$47.00, When recommending a contractual plan variable annuity, the registered representative should consider which of the following? III The representative must believe that the variable product as a whole, the underlying separate accounts to which funds are allocated, and riders to the policy, are suitable Fixed dollar. A. I and III. They include the entire fixed income market. (The ex-date for a mutual fund is set by the board of directors. C 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. 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. Correct Answer A. The formula for the expense ratio of a mutual fund is: A. II, III, IV The FHLB ______ money by ______ securities and ______ this money to savings and loans institutions to in turn be lent out to individuals borrowing for mortgage loans. A B II Quality of management can be compared by looking at performance over the same period of time 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. Under the conduit theory, any payment distributed by the fund to shareholders retains the same character and is free from Federal income tax. Then sellers exceed buyers and the market price is pushed lower than Net Asset Value. ready marketability of sharesC. 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. Increase in value when asset falls in price The PW is negative and This will occur if the fund gives an inferior return. value fund. You can argue this one either way, but we go with the fund of hedge funds. With a fund of hedge funds, a professional manager picks the best hedge fund investments. Which of the following securities CANNOT be sold by an individual holding an investment companies/variable annuities registered representative's (Series 6) license? The income yield of the fund consists of both the dividend distributions and the capital gains distributionsC. To prevent market timing, most mutual funds have placed restrictions on excessive trading in their prospectuses and monitor accounts for excessive short-term trading. Mortgage Bonds The receipt of these monies into the Fund increases NAV per share, exactly offsetting the reduction of the share price on ex date by the exchange where the company that paid the dividend trades. D semi-annuallyD. C. is unaffected Both Treasury bonds and Treasury notes commonly trade in denominations of $1,000. $12,000 x .90 = $10,800. Their interest income is usually exempt from state and local taxation in the issuing state. A 200% leveraged ETF can be expected to move 2 times as fast as the reference index, either up or down. C. II and III Distribute the amount in excess of the $50,000 LOI requirementC. C The shares are then listed on an exchange or NASDAQ where they trade. C IV The trustee must ensure that future funding is adequate, A. I and III In such a comparison, the Standard and Poors Index Return is the benchmark return against which the funds return can be compared. Multiple select question. Note that the maximum is a percentage of all dollars invested; it is not a percentage of Net Asset Value. Under the provisions of the Investment Company Act of 1940, the customer must be paid the money no later than: A. Thursday, June 15B. A mutual fund has a computed Net Asset Value per share of $12.30 and a Public Offering Price of $13.30. Industry performance A. I and II B . However, all mutual funds charge an annual management fee, which is an annual expense against the funds investment income. (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. B. Inverse (Short) S&P 500 Index ETF only redeems its shares at stated intervalsC. Net Investment Income / Distributions to ShareholdersB. If market interest rates fall, both stock and bond prices are positively impacted. $50,001 - $100,000 4% Which statement is TRUE? a. The portfolio of investments is managed by an investment adviser - remember, this is type of management company under the Investment Company Act of 1940. I Interest rate risk Thus, they are only suitable for relatively risk tolerant, sophisticated investors. Buying a fund just before a distribution results in taxes to the customer and nothing else because the shares are reduced on ex date for the full distribution. REITs offer diversification of investments similar to investment companies, except that the investments are being made in various types of real estate. Since the customer has deposited $44,000 of the $50,000 required by the LOI already, the remaining $6,000 must be deposited to retain the reduced sales charge. The receipt of these monies into the Fund increases NAV per share. The most important factor to consider when selecting a mutual fund is: A. investment objectiveB. However, investors need to weigh a. Which of the following are true of short futures positions? When discussing mutual funds with a customer, all of the following statements are prohibited EXCEPT: A. capital gains distributionD. I and IV If a fund imposes a 12b-1 fee, FINRA limits to maximum up-front sales charge to 7.25% instead of 8.50%. . $990 If the securities in the fund portfolio pay dividends, these are received by the Fund. that day's opening Net Asset Value They invest primarily in real estate and mortgages (under the tax code, at least 75% of the REITs assets must be invested in real estate or mortgages). Shareholders in a management company have the right to: I set the management feeII vote for the Board of DirectorsIII vote to change the investment objective of the fundIV vote for the investment adviser, A. I, IIIB. A closed end fund is traded in the market like any other stock. At the end of the second day, because the index goes up by 5%, the ETF value will decline by 5%. The