A. 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%. III Hedge fund managers are compensated based on a percentage of capital appreciation in the fund They are a source of profit for a dealer. Multiple select question. C D A. D C An order placed to buy or redeem mutual fund shares is filled at: A. yesterdays opening Net Asset ValueB. I, II, III, IV. A. IV Typical maturities of securities held in the portfolio are 30 days or less I and III only Label each article definite or indefinite. It is a market where low risk, unsecured and short term debt instruments that are highly liquid are issued and actively traded everyday. B. Inverse (Short) S&P 500 Index ETF A customer asks the following; One of my neighbors was talking about his investment in an ETF (Exchange Traded Fund) and said that it is low cost. Is this true? The registered representative should respond that: A. the expense ratios of most ETFs are lower than those for comparable index mutual fundsB. He is risk-tolerant and understands the use of leverage and shorting as ways of enhancing returns. Under the Investment Company Act of 1940, customers who redeem must be paid within 7 calendar days (1 business week) of the redemption date. II, IVC. At an outpatient mental health clinic, appointment cancellations occur at a mean rate of 1.5 per day requiring a majority vote of the outstanding shares to change a fund's investment objectiveC. a violation known as spinningD. DIAmonds is the trade name for the DIA - Dow Jones Industrial Average Exchange Traded Fund. Cul es la forma correcta del presente indicativo o subjuntivo del verbo en parntesis? Mutual funds cannot be sold short. closed end management companyC. Which of the following are true of short futures positions? Correct Answer B. I and IV For the rest of the year, the investor is locked into the investment. It is based on the free float. Bad debt expense is estimated at1/21/21/2 of 1% of sales. fund has experienced net redemptions of shares. Interest is payable semiannually on June 30 and December 31. are certificates traded in US markets representing ownership in shares of domestic companies. I and IV A A repurchase agreement (repo) is a short-term form of borrowing that involves selling a security with an agreement to repurchase it at a higher price at a later date. A) Most money market securities do not pay interest. A An ownership claim on a pool of mortgages or an obligation that is secured by such a pool is referred to as a mortgage- _______ security. A Expert Answer Who are the experts? The expense ratio is found by taking Total Expenses / Total Net Assets. If the price of the security is fluctuating, the average purchase cost per share will be lower for the investor than simple mathematical average price of the shares over the same period. The entire amount should be invested in one fund or one fund family to give the customer the lowest possible sales charge. He or she should elect which type of withdrawal plan? D. Fixed dollar, ERISA regulations cover: Multiple select question. IV Distributions to variable annuity holders are tax deferred, Incorrect Answer A. I and III only capital gains at Net Asset ValueC. C At the end of that day, the S&P 500 Index declines by 10%. 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. II and IV only, Which statements are TRUE regarding hedge funds? Closed-end funds have a one-time stock issuance and the fund is closed to new investment. yesterday's closing Net Asset Value Mutual funds are bought at the Ask price that includes the sales charge. I and IVC. D Their common stock can be bought or sold freely on stock exchanges. It is typically 1/2 - 1% of assets annually. An open end fund has a Net Asset Value of $10 per share. A mutual fund has a net asset value per share of $10.45. that days opening Net Asset ValueD. To prevent market timing, most mutual funds have placed restrictions on excessive trading in their prospectuses and monitor accounts for excessive short-term trading. A. StockB. Under the conduit theory, any payment distributed by the fund to shareholders retains the same character and is free from Federal income tax. Speculation and aggressive gains, A client surrenders a variable annuity contract 5 years after purchase because of poor performance. A Offering Price, Contributions to Keogh Plans must be made by: Any surrender fee imposed: Federal Home Loan Mortgage Corporation (FHLMC or Freddie Mac). 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). hedge B I, II, III, IV, If a fund distributes a capital gain to shareholders, which statements are TRUE? III onlyC. B II and III only. Class A shares typically charge an up-front sales charge, but have no, or very low, annual 12b-1 fees. The registered representative should make the customer aware of the tax consequences of exchanging mutual fund sharesB. If a mutual fund distributes 99% of its Net Investment Income to its shareholders, how much of the Net Investment Income will be taxable? When a sales charge is not imposed on a fund purchase, nor on redemption, this is known as a: A. front-end load fundB. I Hedge funds are subject to little regulatory oversight II Hedge funds must register as management companies under the Investment Company Act of 1940 . How many shares of the fund can the customer purchase? value fund. For example, if an investor has 1,000 shares @ $1 ($1,000 total) in the fund, and the assets appreciate by 10%, then the customer will have 1,100 shares at $1 ($1,100 total). Determine (a) the amount of the adjusting entry for uncollectible accounts; (b) the adjusted balances of Accounts Receivable, Allowance for Doubtful Accounts, and Bad Debt Expense; and (c) the net realizable value of accounts receivable. However, fixed income security prices fall more than stock prices. The largest expense of running a mutual fund is the annual management fee. Buying a fund just before a distribution results in taxes to the customer and nothing else because the shares are reduced on ex date for the full distribution. REITs offer diversification of investments similar to investment companies, except that the investments are being made in various types of real estate. preferential taxation of dividends received. An open-end fund portfolio is managed and the fund continuously issues and redeems its common shares - so it is an open end management company. Dollar cost averaging does not work if the price of the stock remains fixed, nor does it protect against loss in a falling