Under the Investment Company Act of 1940, an investment company is:

• A. required to register with the SEC.
• B. any company that holds investment securities that have a value that is greater than 40% of the
  company's totalassets.
• C. All of the above accurately describe an investment company as defined by the Investment Company
  Act of 1940.
• D. any issuer whose primary business involves investing, reinvesting, or trading in securities.

Under current tax law, in order for the profits from the sale of any investment to be considered long-term
capital gain income, the investment must have been held for:

• A. longer than 6 months.
• B. longer than 24 months.
• C. longer than 18 months.
• D. longer than 12 months.

A preemptive right:

• A. entitles its owner to buy shares of stock at a specified price within a specified time period in order to
  maintain his proportionate ownership in the firm.
• B. is a feature on some preferred stock issues that allows the preferred shareholders to exchange their
  preferred shares for shares of the common stock of the firm.
• C. is a call option that is usually attached to a bond as a sweetener.
• D. gives a bond owner the option to sell the bond back to the issuer at a pre-specified price.

Which of the following would be a reason for a person to receive a statutory disqualification from
membership in FINRA?

• A. The person has made a misleading statement of material fact on the membership application.
• B. The person is on the verge of financial insolvency.
• C. All of the above are reasons for a person to receive a statutory disqualification from membership in
  FINRA.
• D. The person has been barred from membership in one of the national exchanges.

Which of the following statements regarding the tax treatment of variable annuity contracts is false?

• A. An investor who makes a withdrawal prior to having reached the age of 62 1/2 will be subject to a 10%
  penalty on the withdrawal.
• B. If an investor opts to receive regular payments of a specific amount-i.e., annuities-part of each
  payment will be considered repayment of principal and will not be subject to taxation.
• C. If an investor opts to make a random, partial, lump sum withdrawal, the entire amount of the withdrawal
  will be taxed as ordinary income to the investor.
• D. Earnings on the contributions to a variable annuity are not taxed during the accumulation phase.