IV Investment in collectibles is permitted A. only offers its shares at stated intervalsB. Which of the following investments is the most illiquid? December 31st of the calendar year after which the contribution may be claimed on that person's tax return So why would an investor buy into such a fund? Their dividends are tax-deductible expenses to the issuing firms. Which statement is TRUE regarding money market funds? D Family of Funds. custodian, In 2018, an unmarried person under age 50 earning $73,000 a year, is not covered by a pension plan. 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. Monday, June 19thD. D. $1,025 plus a commission, D. $1,025 plus a commission Mutual fund (open-end management company) shares are newly issued by the fund to any purchaser. It is an investment company that owns an underlying portfolio of securities. exercise price Which statement is TRUE? III If the mutual fund makes dividend distributions to shareholders, the Net Asset Value per share will decrease II and III only Regularly scheduled investments of the same dollar amount in fund shares will most likely result in a: A. lower average price per shareB. $0 - $50,000 5% requiring a majority vote of the outstanding shares to change a fund's investment objective D This action is: A. permittedB. Types of funds Growth, growth and income, income, balanced, index, specialized (sector fund), and special situations fund I Money market funds are typically sold without a sales charge (The maximum sales charge on a mutual fund is 8.5% under FINRA rules. B At the end of the first day, because the index rises by 10%, this position will rise by 20% to $12,000 value ($10,000 x 1.2). 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. both are regulated by the Investment Company Act of 1940 The theory behind such plans is that the advertising will attract more assets to the fund (more shareholders), and as the funds size increases, the expense ratio (ratio of all fund expenses to total net assets) should decrease for all shareholders. Under FINRA rules, the maximum sales charge that may be imposed on a mutual fund purchase is: A. This type of ETF is long 20+ year Treasuries in the hopes that prices will rise, and because it is a 2X leveraged ETF, it has margined the bond positions so that as interest rates fall, the price should rise at 2 times the normal rate of increase of a similar maturity unleveraged bond portfolio. Tax deductibility of contributions made to the contract if distributions are not taken until age 59 1/2 or later On that date, the price of the shares is reduced for any distributions. The guarantee of a minimum growth rate in the separate account if a higher annual fee is paid for this rider The ex-date is set by the Board of Directors of the Fund capital gains potentialD. REITs do not allow for flow through of loss - only net income flows through to shareholders under conduit tax treatment. C B Redemption of shares has no effect on Net Asset Value per share, because the redemption of each share occurs at the current Net Asset Value that day. Which statement is TRUE regarding a Step-Down Certificate of Deposit? ), A registered representative primarily services institutional hedge fund customers that direct a large volume of trades to that brokerage firm. D Distribute the amount in excess of the $50,000 LOI requirementC. Thus, when securities in the portfolio pay a dividend, there is no effect on NAV. B The wife works while the husband does not. III and IV onlyC. that have outperformed the Dow Jones Industrial Average. variable annuity contract I and III Which of the following are the correct about inflation-indexed treasury bonds? d. All of the above are true regarding ETFs. I, II, III, IV. Correct Answer A. 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. pricing of the fund shares must conform to the requirements of the Investment Company Act of 1940. A When comparing an ETN to an ETF, which statement is FALSE? A random sample recorded the amount of money and potential taxable income of the emigrants from New York. Which statements are TRUE regarding money market funds? IV Typical maturities of securities held in the portfolio are 30 days or less IV If the mutual fund makes dividend distributions to shareholders, the Net Asset Value per share is unaffected Of course, any person who elects to reinvest the distributions in more shares will have now hold more shares, each one worth less than before. D A. II and IV, The owner of a variable annuity has all of the following rights EXCEPT the right to vote: B A closed-end fund has a 1 time stock issuance and then closes its books to new investment and then lists its stock on an exchange or NASDAQ. A. They are highly regulated. III and IV onlyC. Industry sector I Investment in U.S. minted gold coins is permitted 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). >$10,000 - $20,000 7 % Though such market timing is not technically illegal, FINRA has taken the view that this activity can hurt existing fund shareholders because it can dilute the value of the existing shares. The letter of intent to receive a breakpoint can be backdated 90 days. II and III onlyD. At the end of the first day, because the index falls by 10%, this position will rise by 10% to $11,000 value ($10,000 x 1.1). 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. C. II and III It pays a fixed stream of income without a contractual obligation to make the payments. Usually, the limited partner investor can only cash out at year end. D True B. A. setting maximum sales charges on mutual fund purchasesB. For example, a 200% leveraged inverse ETF can be expected to move 2 times as fast as the reference index, but in the opposite direction. 