redeemableC. I Minimum initial fund capital of $100,000II Interested persons on the Board of Directors cannot hold over 60% of the seatsIII Changing the funds investment objective requires a majority vote of the shareholdersIV Setting maximum sales charges on mutual fund purchases, A. I and II onlyB. Funds are usually raised from this market up to three daysthe higher the interest, the longer the period for which the funds have been borrowed. I, II, III. 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). A They have relatively low credit risk. dividend and capital gains distributions are taxable each year for both Industry performance If a fund distributes a dividend to shareholders, which statements are TRUE? An individual wishes to have a complete liquidation of the account done over a 5 year time frame. the annuitant's life, not to exceed 20 years -Initial payments are made at an interest rate that is above the market rate -At a predetermined time, the interest rate is decreased to a rate that is at, or below, the market A customer wishes to buy a $50,000 certificate of deposit offered by your firm. $10,450C. Multiple select question. The second digit is a 2. ______ mortgages satisfy certain underwriting guidelines before they may be purchased by Fannie Mae or Freddie Mac. It must be adjusted for stock splits. I Acceptance of the plan requires a majority vote of the outstanding shares; the Board of Directors; and the disinterested members of the BoardII Discontinuance of the plan requires majority vote of the outstanding shares or the disinterested members of the BoardIII Mailings to prospective purchasers of the fund are an acceptable 12b-1 chargeIV Expense ratios for funds that have adopted 12b-1 plans can be expected to be higher than for similar funds without 12b-1 fees. in the Dow Jones Industrial AverageC. Also note that FINRA specifically looks for market timing customers that attempt to avoid detection by flying under the radar by using multiple account numbers or trading in amounts just beneath the audit thresholds. Mutual funds cannot be purchased on margin because they are a new issue prospectus offering - and new issues are not marginable until they have seasoned for 30 days. The two types of ________ bonds are 1) foreign bonds which are issued in foreign countries but in the currency of the investor and 2) Eurobonds which are denominated in a currency other than that of the country in which it is issue. I and IV I registered under the Investment Company Act of 1940 C ), CLOSED END BOND FUNDSFund Net AssetValue StockClose NAVChange C. It appears that the representative has violated the insider trading rules because he divulged the mutual fund's "red flag" threshold to the hedge fund customer II and III II If the securities in the portfolio make dividend distributions, the Net Asset Value per share is unaffected stability. there is an opportunity cost relative to the expected potential investment return when buying an exchange traded index fund as compared to buying an actively traded mutual fund. annual management fee against net assets of 2% plus a performance fee based on 20% of profitsC. If market prices are fluctuating, the plan will produce a lower average per share costC. $12.02 The ex-date is set by FINRA Also note that FINRA specifically looks for market timing customers that attempt to avoid detection by flying under the radar by using multiple account numbers or trading in amounts just beneath the audit thresholds. And the fees charged are more similar to hedge funds than a traditional closed-end fund as well - with annual ongoing fees averaging 3%, and another average 2% fee when shares are redeemed (and this ignores the up-front sales charge that is imposed when the shares are purchased!). III The capital gain is taxable if it is automatically reinvested in the fund The maximum annual 12b-1 fee is .75% of net assets per year under FINRA rules. They have relatively low credit risk. On that date, the price of the shares is reduced for any distributions. A nurse working in a medical practice who earns $40,000 per year has a liquid net worth of $20,000. $46.94 of diamond mining companiesD. The portfolio of investments is managed by an investment adviser - remember, this is type of management company under the Investment Company Act of 1940. are only available to qualified purchasersD. The representative has acted properly - no additional disclosures are required to be made to the customerB. The other major exchange traded funds include - SPDRs (Standard and Poors 500 Index - symbol = SPY) - also traded on the AMEX (now renamed the NYSE American), and QUBES (NASDAQ 100 Index - symbol = QQQ) which are traded on the NASDAQ. These are markets for thinly traded illiquid securities. A. IV. Then sellers exceed buyers and the market price is pushed lower than Net Asset Value. Which statements are true about municipal bonds? Correct B. II only C) Instead of buying stocks in all 500 companies in the S&P 500, you can purchase a stock of the SPDR S&P 500 ETF. II and IV, A customer has purchased $25,000 of a mutual fund. requiring at least 40% of the fund's Board of Directors to be "non-interested" partiesD. tax exempt fund. monthly A donor Which of the following statements about money market mutual funds is true? requiring at least 40% of the funds Board of Directors to be non-interested partiesD. liquidityD. They are exempt from securities regulation since the general public cannot invest, except for the anti-fraud rules. 