ETFs (Exchange Traded Funds) have an NAV that is based on the value of the physical underlying securities. The normal ex-date of 2 business days prior to record date does NOT apply because there is no trading of mutual fund shares. The manager of the fund, not having to worry about redemptions, can make less liquid, more risky investments similar to hedge funds. $11.85 The ex-date is set by FINRA If a single company held in the underlying stock portfolio has its credit rating lowered, this will have a minimal impact on the value of the overall portfolio. The shares are not redeemable; they are negotiable. An inverse ETF is most similar to taking what options position(s) on the reference index? 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. A Limited partners who form a partnership to make the purchaseD. Conforming; prime registered fund C All of the following statements are true about "odd lot" transactions EXCEPT: D. odd lot commissions are set by the NYSE. A. DerivativeD. III and IVD. use aggressive investment strategies and have higher riskC. $19 x 100 shares = $1,900 received upon redemption. When the proportion of the index a stock represents is proportional to the stock's share price, the index is said to be ___________-weighted. Correct Answer C. Fixed percentage The fed funds rate is simply the rate of interest on: very short-term loans among financial institutions. These are taxed at ordinary income tax rates of up to 37%. Their interest income is usually exempt from state and local taxation in the issuing state. It offers its shares continuously like an open-end fund. II and III Then sellers exceed buyers and the market price is pushed lower than Net Asset Value. 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. A 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 A 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. for the Board of Trustees Funds in the bank's reserve account are called ______ ______ . However, fixed income security prices rise more than stock prices. Which statements are TRUE regarding money market funds? They are highly regulated. participating unit investment trust, Which statements are TRUE regarding Individual Retirement Accounts? Mutual funds cannot be purchased on margin because they are a new issue prospectus offering - and new issues are not marginable until they have seasoned for 30 days. II and IIID. I, II, III, IV. In the study, the economist learned that 112,236 tax filers left the state of New York. This fund family has an exchange feature at NAV, which means that shares of one fund can be redeemed and reinvested in shares of another fund within the family without any sales charge. Incorrect Answer C. II and III I and IVC. B Note that in the real world, competition among funds has forced sales charges well below this maximum permitted level. liquidityD. 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. D. $1,025 plus a commission, D. $1,025 plus a commission Corporations may exclude 70% of dividends received from domestic corporations from taxable income. 6% of the amount investedB. The national average interest rate for savings accounts under. Which statements are true about bid-ask spreads? III Distributions to variable annuity holders are taxable to the holder in the year the distribution is made It is a market-value-weighted index. Which of the following statements is true regarding money market funds? $1,802B. Which of the following statements are TRUE regarding the Federal tax treatment of a regulated mutual fund investing solely in municipal securities? At the end of that day, the S&P 500 Index increases by 10%. D The Investment Company Act of 1940 requires that the minimum capital to start a fund is $100,000; that at least 40% of the Board of Directors be non-interested parties - that is, they are not affiliated with the sponsor, custodian, transfer agent, or firms in the selling group; and that the fund have a stated investment objective that can only be changed by majority vote of the shareholders. D $5,500 for the wife; $2,750 for the husband Which statement is TRUE? A. They can be bought on margin or sold short. To prevent market timing, most mutual funds have placed restrictions on excessive trading in their prospectuses and monitor accounts for excessive short-term trading. Which statements are true about municipal bonds? Bond. True B >$20,000 - $45,000 6 % This income includes rents, mortgage interest earned, gains on property sales, income from foreclosed properties, and real estate tax refunds received (as a source of income, an REIT can buy a property and attempt to get its tax assessment lowered - any resulting tax refund is income to the REIT). 