a good 'til cancelled (GTC) market order to sell Risky
D) place a limit order to sell Risky at either $8 a share or a price slightly less than $8 a share

3. Jack purchased a new bond of the Candlestick Corporation for its face value of $1,000.The bond has a
coupon rate of 3.5%, makes semiannual interest payments, and matures in fifteen years. A year after
purchasing the bond, Jack needs to sell the bond to offset some major expenses he incurred when his
home caught on fire. Interest rates in the economy at this time have fallen to 3.0%.Given this scenario,
when Jack sells the bond, he can expect to receive which of the following?

A) more than what he originally paid for the bond.
B) less than what he originally paid for the bond.
C) exactly what he paid for the bond.
D) $965, which is what he paid for the bond less the $35 in interest he received during his year of owning
the bond.

4. Which of the following statements regarding callable bonds is false?

A) The issuer of a callable bond is most likely to redeem the bond early when interest rates fall.
B) A callable bond protects the investor by allowing him to sell his bond back to the issuer and invest in
another, similar-risk bond that pays a higher rate of interest should the investor choose to do so.
C) Investors in callable bonds are subject to prepayment risk.
D) Callable bonds offer a higher yield than non-callable bonds, all else equal.

5. Which of the following bonds will experience the greatest percentage change in price for a given change
in interest rates?

A) a bond with 5 years to maturity that pays a 5% coupon
B) a bond with 10 years to maturity that pays a 7% coupon
C) a bond with 10 years to maturity that pays a 5% coupon
D) a bond with 5 years to maturity that pays a 7% coupon

Solutions: