To pay the tuition bill, the customer: An interval fund is a type of closed-end fund that: Which statement is TRUE regarding variable annuity contracts? The customer is purchasing enough ($35,000) to qualify for a 6 % sales charge. ETFs have market risk. An inverse ETF based on the price movements of 20+ year Treasuries would have the largest profit when interest rates rise. whereas ______ mortgages are riskier loans made to financially weaker borrowers C. I and IV B All of the following would reduce the Net Asset Value per share of a mutual fund EXCEPT: A. asset depreciationB. Their interest income is exempt from federal income taxation. D C. REITs are similar to open-end funds, with shares redeemable at NAV. They are directly accessible to individual investors. participating unit investment trust, Which statements are TRUE regarding Individual Retirement Accounts? A A The money market is a market for short term funds which deals in monetary assets whose period of maturity is upto one year. B Which of the following statements are TRUE about the Investment Company Act of 1940s requirements for management companies? Passive asset managementB. this is a reasonable request because of the large dollar investment to be made and that you will contact the administrative personnel at the Jeffersonian fund familyC. Industry performance REPOs are repurchase agreements; ADRs are American Depositary Receipts; and ADSs are American Depositary Shares. A. Management companies are subclassified as either: A. open-end or closed-endB. It is a market where low risk, unsecured and short term debt instruments that are highly liquid are issued and actively traded everyday. So why would an investor buy into such a fund? Fixed periodC. Under FINRA rules, the maximum sales charge that may be imposed by a mutual fund is 8 1/2% of the Public Offering Price. III A fixed number of units is purchased with each payment D. It appears that the representative has violated industry firewall requirements, because registered representatives are prohibited from talking to the administrative personnel of mutual fund companies, B. (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. They are structured as private placement limited partnerships that are only available to wealthy accredited investors. I and IIID. To impose the maximum sales charge of 8 1/2%, FINRA requires funds to give investors specified breakpoints (lowered sales charges for large dollar purchases), a letter of intent option (once the letter is signed, the investor has 13 months to complete a breakpoint), and rights of accumulation (the investors accumulated position counts towards completion of a breakpoint). The expense ratio is found by taking Total Expenses / Total Net Assets. Depreciating securities in the Fund portfolio will also decrease NAV per share. If a fund distributes a dividend to shareholders, the Fund shares are reduced by the value of the distribution. A The wife works while the husband does not. Which statements are TRUE regarding mutual fund expense ratios? It is listed and trades like a stock, so it has little marketability risk. The plan requires that a constant dollar amount be maintained in equity securities, with any excess invested in debt. They hedge all positions to limit risks. Initial payments are made at an interest rate that is above the prevailing prime rate but stepped down to the Treasury rate over time B. D D Which is considered money in the U.S. economy? Which statements are TRUE regarding hedge funds? 5% of the Public Offering PriceC. Because they are risk-free, they offer lower interest rates than other bonds. D Closed-end funds have a one-time stock issuance and the fund is closed to new investment. The ex-date is the day on which the Net Asset Value per share increases. A. Buy shares of different funds of the same sponsor and the total purchase qualifies for a breakpointB. The sales charge is reduced by 1% for every full year that the fund is held. It is based on 500 firms. Correct B. II only A. This will occur if the fund gives an inferior return. B I Property rentalsII Interest from mortgagesIII Capital gains on property salesIV Real estate tax refunds, A. I and II onlyB. An inverse ETF is one that uses short and options to move opposite to the market. Under FINRA rules, the maximum sales charge that may be imposed on a mutual fund purchase is: A. Which statements are true about bid-ask spreads? capital gains distributionD. Explain your answer by discussing functions of money. B Which statement is TRUE regarding money market funds? B d. All of the above are true regarding ETFs. custodial feesC. Which of the following statements are TRUE regarding the Federal tax treatment of a regulated mutual fund investing solely in municipal securities? ready marketability of sharesC. If the price of the security is fluctuating, the average purchase cost per share will be lower for the investor than the simple mathematical average price of the shares over the same period. A 300% leveraged ETF can be expected to move 3 times as fast as the reference index, either up or down. I If the securities in the portfolio make dividend distributions, the Net Asset Value per share will increaseII If the securities in the portfolio make dividend distributions, the Net Asset Value per share is unaffectedIII If the mutual fund makes dividend distributions to shareholders, the Net Asset Value per share will decreaseIV If the mutual fund makes dividend distributions to shareholders, the Net Asset Value per share is unaffected. The guarantee of a minimum growth rate in the separate account if a higher annual fee is paid for this rider For individual investors, the. I Periodic payments of fixed dollar amounts are made $90 per shareD. She should be told that these are lightly regulated, high risk investments that are only suitable for wealthy, sophisticated investors. It is a type of structured product offered by banks that gives a return tied to a benchmark index. Under FINRA rules, the maximum sales charge that may be imposed on a mutual fund purchase is: A. An investor buys 100 shares of an open-end investment company with a 5% contingent deferred sales charge. I, II, III. $6,500 Rights of AccumulationC. This guy is rich and is looking for a rich mans investment. III