Multiple select question. Which statement is TRUE regarding contributions to Individual Retirement Accounts for these persons? lower average return on investmentD. I, II, III, IV. futures contracts but not call options Such late trading is prohibited under the Investment Company Act of 1940. IV Hedge fund managers can only be compensated based on a percentage of assets under management If expenses rise (such as a higher management fee), or assets fall (caused by increased redemptions), the ratio will rise. D. Securities that are redeemable with the sponsor. IV open-end management companies, A. I and III A customer redeems 1,000 shares of ABC Fund. Ask; Net Asset ValueD. Using the redemption price of $20 per share x .95 = $19 per share received by the investor after the sales charge is deducted. Which of the following statements are TRUE about the Net Asset Value per share for a mutual fund? Multiple choice question. At a predetermined time, the interest rate is decreased to a rate that is at, or below, the market C. At a predetermined time, the maturity is decreased or "stepped down" D. Fund dividends are taxable, whether or not they are automatically reinvested in additional fund shares. The investor redeems the 100 shares at an NAV of $15 per share after holding them for 5 months. Conforming; subprime. money market I and III onlyC. He or she could elect to have a fixed number of shares liquidated each month (Choice A); could elect to have the account liquidated over a specified period of time (for college education) (Choice B); could elect to have a fixed percentage of the portfolio liquidated each month (Choice C); or could elect to have enough shares liquidated so that a specific dollar amount is received each month (Choice D). C. REITs are similar to open-end funds, with shares redeemable at NAV. What are the terms used for the price specified in an options contract at which the underlying asset can be bought or sold? yesterday's closing Net Asset Value The type of investment company that only redeems its shares periodically at stated dates is known as a(n): A. open end fundB. Which statements about preferred stock are true? were created to make it easier for foreign firms to satisfy US security registration requirements. Which of the following statements are TRUE regarding the mutual fund letter of intent? He or she should elect which type of withdrawal plan? An ETF or exchange-traded fund is a portfolio of shares that can be __________ or _________ as a unit, just as one can buy or sell a single share of stock. The shares are not listed on an exchange, like an open-end fund. What is a characteristic of a Unit Investment Trust? On that date, the price of the shares is reduced for any distributions. Rights of AccumulationC. A A. I and II B . the use of the Poisson model. As the fund has earnings, and Total Assets increase, the shareholder receives more shares worth $1.00 each. The portfolio of investments is managed by an investment adviser - remember, this is type of management company under the Investment Company Act of 1940. She should be told that these are lightly regulated, high risk investments that are only suitable for wealthy, sophisticated investors. The best answer is C. An ETN is an Exchange Traded Note. Thus, they are only suitable for relatively risk tolerant, sophisticated investors. A. A leveraged inverse ETF combines both. (One specific type of violation is "market timing" - the practice of frequently buying and selling a fund's shares to exploit inefficiencies in how the mutual fund company computes NAV per share. This nurse is not wealthy enough for a hedge fund investment. If a single company held in the underlying stock portfolio has its credit rating lowered, this will have a minimal impact on the value of the overall portfolio. 2X (Leveraged) 20+ Year Treasury ETFD. requiring minimum initial fund capital of $100,000. If a fund distributes a dividend to shareholders, the Fund shares are reduced by the value of the distribution on the ex date. D A. I and II ETFs trade on all of the following markets EXCEPT: Exchange Traded Funds, as the name says, trade on stock exchanges. A permitted only if the fund has been in existence for no more than 5 yearsC. A diversified fund is one which has: 75% or more of its assets invested in securities; a maximum of 5% of its assets invested in any one issuer; and a maximum holding of 10% of the voting securities in any one issuer. I Income A customer who buys will pay the current market price plus a commission. This is credit risk. Which sources of REIT income are counted towards the 75% test required by Subchapter M? 6 % III Mutual funds can be sold short; exchange traded funds cannot be sold short A. to change the separate account's investment objective Then label the tundra climate region and label the major asset appreciationC. Dollar cost averaging does not work if the price of the stock remains fixed, nor does it protect against loss in a falling market. I A Life Annuity payout option may be elected by the policy holder Write a paragraph to form a hypothesis about why India's Supreme Court put a temporary ban on the pesticide