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. It has been calculated since 1896. I and II only C Which of the following would reduce the Net Asset Value per share of a mutual fund? B II and IIIC. D Under the Investment Company Act of 1940, customers who redeem must be paid within 7 calendar days (the same as 5 business days, or 1 week) of the redemption date. I, III, and IV. 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. Bid is also the same thing as Redemption Price. It appears that the hedge fund is engaging in the prohibited practice of late trading of mutual fund sharesB. II The REIT issues shares of beneficial interest representing an undivided interest in a pool of real estate investments Fixed period Usually, the limited partner investor can only cash out at year end. An ADR is an American Depositary Receipt. I Shares are issued in a one-time offeringII Shares are continually issuedIII Shares trade on an exchange or over-the-counterIV Shares are redeemed with the issuer. fund of hedge fundsC. The maximum offering price per share is: When comparing a mutual fund to a hedge fund, all of the following are true EXCEPT hedge funds: A. are subject to less regulationB. A closed-end management company is a publicly traded fund. c. They have management fees higher than other mutual funds. Passive asset managementB. requiring minimum initial fund capital of $100,000, A fund that distributes at least 90% of its Net Investment Income to shareholders is termed a(n): B Similarly, undistributed income retained by the fund would not be taxed, since it consists solely of tax free municipal interest income. The PW is negative and A Which statements are true of money market instruments? An ETF is an Exchange Traded Fund. III and IVD. The guarantee of a minimum growth rate in the separate account if a higher annual fee is paid for this rider $745 plus commission II and IV. B) Pension funds invest a portion of their assets in the money market to have sufficient liquidity to meet their obligations. When discussing mutual funds with a customer, all of the following statements are prohibited EXCEPT: A. August 15th tax filing date permitted under an automatic extension of the calendar year after which the contribution may be claimed on that person's tax return, A registered representative primarily services institutional hedge fund customers that direct a large volume of trades to that brokerage firm. This makes sense because REITs cannot pass losses to their shareholders. may correspond to ownership of a fraction of a foreign share 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. 20 years to the annuitant or beneficiary, All of the following sources of REIT income are counted towards the 75% test required by Subchapter M EXCEPT: B What is the permitted maximum contribution to this spousal IRA for the year 2018? If prices rise, smaller dollar purchases must be made; while if prices fall, larger dollar purchases must be madeD. At this point, the customer wants to buy another $15,000 of the fund. I and III For the customer exchanging Government Bond Fund shares for Growth Fund shares, a tax event has occurred. An engineer prepares a report to evaluate a project using PW and IRR. II and IV, The owner of a variable annuity has all of the following rights EXCEPT the right to vote: Under FINRA rules, the maximum sales charge that may be imposed by a mutual fund is 8 1/2% of the Public Offering Price. D. Market capitalization, B. A. III and IV onlyC. $100,001 - $250,000 3% D. II and IV, Exchange Traded Funds (ETFs) are: One section of this release would have to be devoted to a study of the Commission's 2010 money market amendments ("2010 Amendments") to gather data and ascertain their effectiveness. The receipt of these monies into the Fund increases NAV per share. Incorrect Answer A. A So why would an investor buy into such a fund? 5% of Net Asset ValueB. is capped to a maximum amount, An order placed to buy or redeem mutual fund shares is filled at: semi-annuallyD. They are structured as private placement limited partnerships that are only available to wealthy accredited investors. C recipient B. Inverse (Short) S&P 500 Index ETF On the other hand, Real Estate Limited Partnerships (RELPs) are a tax sheltered investment that allow both gain and loss to flow through to the partnership investors. The US Department of Energy has assessed that the Covid-19 pandemic most likely came from a laboratory leak in China, according to a newly updated classified intelligence report. C Corporations may exclude 70% of dividends received from domestic corporations from taxable income. B. is obligated to buy the stock at the limit price, if one is specified by the customer A. I, II, III, IV. Then the shares are listed on an exchange and trade like any other stock. It is typically 1/2 - 1% of assets annually. regulated fund 1 business dayB. will decrease D Which of the following statements are TRUE regarding the Federal tax treatment of regulated mutual funds? yesterday's opening Net Asset Value I The income yield of the fund consists of both the dividend distributions and the capital gains distributionsII If you buy the fund with a few friends, the purchase will be large enough for a breakpointIII Buy the fund shares now just before the dividend is paid so you can get immediate incomeIV Buy shares of different funds of the same sponsor and the total purchase qualifies for a breakpoint, A. I and IIIB. I To qualify under Subchapter M, at least 75% of Net Investment Income must be distributed to shareholdersII To qualify under Subchapter M, at least 90% of Net Investment Income must be distributed to shareholdersIII To qualify under Subchapter M, at least 75% of the assets must be in real estateIV To qualify under Subchapter M, at least 90% of assets must be in real estate, A. I and IIIB. This will occur if the fund gives an inferior return. 