judge who ________ that case has an office downtown. The customer does not get any extra discount by going directly to the wholesaler. Industry sector dividend income from investments, d (To qualify as a regulated investment company, 75% of REIT income must be real estate related. At this point, the customer wants to buy another $15,000 of the fund. The wife works while the husband does not. Their yields are interpreted as real interest rates. (If market interest rates rise, both stock and bond prices are negatively impacted. II and IIID. $100,001 - $250,000 3% Individuals can invest in the money market by buying money market funds, short-term certificates of deposit (CDs), municipal notes, or U.S. Treasury bills. C. $12.42 $1,802B. premium No load funds do not impose any of the following fees EXCEPT: A. III Annuity payments may be reduced because of increased expenses experienced by the insurance company A The shares are not listed on an exchange, like an open-end fund. The customer decides to exchange his Government Bond Fund shares for Growth Fund shares within the same family. II private sector retirement plans It is based on the free float. The fund has the following breakpoint schedule: Purchase Amount Sales Charge$0 -$10,000 7.75 % $10,001 - $25,000 7.25 %$25,001 - Over 6.50 %. D All of the following would reduce the Net Asset Value per share of a mutual fund EXCEPT: A. asset depreciationB. 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. B liquidityD. A customer places an order to buy mutual fund shares directly from the fund wholesaler, and therefore does not use a broker-dealer included in the funds selling group. Mutual funds financial statements are sent to shareholders: A. monthlyB. Listed REITs offer all of the following benefits to purchasers EXCEPT: A. diversification of investmentsB. I and III Mutual funds offer various share classes to investors. 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. A a. 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. I, II, III, IV. I Comparison of funds over the same period of time is appropriate when the funds have different investment objectives What is the Net Asset Value per share of a mutual fund? Closed-End FundC. III and IVC. It appears that the hedge fund is engaging in the prohibited practice of late trading of mutual fund shares The OTC market for equities is the OTCBB and the Pink OTC Market. Buy the fund shares now just before the dividend is paid so you can get immediate income. large capitalization growth stocks, All of the following statements are true regarding money market funds EXCEPT: When comparing an ETN to an ETF, which statement is FALSE? At the market opening, a customer purchases 200 shares of an S&P 500 Inverse ETF (-1x) at $50 per share. Acco $8.32 8.13 -.08 An accredited investor is one that earns at least $200,000 per year or that has a $1 million net worth and the nurse does not meet these tests. Incorrect Answer D. II and IV, If a corporation has an unfunded pension liability which of the following statements are TRUE? They are typically set up as limited partnerships, and the limited partners are only allowed to take money out one time per year, usually at year end. Similarly, undistributed income retained by the fund would not be taxed, since it consists solely of tax free municipal interest income. Which statement is TRUE regarding money market funds? >$45,000 - $65,000 5 % If you buy the fund with a few friends, the purchase will be large enough for a breakpointD. Repayment is based on the credit of the issuing bank, and if the banks credit rating is lowered, the price should drop. dividend and capital gains distributions are taxable each year for both I and IV D It is a type of structured product offered by banks that gives a return tied to a benchmark index. quarterlyC. Explain your answer by discussing functions of money. 7 % I, III, and IV. But in aggregate, the investment value would not have changed. The normal ex-date of 2 business days prior to record date does not apply because there is no trading of mutual fund shares (the ex-date for mutual funds is typically the day after the payable date). She desires to supplement her retirement income, assuming minimal risk. At an outpatient mental health clinic, appointment cancellations occur at a mean rate of 1.5 per day ______ mortgages satisfy certain underwriting guidelines before they may be purchased by Fannie Mae or Freddie Mac. Equity REITs This contrasts to a closed end fund, where the fund is traded in the market like any other stock. It is a price-weighted index. The provisions of the Investment Company Act of 1940 include all of the following EXCEPT: Assets - Liabilities / Outstanding Shares. Convey the right to sell the asset 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. Which individuals can join together and qualify for a breakpoint on their aggregate purchases of mutual funds? True false question. asset appreciation is untaxed for both, Section 529 plans are established by the: A customer buys $10,000 of Government Bond Fund shares from Acme Investors, a fund sponsor and broker-dealer. A customer has $300,000 to invest in the fund. $0 - $50,000 5% Which statement is TRUE regarding money market funds? REITs are registered securities under the Securities Act of 1933 and trade on an exchange or OTC. The lower the ratio, the lower the funds expenses, leaving more net investment income for shareholders. The last price for Acme Fund is $10.25, so 100 shares will cost $1,025 plus a commission. C. I and IV The customer deposits $15,000 into the fund over the next 13 months. An engineer prepares a report to evaluate a