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. (c, moderate) Types of Mutual Funds 14. There are 2 specific types of violations: **Late Trading: The practice of placing orders to buy, redeem, or exchange mutual fund shares after the time as of which the fund calculates its daily NAV (typically at 4:00 PM ET). II Money market funds typically do not impose management fees Because of this, the customer must deposit new money in the dollar amount required by the LOI to get the lowered sales charge. II Periodic payments of varying dollar amounts are made C. 2X (Leveraged) 20+ Year Treasury ETF Which of the following statements are TRUE regarding the mutual fund letter of intent? I and II only C In this example, Choice B meets the customers requirements. If the shares are trading in the market at a discount to NAV, institutional investors can buy new creation units and short the equivalent shares that compose the units, in an arbitrage trade. Brainscape helps you realize your greatest personal and professional ambitions through strong habits and hyper-efficient studying. D. Fixed dollar, ERISA regulations cover: Which statements is/are TRUE regarding closed end investment companies? Multiple choice question. Bond. Thus, they are only suitable for relatively risk tolerant, sophisticated investors. It must be adjusted for stock splits. C B. I and IV Question: Multiple Select Question Select all that apply Which statements are true of money market instruments? Friday, June 16C. A However, all mutual funds charge an annual management fee, which is an annual expense against the funds investment income. $19 x 100 shares = $1,900 received upon redemption. D. II and IV. The receipt of these monies into the Fund increases NAV per share. Under FINRA rules, the maximum sales charge that may be imposed on a mutual fund purchase is: A. They are a source of profit for a dealer. II The REIT issues shares of beneficial interest representing an undivided interest in a pool of real estate investments NAV per share of a mutual fund declines when asset values decline in the portfolio. They are insured by the Federal Deposit Insurance Corporation. Similarly, undistributed income retained by the fund would not be taxed, since it consists solely of tax free municipal interest income. (The ex-date for a mutual fund is set by the board of directors. Money Market Yield: The interest rate earned by investing in securities with high liquidity and maturities of less than one year such as negotiable certificates of deposit , U.S. Treasury bills . III and IV only In the prospectus is the following breakpoint schedule: Purchase Amount Sales Charge$0 -$10,000 8 % $10,001 - $25,000 7 %$25,001 - Over 6 %. Note that in the real world, competition among funds has forced sales charges well below this maximum permitted level. 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. A They can be purchased indirectly through mutual funds. >$65,000 5 % The Investment Company Act of 1940 requires that the minimum capital to start a fund is $100,000. B Under the Investment Company Act of 1940, customers who redeem must be paid within 7 calendar days (1 business week) of the redemption date. They are structured as private placement limited partnerships that are only available to wealthy accredited investors. A DerivativeD. C. $12.42 Which of the following customers is NOT allowed a breakpoint on mutual fund purchases? A tax deductible contribution of $11,000 ($5,500 each) is permitted. Investing is best when you're looking to maintain the value of your money with a little bit of growth. As the fund has earnings, and Total Assets increase, the shareholder receives more shares worth $1.00 each. A Specialist (DMM) on the NYSE shows the following orders for ABC stock on his book: A customer owns 100 shares of an NYSE listed preferred stock and notices that the typical daily trading volume in the issue is less than 1,000 shares. I Investment risk is carried by the issuer of the annuity An open-end management company is a mutual fund. Which of the following statements is true with regard to financial markets? The customer deposits $15,000 into the fund over the next 13 months. A customer has $300,000 to invest in the fund. Mutual FundC. (b) What is the probability that no cancellations will occur on a particular Wednesday? I and III onlyD. People cannot join together to obtain a breakpoint on a mutual fund purchase. expense ratiosD. use aggressive investment strategies and have higher riskC. 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. If seasonal production is used, it is assumed that inventory will directly match sales for each month and there will be no inventory buildup. III onlyC. The registered representative advises the customer to invest $8,000 on ABCD fund; $8,000 in DEFF fund; and $8,000 in XYZZ fund; to give the customer complete diversification and reduce risk. any price because this is negotiated in the market. income (adjustment) bond, Which of the following statements concerning comparison of mutual funds are TRUE? Require payment of premium Mutual funds are bought at the Ask price that includes the sales charge. D. II and IV, Exchange Traded Funds (ETFs) are: For this client, the best recommendation would be a: A. hedge fundB. Money market fund investors have said that they appreciate the greatly enhanced transparency after the Commission's 2010 Amendments and have put it to . 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