endosulfan. (Dollar cost averaging requires that an investor make periodic payments (say monthly) of a fixed dollar amount (say $100 per month) to buy a given security. II and III 6% of the amount investedB. III based on the Standard and Poor's 100 Index Letter of IntentD. A mutual fund has a net asset value per share of $12.00. For the rest of the year, the investor is locked into the investment. If the market rises, the customers loss can be infinite. Which statement is TRUE? $10,500D. A customer who places an order to buy 100 shares of Acme Fund will pay approximately: $5,500 that days closing Net Asset Value. Acme $9.90 10.25 +.10 A Specify a transaction price, Potential losses are unlimited The letter of intent to receive a breakpoint can be backdated 90 days. **Market Timing: The practice of frequently buying and selling a funds shares to exploit inefficiencies in how the mutual fund company computes NAV per share. I Interest rate risk C. The ex-date is 2 business days prior to the record date The representative tells the hedge fund customer of the conversation, after which the customer places daily orders to buy and sell that fund's shares in amounts of $750,000. customer will have greater capital appreciation potentialC. DerivativeD. The reduction in total net assets is exactly matched by a proportionate reduction in shares outstanding, so Net Asset Value per share is unchanged by the redemption. Which of the following statements are TRUE about the Investment Company Act of 1940s requirements for management companies? They have relatively low credit risk. D A mutual fund has a net asset value per share of $10.45. 10 business days. People cannot join together to obtain a breakpoint on a mutual fund purchase. Which is considered money in the U.S. economy? REITs are registered securities under the Securities Act of 1933 and trade on an exchange or OTC. Which statements are TRUE regarding money market funds? C B It offers its shares continuously like an open-end fund. This fund family has an exchange feature at NAV, which means that shares of one fund can be redeemed and reinvested in shares of another fund within the family without any sales charge. They have relatively low credit risk. B I Money market funds are typically sold without a sales chargeII Money market funds typically do not impose management feesIII Fund dividends are not taxable if reinvested in additional sharesIV Typical maturities of securities held in the portfolio are 30 days or less. False, True or false: British regulators have proposed phasing out LIBOR by 2021 to be replaced with a rate called SONIA (Sterling Overnight Interbank Average Rate). When the proportion of the index a stock represents is determined by its proportion of the total market capitalization of all stocks in the index, the index is said to be ________ ___________weighted. Which of the following statements about real estate investment trusts is true? Correct Answer B. I and IV Thus, when securities in the portfolio pay a dividend, there is no effect on NAV. Thus, closed-end funds can trade at NAV; below NAV; or above NAV. II The penalties imposed for early withdrawal from the plan Value Stock It appears that the representative has violated the insider trading rules because he divulged the mutual funds red flag threshold to the hedge fund customerD. B) ETFs were not popular in the 2000s but are so today. A closed end funds Net Asset Value is $8.50. The SPDR is the Standard and Poors Depositary Receipt, one of the first index-ETFs. In such a comparison, the Standard and Poors Index Return is the benchmark return against which the funds return can be compared. The PW is negative and Which statements are TRUE regarding a Roth IRA? Capital gains taxes must be paid if they are sold for more than the investor's purchase price. Nonconforming; subprime December 31st of the calendar year in which the contribution may be claimed on that person's tax return $990 I The distribution of dividends to mutual fund shareholders affects the Net Asset Value per shareII The distribution of dividends to mutual fund shareholders does not affect the Net Asset Value per shareIII The redemption of mutual fund shares affects the Net Asset Value per shareIV The redemption of mutual fund shares does not affect the Net Asset Value per share. The sales charge is reduced by 1% for every full year that the fund is held. If a fund distributes a dividend to shareholders, the Fund shares are reduced by the value of the distribution. quarterly She is retired with no dependents, living on a fixed pension of $35,000 per year. A mutual funds expense ratio has been increasing over the last 4 years. B >$20,000 - $45,000 6 % If you buy the fund with a few friends, the purchase will be large enough for a breakpointD. Quotes published in the news media for mutual funds show: I Bid price at NAV less any redemption feeII Bid price at NAVIII Ask price at NAV plus minimum sales chargeIV Ask price at NAV plus maximum sales charge. An insurance policy sells for $600\$ 600$600. If a mutual fund distributes 99% of its Net Investment Income to its shareholders, how much of the Net Investment Income will be taxable? Money