market. Any such late orders are not supposed to be processed at that days closing NAV; rather, they should be processed at the following days NAV. Under FINRA rules, the maximum sales charge that may be imposed by a mutual fund is 8 1/2% of the Public Offering Price. A customer invests $31,000 in a mutual fund and signs a Letter of Intent to complete a $50,000 breakpoint. If the price of the security is fluctuating, the average purchase cost per share will be lower for the investor than the simple mathematical average price of the shares over the same period. Which of the following are mortgage-related government agencies, created because Congress believed that adequate credit was not being received through normal private sources. is not deductible, The underwriter of a mutual fund is known as the: Technically, most ETFs are structured as open-end investment companies, since they allow for the creation of additional shares in minimum creation units of $50,000 - $100,000. 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. Hedge fund managers are not subject to the Investment Company Act of 1940 that limits managers compensation to a percentage of assets under management - no performance fees are allowed. Multiple select question. The best answer is C. An ETN is an Exchange Traded Note. B. the annuitant's life, not to exceed 20 years The ex-date is set by the Board of Directors of the Fund 2X (Leveraged) S&P 500 Index ETF Estimate with 95% confidence the total amount that left New York. 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. 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. open-end fund computes Net Asset Value daily; while a closed-end fund does not. Which statements are TRUE about mutual fund Class A shares? The maximum tax deductible Individual Retirement Account contribution for this year is: It is based on 500 firms. were created to make it easier for foreign firms to satisfy US security registration requirements. The PW is negative and Real Estate Investment Trusts must distribute at least 90% of their Net Investment Income to shareholders; and invest at least 75% of their assets in real estate activities; to be regulated under Subchapter M. REITs can invest in all of the following EXCEPT: A. mortgagesB. An investor buys 100 shares of an open-end investment company with a 5% contingent deferred sales charge. And the fees charged are more similar to hedge funds than a traditional closed-end fund as well - with annual ongoing fees averaging 3%, and another average 2% fee when shares are redeemed (and this ignores the up-front sales charge that is imposed when the shares are purchased!). III and IV only III and IV onlyD. Which statements are true of the S&P 500? C. REITs are similar to open-end funds, with shares redeemable at NAV. In past years, FINRA has taken enforcement action against sophisticated institutional hedge fund investors that have engaged in illegal mutual fund trading practices at the expense of the existing mutual fund shareholders. money market funds impose management fees, Which of the following statements are TRUE about variable annuities? Multiple select question. I a mutual fund A balanced fund is one that: A. invests in securities found in one industry or geographic area B. allocates investment among common stocks, preferred stocks, and bonds of companies in various industries C. sells futures on market indices and uses short sales to limit risks of long positions D. invests solely in the common stocks of companies that DerivativeD. It appears that the hedge fund is engaging in the prohibited practice of market timing of mutual fund shares Adap $7.45 7.50 -.01 The representative has acted properly - no additional disclosures are required to be made to the customerB. If the securities in the fund portfolio pay dividends, these are received by the Fund. This late trading is now an explicitly prohibited activity for both the fund company and the investor. If a fund adopts a 12b-1 plan it may charge its existing shareholders for the cost of soliciting new investment to the fund. I, II, III. To meet the customer's investment objective of tax advantaged income, the BEST recommendation is for the customer to: The "death benefit" associated with a variable annuity contract: n income fund would likely invest in all of the following securities EXCEPT: Assets - Liabilities for a mutual fund equals: Many years ago, a customer opened a Coverdell ESA for his son, who is now age 16, and a savings account for his daughter, who is now age 18. recipient It has been calculated since 1896. A money market fund's . II and III only The production manager thinks the preceding assumption is too optimistic and decides to go with level production to avoid being out of merchandise. These are fund shares that trade like any other stock. Note that the maximum is a percentage of all dollars invested; it is not a percentage of Net Asset Value. IV REITs are similar to closed end investment company shares C The shares are not listed on an exchange, like an open-end fund. Most are AMEX (now renamed the NYSE American) listed, but there are ETFs on the NYSE and NASDAQ as well. regulated fund may correspond to ownership of a fraction of a foreign share Because stockholders are the last in line of all those who have a claim on the assets and income of the corporation they are considered _______ claimants. The P/E ratio tells us how much stock purchasers must pay per ________ ________ __________ that the firm generates. D. Inverse (Short) 20+ Year Treasury ETF, D. Inverse (Short) 20+ Year Treasury ETF The sales charge is reduced by 1% for every full year that the fund is held. C All of the following statements are true EXCEPT the: A. customers yield will decreaseB. III The number of annuity units is fixed; the annuity payment may vary $100,001 - $250,000 3% I and IV onlyC. The customer starts with 200 shares at $50, or a $10,000 position. B Since this ETF is -1x, it is an inverse ETF that moves at the same rate (1x), but in the opposite direction (-), to the market. Option B is correct Tax-free mon View the full answer Previous questionNext question COMPANY About Chegg Custodian This is a tricky question. ), Which statement is TRUE regarding the ex date for a mutual fund? The stock then trades like any other common stock, except the company is in the business of making investments; instead of say, making cars, beer, or computers. 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