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. Bid I The REIT issues common shares representing a proportional interest in the investment company A. The ex-date is set by the Board of Directors of the Fund I registered under the Investment Company Act of 1940 If prices rise, smaller dollar purchases must be made; while if prices fall, larger dollar purchases must be madeD. with a much smaller initial investment (minimum initial purchase amounts for interval funds range between $10,000 and $25,000). III and IVC. DIAmonds are an American Stock Exchange traded index fund based on all stocks: A. rated AA or betterB. D I If the securities in the portfolio make dividend distributions, the Net Asset Value per share will increase Redemption of shares should have no effect on NAV per share. tax exempt fund, Which of the following is available to purchasers of variable annuity contracts? When the proportion of the index a stock represents is proportional to the stock's share price, the index is said to be D The formula to find the offering price is: Net Asset Value $11.00 $11.00- = = = $12.02100% - Sls Chrg % 100%-8.5% .915. This is a violation known as a breakpoint sale. Which of the following is an Exchange Traded Fund? that day's opening Net Asset Value You comply with the customer's request and the administrative personnel inform you that the limit is $1,000,000. Browse over 1 million classes created by top students, professors, publishers, and experts. It is a type of structured product offered by banks that gives a return tied to a benchmark index. $990B. Fill in the blanks to complete the sentence. Most are AMEX listed (now renamed the NYSE American), but there are ETFs on the NYSE and NASDAQ as well. 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. $990 net rental income III Mutual funds can be sold short; exchange traded funds cannot be sold short If a fund distributes a dividend to shareholders, the Fund shares are reduced by the value of the distribution. They are a source of profit for a dealer. II and IV, The term "mutual fund" is the common name for a(n): Which of the following is true regarding ETFs? C. I and IV Which statements are TRUE regarding mutual fund expense ratios? IV a varied dollar amount is invested periodically A 22-year old, unmarried, new customer contacts you, explaining that he just inherited $10,000,000 and wishes to invest the money aggressively to produce superior returns. growth fundD. Thus, if the market is fluctuating fairly evenly, periodic investments of the same dollar amount result in a lower average cost per share. A B large capitalization growth stocks, All of the following statements are true regarding money market funds EXCEPT: is unaffected The customer must be paid the money from the fund company within how many business days? Inverse (Short) S&P 500 Index ETFC. I REITs allow for flow through of gainII RELPs allows for flow through of gainIII REITs allow for flow through of lossIV RELPs allow for flow through of loss, A. I and II onlyB. Capital appreciation and stability I The portfolio of investments is managedII The initial offering of shares is made under a prospectusIII Shares trade in the secondary market at prevailing market prices, A. I onlyB. II Salespeople must register with both FINRA and the State Insurance Commission money market The provisions of the Investment Company Act of 1940 include all of the following EXCEPT: A. setting maximum sales charges on mutual fund purchasesB. Both open-end and closed-end management companies use an investment adviser to manage a portfolio within the funds stated objectives. The money market is a market for short term funds which deals in monetary assets whose period of maturity is upto one year. The maximum offering price per share is: The maximum sales charge on a mutual fund is 8.5% under FINRA rules. a violation known as interpositioning. When buyers exceed sellers, and the fund gives a superior return relative to the market rate of return for similar investments, the ask price is pushed higher. Then the shares are listed on an exchange and trade like any other stock. These 3 funds all have different sponsors. III closed-end management companies Over the past 5 years, the fund has appreciated to $46,000. Both Treasury notes and Treasury bonds may be issued in increments of $ ________. A customer who places an order to buy 100 shares of Adap Fund will pay approximately: True 5% of Net Asset ValueB. Each year the Internal Revenue Service of the United States issues a migration report that shows how many tax filers moved from one state to another. Industry performance It appears that the representative has violated the insider trading rules because he divulged the mutual fund's "red flag" threshold to the hedge fund customer there is an opportunity cost relative to the expected potential investment return when buying an exchange traded index fund as compared to buying an actively traded mutual fund. April 15th tax filing date of the calendar year after which the contribution may be claimed on that person's tax return Thus, they are similar to closed-end investment companies under the Investment Company Act of 1940, except that investments are made in real estate and mortgages, instead of in securities. Which of the following investments is the most illiquid? Passive asset managementB. The last price for Acme Fund is $10.25, so 100 shares will cost $1,025 plus a commission. I and III B $1,039D. A Brainscape helps you realize your greatest personal and professional ambitions through strong habits and hyper-efficient studying. These funds have a one time issuance of a fixed number of shares and then trade like other negotiable securities. It has been calculated since 1896. I and IVD. 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. When comparing an ETN to an ETF, which statement is FALSE? It appears that the hedge fund is engaging in the prohibited practice of market timing of mutual fund sharesC. C income (adjustment) bond, Which of the following statements concerning comparison of mutual funds are TRUE? 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