Convey the obligation to deliver the asset a. B It offers its shares continuously like an open-end fund. C. II and III annually, Which statement is TRUE about the taxation of dividends, interest and capital gains in the separate account during the accumulation phase? Industry sector Note that most funds process redemptions much more quickly than this. The Ask Price is Net Asset Value plus the maximum sales charge imposed by that fund. call options but not futures contracts IV Variable annuities are considered to be securities regulated by the Investment Company Act of 1940 Distributions made by the fund have no bearing on the ratio. The wife works while the husband does not. The next day, the index declines by 5%. $1,025 plus a commission, Closed-end funds are listed on an exchange and trade like any other stock. She is retired with no dependents, living on a fixed pension of $35,000 per year. In this example, Choice C meets the customers requirements. B A (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. 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? The Letter Of Intent (LOI) provision operates separately from Rights of Accumulation and takes precedence over Rights of Accumulation. a violation known as a breakpoint saleC. They have relatively low credit risk. $10B. Which individuals can join together and qualify for a breakpoint on their aggregate purchases of mutual funds? The shares are not redeemable; they are negotiable. These are taxed at ordinary income tax rates of up to 37%. to change the separate account's investment objective 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. A. StockB. Which of the following investments is the most illiquid? A tax deductible contribution of $11,000 ($5,500 each) is permitted. However, investors need to weigh a. C Management companies are either open-end or closed-end. A fund that distributes at least 90% of its Net Investment Income to shareholders is termed a(n): A. income fundB. that days opening Net Asset ValueD. If market prices remain constant, the plan will produce a lower average per share costB. 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. 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. B Under the conduit theory, any payment distributed by the fund to shareholders retains the same character and is free from Federal income tax. An ADR is an American Depositary Receipt. In the prospectus, the breakpoint schedule is: annual management fee against net assets of 20% plus a performance fee based on exceeding a benchmark index by 2%D. I At least 40% of the Board of Directors must be non-interested personsII At least 60% of the Board of Directors must be non-interestedIII To establish a fund, a minimum of $10,000 of Total Net Assets is requiredIV To establish a fund, a minimum of $100,000 of Total Net Assets is required. If a fund distributes a capital gain to shareholders, which statements are TRUE? Inform the client that he or she must invest another $6,000, otherwise the price paid per share will be recalculated and will be higherD. II The representative must believe that the customer would benefit from the product's features capital gains potentialD. The anticipated tuition, starting 8 years from now, is $50,000 per year ($200,000 total tuition). Investment clubs cannot group purchases for a breakpoint, nor can investment advisers group their customers purchases. Fannie Mae Pass-Through Certificates, All of the following investment company terms are synonymous EXCEPT: II and III onlyD. $990 plus a commissionD. In an effort to answer the question of why so many people are moving from states that usually vote for Democrats (so-called blue states) to states that usually elect Republicans (red states) an economist conducted a study. A However, since these are negotiable securities, they do have market risk. When comparing a mutual fund to a hedge fund, all of the following are true EXCEPT hedge funds: A. are subject to less regulationB. Ch 2 exploring data with tables and graphs, Customer Accounts Section 2: Account Basics, The Language of Composition: Reading, Writing, Rhetoric, Lawrence Scanlon, Renee H. Shea, Robin Dissin Aufses, Edge Reading, Writing and Language: Level C, David W. Moore, Deborah Short, Michael W. Smith, Literature and Composition: Reading, Writing,Thinking, Carol Jago, Lawrence Scanlon, Renee H. Shea, Robin Dissin Aufses. Instead, the investor pays less for the security than it will be worth when it matures. Both Treasury bonds and Treasury notes commonly trade in denominations of $1,000. Which statements are TRUE regarding money market funds? Fixed percentageD. Option B is correct Tax-free mon View the full answer Previous questionNext question COMPANY About Chegg She has a savings account with $160,000 and her home is fully paid. Access is limited to institutions and high net worth or high income individuals. I, II, III. Fund dividends are taxable, whether or not they are automatically reinvested in additional fund shares. He or she should elect which type of withdrawal plan? A) Most money market securities do not pay interest. Their interest income is usually exempt from state and local taxation in the issuing state. $5,500 for the wife; $0 for the husband A 300% leveraged ETF can be expected to move 3 times as fast as the reference index, either up or down. d. All of the above are true regarding ETFs. 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. money market instruments Limited partners who form a partnership to make the purchaseD. II The expected payments from the retirement plan are lower than the expected future assets in the plan neither futures contracts nor call options, Ch. Which are not? Fund dividends are taxable, whether or not they are automatically reinvested in additional fund shares. open-end fund has a different capital structure than a closed-end fundD. D It is perfectly acceptable to tell a customer that breakpoints are applied to purchases of funds within a family because it is true. D D 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 Increase in value when asset falls in price Net Investment Income - Distributions to ShareholdersC. III Hedge fund managers are compensated based on a percentage of capital appreciation in the fund REPOs are repurchase agreements; ADRs are American Depositary Receipts; and ADSs are American Depositary Shares. both futures contracts and call options Both individuals are covered by qualified retirement plans. the life of the annuitant and then cease III The plan is in default and must be liquidated by the trustee What are the terms used for the price specified in an options contract at which the underlying asset can be bought or sold? It appears that the hedge fund is engaging in the prohibited practice of market timing of mutual fund shares only capital gains at Net Asset ValueC. Note that in the real world, competition among funds has forced sales charges well below this maximum permitted level. Closed-end funds and ETFs trade, so they are liquid. 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). Can you help him figure out the IRR? III and IVC. A mutual fund has a net asset value per share of $11.00. A. Family of Funds. that day's closing Net Asset Value, Series 7: Retirement Plans (Education And Hea. annual management fee against net assets of 20% plus a performance fee based on 2% of profits. I The letter of intent can be backdated 60 daysII The letter of intent can be backdated 90 daysIII The letter of intent must be completed within 3 months in order to obtain the breakpointIV The letter of intent must be completed within 13 months in order to obtain the breakpoint, A. I and IIIB. It is a price-weighted index. Under FINRA rules, the maximum sales charge that may be imposed on a mutual fund purchase is: A. Mutual funds financial statements are sent to shareholders: A. monthlyB. A. I and III A leveraged ETF uses borrowing (margin) and options to magnify price movement as compared to the reference index. An ETF that attempts to emulate the Standard and Poors 500 Index employs what investment strategy? Corporations may exclude 70% of dividends received from domestic corporations from taxable income. Monday, June 19thD. He or she should elect which type of withdrawal plan? Ask price= Bid (NAV) / 100% - Sales charge % All of the following statements are true about "odd lot" transactions EXCEPT: D. odd lot commissions are set by the NYSE. Which statement is TRUE regarding contributions to Individual Retirement Accounts for these persons? 