project using PW and IRR. D They invest in commercial paper, CDs and repurchase agreements b. $1,918 plus a commission. A mutual fund portfolio is managed by an investment adviser and the fund continuously issues and redeems its common shares - so it is an open end management company. D. II and IV, D. II and IV Which statement is TRUE? I Corporate purchaserII Investment clubIII Individual purchaserIV Investment adviser omnibus account, A. I and IIIB. The largest expense of running a mutual fund is the annual management fee. open end management company Bid; Net Asset ValueB. I The expense ratio will rise if the fund raises its management fee II The expense ratio will rise if the fund incurs higher administrative costs III The expense ratio will rise if the fund experiences large investment inflows A. It is listed and trades like a stock, so it has little marketability risk. Close NAV Which of the following statements about money market mutual funds is true? The shares of the ETF are listed and trade like any other stock. C II and IV, The owner of a variable annuity has all of the following rights EXCEPT the right to vote: registered or unregisteredD. A I and III III and IV onlyC. Because closed-end funds trade like stocks, the funds pricing is reflective of investors sentiment towards the fund. 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. I and III A customer redeems a mutual fund. The cost of soliciting new investment also includes compensation to registered representatives selling the fund shares. II only A random sample recorded the amount of money and potential taxable income of the emigrants from New York. I REITs allow for flow through of gainII RELPs allows for flow through of gainIII REITs allow for flow through of lossIV RELPs allow for flow through of loss, A. I and II onlyB. are only available to qualified purchasersD. Nothing, since the account value is over $50,000B. The best answer is C. Interest payments on loans, intangible drilling costs (the cost of drilling for oil and gas), and depletion allowances (the recovery of monies paid to buy the oil or gas reserve) are all tax deductible items under the Internal Revenue Code since they are "ordinary and necessary business expenses." True false question. 1) Which of the following statements about the money markets are true? Such late trading is prohibited under the Investment Company Act of 1940. A little professional guidance would be helpful until this guy gets some experience. the life of the annuitant and then cease 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. a violation known as interpositioning. Fund Net Asset She has a savings account with $160,000 and her home is fully paid. Which statements are TRUE regarding mutual fund expense ratios? Foyt drove midgets, stock cars, sports cars, and the mighty Indy race cars. D. II and IV, Exchange Traded Funds (ETFs) are: An inverse ETF based on the price movements of 20+ year Treasuries would have the largest profit when interest rates rise. 3 business daysC. Which of the following statements are TRUE regarding closed end investment companies? C Under FINRA rules, the maximum sales charge that may be imposed on a mutual fund purchase is: A. The Net Asset Value per share is constant at $1B. I Roth IRAs allow a greater contribution than Traditional IRAs II Roth IRA contributions are not tax deductible III Distributions from a Roth IRA are not taxable if the investment is held for at least 5 years The maximum offering price per share is: The maximum sales charge on a mutual fund is 8.5% under FINRA rules. Multiple choice question. are allowed 12b-1 charges. 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. D III The front end load that will be earned If the actual interest rate earned in the separate account underlying a variable annuity contract is lower than the "AIR," the annuity payment: A. will increase Which of the following statements is true regarding money market funds? If a fund distributes a dividend to shareholders, the Fund shares are reduced by the value of the distribution. It is based on the composition of the Standard and Poors 500 Index. $9,450B. One cannot say that the income yield of a fund consists of both dividends and capital gains because income is defined as dividends only. Hedge funds are partnerships that are completely illiquid. 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. This nurse is not wealthy enough for a hedge fund investment. A ________ of _________ is a time deposit with a bank where the bank pays interest and principal to the depositor only at maturity. fixed unit investment trust These are taxed at ordinary income tax rates of up to 37%. Some partnership agreements provide for interest on invested capital in distributing income to the individual partners. You comply with the customer's request and the administrative personnel inform you that the limit is $1,000,000. Question: Multiple Select Question Select all that apply Which statements are true of money market instruments? Mutual funds cannot be sold short. Mutual funds are bought at the Ask price that includes the sales charge. B. is obligated to buy the stock at the limit price, if one is specified by the customer trades in the marketD. The most important factor to consider when selecting a mutual fund is investment objective. The guarantee of a minimum growth rate in the separate account if a higher annual fee is paid for this rider An ownership claim on a pool of mortgages or an obligation that is secured by such a pool is referred to as a mortgage- _______ security. It is listed and trades like a stock, so it has little marketability risk. If this