Which of the following statements are TRUE regarding the Federal tax treatment of regulated mutual funds? D Thus, the ratio measures the funds efficiency. II Hedge funds must register as management companies under the Investment Company Act of 1940 During a period of falling interest rates, which investment would be most profitable? The second digit is a 2. The note is a debt of the bank, and is backed by the faith and credit of the issuing bank. It is based on 500 firms. It is a market-value-weighted index. of diamond mining companiesD. D 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 Other this difference, the trust is run in a similar fashion to a corporation. $5,500 for the wife; $5,500 for the husband b. The provisions of the Investment Company Act of 1940 include all of the following EXCEPT: Rights of AccumulationC. Which statements are true about bid-ask spreads? Dividing customer purchase amounts will deny the customer the benefit of the breakpoint. Closed-End FundC. limited partnershipsD. I and IVC. No collateral is required to borrow from this market. IV Whether the customer can handle declining benefit payments in retirement A. $60 per shareC. C I If the securities in the portfolio make dividend distributions, the Net Asset Value per share will increase 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. II and IV only, Which statements are TRUE regarding hedge funds? Fund wholesalers must be FINRA members. In the study, the economist learned that 112,236 tax filers left the state of New York. Which of the following are the correct about inflation-indexed treasury bonds? II and IV, The purchaser of a variable annuity bears which of the following risks? Thus, a closed-end fund share is purchased at the prevailing market price plus a commission (or a mark-up if it is an OTC principal transaction). 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. One of the hedge fund customers tells the representative: I would like you to talk to the administrative people at the Jeffersonian Fund Group. When a sales charge is imposed on a fund purchase, this is known as a: A. front-end load fundB. Buying a security into inventory directly from a customer with a mark-down. II The capital gain is not taxable if it is taken as a check Types of funds Growth, growth and income, income, balanced, index, specialized (sector fund), and special situations fund Which is considered money in the U.S. economy? $5,500 for the wife; $0 for the husband $750 plus commission, A customer, age 69, has never invested in securities. This is a violation known as a breakpoint sale. However, fixed income security prices fall more than stock prices. Then sellers exceed buyers and the market price is pushed lower than Net Asset Value. A customer redeems 1,000 shares of ABC Fund. annual management fee against net assets of 2% plus a performance fee based on 20% of profitsC. The members of the board of directors are elected at the annual meeting. II Periodic payments of varying dollar amounts are made Inverse (Short) 20+ Year Treasury ETF. The P/E ratio tells us how much stock purchasers must pay per ________ ________ __________ that the firm generates. D D D The ex-date is set by the Board of Directors of the FundB. It is based on 500 firms. It is based on the composition of the Standard and Poors 500 Index. A money market mutual fund portfolio will obviously consist of money market instruments, which are short-term, high-quality debt securities. Fund dividends are taxable, whether or not they are automatically reinvested in additional fund shares. Under FINRA rules, all of the following statements are true EXCEPT: A. the wholesaler must be a registered FINRA memberB. Finally, REIT dividend taxation is truly not that great. While dividends received from common stock investments, including mutual funds, qualify for the lower 15% or 20% tax rate, the tax law specifically denies this benefit to REIT dividend distributions. quarterly The letter can extend for a maximum time period of 13 months, inclusive of the 90-day backdating. Close NAV 5% of Net Asset ValueB. 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. B Because common stock is equity, it is not found in money market funds. A customer redeems a mutual fund. IV Investment in collectibles is permitted 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. Capital appreciation and stability The letter of intent to receive a breakpoint can be backdated 90 days. are allowed 12b-1 charges. I registered under the Investment Company Act of 1940 A the annuitant's life, but if he dies before 20 years elapse, payments continue to his heir(s) a. A C This nurse is not wealthy enough for a hedge fund investment. $11,000 x .95 = $10,450. This makes sense because REITs cannot pass losses to their shareholders. Thus, these are illiquid securities because an investor cannot trade out the position, nor can the investor redeem the position at any time. If the securities in the fund portfolio pay dividends, these are received by the Fund. Multiple select question. B. I and IV closed end management company Which statement is TRUE? dividends at NAV and capital gains at POPC. ), Dollar cost averaging will result in a lower average per share price only if: One of the hedge fund customers tells the representative: "I would like you to talk to the administrative people at the Jeffersonian Fund Group and find out the redemption dollar amount that they use to identify funds that excessively trade." The ex-date is set by FINRAC. The Ask Price is Net Asset Value plus the maximum sales charge imposed by that fund. 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. When comparing an ETN to an ETF, which statements are TRUE? Ask price= Bid (NAV) / 100% - Sales charge % Fund Net Asset call options but not futures contracts D IV The annuity payment is fixed; the number of annuity units may vary B. I Periodic payments of fixed dollar amounts are made Unlimited. 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. II and IV. I, II, IVD. Any surrender fee imposed: Which of the following would reduce the Net Asset Value per share of a mutual fund? B Also known as over-night borrowing (called as money at call) and for a period up to 14 days (called short notice). recipient Industry sector A The customer does not get any extra discount by going directly to the wholesaler. A Depreciating securities in the Fund portfolio will also decrease NAV per share. C However, it will only redeem shares at stated intervals - usually quarterly - and it will not redeem the investors entire holding at these redemption dates. A customer who buys 100 shares of ALPO Fund will pay: A. I and IVD. 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. III and IV onlyD. Net Asset Value D. II and III, C. I and IV The expense ratio of a mutual fund is a measure of: A. profitabilityB. **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. A. Unrelated investors cannot join together to aggregate their purchases and get the benefit of a breakpoint. Write the articles found in the following sentences. $0 - $10,000 8 % What should the representative do? 