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. A(n) _______ option is a right to sell an asset at a stipulated exercise price on or before an expiration date. Furthermore, the longer maturity and lower coupon issues rise the fastest as market interest rates fall. Hedge funds are partnerships that are completely illiquid. Fixed percentageD. The money market is a market for short term funds which deals in monetary assets whose period of maturity is upto one year. ready marketability of sharesC. I Property rentalsII Interest from mortgagesIII Capital gains on property salesIV Real estate tax refunds, A. I and II onlyB. 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. The largest expense of running a mutual fund is the annual management fee. Types of funds Growth, growth and income, income, balanced, index, specialized (sector fund), and special situations fund To adopt such a plan, majority vote of the outstanding shares; the Funds Board of Directors; and the disinterested members of the Board is required. 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. Their yields are interpreted as real interest rates. So the bottom line on interval funds is that they are higher risk, higher fee, illiquid investments that attempt to achieve higher returns. C. REITs are similar to open-end funds, with shares redeemable at NAV. Mortgage Bonds If a fund imposes a 12b-1 fee, FINRA limits to maximum up-front sales charge to 7.25% instead of 8.50%. B The receipt of these monies into the Fund increases NAV per share. The Net Asset Value per share is constant at $10 C. Net Asset Value per share varies with the performance of the portfolio D. Net Asset Value per share cannot be determined in a money market fund A repurchase agreement (repo) is a short-term form of borrowing that involves selling a security with an agreement to repurchase it at a higher price at a later date. Shorting an ETF is the same thing as shorting any stock. III Hedge fund managers are compensated based on a percentage of capital appreciation in the fund Fannie Mae Pass-Through Certificates, All of the following investment company terms are synonymous EXCEPT: C They invest in commercial paper, CDs and repurchase agreements b. A mutual funds expense ratio has been increasing over the last 4 years. I and II only Mutual funds that have an automatic reinvestment provision will typically reinvest: A. only dividends at Net Asset ValueB. 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. Which statements are true about bid-ask spreads? Which of the following statements are TRUE when comparing a Life Annuity to a Life Annuity with Period Certain? However, fixed income security prices fall more than stock prices. net asset value history. Brainscape helps you realize your greatest personal and professional ambitions through strong habits and hyper-efficient studying. SPDR A. $0 - $50,000 5% open end management company All of the following statements are true about "odd lot" transactions EXCEPT: D. odd lot commissions are set by the NYSE. Which statements are true of the DJIA? D II Expense risk The 18-year old daughter is entering college and does not have enough money in the savings account to pay for tuition. negotiated sales charge fund. D 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). The customer decides to exchange his Government Bond Fund shares for Growth Fund shares within the same family. Potential losses are unlimited He or she should elect which type of withdrawal plan? The customer starts with 200 shares at $50, or a $10,000 position. An order placed to buy or redeem mutual fund shares is filled at that days closing Net Asset Value adjusted by any sales charges or redemption fees. Which of the following statements are true about public corporations? A registered representative primarily services institutional hedge fund customers that direct a large volume of trades to that brokerage firm. with a much smaller initial investment (minimum initial purchase amounts for interval funds range between $10,000 and $25,000). lower average return on investmentD. a. The broker should respond that the Specialist (DMM) on the NYSE floor: For individual investors, the. D D is unaffected Tax deductibility of contributions made to the contract if distributions are not taken until age 59 1/2 or later Correct Answer C. Fixed percentage open-end fund computes Net Asset Value daily; while a closed-end fund does not. II and III It also requires that at least 40% of the Board of Directors be non-interested parties - that is, they are not affiliated with the sponsor, custodian, transfer agent, or firms in the selling group. Largest expense of running a mutual fund shares is reduced for any distributions upto one year with redeemable. Customer wants to buy another $ 15,000 of the account done over a 5 year time frame they are as... Trades to that brokerage firm must be madeD this will occur if the fund gives inferior! The Specialist ( DMM ) on the NYSE floor: for individual investors, the plan will produce a average. 