B All of the following statements are true EXCEPT the: A. customers yield will decreaseB. A customer will pay a sales charge. I and III B. The best answer is C. An ETN is an Exchange Traded Note. This will not work if the market moves straight up or straight down. B REIT shares are listed and trade on an exchange (like a closed-end fund), so they are readily marketable. 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 appears that the hedge fund is engaging in the prohibited practice of market timing of mutual fund shares C $10,450C. both are regulated by the Investment Company Act of 1940 The judge who ________ that case has an office downtown. A customer will have a tax eventD. When a fund pays either a dividend distribution or capital gains distribution, the NAV per share is reduced on the ex date to reflect the lower per share value. will decrease 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. A leveraged ETF uses borrowing (margin) and options to magnify price movement as compared to the reference index. D A D Which statement is FALSE about Exchange Traded Funds (ETFs)? 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!). The investor can choose to buy the same fund either as a Class A, B, C, or D share. 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. Which statements is/are TRUE regarding closed end investment companies? The representative was required to tell the customer about the family of funds featureC. II and IV, A customer has purchased $25,000 of a mutual fund. Which of the following statements are TRUE regarding the mutual fund letter of intent? April 15th tax filing date of the calendar year after which the contribution may be claimed on that person's tax return Explain. the wholesaler can offer the customer a lower sales charge since no concession will be paid to a selling group memberD. is unaffected Under the conduit theory, any payment distributed by the fund to shareholders retains the same character and is free from Federal income tax. is deductible that day's closing Net Asset Value, Series 7: Retirement Plans (Education And Hea. If the company sells 10,00010,00010,000 policies, what is the expected profit or loss? The _________ price is the price you would pay for a security from a dealer, and the ______ price is the slightly lower price you would receive if you wanted to sell to a dealer. Similarly, undistributed income retained by the fund would not be taxed, since it consists solely of tax free municipal interest income. Active asset managementC. 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. Both Treasury bonds and Treasury notes commonly trade in denominations of $1,000. They also may provide for additional income and loss-sharing features such as salaries, bonuses, and interest allowances on invested capital. Custodian They have come to you to obtain information about the basic elements of a partnership agreement. True II, III, IV A [3] The essential difference between an open end fund and closed end fund is that a(n): A. open-end fund is managed; while a closed-end fund is not managedB. MUTUAL FUNDSFund Net Asset Value Offering Price Change, Capital $9.01 $9.59 -.02Common $6.37 $6.64 -.04Corporate $7.72 $8.44 +.03. $46.92 People cannot group together to get a breakpoint. D It is a market where low risk, unsecured and short term debt instruments that are highly liquid are issued and actively traded everyday. C. $12.42 Can you help him figure out the IRR? Which statement is TRUE? I, III, and IV. II an exchange traded fund Fixed shares At the end of the current year, Accounts Receivable has a balance of $3,460,000, Allowance for Doubtful Accounts has a debit balance of$12,500, and sales for the year total $46,300,000. When discussing mutual funds with a customer, which statements are prohibited? MARR is 15 percent. Under FINRA rules, the maximum sales charge that may be imposed by a mutual fund is 8 1/2% of the Public Offering Price. Closed-end funds and ETFs trade, so they are liquid. I, II, III, IV, Which of the following statements are TRUE about the Net Asset Value per share for a mutual fund? If the market rises, the customers loss can be infinite. $1,802 plus a commissionC. $5,500 for the wife; $0 for the husband III and IV onlyC. The shares are then listed on an exchange or NASDAQ where they trade. When discussing mutual funds with a customer, all of the following statements are prohibited EXCEPT: A. C. Country SPDR If a fund distributes a dividend to shareholders, the Fund shares are reduced by the value of the distribution on the ex date. REITs do not invest in limited partnerships, which are tax shelter vehicles. II The capital gain is not taxable if it is taken as a check Their common stock can be bought or sold freely on stock exchanges. A. C IV Hedge fund managers can only be compensated based on a percentage of assets under management 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. But in aggregate, the investment value would not have changed. Purchase Amount Sales Charge True or false: Development in financial markets worldwide include the construction of indexes for foreign markets. contingent deferred sales charge fundD. Mutual funds that have an automatic reinvestment provision will typically reinvest: A. only dividends at Net Asset ValueB. 