Practice Quiz

FINRA Series 6

Category - Series 6

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A brochure advertising the Stocks4U Mutual Fund contains an example illustrating how much an investor who had invested $10,000 with the fund ten years ago would have in his account today, using the fund’s historical return data, to illustrate the principle of compound interest. An example of this nature:
  1. is expressly in violation of FINRA rules.
  2. may be used only if there actually was such an investor on record.
  3. may be used as long as there is a clear statement that the illustration in no way predicts or projects what an investor who invests $10,000 today would have in his account in ten years.
  4. may be used only if the fund is expecting to be able to duplicate these returns over the next decade.
Explanation
Answer: C - The brochure may contain an example illustrating how much an investor who had invested $10,000 with the fund ten years ago would have in his account today as long as there is a clear statement that the illustration in no way predicts or projects what an investor who invests $10,000 today would have in his account in ten years. Hypothetical illustrations are permitted.
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