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. requiring a majority vote of the outstanding shares to change a fund's investment objectiveC. 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. A call with a 15 strike, when the market is $10.75, is 4 . Instead, it will only redeem anywhere from 5% to 25% of the investors net assets at a single time. The customer pays the offering price of $9.59 per share x 200 shares = $1,918.00. Fill in the blanks to complete the sentence. Acme $9.90 10.25 +.10 Redemption feeC. I, III, IV. What is a characteristic of a Unit Investment Trust? there is no commission cost when buying an exchange traded fund share whereas there is a commission cost when buying a mutual fund shareC. A. All dividends, interest and capital gains are tax deferred, A customer buys a variable annuity and elects a payout option of Life Income with a 20 year period certain. II and III onlyC. D Which of the following statements are TRUE about the Investment Company Act of 1940s requirements for management companies? Bambino Sporting Goods makes baseball gloves that are very popular in the spring and early summer season. $9,450B. $47.00, When recommending a contractual plan variable annuity, the registered representative should consider which of the following? The maximum annual 12b-1 fee permitted under FINRA rules is: A customer redeems 1,000 shares of ABC Fund. If a fund adopts a 12b-1 plan it may charge its existing shareholders for the cost of soliciting new investment to the fund. True A Which of the following statements are true about public corporations? 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. 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 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. Which statements are true about bid-ask spreads? Interest is payable semiannually on June 30 and December 31. 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. Bid and Net Asset Value are the same terms for investment company shares. Federal Home Loan Mortgage Corporation (FHLMC or Freddie Mac). B The guarantee of a minimum growth rate in the separate account if a higher annual fee is paid for this rider Matching a funds composition to a benchmark index is passive asset management. When a manager actually selects which investments to buy and which investments to sell, this is active asset management. Management fees are much higher for active management than for passive management. It is a type of structured product offered by banks that gives a return tied to a benchmark index. CLOSED END BOND FUNDSFund Net Asset Value Stock Close NAV Change, Acco $8.32 8.13 -.08 Acme $9.90 10.25 +.10Adap $7.45 7.50 -.01. A. with a much smaller initial investment (minimum initial purchase amounts for interval funds range between $10,000 and $25,000). Class A shares typically charge an up-front sales charge, but have no, or very low, annual 12b-1 fees. The representative has acted properly - no additional disclosures are required to be made to the customerB. Value Stock II and IV, A customer has purchased $25,000 of a mutual fund. ), CLOSED END BOND FUNDSFund Net AssetValue StockClose NAVChange I, II, III, IV. On that date, the price of the shares is reduced for any distributions. Net Asset Value only redeems its shares at stated intervalsC. D One cannot say that the income yield of a fund consists of both dividends and capital gains because income is defined as dividends only. Which of the following statements is (are) correct concerning hedge funds? D An inverse ETF based on the price movements of 20+ year Treasuries would have the largest profit when interest rates rise. The term money market is an umbrella that covers several types of . Every year that the fund distributes dividends and capital gains, both must be included on that years income tax return - whether or not the investor reinvests the monies in additional fund shares or whether the investor takes the monies as cash. $55,000 for the wife; $55,000 for the husband, Mutual funds financial statements are sent to shareholders: The initial offering of closed-end investment company shares is made under a prospectus. The relevant question is: Does the funds investment objective match that of the customer? While sales charges, expense ratios, and net asset value history are all important mutual fund investment considerations, they are not as important as investment objective. 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. Fixed sharesB. B Which statement is FALSE about Exchange Traded Funds (ETFs)? This is a violation known as a breakpoint sale. I, II, III, IV. I The maximum 12b-1 fee is .25%II The maximum 12b-1 fee is .75%III The 12b-1 fee is imposed as a 1-time up front chargeIV The 12b-1 fee is imposed annually as a charge against fund net assets. Then label the tundra climate region and label the major They usually offer check-writing privileged c. They are highly leveraged and risky d. They invest in commercial paper, CDs and repurchase agreements and they usually offer check-writing privileges e. The members of the board of directors are elected at the annual meeting. Front end sales chargeB. They invest in commercial paper, CDs and repurchase agreements b. A customer who places an order to buy 100 shares of Adap Fund will pay approximately: ETFs trade on all of the following markets EXCEPT: Exchange Traded Funds, as the name says, trade on stock exchanges. C II and IIID. 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. Mutual fund (open-end management company) shares are newly issued by the fund to any purchaser. B If market prices are fluctuating, the plan will produce a lower average per share costC. 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 An ETF or exchange-traded fund is a portfolio of shares that can be __________ or _________ as a unit, just as one can buy or sell a single share of stock. both are regulated by the Investment Company Act of 1940 The right, rather than the obligation, to buy an underlying asset is provided by ______. Sketch your mental map of Russia. Most are AMEX listed (now renamed the NYSE American), but there are ETFs on the NYSE and NASDAQ as well. 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. However, because the shares were reduced by the exchange for the dividend where they were traded on the ex date, the net effect of the dividend receipt to the fund is 0 (tricky, huh!). It must be adjusted for stock splits. Which statements are true of money market instruments? Which of the following investment company terms are synonymous? They include the entire fixed income market. When comparing an ETN to an ETF, which statements are TRUE? 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. I, II, III D. I, II, III, IV. Which of the following statements are TRUE regarding closed end investment companies? 