B (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. All of the following statements are true EXCEPT the: A. customers yield will decreaseB. Over the past 5 years, the fund has appreciated to $46,000. I The capital gain is taxable if it is taken as a checkII The capital gain is not taxable if it is taken as a checkIII The capital gain is taxable if it is automatically reinvested in the fundIV The capital gain is not taxable if it is automatically reinvested in the fund. Which of the following statements are TRUE when comparing a Life Annuity to a Life Annuity with Period Certain? II and IIIC. are allowed 12b-1 charges. Identify the statements that describe the similarities between Treasury bonds and Treasury notes. D. II and IV. This will not work if the market moves straight up or straight down. A. fixed or participating. dividend distribution. II Money market funds typically do not impose management fees II and III. Offering Price, Contributions to Keogh Plans must be made by: 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. Which statement is TRUE regarding money market funds? Because common stock is equity, it is not found in money market funds. 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 II the price of the stock fluctuates Bid; Public Offering PriceC. mutual funds Ask price= Bid (NAV) / 100% - Sales charge % III Investment in art is permitted A customer has signed a Letter of Intent (LOI) to buy $25,000 of XYZ mutual fund to qualify for a breakpoint that reduces the sales charge from 7% to 6%. Inverse (Short) 20+ Year Treasury ETF. A. prohibited. were created to make it easier for foreign firms to satisfy US security registration requirements. B A True false question. I, II, III. II Investment in U.S. issued securities is permitted are only available to qualified purchasersD. 5 % There is no credit risk here. $990B. C I and II only They are structured as private placement limited partnerships that are only available to wealthy accredited investors. This is the Public Offering Price. Purchase Amount Sales Charge The investor will receive: A contingent deferred sales charge is imposed if an investor redeems a mutual fund before holding the fund for a stated time period. It conveys voting power regarding the management of the firm. I Family of FundsII BreakpointsIII Letter of IntentIV Rights of Accumulation, A. I and II onlyB. 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. But in aggregate, the investment value would not have changed. Which statements are true of the S&P 500? I set by the Board of Directors of the FundII 2 business days prior to the Record DateIII the date on which the funds NAV per share is reduced for any distributions, A. I and IIB. A mutual fund has a computed Net Asset Value per share of $12.30 and a Public Offering Price of $13.30. Mutual funds that have an automatic reinvestment provision must reinvest: A. dividends at NAV and capital gains at NAVB. A. I and II B . Dollar cost averaging results in slightly more shares being bought as prices fall than when prices rise. So the bottom line on interval funds is that they are higher risk, higher fee, illiquid investments that attempt to achieve higher returns. typical maturities of securities held in the portfolio are 30 days or less However, it will only redeem shares at stated intervals - usually quarterly - and it will not redeem the investors entire holding at these redemption dates. E. a response to Charles Dickens's Sketches by Boz. The provisions of the Investment Company Act of 1940 include which of the following? Dividends and interest are tax deferred; capital gains are taxable in the year received The ratio really represents that portion of the funds return on net assets that is eaten up by expenses. True The reality is that, for most funds which have adopted 12b-1 plans, expenses have risen faster (due to the selling expense costs charged to shareholders) than asset size, and expense ratios have increased. The note is a debt of the bank, and is backed by the faith and credit of the issuing bank. net rental income variable annuity contract A Corporations may exclude 70% of dividends received from domestic corporations from taxable income. Then the shares are listed on an exchange and trade like any other stock. It is listed and trades like a stock, so it has little marketability risk. large capitalization growth stocks, All of the following statements are true regarding money market funds EXCEPT: Their interest income is usually exempt from state and local taxation in the issuing state. It is typically 1/2 - 1% of assets annually. It appears that the hedge fund is engaging in the prohibited practice of market timing of mutual fund shares registered or unregisteredD. A C. II and III I, II, III. $10,450C. If a fund distributes a dividend to shareholders, an ex date is set by the Board of Directors of the Fund. Which of the following are true of short futures positions? D 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. D. Securities that are redeemable with the sponsor. A. Which of the following statements are TRUE regarding the "AIR" stated in a variable annuity prospectus? 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): The ex-date is set by the Board of Directors of the Fund A customer has $24,000 to invest in mutual fund shares. The registered representative should make the customer aware of the tax consequences of exchanging mutual fund sharesB. $10,800. All of the following statements are true about Health Savings Accounts EXCEPT: A. HSAs are only appropriate for those individuals covered by high-deductible health insurance plans, Which of the following statements are TRUE regarding mutual funds and variable annuities that are in the accumulation phase? Which of the following statements are TRUE regarding the Federal tax treatment of a regulated mutual fund investing solely in municipal securities? C Money market fund investors have said that they appreciate the greatly enhanced transparency after the Commission's 2010 Amendments and have put it to . A. is obligated to buy the stock at the current market They are highly regulated. The BEST recommendation would be for the customer to invest $100,000 of her cash savings into a(n): the life of the annuitant and then cease However, since these are negotiable securities, they do have market risk. Limited partners who form a partnership to make the purchaseD. III Capital Gains Which statement is TRUE regarding contributions to Individual Retirement Accounts for these persons? B I and IV onlyD. $5,500 II and IV, A customer has purchased $25,000 of a mutual fund. IV Capital Losses, A. I and III The representative tells the hedge fund customer of the conversation, after which the customer places daily orders to buy and sell that funds shares in amounts of $750,000. C I, II and IIID. II and III Any such late orders are not supposed to be processed at that days closing NAV; rather, they should be processed at the following days NAV. D $19 x 100 shares = $1,900 received upon redemption. Under FINRA rules, all of the following statements are true EXCEPT: A. the wholesaler must be a registered FINRA memberB. D for the Board of Trustees Most are AMEX listed (now renamed the NYSE American), but there are ETFs on the NYSE and NASDAQ as well. In order to be regulated under Subchapter M of the IRS Code, at least how much of the Net Investment Income must be distributed to the mutual fund shareholders? $1,025 The letter can extend for a maximum time period of 13 months, inclusive of the 90-day backdating. B. I and IV Question: Multiple Select Question Select all that apply Which statements are true of money market instruments? I The capital gain is taxable if it is taken as a check $55,000 for the wife; $55,000 for the husband, Mutual funds financial statements are sent to shareholders: An insurance policy sells for $600\$ 600$600. They are not mutual fund shares because they cannot be redeemed at any time with the sponsor. 