onlyC. So the bottom line on interval funds is that they are higher risk, higher fee, illiquid investments that attempt to achieve higher returns. An individual wishes to have a complete liquidation of the account done over a 5 year time frame. I and III onlyC. The typical hedge fund fee is 2 and 20 - a 2% annual management fee as a percent of assets under management, plus 20% of profits. What is the ending inventory at the end of each month? contingent deferred sales charge fundD. I, II, III, IV. Income and growth Which of the following statements are TRUE about REITs? The registered representative accepts the customer purchase order without making any additional disclosures. III Capital Gains A. ETNs have credit riskB. Which statements are TRUE when the Federal Reserve enters into a repurchase agreement with a U.S. Government securities dealer? I, II, III, IV. The customer wants to sell the stock and asks his broker what will happen if there is no ready buyer for the stock. The term mutual fund is the common name for a(n): A. open end management companyB. Thus, they are similar to closed-end investment companies under the Investment Company Act of 1940, except that investments are made in real estate and mortgages, instead of in securities. At the market opening, a customer purchases 200 shares of an S&P 500 2X ETF at $50 per share. 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). II If the securities in the portfolio make dividend distributions, the Net Asset Value per share is unaffected IV. No load funds do not impose any of the following fees EXCEPT: A. CLOSED END BOND FUNDSFund Net Asset Value Stock Close NAV Change, Acco $8.32 8.13 -.08 Acme $9.90 10.25 +.10Adap $7.45 7.50 -.01. At the end of 13 months, the NAV is $20,000. The reason why these funds are called "money" funds is that the securities held in the portfolios have very short maturities (less than 30 days) and turn over into cash quickly. Which of the following statement (s) is (are) TRUE regarding family limited partnerships? Multiple select question. closed-end fund is managed; while an open-end fund is not managedC. Which of the following statements are TRUE when comparing a Life Annuity to a Life Annuity with Period Certain? B D He will produce the 31,500 units over four months at a level of 7,875 per month. I The Fed buys U.S. Government securities from the dealer II The Fed sells U.S. Government securities to the dealer III The Federal Reserve is loosening credit in the banking system If an individual wishes to redeem shares of a mutual fund under a systematic withdrawal plan, he or she gets to elect a withdrawal option. What will be the market value of the 200 share position? REITs are registered securities under the Securities Act of 1933 and trade on an exchange or OTC. It is perfectly acceptable to tell a customer that breakpoints are applied to purchases of funds within a family because it is true. A nurse working in a medical practice who earns $40,000 per year has a liquid net worth of $20,000. The cost of soliciting new investment also includes compensation to registered representatives selling the fund shares. I and IVC. III If the mutual fund makes dividend distributions to shareholders, the Net Asset Value per share will decrease Which statements are true about municipal bonds? tax exempt fund. Which statement is TRUE regarding money market funds? 2X (Leveraged) 20+ Year Treasury ETFD. capital gains potentialD. The registered representative should make the customer aware of the tax consequences of exchanging mutual fund sharesB. D The Ask price on ALPO Fund is $10.39 per share or $1,039 for 100 shares. Because common stock is equity, it is not found in money market funds. Increase in value when asset falls in price I ETNs have both credit risk and market riskII ETFs have both credit and market riskIII ETNs have only market riskIV ETFs have only market risk, A. I and II onlyB. All fund shares must be priced in accordance with the rules written under the Investment Company Act of 1940 - for example, mutual fund shares must be forward priced under these rules. $1,039D. Both Treasury bonds and Treasury notes make semiannual interest payments. The stock then trades like any other common stock, except the company is in the business of making investments; instead of say, making cars, beer, or computers. The last price for Acme Fund is $10.25, so 100 shares will cost $1,025 plus a commission. negotiated sales charge fund, The sales charge that is imposed when a customer initially purchases fund shares is known as a front-end load sales charge.. II and IIIC. I, II, IIID. This action is: A. permittedB. A 22-year old, unmarried, new customer contacts you, explaining that he just inherited $10,000,000 and wishes to invest the money aggressively to produce superior returns. I and II only both have portfolios that are managed requiring at least 40% of the funds Board of Directors to be non-interested partiesD. registered fundC. 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. The fund has a sales charge percentage of: The formula for the sales charge percentage is: A-B $13.30 - $12.30 $1.00- = - = = 7.5% A $13.30 $13.30. If the securities in the fund portfolio pay dividends, these are received by the Fund. **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. 5- Risk, Return and the Historical Record, Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield, Fundamentals of Financial Management, Concise Edition, Carl S Warren, James M Reeve, Jonathan E. Duchac, Trends Chpt 22 Quality Improvement and Patien. An ETF is an Exchange Traded Fund. B III and IV onlyC. IV based on the Standard and Poor's 500 Index II Dividends The four most relevant types of money are commodity money, fiat money, fiduciary money ( cheques, banknotes ), and commercial bank money. Hedge FundD. If a customer is close to a breakpoint, it is a violation to not make the customer aware that putting in the additional funds to reach that level will result in a lower sales charge. is unaffected III Mortality risk Technically, most ETFs are structured as open-end investment companies, since they allow for the creation of additional shares in minimum creation units of $50,000 - $100,000. Incorrect Answer C. 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