Which statements are true of the S&P 500? money market I and IVD. Which statements are true of the DJIA? Review these concept resources. 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 The sales charge is reduced by 1% for every full year that the fund is held. Which of the following statements are true about public corporations? I and IV onlyD. IV REITs are similar to closed end investment company shares Shareholders in a management company have the right to: I set the management feeII vote for the Board of DirectorsIII vote to change the investment objective of the fundIV vote for the investment adviser, A. I, IIIB. Some partnership agreements provide for interest on invested capital in distributing income to the individual partners. On that date, the price of the shares is reduced for any distributions. III The front end load that will be earned both have portfolios that are managed 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. A. of diamond mining companiesD. Which statement is TRUE regarding this situation? An ETN is an Exchange Traded Note. The largest expense of running a mutual fund is the annual management fee. 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. If the securities in the fund portfolio pay dividends, these are received by the Fund. I, III, IV. II not registered under the Investment Company Act of 1940 Note that most funds process redemptions much more quickly than this. 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. However, fixed income security prices fall more than stock prices. C. The ex-date is 2 business days prior to the record date Investing is best when you're looking to maintain the value of your money with a little bit of growth. A. a satire of the last few hours of Ivan Ilych's life. The ex-date is set by the Board of Directors of the Fund 20 years to the annuitant or beneficiary, All of the following sources of REIT income are counted towards the 75% test required by Subchapter M EXCEPT: Acme is the sponsor for a variety of funds within the Acme family. The ACME family has an exchange feature at NAV. I Mutual funds can be purchased on margin; exchange traded funds cannot be purchased on marginII Mutual funds cannot be purchased on margin; exchange traded funds can be purchased on marginIII Mutual funds can be sold short; exchange traded funds cannot be sold shortIV Mutual funds cannot be sold short; exchange traded funds can be sold short, A. I and III onlyB. Which statements are TRUE regarding hedge funds? other REITs. . Net Asset Value per share varies with the performance of the portfolioD. A A. Browse over 1 million classes created by top students, professors, publishers, and experts. 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. In this example, Choice B meets the customers requirements. 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. C. II and III The provisions of the Investment Company Act of 1940 include all of the following EXCEPT: may correspond to ownership of a fraction of a foreign share A customer who places an order to buy 100 shares of Acme Fund will pay approximately: A. DIAmonds are an American Stock Exchange traded index fund based on all stocks: A. rated AA or betterB. REIT shares are listed and trade on an exchange (like a closed-end fund), so they are readily marketable. Multiple select question. I and III onlyC. C The ratio of the current stock price to last year's earnings per share is known as the ______ C. I and IV When making a presentation to a client that wishes to purchase a mutual fund, the representative compares the 5-year return of the fund to the 10-year return of the Standard and Poors 500 Index to illustrate the funds performance. fund has made dividend distributions to shareholdersD. D True _______ bonds give the firm the option to repurchase the bond from the holder at a stipulated call price. typical maturities of securities held in the portfolio are 30 days or less 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. A customer who placed an order to buy 200 shares of Capital Fund this day will pay: A. Which of the following are the correct about inflation-indexed treasury bonds? B. I and IV A mutual fund that holds shares in proportion to their representation in the S&P 500 is an example of a(n) ______ fund. ), A registered representative primarily services institutional hedge fund customers that direct a large volume of trades to that brokerage firm. She has a savings account with $160,000 and her home is fully paid. B Which of the following customers is allowed a breakpoint on mutual fund purchases? Thus, a closed-end fund share is purchased at the prevailing market price plus a commission (or a mark-up if it is an OTC principal transaction). An interval fund is a newer type of fund structure that is classified as a closed-end fund, but it has many open-end fund features. C D For example, if you see a television or web advertisement for a mutual fund, it is being paid for by 12b-1 fees. C. II and III IV The capital gain is not taxable if it is automatically reinvested in the fund income (adjustment) bond, Which of the following statements concerning comparison of mutual funds are TRUE? Charges for soliciting new shareholders, mailing prospectuses to new shareholders, etc. Thus, they are only suitable for relatively risk tolerant, sophisticated investors. 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. We believe, however, that the question hinges on the fact that the customer is new to being rich and professional management of his hedge fund investments is probably a good idea. 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. Question: Multiple Select Question Select all that apply Which statements are true of money market instruments? What is the customers maximum potential loss? Fund dividends are taxable, whether or not they are automatically reinvested in additional fund shares. If a fund imposes a 12b-1 fee, FINRA limits to maximum up-front sales charge to 7.25% instead of 8.50%. If expenses rise (such as a higher management fee), or assets fall (caused by increased redemptions), the ratio will rise. One of the hedge fund customers tells the representative: I would like you to talk to the administrative people at the Jeffersonian Fund Group. II, III, IVD. The maximum annual 12b-1 fee is .75% of net assets per year under FINRA rules. Passive asset managementB. A customer invests $31,000 in a mutual fund and signs a Letter of Intent to complete a $50,000 breakpoint. will decrease This type of ETF is long 20+ year Treasuries in the hopes that prices will rise, and because it is a 2X leveraged ETF, it has margined the bond positions so that as interest rates fall, the price should rise at 2 times the normal rate of increase of a similar maturity unleveraged bond portfolio. To compute the new lowered offering price, the formula is: Net Asset Value $9.42 $9.42- = = = $10.075100% - Sls Chrg % 100%-6.5% .935 Nw Prc. Initial payments are made at an interest rate that is above the prevailing prime rate but stepped down to the Treasury rate over time B. II The penalties imposed for early withdrawal from the plan True Which of the following statements are TRUE regarding the mutual fund letter of intent? Limited partners who form a partnership to make the purchaseD. Inverse (Short) 20+ Year Treasury ETF. II and IV, The purchaser of a variable annuity bears which of the following risks? II Salespeople must register with both FINRA and the State Insurance Commission C. II and III REITs are registered securities under the Securities Act of 1933 and trade on an exchange or OTC. Which of the following investments is the most illiquid? Ask; Redemption Price. The representative was required to tell the customer about the family of funds featureC. At a predetermined time, the interest rate is decreased to a rate that is at, or below, the market C. At a predetermined time, the maturity is decreased or "stepped down" D. A. Class C shares have a lower contingent deferred sales charge than B shares, but impose the highest 12b-1 fees. 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. premium The portfolio of investments is managed - this is a closed-end management company. C Which statements are TRUE regarding closed end investment companies? D $5,500 Industry performance At the end of 13 months, the NAV is $20,000. IV. An individual or corporation making a purchase is considered to be one purchaser and qualifies for the breakpoint. For individual investors, the. For the most part, money markets provide those with fundsbanks, money managers, and retail investorsa means for safe, liquid, short-term investments, and they offer borrowersbanks, broker-dealers, hedge funds, and nonfinancial corporationsaccess to low-cost funds. 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.) a violation known as a breakpoint saleC. IV open-end management companies, A. I and III C They are a source of profit for a dealer. Their dividends are tax-deductible expenses to the issuing firms. for dissolution of the trust, "SPIDERS" are: 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. It appears that the representative has violated industry firewall requirements, because registered representatives are prohibited from talking to the administrative personnel of mutual fund companies, A customer, age 51, has a 20 year investment time horizon, a moderate risk tolerance, and is looking for investments that provide both income and growth. 8 1/2% of the amount investedD. large capitalization growth stocks, All of the following statements are true regarding money market funds EXCEPT: monthly True In the United States, inflation-indexed Treasury bonds are referred to by their acronym ______. Expert Answer Who are the experts? A. The customer is purchasing enough of the fund to qualify for a 6.50% sales charge.
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