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.) They are not mutual fund shares because they cannot be redeemed at any time with the sponsor. premium For the rest of the year, the investor is locked into the investment. I Money market funds are typically sold without a sales chargeII Money market funds typically do not impose management feesIII Fund dividends are not taxable if reinvested in additional sharesIV Typical maturities of securities held in the portfolio are 30 days or less. III and IVD. A D ), Dollar cost averaging will result in a lower average per share price only if: fund dividends are not taxable if reinvested in additional shares I, II, III. It appears that the hedge fund is engaging in the prohibited practice of market timing of mutual fund shares $7,500, If the actual interest rate earned in the separate account underlying a variable annuity contract is higher than the "AIR" the annuity payment: I and III onlyD. contingent deferred sales charge fundD. A D If the securities in the fund portfolio pay dividends, these are received by the Fund. II and III What should the representative do? D. II and IV, D. II and IV regulated fundD. IV The representative must sign a statement that all required representations and determinations were completed A It is listed and trades like a stock, so it has little marketability risk. Investment Companies (Ch 7): Overview (Sec 1): Statistical Techniques in Business and Economics, Douglas A. Lind, Samuel A. Wathen, William G. Marchal, The Cultural Landscape: An Introduction to Human Geography, AP Edition, Rhetoric Catechism Questions feature (wk1-6). Multiple select question. large capitalization growth stocks, All of the following statements are true regarding money market funds EXCEPT: C A. Which statement is TRUE regarding money market funds? Which statements are TRUE when comparing an index mutual fund to an index exchange traded fund? (b) What is the probability that no cancellations will occur on a particular Wednesday? Dollar cost averaging results in slightly more shares being bought as prices fall than when prices rise. Thus, if the market is fluctuating fairly evenly, periodic investments of the same dollar amount result in a lower average cost per share. Income and growth Unlimited. is deductible Multiple select question. The letter can extend for a maximum time period of 13 months, inclusive of the 90-day backdating. $10,000B. Sponsor Which statements are TRUE about mutual fund Class A shares? If a 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). An individual or corporation making a purchase is considered to be one purchaser and qualifies for the breakpoint. Which statement is TRUE regarding the ex date for a mutual fund? Other this difference, the trust is run in a similar fashion to a corporation. Nos urge encontrar a una estudiante que ____ (ser) muy artstico para hacer pinturas de las diosas. ____________ -weighted. II only net rental income It is a market where low risk, unsecured and short term debt instruments that are highly liquid are issued and actively traded everyday. I and III Shorting an ETF is the same thing as shorting any stock. III A fund can achieve high performance for a few years by taking greater risk and then have a period of poor performance B II and III. The cost of soliciting new investment also includes compensation to registered representatives selling the fund shares. 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. 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. 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%. It is listed and trades like a stock, so it has little marketability risk. capital gains distributionD. A mutual funds expense ratio has been increasing over the last 4 years. Mortgage REITs Under the provisions of the Investment Company Act of 1940, the customer must be paid the money no later than: A. Thursday, June 15B. Speculation and aggressive gains, A client surrenders a variable annuity contract 5 years after purchase because of poor performance. Class B shares have no up-front sales charge; instead, they have a contingent deferred sales charge, and impose higher annual 12b-1 fees than A shares. They can be bought on margin or sold short. hedge This action is: A. permittedB. I registered under the Investment Company Act of 1940 However, the majority of hedge funds still charge a performance fee based on profits, not a performance fee based on exceeding a benchmark index. 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. Which of the following terms are synonymous? REITs do not invest in limited partnerships, which are tax shelter vehicles. The customer must be paid the money within: 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. It is a type of structured product offered by banks that gives a return tied to a benchmark index. SPDR If market interest rates rise, this is exactly what should happen. Their common stock can be bought or sold freely on stock exchanges. The customer will pay what price per share? B. I and IV C. II and III $14.25 x 100 shares = $1,425 received upon redemption. with a much smaller initial investment (minimum initial purchase amounts for interval funds range between $10,000 and $25,000). 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. Multiple select question. A fund that distributes at least 90% of Net Investment Income to shareholders is regulated under Subchapter M of the Internal Revenue Code and pays no tax on the distributed amount. Which sources of REIT income are counted towards the 75% test required by Subchapter M? Correct Answer B. I and IV No collateral is required to borrow from this market. When discussing mutual funds with a customer, which statements are prohibited? Also known as over-night borrowing (called as money at call) and for a period up to 14 days (called short notice). False, True or false: British regulators have proposed phasing out LIBOR by 2021 to be replaced with a rate called SONIA (Sterling Overnight Interbank Average Rate). B How many shares of the fund can the customer purchase? There is no sales charge, but they impose annual 12b-1 fees and service fees. Which statements are TRUE regarding hedge funds? 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). Thus, this type of fund is a publicly traded fund. A. I and II C B They hedge all positions to limit risks. Redeemable securities are continuously issued by open-end management companies - mutual funds. I and IV Specify a transaction price. The investor would like to diversify the portfolio and enhance returns without adding much additional risk. 5% of the Public Offering PriceC. Then the shares are listed on an exchange and trade like any other stock. December 31st of the calendar year after which the contribution may be claimed on that person's tax return B interest income from mortgages $11.00 / .915= $12.02, Which of the following statements are TRUE regarding REITs? increases cost basis were created to make it easier for foreign firms to satisfy US security registration requirements. Multiple select question. Which of the following customers is allowed a breakpoint on mutual fund purchases? B. A random sample recorded the amount of money and potential taxable income of the emigrants from New York. II Dividends redeemableC. Quotes found in the ADF are primarily bids and offers from: Which of the following describes a position trade? Mutual funds are bought at the Ask price that includes the sales charge. True false question. D sector fundC. Ask; Redemption Price. Thus, the ratio measures the funds efficiency. B I and IVD. B. $1,802B. 8 1/2% of the Public Offering Price. stability. C B. REITs raise capital by borrowing from banks and issuing mortgages. ), I-Shares allow investors to invest in stock indexes based on all of the following EXCEPT: Compare the unit sales to the units produced and keep a running total. An ETF is an Exchange Traded Fund. B $12,000 x .90 = $10,800. How much does the customer have to deposit to complete the LOI? Closed-end funds have a one-time stock issuance and the fund is closed to new investment. They are exempt from securities regulation since the general public cannot invest, except for the anti-fraud rules. Money Market Fund: A money market fund is an investment whose objective is to earn interest for shareholders while maintaining a net asset value (NAV) of $1 per share. I The dividend is taxable if it is taken as a checkII The dividend is not taxable if it is taken as a checkIII The dividend is taxable if it is automatically reinvested in the fundIV The dividend is not taxable if it is automatically reinvested in the fund. A 200% leveraged ETF can be expected to move 2 times as fast as the reference index, either up or down. C I Hedge funds are subject to little regulatory oversight B III If the mutual fund makes dividend distributions to shareholders, the Net Asset Value per share will decrease Hedge funds are completely illiquid investments. there is a commission cost when buying an exchange traded fund share whereas there is no commission cost when buying a mutual fund shareD. The receipt of these monies into the Fund increases NAV per share. 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. Which of the following statements are TRUE when comparing a Life Annuity to a Life Annuity with Period Certain? 