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.. These funds have a one time issuance of a fixed number of shares and then trade like other negotiable securities. $750 plus commission, A customer, age 69, has never invested in securities. Multiple select question. $1,918 plus a commission. They have relatively low credit risk. 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!). B They have come to you to obtain information about the basic elements of a partnership agreement. I Asset depreciationII Asset appreciationIII Capital gains distributionIV Dividend distribution, A. I only B. I and IIC. Compare the unit sales to the units produced and keep a running total. D C D. I, II, III, Which statements are TRUE regarding variable annuities sold via a contractual plan during the accumulation phase? The production manager thinks the preceding assumption is too optimistic and decides to go with level production to avoid being out of merchandise. When comparing Real Estate Investment Trusts (REITs) to Real Estate Limited Partnerships (RELPs), which of the following statements are TRUE? B. Which statements are true of the DJIA? A. It is a type of structured product offered by banks that gives a return tied to a benchmark index. D Determine (a) the amount of the adjusting entry for uncollectible accounts; (b) the adjusted balances of Accounts Receivable, Allowance for Doubtful Accounts, and Bad Debt Expense; and (c) the net realizable value of accounts receivable. A. Which statements are true about municipal bonds? The anticipated tuition, starting 8 years from now, is $50,000 per year ($200,000 total tuition). Mutual funds send their financial statements (describing how the fund performed) to shareholders semi-annually. ETFs have credit riskC. IV open-end management companies, A. I and III If a fund offers an automatic reinvestment provision, both dividend distributions and capital gains distributions are reinvested at Net Asset Value. Sketch your mental map of Russia. A Adap $7.45 7.50 -.01 Similarly, undistributed income retained by the fund would not be taxed, since it consists solely of tax free municipal interest income. dividends at NAV and capital gains at POPC. A mutual funds expense ratio has been increasing over the last 4 years. The formula to find the offering price is: Net Asset Value $9.45 $9.45 = = = $10.33100%-Sls Chrg 100%-8.5% .915. An ETF is an Exchange Traded Fund. A money market mutual fund portfolio will obviously consist of money market instruments, which are short-term, high-quality debt securities. B whereas ______ mortgages are riskier loans made to financially weaker borrowers The maximum offering price per share is: donor B Total Expenses / Total Net Assets. Money market accounts present a way for consumers to accelerate interest-earning through potentially higher-yielding rates. Which statements are true about bid-ask spreads? I and III Since this mutual fund invests solely in municipal securities, there is no Federal tax liability on the interest income received (remember, the interest income from municipal securities is exempt from Federal income tax). II. C If the disclosure is not made, the registered representative has committed a violation known as a breakpoint sale. A backing away violation is where a firm quote is given to a customer and then not honored - the representative has backed away from that quote. Net Asset Value per share varies with the performance of the portfolioD. The term mutual fund is the common name for a(n): A. open end management companyB. This guy is rich and is looking for a rich mans investment. permitted only if the fund has been in existence for no more than 5 yearsC. I Comparison of funds over the same period of time is appropriate when the funds have different investment objectives Fund dividends are taxable, whether or not they are automatically reinvested in additional fund shares. A A leveraged inverse ETF combines both. Foyt drove midgets, stock cars, sports cars, and the mighty Indy race cars. will increase A call with a 15 strike, when the market is $10.75, is 4 . Multiple choice question. Because the investor might be able to achieve hedge fund like returns (since the interval fund makes investments in a much broader range of assets such as commercial property, private equity funds, hedge funds, business loans, catastrophe bonds, etc.) ), A mutual fund has a net asset value per share of $11.00. Shorting an ETF is the same thing as shorting any stock. II an exchange traded fund Nitty and Gritty are considering the formation of a partnership to operate a crafts and hobbies store. participating unit investment trust, Which statements are TRUE regarding Individual Retirement Accounts? How many shares of the fund can the customer purchase? 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. Tax deductions and tax credits Which are not? II and III onlyC. is deductible C II and III II and III Ask; Redemption Price. I Investors have a Federal tax liability on the interest income received from the fundII Investors have no Federal tax liability on the interest income received from the fundIII The investment company has Federal tax liability on the undistributed income that it retainsIV The investment company has no Federal tax liability on the undistributed income that it retains. Instead, it will only redeem anywhere from 5% to 25% of the investors net assets at a single time. D II and IV only, Which statements are TRUE regarding hedge funds? Which statements are true of money market instruments? requiring minimum initial fund capital of $100,000 A The best answer is A. B 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. In the prospectus, the breakpoint schedule is: Mutual funds financial statements are sent to shareholders: A. monthlyB. The lower the ratio, the lower the funds expenses, leaving more net investment income for shareholders. A 200% leveraged ETF can be expected to move 2 times as fast as the reference index, either up or down. Like other negotiable securities at any time with the performance of the?... 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which statements are true regarding money market funds?