Finra Series-6 Exam - Topic 10 Question 29 Discussion

Actual exam question for Finra's Series-6 exam

Question #: 29
Topic #: 10

Mr.B . Beard started making regular investments in a mutual fund with the goal of financing a five-year circumnavigation on his 40-foot sailboat, ''Pirate's Lady.'' He is getting ready to depart and wants to set up an automatic withdrawal plan such that the money he has invested will see him through his circumnavigation, with nothing remaining in the account at the end.

Which of the systematic withdrawal plans will best fit his needs?

A . fixed-percentage plan

B . fixed-share plan

Afixed-time plan

Bfixed-dollar plan

Show Suggested Answer

Suggested Answer: A

Since Mr. Beard wants an automatic withdrawal plan such that the money will last through his circumnavigation, with nothing remaining at the end, he should elect to use the fixed -time plan. Under this plan, the fund determines how much it will redeem each period over the five years such that the account is depleted at the end of that time period. There is no way of knowing exactly how long Mr. Beard's money will last under the other three types of plans; it could be greater than or less than 5 years--or exactly 5 years for that matter.

by Art at May 03, 2022, 09:54 PM

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Larue

4 months ago

I’m not so sure, a fixed-time plan might be better for steady withdrawals.

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Paz

4 months ago

Wait, can he really plan to have nothing left after five years? Sounds risky!

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Karan

4 months ago

A fixed-percentage plan could leave him with leftover funds, not ideal!

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Zachary

4 months ago

Totally agree, it gives him a clear amount to work with each month.

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Denny

5 months ago

I think a fixed-dollar plan makes the most sense for him.

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Willard

5 months ago

I feel like the fixed-dollar plan makes the most sense for his situation, but I need to double-check how it compares to the other options.

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Avery

5 months ago

I practiced a similar question where a fixed-time plan was suggested, but I’m not sure if that applies here since he has a specific duration in mind.

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Janey

5 months ago

I’m not entirely sure, but I think a fixed-percentage plan could leave him with some money left over at the end, which he doesn’t want.

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Aleisha

5 months ago

I remember discussing how a fixed-dollar plan might work better for Mr. Beard since he wants to deplete his account completely.

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Kiera

5 months ago

I'm not totally sure about this one. The options seem a bit tricky. I'll have to review my notes on the advantages of stratified sampling to make sure I'm picking the right answer.

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Dorsey

5 months ago

Okay, let's see here. I think options A and B seem like they could be valid, but I'm not sure about C and D. I'll need to double-check the definitions of those terms.

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Carman

5 months ago

I practiced some questions on the BBA before, and I think both A and B have to be correct for the right answer, maybe C?

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