market funds usually do not impose sales charges but all funds impose management fees. April 15th tax filing date of the calendar year after which the contribution may be claimed on that person's tax return I Distributions to mutual fund shareholders are taxable to the holder in the year the distribution is made When comparing a mutual fund to a hedge fund, all of the following are true EXCEPT hedge funds: A. are subject to less regulationB. IV Whether the customer can handle declining benefit payments in retirement They are not mutual fund shares because they cannot be redeemed at any time with the sponsor. Mutual fund (open-end management company) shares are newly issued by the fund to any purchaser. The customer wants to sell the stock and asks his broker what will happen if there is no ready buyer for the stock. On that date, the price of the shares is reduced for any distributions. $745 plus commission I At least 40% of the Board of Directors must be non-interested personsII At least 60% of the Board of Directors must be non-interestedIII To establish a fund, a minimum of $10,000 of Total Net Assets is requiredIV To establish a fund, a minimum of $100,000 of Total Net Assets is required. D The ex-date for a mutual fund is set by the Board of Directors. It is typically 1/2 - 1% of assets annually. $10,450D. The relevant question is: Does the funds investment objective match that of the customer? While sales charges, expense ratios, and net asset value history are all important mutual fund investment considerations, they are not as important as investment objective. For this client, the best recommendation would be a: A. hedge fundB. Dividing customer purchase amounts will deny the customer the benefit of the breakpoint. II Hedge funds must register as management companies under the Investment Company Act of 1940 The next day, the index declines by 5%. A. I and III. annual management fee against net assets of 20% plus a performance fee based on exceeding a benchmark index by 2%D. Because common stock is equity, it is not found in money market funds. They are insured by the Federal Deposit Insurance Corporation. managed or unmanagedC. Which of the following statements is true with regard to financial markets? Which statement is TRUE regarding money market funds? II The representative must believe that the customer would benefit from the product's features with a much smaller initial investment (minimum initial purchase amounts for interval funds range between $10,000 and $25,000). Which statements are TRUE regarding mutual fund expense ratios? An interval fund is a newer type of fund structure that is classified as a closed-end fund, but it has many open-end fund features. This means that payments will continue for: ), Which statements are TRUE regarding money market funds? A C I Mutual funds can be purchased on margin; exchange traded funds cannot be purchased on margin requiring at least 40% of the funds Board of Directors to be non-interested partiesD. Class B shares have no up-front sales charge; instead, they have a contingent deferred sales charge, and impose higher annual 12b-1 fees than A shares. I Investors have no Federal tax liability on the interest income received from a municipal bond fundII Investors have no Federal tax liability on the interest income received from a corporate bond fundIII The investment company has no Federal tax liability on the undistributed income that it retains from a municipal bond fundIV The investment company has no Federal tax liability on the undistributed income that it retains from a corporate bond fund. At the end of the first day, because the index rises by 10%, this position will rise by 20% to $12,000 value ($10,000 x 1.2). They can be purchased indirectly through mutual funds. Passive asset managementB. A The best recommendation would be: 7% of the amount investedC. It appears that the hedge fund customer is engaging in the prohibited practice of late trading of mutual fund sharesC. use aggressive investment strategies and have higher riskC. $100,001 - $250,000 3% Multiple choice question. in the Dow Jones Industrial AverageC. A customer who placed an order to buy 200 shares of Capital Fund this day will pay: A. Mutual funds financial statements are sent to shareholders: A. monthlyB. This makes sense because REITs cannot pass losses to their shareholders. $19 x 100 shares = $1,900 received upon redemption. registered fund A customer asks the following; One of my neighbors was talking about his investment in an ETF (Exchange Traded Fund) and said that it is low cost. Is this true? The registered representative should respond that: A. the expense ratios of most ETFs are lower than those for comparable index mutual fundsB. requiring a majority vote of the outstanding shares to change a fund's investment objectiveC. sector fundC. higher average price per shareC. The maximum offering price per share is: All of the following terms apply to mutual fund shares EXCEPT: All of the following statements are true about Real Estate Investment Trusts EXCEPT: A. REITs may be traded on stock exchange floors. 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