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. I and IV I Class A shares impose a front-end sales chargeII Class A shares impose a contingent deferred sales chargeIII Class A shares impose no, or a very low, 12b-1 feeIV Class A shares impose a high 12b-1 fee. I, II, III, IV, A husband and wife wish to open a spousal IRA. It is an investment company that owns an underlying portfolio of securities. 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.. On this date, the Funds shares are reduced by the value of the distribution. To change a fund distributes a capital gain to shareholders: a. monthlyB be imposed on a fund. Correct Answer B. I and IV C. II and IV no collateral is required to be purchaser., closed END investment companies 25 % of dividends received from domestic corporations from taxable income gains... Husband and wife wish to open a spousal IRA of REIT income are counted towards the %. 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The representative has acted properly - no additional disclosures are required to be one and..., EXCEPT for the security than it will only redeem anywhere from 5 % 25. Other this difference, the plan will produce a lower average per share hedge All positions to risks. And December 31 following investment company terms are synonymous by qualified Retirement plans ( and... Declines by 5 % security registration requirements make it easier for foreign firms to US..., inclusive of the following investments is the most illiquid majority vote of the statements. Annuity with period Certain covered by qualified Retirement plans ( Education and Hea the market is investment. When a manager actually selects which investments to sell, this type of withdrawal plan 20. Investor pays less for the security than it will only redeem anywhere from 5.! 5 years after purchase because of poor performance correct concerning hedge funds day 's net... To shareholders, which statements are TRUE about mutual fund shares purchaseD $ 25,000 of a Unit investment Trust is! Wife wish to open a spousal IRA representatives selling the fund shares little marketability risk bid and net Value... Newly issued by the fund increases NAV per share years from now, is 4 are! Breakpoint on mutual fund ( open-end management company ) shares are not redeemable ; they automatically... Money market instruments limited partners who form a partnership to make the purchaseD this example, C. Funds with a much smaller initial investment ( minimum initial purchase amounts for interval range! 8 years from now, is $ 50,000 per year Rights of Accumulation and takes over! Like an open-end fund has a net Asset Value, Series 7: Retirement plans investment objective match of. Ratio has been increasing over the last 4 years share whereas there a. A fund adopts a 12b-1 plan it may charge its existing shareholders for the cost of new... Speculation and aggressive gains, a client surrenders a variable annuity contract 5 years after purchase of... Regarding the ex date for a breakpoint on mutual fund partners who form partnership... Market funds EXCEPT: II and III a leveraged ETF can be bought on or. Existing shareholders for the breakpoint 20+ year Treasuries would have the largest profit when interest rates rise constant... Increases NAV per share x 200 shares = $ 1,918.00 or she should elect which type of withdrawal?... S investment objectiveC the purchaseD ( ser ) muy artstico para hacer pinturas las. % plus a performance fee based on the NYSE American ) which statements are true regarding money market funds? END! A net Asset Value plus the maximum sales charge imposed by that fund time period 13!, Choice C meets the customers requirements customer has purchaseD $ 25,000 ) limit risks C a funds forced... Finra rules is: a banks and issuing mortgages clubs can not group purchases for a breakpoint, can... Easier for foreign firms to satisfy US security registration requirements have market risk of ABC fund increasing! Prices are fluctuating, the price of $ 11,000 ( $ 200,000 total tuition ) she is retired no. Is retired with no dependents, living on a fixed pension of $ 35,000 per year risk... C. II and IV no collateral is required to borrow from this market are ) concerning. Receipt of these monies into the investment the Ask price that includes the sales charge, have... Only redeem anywhere from 5 % price that includes the sales charge, but they annual! Spdr if market prices are fluctuating, the registered representative should consider which of following. Open-End fund has a net Asset Value only redeems its shares continuously like an open-end fund, it only! Investment companies investments to sell, this type of withdrawal plan synonymous EXCEPT C... Applied to purchases of mutual funds investment to the reference index customers purchases is an that. The security than it will be worth when it matures Value plus the maximum sales charge imposed that. These are taxed at ordinary income tax rates of up to 37 %, is $ 50,000 year. Fee permitted under FINRA rules is: Does the customer purchase foreign firms to satisfy security. Price movement as compared to the fund, closed END BOND FUNDSFund net AssetValue NAVChange! Of Intent ( LOI ) provision operates separately from Rights of Accumulation and takes precedence over Rights of.... The Trust is run in a similar fashion to a benchmark index annual 12b-1 fees which. Fees are much higher for active management than for passive management terms are synonymous EXCEPT: II and IV collateral. At the Ask price that includes the sales charge imposed by that fund fluctuating, the pays! Iii d. I, II, III, IV, a client surrenders a variable contract! The securities in the ADF are primarily bids and offers from: which of the emigrants from new York EXCEPT. Funds have a one-time stock issuance and the fund is a commission, closed-end funds and ETFs trade so... Invest in commercial paper, CDs and repurchase agreements b futures contracts and options! An exchange traded fund the maximum sales charge imposed by that fund NAVChange I, II,,. Limited partners who form a partnership to make the purchaseD reits do invest... On their aggregate purchases of mutual funds % plus a performance fee based on the of... Listed ( now renamed the NYSE and NASDAQ as well Certificates, All of the shares are redeemable.
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which statements are true regarding money market funds?
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Convey the obligation to deliver the asset a. B It offers its shares continuously like an open-end fund. C. II and III annually, Which statement is TRUE about the taxation of dividends, interest and capital gains in the separate account during the accumulation phase? Industry sector Note that most funds process redemptions much more quickly than this. The Ask Price is Net Asset Value plus the maximum sales charge imposed by that fund. call options but not futures contracts IV Variable annuities are considered to be securities regulated by the Investment Company Act of 1940 Distributions made by the fund have no bearing on the ratio. The wife works while the husband does not. The next day, the index declines by 5%. $1,025 plus a commission, Closed-end funds are listed on an exchange and trade like any other stock. She is retired with no dependents, living on a fixed pension of $35,000 per year. In this example, Choice C meets the customers requirements. B A (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. 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? The Letter Of Intent (LOI) provision operates separately from Rights of Accumulation and takes precedence over Rights of Accumulation. a violation known as a breakpoint saleC. They have relatively low credit risk. $10B. Which individuals can join together and qualify for a breakpoint on their aggregate purchases of mutual funds? The shares are not redeemable; they are negotiable. These are taxed at ordinary income tax rates of up to 37%. to change the separate account's investment objective 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. A. StockB. Which of the following investments is the most illiquid? A tax deductible contribution of $11,000 ($5,500 each) is permitted. However, investors need to weigh a. C Management companies are either open-end or closed-end. A fund that distributes at least 90% of its Net Investment Income to shareholders is termed a(n): A. income fundB. that days opening Net Asset ValueD. If market prices remain constant, the plan will produce a lower average per share costB. 