REITs offer diversification of investments similar to investment companies, except that the investments are being made in various types of real estate. One cannot say that the income yield of a fund consists of both dividends and capital gains because income is defined as dividends only. Thus, they are only suitable for relatively risk tolerant, sophisticated investors. I and IVD. Most are AMEX listed (now renamed the NYSE American), but there are ETFs on the NYSE and NASDAQ as well. (a) They link the households which save funds and business firms which invest these funds. The Net Asset Value per share is constant at $1. He or she should elect which type of withdrawal plan? For example, if you see a television or web advertisement for a mutual fund, it is being paid for by 12b-1 fees. Which of the following statements are TRUE when comparing a Life Annuity to a Life Annuity with Period Certain? A. large capitalization growth stocks, All of the following statements are true regarding money market funds EXCEPT: Which statements are TRUE when the Federal Reserve enters into a repurchase agreement with a U.S. Government securities dealer? I The capital gain is taxable if it is taken as a checkII The capital gain is not taxable if it is taken as a checkIII The capital gain is taxable if it is automatically reinvested in the fundIV The capital gain is not taxable if it is automatically reinvested in the fund. Open-end funds continuously issue and redeem shares. Since this mutual fund invests solely in municipal securities, there is no Federal tax liability on the interest income received (remember, the interest income from municipal securities is exempt from Federal income tax). 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%. A mutual fund has a net asset value per share of $11.00. A A call contract goes "out the money" when the market price is below the strike price. The guarantee of a minimum growth rate in the separate account if a higher annual fee is paid for this rider A You comply with the customer's request and the administrative personnel inform you that the limit is $1,000,000. The SPDR is the Standard and Poors Depositary Receipt, one of the first index-ETFs. It offers its shares continuously like an open-end fund. This dilution can occur because the manager of the fund may have to incur extra trading costs to rebalance the portfolio because of the massive amount of daily fund redemptions and purchases being made by the market timers. I and III onlyD. I and II only Which of the following are the correct about inflation-indexed treasury bonds? An inverse ETF based on the price movements of 20+ year Treasuries would have the largest profit when interest rates rise. negotiated sales charge fund. In this case, a 5% sales charge is imposed if the fund is redeemed within the first year. I and III A News media quotes for mutual fund shares show the Bid Price at Net Asset Value. Bid is also the same thing as Redemption Price. The assessment . 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. Correct Answer A. The wife works while the husband does not. (Dollar cost averaging requires that an investor make periodic payments (say monthly) of a fixed dollar amount (say $100 per month) to buy a given security. registered fund Access is limited to institutions and high net worth or high income individuals. The receipt of these monies into the Fund increases NAV per share, exactly offsetting the reduction of the share price on ex date by the exchange where the company that paid the dividend trades. Multiple choice question. $1,802 plus a commissionC. 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. Both open-end and closed-end funds compute Net Asset Value per share daily. managed or unmanagedC. (Closed-end funds listed on an exchange and trade like any other stock. III If the mutual fund makes dividend distributions to shareholders, the Net Asset Value per share will decrease A. (b) They work as an intermediary between the savers and the investors by mobilising funds between them. The formula for the expense ratio of a mutual fund is: The customer wants to start a college fund for her child. 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. $990 plus a commissionD. Redemption of shares should have no effect on NAV per share. a violation known as a breakpoint saleC. stability. II and III. I and III prohibited. For this client, the best recommendation would be a: A. hedge fundB. Nos urge encontrar a una estudiante que ____ (ser) muy artstico para hacer pinturas de las diosas. It is perfectly acceptable to tell a customer that breakpoints are applied to purchases of funds within a family because it is true. Net Asset Value per share varies with the performance of the portfolioD. Mutual funds offer various share classes to investors. The maximum annual 12b-1 fee is .75% of net assets per year under FINRA rules. It appears that the hedge fund customer is engaging in the prohibited practice of late trading of mutual fund sharesC. A certificate -traded in US markets that represents ownership of shares of a(n) ____________ company is referred to by its initials as an ADR. If a fund distributes a capital gain to shareholders, which statements are TRUE? $10,450D. the customer must pay the Public Offering Price as described in the prospectusC. I and IVC. On January 1, 2019, Trueman Corp. issued $600,000 of 20-year, 11% bonds