Practice Quiz

FINRA Series 6

Category - Series 6

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Upon receiving approval via a majority vote of its shareholders, a mutual fund is permitted to:
  1. change from a diversified company to a non-diversified company.
  2. engage in margin transactions.
  3. retain any dividends and capital gains that it earned on its portfolio rather than paying them out to the shareholders.
  4. issue preferred stock.
Explanation
Answer: A - Upon receiving approval via a majority vote of its shareholders, a mutual fund is permitted to change from a diversified company to a non-diversified company. The fund is not allowed to engage in margin transactions, fail to make dividend and capital gain distributions, or issue preferred stock under any circumstances.
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