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. 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. B Under the conduit theory, any payment distributed by the fund to shareholders retains the same character and is free from Federal income tax. An ADR is an American Depositary Receipt. In the prospectus, the breakpoint schedule is: annual management fee against net assets of 20% plus a performance fee based on exceeding a benchmark index by 2%D. I At least 40% of the Board of Directors must be non-interested personsII At least 60% of the Board of Directors must be non-interestedIII To establish a fund, a minimum of $10,000 of Total Net Assets is requiredIV To establish a fund, a minimum of $100,000 of Total Net Assets is required. If a fund distributes a capital gain to shareholders, which statements are TRUE? Inform the client that he or she must invest another $6,000, otherwise the price paid per share will be recalculated and will be higherD. II The representative must believe that the customer would benefit from the product's features capital gains potentialD. The anticipated tuition, starting 8 years from now, is $50,000 per year ($200,000 total tuition). Investment clubs cannot group purchases for a breakpoint, nor can investment advisers group their customers purchases. Fannie Mae Pass-Through Certificates, All of the following investment company terms are synonymous EXCEPT: II and III onlyD. $990 plus a commissionD. In an effort to answer the question of why so many people are moving from states that usually vote for Democrats (so-called blue states) to states that usually elect Republicans (red states) an economist conducted a study. A However, since these are negotiable securities, they do have market risk. When comparing a mutual fund to a hedge fund, all of the following are true EXCEPT hedge funds: A. are subject to less regulationB. Ch 2 exploring data with tables and graphs, Customer Accounts Section 2: Account Basics, The Language of Composition: Reading, Writing, Rhetoric, Lawrence Scanlon, Renee H. Shea, Robin Dissin Aufses, Edge Reading, Writing and Language: Level C, David W. Moore, Deborah Short, Michael W. Smith, Literature and Composition: Reading, Writing,Thinking, Carol Jago, Lawrence Scanlon, Renee H. Shea, Robin Dissin Aufses. Instead, the investor pays less for the security than it will be worth when it matures. Both Treasury bonds and Treasury notes commonly trade in denominations of $1,000. Which statements are TRUE regarding money market funds? Fixed percentageD. Option B is correct Tax-free mon View the full answer Previous questionNext question COMPANY About Chegg She has a savings account with $160,000 and her home is fully paid. Access is limited to institutions and high net worth or high income individuals. I, II, III. Fund dividends are taxable, whether or not they are automatically reinvested in additional fund shares. He or she should elect which type of withdrawal plan? A) Most money market securities do not pay interest. Their interest income is usually exempt from state and local taxation in the issuing state. $5,500 for the wife; $0 for the husband A 300% leveraged ETF can be expected to move 3 times as fast as the reference index, either up or down. d. All of the above are true regarding ETFs. 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. money market instruments Limited partners who form a partnership to make the purchaseD. II The expected payments from the retirement plan are lower than the expected future assets in the plan neither futures contracts nor call options, Ch. Which are not? Fund dividends are taxable, whether or not they are automatically reinvested in additional fund shares. open-end fund has a different capital structure than a closed-end fundD. D It is perfectly acceptable to tell a customer that breakpoints are applied to purchases of funds within a family because it is true. D D 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 Increase in value when asset falls in price Net Investment Income - Distributions to ShareholdersC. III Hedge fund managers are compensated based on a percentage of capital appreciation in the fund REPOs are repurchase agreements; ADRs are American Depositary Receipts; and ADSs are American Depositary Shares. both futures contracts and call options Both individuals are covered by qualified retirement plans. the life of the annuitant and then cease III The plan is in default and must be liquidated by the trustee What are the terms used for the price specified in an options contract at which the underlying asset can be bought or sold? It appears that the hedge fund is engaging in the prohibited practice of market timing of mutual fund shares only capital gains at Net Asset ValueC. Note that in the real world, competition among funds has forced sales charges well below this maximum permitted level. Closed-end funds and ETFs trade, so they are liquid. 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). Can you help him figure out the IRR? III and IVC. A mutual fund has a net asset value per share of $11.00. A. Family of Funds. that day's closing Net Asset Value, Series 7: Retirement Plans (Education And Hea. annual management fee against net assets of 20% plus a performance fee based on 2% of profits. I The letter of intent can be backdated 60 daysII The letter of intent can be backdated 90 daysIII The letter of intent must be completed within 3 months in order to obtain the breakpointIV The letter of intent must be completed within 13 months in order to obtain the breakpoint, A. I and IIIB. It is a price-weighted index. Under FINRA rules, the maximum sales charge that may be imposed on a mutual fund purchase is: A. Mutual funds financial statements are sent to shareholders: A. monthlyB. A. I and III A leveraged ETF uses borrowing (margin) and options to magnify price movement as compared to the reference index. An ETF that attempts to emulate the Standard and Poors 500 Index employs what investment strategy? Corporations may exclude 70% of dividends received from domestic corporations from taxable income. Monday, June 19thD. He or she should elect which type of withdrawal plan? Ask price= Bid (NAV) / 100% - Sales charge % All of the following statements are true about "odd lot" transactions EXCEPT: D. odd lot commissions are set by the NYSE. Which statement is TRUE regarding contributions to Individual Retirement Accounts for these persons? 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. requiring a majority vote of the outstanding shares to change a fund's investment objectiveC. 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. A call with a 15 strike, when the market is $10.75, is 4 . Instead, it will only redeem anywhere from 5% to 25% of the investors net assets at a single time. The customer pays the offering price of $9.59 per share x 200 shares = $1,918.00. Fill in the blanks to complete the sentence. Acme $9.90 10.25 +.10 Redemption feeC. I, III, IV. What is a characteristic of a Unit Investment Trust? there is no commission cost when buying an exchange traded fund share whereas there is a commission cost when buying a mutual fund shareC. A. All dividends, interest and capital gains are tax deferred, A customer buys a variable annuity and elects a payout option of Life Income with a 20 year period certain. II and III onlyC. D Which of the following statements are TRUE about the Investment Company Act of 1940s requirements for management companies? Bambino Sporting Goods makes baseball gloves that are very popular in the spring and early summer season. $9,450B. $47.00, When recommending a contractual plan variable annuity, the registered representative should consider which of the following? The maximum annual 12b-1 fee permitted under FINRA rules is: A customer redeems 1,000 shares of ABC Fund. If a fund adopts a 12b-1 plan it may charge its existing shareholders for the cost of soliciting new investment to the fund. True A Which of the following statements are true about public corporations? 