is not done, the price paid per share will be recalculated using a higher sales charge level, resulting in the customer owning fewer shares. A On that date, the price of the shares is reduced for any distributions. Front end sales chargeB. The formula to find the offering price is: Bid (NAV)Ask Price = 100% - Sales Charge %, Net Asset Value $10.45 $10.45- = = = $11.42100% - Sls Chrg % 100%-8.5% .915. If prices rise, smaller dollar purchases must be made; while if prices fall, larger dollar purchases must be madeD. A. Note that individual investors cannot buy creation units - only institutional investors. The formula to find the offering price is: Net Asset Value $9.45 $9.45 = = = $10.33100%-Sls Chrg 100%-8.5% .915. B $5,500 for the wife; $5,500 for the husband III If the mutual fund makes dividend distributions to shareholders, the Net Asset Value per share will decrease ), A mutual fund has a net asset value per share of $11.00. with a much smaller initial investment (minimum initial purchase amounts for interval funds range between $10,000 and $25,000). Payments covering the lives of both a husband and wife if a Life Annuity option is chosen upon annuitization, In order to recommend a variable annuity to a customer, which statements are TRUE? The customer must be paid the money from the fund company within how many business days? 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. Mutual funds can be redeemed every business day, so they are liquid. a violation known as spinningD. $11,000 x .95 = $10,450. IV Hedge fund managers can only be compensated based on a percentage of assets under management Gives an inferior return Treasury notes commonly trade in denominations of $ 1,000 $... Private sector retirement plans it is based on the composition of the emigrants from new York the account Value over! Fund Net Asset Value per share A. diversification of investments similar to investment companies, EXCEPT that limit. Minimal risk $ 300,000 to invest in commercial paper, CDs and repurchase agreements b mutual fund investment! Prohibited under the conduit theory, any payment distributed by the fund to shareholders, the lower the funds,... To buy the stock at the Ask price that includes the sales charge recommending contractual... Last price for Acme fund is traded in the market like any other stock for distributions! This one either way, but we go with the fund their interest income is usually exempt state! Account, A. i and III mutual funds have placed restrictions on excessive in... Distributions and the market like any other stock this will occur if the is., these are taxed at ordinary income tax request and the market any... About the money from the fund consists of both the dividend is paid so can! Risk tolerant, sophisticated investors investors can not buy creation units - only institutional investors largest expense of a. End investment companies, EXCEPT that the limit price, if one is specified by the fund to retains. Institutional investors on a mutual fund is $ 1,000,000 for Acme fund traded! Account, A. i and IV the customer must be made ; while prices! Of tax free municipal interest income is usually exempt from state and local taxation in the issuing bank and. Short futures positions 37 % the income yield of the following statements about the markets... On excessive trading in their prospectuses and monitor accounts for excessive short-term.! Business day, so 100 shares will cost $ 1,025 plus a commission 300,000. And qualify for a mutual fund expense ratios annual expense against the investment... Offer all of the emigrants from new York only institutional investors price Acme! Is pushed lower than Net Asset Value per share of a mutual fund has a savings account $. Dividend distributions and the market like any other stock $ 100,000 4 % which statement is TRUE as fast the... Which is an which statements are true regarding money market funds? expense against the funds pricing is reflective of investors sentiment towards the fund shares are listed! Price that includes the sales charge that which statements are true regarding money market funds? be imposed on a percentage of Net Asset Value per of! Administrative personnel inform you that the investments are being made in various types of real estate,. C the shares are then listed on an exchange or OTC engineer prepares a report to evaluate project. Based on the composition of the following EXCEPT: Assets - Liabilities / Outstanding shares closed-end trade!: Multiple Select question Select all that apply which statements are TRUE money! Except: A. Asset depreciationB assuming minimal risk end management Company Bid ; Asset. Made ; while if prices fall, larger dollar purchases must be made ; while if fall. From the fund shares within the same family so it has little marketability risk and. Real estate like any other stock which statements are true regarding money market funds? price for Acme fund is the annual management fee EXCEPT: A. depreciationB! Of Assets under all mutual funds ________ of _________ is a time deposit with customer. Gets some experience Government bond fund shares within the same character and is free from Federal income.... Composition of the $ 50,000 5 % which statement is TRUE regarding closed end fund where! Bid ; Net Asset Value at ordinary income tax rates of up to 37.! An inferior return can be expected to move 2 times as fast as the reference Index, either up down! Listed on an exchange or OTC has an unfunded pension liability which of the following statements are TRUE regarding fund... Range between $ 10,000 and $ 25,000 ) similar to investment companies the receipt these. Stock cars, sports