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). Which statements are true of money market instruments? The ex-date is set by the Board of Directors of the Fund -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. Compare the unit sales to the units produced and keep a running total. If a fund distributes a dividend to shareholders, an ex date is set by the Board of Directors of the Fund. This will not work if the market moves straight up or straight down. IV The trustee must ensure that future funding is adequate, A. I and III Mortgage REITs I are available only to accredited investorsII are available to any investorIII are lightly regulatedIV are like mutual funds. due to required industry firewalls, registered representatives are prohibited from talking to the administrative personnel of mutual fund companies. These agreements usually specify an income and loss-sharing ratio. A. III and IVD. I Investment ClubII Omnibus AccountIII Corporate PurchaserIV Individual Purchaser, A. I and II onlyB. We review their content and use your feedback to keep the quality high. II and IV only. Under FINRA rules, the maximum sales charge that may be imposed by a mutual fund is 8 1/2% of the Public Offering Price. A Distributions made by the fund have no bearing on the ratio. If market interest rates fall, both stock and bond prices are positively impacted. 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. 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. However, for a corporate bond fund, since the interest income from corporate bonds is taxable, distributions from the fund to shareholders are taxable; and any undistributed income retained by the fund will be taxed to the fund. He or she should elect which type of withdrawal plan? (REITs issue shares of beneficial interest with each certificate representing an undivided interest in the pool of real estate investments. In this example, Choice B meets the customers requirements. It pays a fixed stream of income without a contractual obligation to make the payments. Conforming; prime 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. B. III and IV tax exempt fund, Which of the following is available to purchasers of variable annuity contracts? 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 strike or striking price 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. C If a fund distributes a dividend to shareholders, the Fund shares are reduced by the value of the distribution on the ex date. II and III They are exempt from securities regulation since the general public cannot invest, except for the anti-fraud rules. Cul es la forma correcta del presente indicativo o subjuntivo del verbo en parntesis? $46.00 III based on the Standard and Poor's 100 Index I, II, III, IV, Which of the following statements are TRUE about the Net Asset Value per share for a mutual fund? II The REIT issues shares of beneficial interest representing an undivided interest in a pool of real estate investments III Hedge fund managers are compensated based on a percentage of capital appreciation in the fund If the securities in the fund portfolio pay dividends, these are received by the Fund. (The maximum sales charge on a mutual fund is 8.5% under FINRA rules. An individual wishes to have a fixed portion of the portfolio liquidated each month. Mortgage Bonds An ETF that attempts to emulate the Standard and Poors 500 Index employs what investment strategy? Which statement is TRUE regarding the ex date for a mutual fund? The Act does not set sales charges for mutual fund purchases - these are set by FINRA - which allows a maximum sales charge of 8 1/2%. will increase Bid and Net Asset Value are the same terms for investment company shares. B I and III I Hedge funds are subject to little regulatory oversight II Hedge funds must register as management companies under the Investment Company Act of 1940 . How many shares of the fund can the customer purchase? A. It appears that the hedge fund is engaging in the prohibited practice of late trading of mutual fund shares One cannot say that the income yield of a fund consists of both dividends and capital gains because income is defined as dividends only. D. Securities that are redeemable with the sponsor. 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. The Investment Company Act of 1940 requires that the minimum capital to start a fund is $100,000; that no more than 60% of the Board of Directors be interested parties - that is, they are affiliated with the sponsor, custodian, transfer agent, or firms in the selling group; and that the fund have a stated investment objective that can only be changed by majority vote of the shareholders. II, III, IVD. Industry performance Then the shares are listed on an exchange and trade like any other stock. $990 plus a commissionD. An inverse ETF is one that uses short and options to move opposite to the market. 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%. registered fund trades in the marketD. Which statement is TRUE? You could also argue that funds of hedge funds have 2 layers of fees, whereas a direct hedge fund investment only has 1 layer of fees, so it is less costly and is the better choice. NAV per share of a mutual fund declines when asset values decline in the portfolio. She overhears some of the doctors in her office talking about hedge funds and is interested in using her cash funds to make an investment. However, it will only redeem shares at stated intervals - usually quarterly - and it will not redeem the investors entire holding at these redemption dates. B DerivativeD. So, only the 1% of the income retained will be taxed. Real Estate Investment Trusts must distribute at least 90% of their Net Investment Income to shareholders; and invest at least 75% of their assets in real estate activities; to be regulated under Subchapter M. REITs can invest in all of the following EXCEPT: A. mortgagesB. Which of the following statements are TRUE regarding the "AIR" stated in a variable annuity prospectus? 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. The customer will pay $10.075 per share (rounded). II Expense risk To prevent market timing, most mutual funds have placed restrictions on excessive trading in their prospectuses and monitor accounts for excessive short-term trading. B (Exchange traded funds based on indexes by industry sector, country, or market capitalization, are known as "I-Shares," as in "Index Shares. Family members in the same householdB. 5%, CLOSED END BOND FUNDS A there is no commission cost when buying an exchange traded fund share whereas there is a commission cost when buying a mutual fund shareC.
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