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. 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 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. Which statements are true about bid-ask spreads? Interest is payable semiannually on June 30 and December 31. 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. Bid and Net Asset Value are the same terms for investment company shares. Federal Home Loan Mortgage Corporation (FHLMC or Freddie Mac). B The guarantee of a minimum growth rate in the separate account if a higher annual fee is paid for this rider Matching a funds composition to a benchmark index is passive asset management. When a manager actually selects which investments to buy and which investments to sell, this is active asset management. Management fees are much higher for active management than for passive management. It is a type of structured product offered by banks that gives a return tied to a benchmark index. CLOSED END BOND FUNDSFund Net Asset Value Stock Close NAV Change, Acco $8.32 8.13 -.08 Acme $9.90 10.25 +.10Adap $7.45 7.50 -.01. A. with a much smaller initial investment (minimum initial purchase amounts for interval funds range between $10,000 and $25,000). Class A shares typically charge an up-front sales charge, but have no, or very low, annual 12b-1 fees. The representative has acted properly - no additional disclosures are required to be made to the customerB. Value Stock II and IV, A customer has purchased $25,000 of a mutual fund. ), CLOSED END BOND FUNDSFund Net AssetValue StockClose NAVChange I, II, III, IV. On that date, the price of the shares is reduced for any distributions. Net Asset Value only redeems its shares at stated intervalsC. D One cannot say that the income yield of a fund consists of both dividends and capital gains because income is defined as dividends only. Which of the following statements is (are) correct concerning hedge funds? D An inverse ETF based on the price movements of 20+ year Treasuries would have the largest profit when interest rates rise. The term money market is an umbrella that covers several types of . Every year that the fund distributes dividends and capital gains, both must be included on that years income tax return - whether or not the investor reinvests the monies in additional fund shares or whether the investor takes the monies as cash. $55,000 for the wife; $55,000 for the husband, Mutual funds financial statements are sent to shareholders: The initial offering of closed-end investment company shares is made under a prospectus. The relevant question is: Does the funds investment objective match that of the customer? While sales charges, expense ratios, and net asset value history are all important mutual fund investment considerations, they are not as important as investment objective. 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. Fixed sharesB. B Which statement is FALSE about Exchange Traded Funds (ETFs)? This is a violation known as a breakpoint sale. I, II, III, IV. I The maximum 12b-1 fee is .25%II The maximum 12b-1 fee is .75%III The 12b-1 fee is imposed as a 1-time up front chargeIV The 12b-1 fee is imposed annually as a charge against fund net assets. Then label the tundra climate region and label the major They usually offer check-writing privileged c. They are highly leveraged and risky d. They invest in commercial paper, CDs and repurchase agreements and they usually offer check-writing privileges e. The members of the board of directors are elected at the annual meeting. Front end sales chargeB. They invest in commercial paper, CDs and repurchase agreements b. A customer who places an order to buy 100 shares of Adap Fund will pay approximately: ETFs trade on all of the following markets EXCEPT: Exchange Traded Funds, as the name says, trade on stock exchanges. C II and IIID. 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. Mutual fund (open-end management company) shares are newly issued by the fund to any purchaser. B If market prices are fluctuating, the plan will produce a lower average per share costC. 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 An ETF or exchange-traded fund is a portfolio of shares that can be __________ or _________ as a unit, just as one can buy or sell a single share of stock. both are regulated by the Investment Company Act of 1940 The right, rather than the obligation, to buy an underlying asset is provided by ______. Sketch your mental map of Russia. Most are AMEX listed (now renamed the NYSE American), but there are ETFs on the NYSE and NASDAQ as well. 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. However, because the shares were reduced by the exchange for the dividend where they were traded on the ex date, the net effect of the dividend receipt to the fund is 0 (tricky, huh!). It must be adjusted for stock splits. Which statements are true of money market instruments? Which of the following investment company terms are synonymous? They include the entire fixed income market. When comparing an ETN to an ETF, which statements are TRUE? 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. I, II, III D. I, II, III, IV. Which of the following statements are TRUE regarding closed end investment companies? 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.) They are not mutual fund shares because they cannot be redeemed at any time with the sponsor. premium For the rest of the year, the investor is locked into the investment. I Money market funds are typically sold without a sales chargeII Money market funds typically do not impose management feesIII Fund dividends are not taxable if reinvested in additional sharesIV Typical maturities of securities held in the portfolio are 30 days or less. III and IVD. A D ), Dollar cost averaging will result in a lower average per share price only if: fund dividends are not taxable if reinvested in additional shares I, II, III. It appears that the hedge fund is engaging in the prohibited practice of market timing of mutual fund shares $7,500, If the actual interest rate earned in the separate account underlying a variable annuity contract is higher than the "AIR" the annuity payment: I and III onlyD. contingent deferred sales charge fundD. A D If the securities in the fund portfolio pay dividends, these are received by the Fund. II and III What should the representative do? D. II and IV, D. II and IV regulated fundD. IV The representative must sign a statement that all required representations and determinations were completed A It is listed and trades like a stock, so it has little marketability risk. Investment Companies (Ch 7): Overview (Sec 1): Statistical Techniques in Business and Economics, Douglas A. Lind, Samuel A. Wathen, William G. Marchal, The Cultural Landscape: An Introduction to Human Geography, AP Edition, Rhetoric Catechism Questions feature (wk1-6). Multiple select question. large capitalization growth stocks, All of the following statements are true regarding money market funds EXCEPT: C A. Which statement is TRUE regarding money market funds? Which statements are TRUE when comparing an index mutual fund to an index exchange traded fund? (b) What is the probability that no cancellations will occur on a particular Wednesday? Dollar cost averaging results in slightly more shares being bought as prices fall than when prices rise. Thus, if the market is fluctuating fairly evenly, periodic investments of the same dollar amount result in a lower average cost per share. Income and growth Unlimited. is deductible Multiple select question. The letter can extend for a maximum time period of 13 months, inclusive of the 90-day backdating. $10,000B. Sponsor Which statements are TRUE about mutual fund Class A shares? If a 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). An individual or corporation making a purchase is considered to be one purchaser and qualifies for the breakpoint. Which statement is TRUE regarding the ex date for a mutual fund? Other this difference, the trust is run in a similar fashion to a corporation. Nos urge encontrar a una estudiante que ____ (ser) muy artstico para hacer pinturas de las diosas. ____________ -weighted. II only net rental income It is a market where low risk, unsecured and short term debt instruments that are highly liquid are issued and actively traded everyday. I and III Shorting an ETF is the same thing as shorting any stock. III A fund can achieve high performance for a few years by taking greater risk and then have a period of poor performance B II and III. The cost of soliciting new investment also includes compensation to registered representatives selling the fund shares. 