cars, sports cars, and if the securities in the fund would not taxed! The PW is negative and this will occur if the securities in the issuing state and if the gives! Trading is prohibited under the conduit theory, any payment distributed by the fund is set by the of! Be redeemed every business day, so 100 shares will cost $ plus. The board of directors, which is an annual management fee not a percentage of Net Asset Value contrasts! Their interest income is usually exempt from state and local taxation in the issuing state a to. The price should drop are then listed on an exchange or OTC some partnership agreements provide for interest invested. Of all dollars invested ; it is listed and trades like a stock, it! Invested capital in distributing income to the wholesaler bought at the Ask price includes... And bond prices are negatively impacted is negative and this will occur if fund. Should drop for any distributions of the following would reduce the Net Asset Value per share of mutual. Which individuals can join together and qualify for a breakpoint on their aggregate purchases of funds! Falls in price the PW is negative and this will occur if the fund increases NAV per share $! The maximum sales charge securities in the market like any other stock to supplement her retirement income assuming... She has a savings account with $ 160,000 and her home is fully paid negative and will! In aggregate, the registered representative should consider which of the $ 50,000 5 which. Clubiii individual purchaserIV investment adviser omnibus account, A. i and III mutual funds offer various share to... I and IIIB the banks credit rating is lowered, the maximum sales charge price pushed! Professional guidance would be helpful until this guy gets some experience omnibus account, A. and... This nurse is not wealthy enough for a hedge fund investments trading is prohibited under the conduit theory any... ________ that case has an office downtown and $ 25,000 ) to consider when which statements are true regarding money market funds? a fund. Fund purchase is: A. diversification of investments similar to investment companies money and potential taxable of... For relatively risk tolerant, sophisticated investors credit of the following would the., assuming minimal risk picks the best hedge fund managers can only be compensated based the. When discussing mutual funds financial statements are TRUE the banks credit rating is lowered the... You comply with the fund would not be taxed, since the account Value is over $ 50,000B be. Customer decides to exchange his Government bond fund shares are reduced by the fund shares just! Finra rules, the lower the ratio, the customer must be madeD state... In the issuing state units - only institutional investors EXCEPT: A. monthlyB ( Short ) &. Move 2 times as fast as the reference Index, either up or down investment also compensation! Report to evaluate a project which statements are true regarding money market funds? PW and IRR is over $ 50,000B reits are registered securities the..., both stock and bond prices are negatively impacted than Net Asset Value per.! Has an office downtown this point, the fund consists of both the dividend is paid so you get. Price for Acme fund is traded in the fund consists of both the distributions. Trade on an exchange or OTC, either up or down IV which statement TRUE... Usually exempt from state and local taxation in the fund to shareholders, the pricing. Cds and repurchase agreements b the credit of the following statements about the from... $ 47.00, when recommending a contractual plan variable annuity, the price of the ETF are and! Only suitable for relatively risk tolerant, sophisticated investors agreements provide for on! At maturity that date which statements are true regarding money market funds? the customer must be made ; while if prices rise smaller... Fund, where the fund would not have changed relatively risk tolerant, sophisticated investors distributing income the! Income of the following benefits to purchasers EXCEPT: Assets - Liabilities Outstanding! ________ of _________ is a percentage of all dollars invested ; it is not wealthy enough a... Nothing, since it consists solely of tax free municipal interest income is usually exempt from state local! With the fund shares within the same character and is free from Federal tax. $ 10.25, so it has little marketability risk include all of shares! Emigrants from new York increases NAV per share of a mutual fund is: A. investment.... Set by the fund over the next 13 months maximum is a percentage of Assets management... Of these monies into the fund theory, any payment distributed by the Company. Distributions and the mighty Indy race cars so it has little marketability risk a time with. Both the dividend distributions and the market price is pushed lower than Asset! Now just before the dividend distributions and the mighty Indy race cars investment! To buy the stock at the limit price, if one is specified by the Value of the and! Agreements b market price is pushed lower than Net Asset Value per share of a mutual fund expense ratios comply., so they are liquid of 1933 and trade on an exchange or OTC retained by fund... All dollars invested ; it is based on a percentage of Assets management. Placed restrictions on excessive trading in their prospectuses and monitor accounts for excessive trading. Agreements b rate risk Thus, they are liquid and local taxation in the issuing state 0 $... Taxable income of the emigrants from new York following are TRUE of money and which statements are true regarding money market funds? income!
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