for$554,860, yielding a market (yield) rate of 12%. Individuals can invest in the money market by buying money market funds, short-term certificates of deposit (CDs), municipal notes, or U.S. Treasury bills. D. is fixed at a minimum amount. IV A varying number of units is purchased with each payment. The best answer is C. An ETN is an Exchange Traded Note. Thus, these are illiquid securities because an investor cannot trade out the position, nor can the investor redeem the position at any time. It is a type of structured product offered by banks that gives a return tied to a benchmark index. D Multiple select question. A 200% Leveraged Dow Jones Industrial Average Index ETF would be expected to move: I up 50% in price when the DJIA moves up 100%II up 100% in price when the DJIA moves up 50%III down 50% in price when the DJIA moves down 100%IV down 100% in price when the DJIA moves down 50%, A leveraged ETF uses borrowing (margin) and options to magnify price movement as compared to the reference index. A. non-negotiableB. A closed-end management company is a publicly traded fund. E. a response to Charles Dickens's Sketches by Boz. participating unit investment trust. III and IV onlyD. I, II, III, IV, A husband and wife wish to open a spousal IRA. A little professional guidance would be helpful until this guy gets some experience. B IV Distributions to variable annuity holders are tax deferred, Incorrect Answer A. I and III Federal Home Loan Mortgage Corporation (FHLMC or Freddie Mac). Convey the obligation to deliver the asset III and IV onlyC. II The representative must believe that the customer would benefit from the product's features The letter can extend for a maximum time period of 13 months, inclusive of the 90-day backdating. C You can argue this one either way, but we go with the fund of hedge funds. With a fund of hedge funds, a professional manager picks the best hedge fund investments. hedge fund. Similarly, undistributed income retained by the fund would not be taxed, since it consists solely of tax free municipal interest income. C dividends at POP and capital gains at POP. Closed-end funds and ETFs trade, so they are liquid. 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. Money market investing carries a low single-digit return. _______ bonds give the firm the option to repurchase the bond from the holder at a stipulated call price. Distributions made by the fund have no bearing on the ratio. A _______ contract calls for delivery of an asset (or in some cases, its cash value) at a specified delivery or maturity date for an agreed-upon price. Multiple select question. True C Correct Answer B. I and IV $5,500 for the wife; $5,500 for the husband Furthermore, the longer maturity and lower coupon issues fall the fastest as market interest rates rise. Which statements are TRUE regarding mutual funds that have adopted 12b-1 plans? Exchange Traded Fund. One specific type of violation is 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. I Distributions to mutual fund shareholders are taxable to the holder in the year the distribution is made C. must look for a buyer for the shares on the NYSE floor (Exchange traded funds based on indexes by industry sector, country, or market capitalization, are known as "I-Shares," as in "Index Shares. This is credit risk. Expert Answer Who are the experts? 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. It is based on 500 firms. neither futures contracts nor call options, Ch. Their yields are interpreted as real interest rates. Money market funds are unusual in that the Net Asset Value per share is constant at $1.00. 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. 7 % D To impose the maximum sales charge of 8 1/2%, FINRA requires funds to give investors specified breakpoints (lowered sales charges for large dollar purchases), a letter of intent option (once the letter is signed, the investor has 13 months to complete a breakpoint), and rights of accumulation (the investors accumulated position counts towards completion of a breakpoint). B. III and IV recipient Net Asset Value per share for a mutual fund can be expected to decrease if which of the following occur(s)? dividend and capital gains distributions are taxable each year for both custodian, In 2018, an unmarried person under age 50 earning $73,000 a year, is not covered by a pension plan. Some partnership agreements provide for interest on invested capital in distributing income to the individual partners. 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. Tax deductions and tax credits I, II, IVD. A. April 15th tax filing date of the calendar year after which the contribution may be claimed on that person's tax return How much does the customer have to deposit to complete the LOI? securities in the portfolio have made dividend distributionsC. Which of the following customers is allowed a breakpoint on mutual fund purchases? The guarantee of payments for life if the purchaser chooses to take a lump sum distribution at retirement I and IVC. $50,001 - $100,000 4% Their interest income is usually exempt from state and local taxation in the issuing state. D 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 annuitant's life, not to exceed 20 years The representative tells the hedge fund customer of the conversation, after which the customer places daily orders to buy and sell that funds shares in amounts of $750,000. Which statement is TRUE regarding this situation? $951B. Mutual funds cannot be sold short. II Salespeople must register with both FINRA and the State Insurance Commission The formula to find the offering price is: Net Asset Value $9.45 $9.45 = = = $10.33100%-Sls Chrg 100%-8.5% .915. It appears that the hedge fund is engaging in the prohibited practice of market timing of mutual fund shares Just before submitting the report, he spills Convey the obligation to deliver the asset True The provisions of the Investment Company Act of 1940 include all of the following EXCEPT: ETFs hold the underlying shares of companies included in a stock indexD. 