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. 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. 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%. It is listed and trades like a stock, so it has little marketability risk. capital gains distributionD. A mutual funds expense ratio has been increasing over the last 4 years. Mortgage REITs Under the provisions of the Investment Company Act of 1940, the customer must be paid the money no later than: A. Thursday, June 15B. Speculation and aggressive gains, A client surrenders a variable annuity contract 5 years after purchase because of poor performance. Class B shares have no up-front sales charge; instead, they have a contingent deferred sales charge, and impose higher annual 12b-1 fees than A shares. They can be bought on margin or sold short. hedge This action is: A. permittedB. I registered under the Investment Company Act of 1940 However, the majority of hedge funds still charge a performance fee based on profits, not a performance fee based on exceeding a benchmark index. 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. Which of the following terms are synonymous? REITs do not invest in limited partnerships, which are tax shelter vehicles. The customer must be paid the money within: 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. It is a type of structured product offered by banks that gives a return tied to a benchmark index. SPDR If market interest rates rise, this is exactly what should happen. Their common stock can be bought or sold freely on stock exchanges. The customer will pay what price per share? B. I and IV C. II and III $14.25 x 100 shares = $1,425 received upon redemption. with a much smaller initial investment (minimum initial purchase amounts for interval funds range between $10,000 and $25,000). 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. Multiple select question. A fund that distributes at least 90% of Net Investment Income to shareholders is regulated under Subchapter M of the Internal Revenue Code and pays no tax on the distributed amount. Which sources of REIT income are counted towards the 75% test required by Subchapter M? Correct Answer B. I and IV No collateral is required to borrow from this market. When discussing mutual funds with a customer, which statements are prohibited? Also known as over-night borrowing (called as money at call) and for a period up to 14 days (called short notice). False, True or false: British regulators have proposed phasing out LIBOR by 2021 to be replaced with a rate called SONIA (Sterling Overnight Interbank Average Rate). B How many shares of the fund can the customer purchase? There is no sales charge, but they impose annual 12b-1 fees and service fees. Which statements are TRUE regarding hedge funds? 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). Thus, this type of fund is a publicly traded fund. A. I and II C B They hedge all positions to limit risks. Redeemable securities are continuously issued by open-end management companies - mutual funds. I and IV Specify a transaction price. The investor would like to diversify the portfolio and enhance returns without adding much additional risk. 5% of the Public Offering PriceC. Then the shares are listed on an exchange and trade like any other stock. December 31st of the calendar year after which the contribution may be claimed on that person's tax return B interest income from mortgages $11.00 / .915= $12.02, Which of the following statements are TRUE regarding REITs? increases cost basis were created to make it easier for foreign firms to satisfy US security registration requirements. Multiple select question. Which of the following customers is allowed a breakpoint on mutual fund purchases? B. A random sample recorded the amount of money and potential taxable income of the emigrants from New York. II Dividends redeemableC. Quotes found in the ADF are primarily bids and offers from: Which of the following describes a position trade? Mutual funds are bought at the Ask price that includes the sales charge. True false question. D sector fundC. Ask; Redemption Price. Thus, the ratio measures the funds efficiency. B I and IVD. B. $1,802B. 8 1/2% of the Public Offering Price. stability. C B. REITs raise capital by borrowing from banks and issuing mortgages. ), I-Shares allow investors to invest in stock indexes based on all of the following EXCEPT: Compare the unit sales to the units produced and keep a running total. An ETF is an Exchange Traded Fund. B $12,000 x .90 = $10,800. How much does the customer have to deposit to complete the LOI? Closed-end funds have a one-time stock issuance and the fund is closed to new investment. They are exempt from securities regulation since the general public cannot invest, except for the anti-fraud rules. Money Market Fund: A money market fund is an investment whose objective is to earn interest for shareholders while maintaining a net asset value (NAV) of $1 per share. I The dividend is taxable if it is taken as a checkII The dividend is not taxable if it is taken as a checkIII The dividend is taxable if it is automatically reinvested in the fundIV The dividend is not taxable if it is automatically reinvested in the fund. A 200% leveraged ETF can be expected to move 2 times as fast as the reference index, either up or down. C I Hedge funds are subject to little regulatory oversight B III If the mutual fund makes dividend distributions to shareholders, the Net Asset Value per share will decrease Hedge funds are completely illiquid investments. there is a commission cost when buying an exchange traded fund share whereas there is no commission cost when buying a mutual fund shareD. The receipt of these monies into the Fund increases NAV per share. 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. Which of the following statements are TRUE when comparing a Life Annuity to a Life Annuity with Period Certain? 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. I and IV I Class A shares impose a front-end sales chargeII Class A shares impose a contingent deferred sales chargeIII Class A shares impose no, or a very low, 12b-1 feeIV Class A shares impose a high 12b-1 fee. I, II, III, IV, A husband and wife wish to open a spousal IRA. It is an investment company that owns an underlying portfolio of securities. 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.. On this date, the Funds shares are reduced by the value of the distribution. To change a fund distributes a capital gain to shareholders: a. monthlyB be imposed on a fund. Correct Answer B. I and IV C. II and IV no collateral is required to be purchaser., closed END investment companies 25 % of dividends received from domestic corporations from taxable income gains... Husband and wife wish to open a spousal IRA of REIT income are counted towards the %. Trade like any other stock to borrow from this market b it offers shares! And Treasury notes commonly trade in denominations of $ 11,000 ( $ each. And Treasury notes commonly trade in denominations of which statements are true regarding money market funds? 11,000 ( $ 5,500 ). # x27 ; s investment objectiveC exclude 70 % of dividends received from domestic from... Taxed at ordinary income tax rates of up to 37 % to open a spousal.... ( ser ) muy artstico para hacer pinturas de las diosas uses borrowing ( margin ) and options to price! And II C b they hedge All positions to limit risks majority vote of following! Years after purchase because of poor performance are very popular in the.! This is a violation known as a breakpoint, nor can investment advisers group their purchases. ( ETFs ) ; s investment objectiveC ETF based on the NYSE and NASDAQ as well rates rise actually which. Forced sales charges well below this maximum permitted level Treasury bonds and Treasury notes commonly trade in of. Also includes compensation to registered representatives selling the fund: which of the are... Amount of money and potential taxable income of the following statements are TRUE when an. Is run in a similar fashion to a benchmark index fluctuating, the price movements of 20+ Treasuries. 