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.. IV Mutual funds cannot be sold short; exchange traded funds can be sold short 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 Net Asset Value per share is constant at $10C. Identify the statements that describe the similarities between Treasury bonds and Treasury notes. B Correct Answer A. The venture must have a legitimate business purpose other than tax avoidance The partnership must have at least 1 general partner and 1 limited partner Only general partners can assume a management role Any asset can be held in the partnership Class A shares typically charge an up-front sales charge, but have no, or very low, annual 12b-1 fees. I The initial offering of shares is made under a prospectusII Shares are redeemable with the issuer at Net Asset ValueIII Shares trade in the secondary market at prevailing market pricesIV The portfolio of investments is not managed, A. I and II onlyB. negotiated sales charge fund. The members of the board of directors are elected at the annual meeting. An ETF is an Exchange Traded Fund. If the shares are trading in the market at a discount to NAV, institutional investors can buy new creation units and short the equivalent shares that compose the units, in an arbitrage trade. Which statement is TRUE regarding money market funds? The last price for Acme Fund is $10.25, so 100 shares will cost $1,025 plus a commission. Both open-end and closed-end funds compute Net Asset Value per share daily. A registered representative primarily services institutional hedge fund customers that direct a large volume of trades to that brokerage firm. $14.25 x 100 shares = $1,425 received upon redemption. (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. If a customer buys fund shares directly from a fund wholesaler instead of from a broker-dealer in the fund selling group, the customer still must pay the Public Offering Price as stated in the prospectus. The customer must be paid the money within: A married couple, where both individuals work, earns in excess of $119,000 in year 2017. 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. Fundamental analysisD. Mutual funds offer various share classes to investors. Redemption of shares should have no effect on NAV per share. A. This will occur if the fund gives an inferior return. I, II, III. Other this difference, the trust is run in a similar fashion to a corporation. other REITs. B A. They are structured as private placement limited partnerships that are only available to wealthy accredited investors. An inverse ETF is most similar to taking what options position(s) on the reference index? II and IV Acme is the sponsor for a variety of funds within the Acme family. The ACME family has an exchange feature at NAV. Total Expenses - Total Net AssetsD. 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. ______ mortgages satisfy certain underwriting guidelines before they may be purchased by Fannie Mae or Freddie Mac. Multiple select question. A money market mutual fund portfolio will obviously consist of money market instruments, which are short-term, high-quality debt securities. Which statements are TRUE regarding Step-Down Certificates of Deposit? It is a market-value-weighted index. tax exempt fund. At the end of the first day, because the index falls by 10%, this position will rise by 10% to $11,000 value ($10,000 x 1.1). Because common stock is equity, it is not found in money market funds. ), CLOSED END BOND FUNDSFund Net AssetValue StockClose NAVChange Money market funds are unusual in that the Net Asset Value per share is constant at $1.00. ), A registered representative primarily services institutional hedge fund customers that direct a large volume of trades to that brokerage firm. Which of the following statements are TRUE about the Investment Company Act of 1940s requirements for management companies? True false question. Usually, the limited partner investor can only cash out at year end. The shares are not redeemable; they are negotiable. The manager of the fund, not having to worry about redemptions, can make less liquid, more risky investments similar to hedge funds. III Mutual funds can be sold short; exchange traded funds cannot be sold short Because of this, the customer must deposit new money in the dollar amount required by the LOI to get the lowered sales charge. Nonconforming; subprime A mutual fund has a net asset value per share of $12.00. III The capital gain is taxable if it is automatically reinvested in the fund liquidityD. Management feeD. B Fund dividends are taxable, whether or not they are automatically reinvested in additional fund shares. Fill in the blanks to complete the sentence. After the LOI is completed, the additional NAV from the asset appreciation is added to the account balance, and establishes a new higher base level ($25,000 deposited plus $5,000 asset appreciation = $30,000) from which the sales charge will be calculated on any future purchases. All of the following would reduce the Net Asset Value per share of a mutual fund EXCEPT: A. asset depreciationB. this is a reasonable request because of the large dollar investment to be made and that you will contact the administrative personnel at the Jeffersonian fund familyC. Complete each sentence by writing the form of the verb indicated in parentheses. A customer who buys will pay the current market price plus a commission. A I a mutual fund $1,039D. 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. stability. Which of the following statements are TRUE regarding the Federal tax treatment of regulated mutual funds? $990 plus a commissionD. In addition, as a negotiable security, any general decline in stock prices will result in a price decline of the ETN (market risk). On this date, the Funds shares are reduced by the value of the distribution. The management fee is not decided on by the shareholders of the fund. I, II, IIID. I The Net Asset Value per share is . Dollar cost averaging results in slightly more shares being bought as prices fall than when prices rise. $10,500. The portfolio of investments is managed by an investment adviser - remember, this is type of management company under the Investment Company Act of 1940. 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. 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. People cannot join together to obtain a breakpoint on a mutual fund purchase. -Initial payments are made at an interest rate that is above the market rate -At a predetermined time, the interest rate is decreased to a rate that is at, or below, the market A customer wishes to buy a $50,000 certificate of deposit offered by your firm. 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. 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