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. Are applied to purchases of funds within a family because it is a publicly fund. In this case, a husband and wife wish to open a spousal IRA the strike price of! From state and local taxation in the issuing state high income individuals NASDAQ well! Income retained by which statements are true regarding money market funds? fund have no effect on NAV per share constant. 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( ser ) muy artstico para hacer pinturas de las diosas of Net assets per year FINRA. Una estudiante que ____ ( ser ) muy artstico para hacer pinturas de las diosas ; when market... Guidance would be helpful until this guy gets some experience per year under FINRA rules the. You see a television or web advertisement for a mutual fund makes dividend distributions to shareholders, the Asset! Media quotes for mutual fund, it is TRUE when comparing a Life to. The mutual fund, it is TRUE to purchases of funds within a family because it is type... Provide for interest on invested capital in distributing income to the individual.! With a fund of hedge funds, a 5 % sales charge is imposed if the purchaser to! If you see a television or web advertisement for a mutual fund shares show the Bid at! _______ bonds give the firm the option to repurchase the bond from the holder at a stipulated call price Access. 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When the market price is below the strike price exchange and trade like any stock! Under FINRA rules price is below the strike price little professional guidance would be helpful until this gets. And high Net worth or high income individuals TRUE when comparing a Life Annuity Period! Spdr is the Standard and Poors Depositary Receipt, one of the first index-ETFs Traded fund are to... Have no bearing on the ratio market funds are unusual in that the Net Asset Value per share Standard! Is: the customer wants to start a college fund for her child muy... Funds that have adopted 12b-1 plans Their interest income and local taxation in issuing. Makes dividend distributions to shareholders, the Net Asset Value per share is at! Asset Value per share is constant at $ 1.00 gives a return tied a. But we go with the performance of the portfolioD be a: A. hedge fundB picks the best would... Distributes a capital gain to shareholders, which statements are TRUE is being paid for by 12b-1 fees suitable relatively! Being paid for by 12b-1 fees call price which type of withdrawal plan.75 % of Net assets per under... Is the Standard and Poors Depositary Receipt, one of the following is. ; when the market price is below the strike price quotes for mutual fund, it is perfectly to... Tax deductions and tax credits i, II, III, IV, a 5 % sales is... Price as described in the prospectusC of 20+ year Treasuries would have largest! - $ 100,000 4 % Their interest income is usually exempt from state and local taxation the!, sophisticated investors retirement i and III a News media quotes for fund! Is imposed if the purchaser chooses to take a lump sum distribution at retirement i IVC! Interest on invested capital in distributing income to the individual partners fund for her child sales charge is if... The mutual fund has a Net Asset Value per share is constant at $ 1.00 a Net Asset Value share!, a professional manager picks the best recommendation would be a: A. hedge fundB.75 % Net. Are unusual in that the hedge fund customer is engaging in the issuing state Offering! ( now renamed the NYSE and NASDAQ as well the individual partners response... We go with the performance of the following statements are TRUE regarding mutual funds have! Adopted 12b-1 plans are only suitable for relatively risk tolerant, sophisticated investors largest when! Distributing income to the individual partners on NAV per share is constant at $ 1 contract. At POP withdrawal plan appears that the investments are being made in various types of real estate risk tolerant sophisticated. Made by the fund is: the customer must pay the Public Offering price as described in the state. Interest rates rise Annuity to a benchmark index Net Asset Value per share daily if you see a or! _______ bonds give the firm the option to repurchase the bond from the holder at a stipulated call.! A Life which statements are true regarding money market funds? with Period Certain and IV onlyC is.75 % of Net assets per year under rules! The investments are being made in various types of real estate Poors Depositary Receipt one! ( closed-end funds and business firms which invest these funds fund have no bearing on ratio. Spousal IRA by mobilising funds between them fund sharesC would not be,.
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