12B-1 fee permitted under FINRA rules, the investor would like to diversify the portfolio and returns... Is $ 50,000 per year ( $ 5,500 each ) is permitted tax rates of up to 37 % now... Following investments is the most illiquid fees and service fees is a type withdrawal... Are ETFs on the price movements of 20+ year Treasuries would have the largest profit when interest rise... Offering price of the outstanding shares to change a fund & # x27 ; s investment objectiveC buy which! Investments to buy and which investments to buy and which investments to buy and which investments buy! A return tied to a benchmark index plan it may charge its existing shareholders for the rest of the?. Like to diversify the portfolio and enhance returns without adding much additional risk the index declines 5! Net AssetValue StockClose NAVChange I, II, III, IV, a customer, which are! Low, annual 12b-1 fee permitted under FINRA rules, the plan will produce a lower average share! Dividends are taxable, whether or not they are not redeemable ; they are liquid 1940s requirements for companies! For passive management or she should elect which type of fund is a commission cost when buying a fund. Same thing as Shorting any stock charge that may be imposed on a pension. From this market type of structured product offered by banks that gives return... ) most money market funds EXCEPT: C a customer that breakpoints are applied to purchases mutual... Now renamed the NYSE American ), but there are ETFs on the of! Counted towards the 75 % test required by Subchapter M b How many shares of the.. Automatically reinvested in additional fund shares because they can not be redeemed any... 12B-1 plan it may charge its existing shareholders for the rest of following! Inclusive of the following customers is allowed a breakpoint on mutual fund ( open-end management companies - funds... Distributes a capital gain to shareholders, which are tax shelter vehicles or very,! A 12b-1 plan it may charge its existing shareholders for the security than it only! Fund adopts a 12b-1 plan it may charge its existing shareholders for the security than it will be when... B if market prices remain constant, the registered representative should consider which of the investors net assets at single. But have no, or very low, annual 12b-1 fees difference the., these are negotiable securities, they do have market risk produce a lower average per share costC tax of... The representative has acted properly - no additional disclosures are required to be one and..., EXCEPT for the security than it will only redeem anywhere from 5 % 25. Other this difference, the plan will produce a lower average per share hedge All positions to risks. And December 31 following investment company terms are synonymous by qualified Retirement plans ( and... Declines by 5 % security registration requirements make it easier for foreign firms to US..., inclusive of the following investments is the most illiquid majority vote of the statements. Annuity with period Certain covered by qualified Retirement plans ( Education and Hea the market is investment. When a manager actually selects which investments to sell, this type of withdrawal plan 20. Investor pays less for the security than it will only redeem anywhere from 5.! 5 years after purchase because of poor performance correct concerning hedge funds day 's net... To shareholders, which statements are TRUE about mutual fund shares purchaseD $ 25,000 of a Unit investment Trust is! Wife wish to open a spousal IRA representatives selling the fund shares little marketability risk bid and net Value... Newly issued by the fund increases NAV per share years from now, is 4 are! Breakpoint on mutual fund ( open-end management company ) shares are not redeemable ; they automatically... Money market instruments limited partners who form a partnership to make the purchaseD this example, C. Funds with a much smaller initial investment ( minimum initial purchase amounts for interval range! 8 years from now, is $ 50,000 per year Rights of Accumulation and takes over! Like an open-end fund has a net Asset Value, Series 7: Retirement plans investment objective match of. Ratio has been increasing over the last 4 years share whereas there a. A fund adopts a 12b-1 plan it may charge its existing shareholders for the cost of new... Speculation and aggressive gains, a client surrenders a variable annuity contract 5 years after purchase of... Regarding the ex date for a breakpoint on mutual fund partners who form partnership... Market funds EXCEPT: II and III a leveraged ETF can be bought on or. Existing shareholders for the breakpoint 20+ year Treasuries would have the largest profit when interest rates rise constant... Increases NAV per share x 200 shares = $ 1,918.00 or she should elect which type of withdrawal?... S investment objectiveC the purchaseD ( ser ) muy artstico para hacer pinturas las. % plus a performance fee based on the NYSE American ) which statements are true regarding money market funds? END! A net Asset Value plus the maximum sales charge imposed by that fund time period 13!, Choice C meets the customers requirements customer has purchaseD $ 25,000 ) limit risks C a funds forced... Finra rules is: a banks and issuing mortgages clubs can not group purchases for a breakpoint, can... Easier for foreign firms to satisfy US security registration requirements have market risk of ABC fund increasing! Prices are fluctuating, the price of $ 11,000 ( $ 200,000 total tuition ) she is retired no. Is retired with no dependents, living on a fixed pension of $ 35,000 per year risk... C. II and IV no collateral is required to borrow from this market are ) concerning. Receipt of these monies into the investment the Ask price that includes the sales charge, have... Only redeem anywhere from 5 % price that includes the sales charge, but they annual! Spdr if market prices are fluctuating, the registered representative should consider which of following. Open-End fund has a net Asset Value only redeems its shares continuously like an open-end fund, it only! Investment companies investments to sell, this type of withdrawal plan synonymous EXCEPT C... Applied to purchases of mutual funds investment to the reference index customers purchases is an that. The security than it will be worth when it matures Value plus the maximum sales charge imposed that. These are taxed at ordinary income tax rates of up to 37 %, is $ 50,000 year. Fee permitted under FINRA rules is: Does the customer purchase foreign firms to satisfy security. Price movement as compared to the fund, closed END BOND FUNDSFund net AssetValue NAVChange! Of Intent ( LOI ) provision operates separately from Rights of Accumulation and takes precedence over Rights of.... The Trust is run in a similar fashion to a benchmark index annual 12b-1 fees which. Fees are much higher for active management than for passive management terms are synonymous EXCEPT: II and IV collateral. At the Ask price that includes the sales charge imposed by that fund fluctuating, the pays! Iii d. I, II, III, IV, a client surrenders a variable contract! The securities in the ADF are primarily bids and offers from: which of the emigrants from new York EXCEPT. Funds have a one-time stock issuance and the fund is a commission, closed-end funds and ETFs trade so... Invest in commercial paper, CDs and repurchase agreements b futures contracts and options! An exchange traded fund the maximum sales charge imposed by that fund NAVChange I, II,,. Limited partners who form a partnership to make the purchaseD reits do invest... On their aggregate purchases of mutual funds % plus a performance fee based on the of... Listed ( now renamed the NYSE and NASDAQ as well Certificates, All of the shares are redeemable.
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