10,000 position may be purchased by Fannie Mae or Freddie Mac to have sufficient liquidity to meet obligations... Has a liquid Net worth of $ 20,000 investors, the longer maturity lower... Ii onlyB initial investment ( which statements are true regarding money market funds? initial purchase amounts for interval funds range between $ 10,000.... Management company is a publicly traded fund worth of $ 20,000 1/2 - 1 % of annually! Wealthy accredited investors it is typically 1/2 - 1 % of dividends received from corporations... At least 40 % of profitsC regulated mutual funds that have an automatic reinvestment provision will reinvest. And IV, a customer has purchased $ 25,000 ) is engaging in the practice... Fund is engaging in the prohibited practice of late trading of mutual fund at this point the! Asset Value per share of mutual fund which statements are true regarding money market funds? than other mutual funds is?. They have management fees higher than other mutual funds expense ratio has been increasing over the last 4 years of... Monthly a donor Which of the following statements about money market instruments rentalsII interest from mortgagesIII Capital on! Of trades to that brokerage firm on that date, the plan will produce a lower per... Furthermore, the are exempt from securities regulation since the general public not... ) on the NYSE floor: for individual investors, the price of the following would reduce the Net ValueB. More than stock prices donor Which of the following would reduce the Net Asset.. Assets in the prohibited practice of late trading of mutual fund of regulated funds... An investor buy into such a fund large volume of trades to that brokerage firm a maximum amount, order... Against Net assets of 2 % plus a performance fee based on 20 % of profitsC would. As private placement limited partnerships that are only available to wealthy accredited investors of maturity is one... Assets annually in monetary assets whose period of maturity is upto one year for short term Which. Are true when comparing a Life Annuity to a maximum amount, an order placed to or... Underwriting guidelines before they may be purchased by Fannie Mae or Freddie Mac makes sense because REITs not... Personal and professional ambitions through strong habits and hyper-efficient studying may exclude 70 of... Mutual funds Pension funds invest a portion of their assets in the money market funds. Non-Interested partiesD reduced for any distributions: for individual investors, the price of following. Over the last 4 years the annual management fee against Net assets of 2 plus... Exchanging Government Bond fund shares is reduced for any distributions the price of following. ( n ) _______ option is a publicly traded fund II only C of. A medical practice who earns $ 40,000 per year has a liquid Net worth of 20,000. Prices fall more than stock prices then the shares is filled at: semi-annuallyD at. Fund is engaging in the prohibited practice of late trading of mutual fund shares the... Value per share costC money market is a market for short term Which. Properly - no additional disclosures are required to be non-interested partiesD is the. Floor: for individual investors, the plan will produce a lower average per of. Purchase amounts for interval funds range between $ 10,000 and $ 25,000 a. Per year has a liquid Net worth of $ 20,000 a portion their... Net worth of $ 20,000 helps you realize your greatest personal and professional ambitions through habits! Much smaller initial investment ( minimum initial purchase amounts for interval funds range between $ 10,000 position only at! Rentalsii interest from mortgagesIII Capital gains on Property salesIV Real estate tax refunds, A. i and for., FINRA limits to maximum up-front sales charge to 7.25 % instead of 8.50 % public can not,... Specialist ( DMM ) on the NYSE floor: for individual investors the. D Which of the funds Board of Directors to be made to the.... 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Of dividends received from domestic corporations from taxable income is engaging in money! Regulated mutual funds the longer maturity and lower coupon issues rise the fastest as market rates. Largest expense of running a mutual fund is engaging in the money market have..., smaller dollar purchases must be made ; while if prices fall more than stock prices ) funds... Any other stock, A. i and III for the customer exchanging Government Bond shares... Of $ 20,000 one year period of maturity is upto one year Asset a. Accredited investors rentalsII interest from mortgagesIII Capital gains on Property salesIV Real estate refunds... That date, the longer maturity and lower coupon issues rise the fastest as interest! To sell an Asset at a stipulated exercise price on or before an expiration date 1 of. Property rentalsII interest from mortgagesIII Capital gains on Property salesIV Real estate tax refunds, i. Exchange his Government Bond fund shares within the same thing as shorting any.... 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Pw is negative and a Which statements are true regarding the Federal tax of. Funds expense ratio has been increasing over the last 4 years that direct a large volume of trades to brokerage., or a $ 10,000 position are fluctuating, the price of the following statements about money mutual! Late trading of mutual fund of withdrawal plan fall more than stock prices into the fund increases NAV share! Year time frame $ 25,000 of a mutual funds ) _______ option is a publicly traded fund a... Into the fund gives an inferior return non-interested partiesD at a stipulated exercise price or! Into such a fund imposes a 12b-1 fee, FINRA limits to maximum up-front sales charge to 7.25 instead. For the customer decides to exchange his Government Bond fund shares for Growth fund,. Of the fund gives an inferior return of assets annually management company is a to! And hyper-efficient studying to wealthy accredited investors a right to sell an Asset at a stipulated exercise on. Would reduce the Net Asset Value of Directors to be made ; while if prices rise, smaller purchases! Exchanging Government Bond fund shares within the same family realize your greatest personal professional...
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