The Ask Price is Net Asset Value plus the maximum sales charge imposed by that fund. B Which of the following statements are TRUE about REITs? A mutual fund has a net asset value per share of $11.00. The customer pays the offering price of $9.59 per share x 200 shares = $1,918.00. An ETN is an Exchange Traded Note. Their common stock can be bought or sold freely on stock exchanges. MARR is 15 percent. III Mutual funds can be sold short; exchange traded funds cannot be sold short A. a satire of the last few hours of Ivan Ilych's life. The SPDR is the Standard and Poors Depositary Receipt, one of the first index-ETFs. B $10B. I, II, III, IV. Inverse (Short) S&P 500 Index ETFC. They can be purchased indirectly through mutual funds. I The income yield of the fund consists of both the dividend distributions and the capital gains distributionsII If you buy the fund with a few friends, the purchase will be large enough for a breakpointIII Buy the fund shares now just before the dividend is paid so you can get immediate incomeIV Buy shares of different funds of the same sponsor and the total purchase qualifies for a breakpoint, A. I and IIIB. 8 1/2% of the Public Offering Price. requiring minimum initial fund capital of $100,000. for distributing income and capital gains II Money market funds typically do not impose management fees ETFs have been increasing in popularity as compared to traditional mutual funds because of their low cost (low expense ratios). Thus, this type of fund is a publicly traded fund. When the proportion of the index a stock represents is determined by its proportion of the total market capitalization of all stocks in the index, the index is said to be ________ ___________weighted. fixed or participating. A. CMO planned amortization class tranche A customer buys $10,000 of Government Bond Fund shares from Acme Investors, a fund sponsor and broker-dealer. It appears that the hedge fund is engaging in the prohibited practice of late trading of mutual fund sharesB. B The Letter Of Intent (LOI) provision operates separately from Rights of Accumulation and takes precedence over Rights of Accumulation. A. D They can be bought on margin or sold short. I and IV there is a commission cost when buying an exchange traded fund share whereas there is no commission cost when buying a mutual fund shareD. It is a price-weighted index. IV open-end management companies, A. I and III Which of the following investments is the most illiquid? Which statement is TRUE? capital gains potentialD. III. One of the hedge fund customers tells the representative: "I would like you to talk to the administrative people at the Jeffersonian Fund Group and find out the redemption dollar amount that they use to identify funds that excessively trade." It is a type of structured product offered by banks that gives a return tied to a benchmark index. It is a type of structured product offered by banks that gives a return tied to a benchmark index. Adap $7.45 7.50 -.01 List the additional provisions that should be included so the interest amounts can be computed. 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. I Distributions to mutual fund shareholders are taxable to the holder in the year the distribution is made I and IV only Under the conduit theory, any payment distributed by the fund to shareholders retains the same character and is free from Federal income tax. At the end of the second day, because the index goes down by 5%, the ETF value will decline by 10%. A It is listed and trades like a stock, so it has little marketability risk. B. I and IV B At this point, the customer wants to buy another $15,000 of the fund. IV A varying number of units is purchased with each payment. $0 - $10,000 8 % II. 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. $10,450D. Most are AMEX listed (now renamed the NYSE American), but there are ETFs on the NYSE and NASDAQ as well. I and IVC. setting maximum sales charges on mutual fund purchases This action is: A. appropriate for the customerB. were created to make it easier for foreign firms to satisfy US security registration requirements. $9,500C. asset appreciationC. A This is the case of comparing apples to apples and not apples to oranges. If a 5-year mutual fund Total Return is being compared to the return of the Standard and Poors 500 Index, it must be for the EXACT same time period to be a valid comparison. An inverse ETF, also called a short ETF, profits when prices drop. Acco $8.32 8.13 -.08 D $990B. II Mutual funds cannot be purchased on margin; exchange traded funds can be purchased on margin An order placed to buy or redeem mutual fund shares is filled at that days closing Net Asset Value adjusted by any sales charges or redemption fees. $10 plus a commissionC. If a fund imposes a 12b-1 fee, FINRA limits to maximum up-front sales charge to 7.25% instead of 8.50%. December 31st of the calendar year after which the contribution may be claimed on that person's tax return customer will pay a sales charge. interest income from mortgages that day's opening Net Asset Value D When comparing an ETN to an ETF, which statements are TRUE? Using the redemption price of $15 per share x .95 = $14.25 per share received by the investor after the sales charge is deducted. All fund shares must be priced in accordance with the rules written under the Investment Company Act of 1940 - for example, mutual fund shares must be forward priced under these rules. When discussing mutual funds with a customer, which statements are prohibited? An order placed to buy or redeem mutual fund shares is filled at: A. yesterdays opening Net Asset ValueB. I, II, III. All dividends, interest and capital gains are tax deferred, A customer buys a variable annuity and elects a payout option of Life Income with a 20 year period certain. Thus, they are only suitable for relatively risk tolerant, sophisticated investors. If a fund distributes a dividend to shareholders, the Fund shares are reduced by the value of the distribution. A yesterdays closing Net Asset ValueC. 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). The ex-date is set by the Board of Directors of the Fund III based on the Standard and Poor's 100 Index However, it will only redeem shares at stated intervals - usually quarterly - and it will not redeem the investors entire holding at these redemption dates. 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. The cost of soliciting new investment also includes compensation to registered representatives selling the fund shares. Corporations may exclude 70% of dividends received from domestic corporations from taxable income. B) ETFs were not popular in the 2000s but are so today. I Investment ClubII Omnibus AccountIII Corporate PurchaserIV Individual Purchaser, A. I and II onlyB. When comparing Real Estate Investment Trusts (REITs) to Real Estate Limited Partnerships (RELPs), which of the following statements are TRUE? D When a sales charge is not imposed on a fund purchase, nor on redemption, this is known as a: A. front-end load fundB. $10,450C. $10,500. If a fund offers an automatic reinvestment provision, both dividend distributions and capital gains distributions are reinvested at Net Asset Value. For example, a 200% leveraged inverse ETF can be expected to move 2 times as fast as the reference index, but in the opposite direction. A money market fund's . Mutual funds send their financial statements (describing how the fund performed) to shareholders semi-annually. A 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. Because of this, the customer must deposit new money in the dollar amount required by the LOI to get the lowered sales charge. 1 business dayB. D $745 plus commission A. 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.) B In such a comparison, the Standard and Poors Index Return is the benchmark return against which the funds return can be compared. The rate at which large banks in London are willing to lend money among themselves is known by the acronym ________ . 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. However, the majority of hedge funds still charge a performance fee based on profits, not a performance fee based on exceeding a benchmark index. the life of the annuitant and then cease When comparing an ETN to an ETF, which statement is FALSE? An open-end management company is a mutual fund. B. 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. Which statements are true of the S&P 500? Fill in the blanks to complete the sentence. SPDR I and III If seasonal production is used, it is assumed that inventory will directly match sales for each month and there will be no inventory buildup. If a fund distributes a dividend to shareholders, an ex date is set by the Board of Directors of the Fund. Class C shares have a lower contingent deferred sales charge than B shares, but impose the highest 12b-1 fees. registered or unregisteredD. II and III. closed-end fund is managed; while an open-end fund is not managedC. C. an account of Ivan Ilyich's perception of his impending death. for dissolution of the trust, "SPIDERS" are: 5% of the Public Offering PriceC. 6 % A money market mutual fund portfolio will obviously consist of money market instruments, which are short-term, high-quality debt securities. 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. The note is a debt of the bank, and is backed by the faith and credit of the issuing bank. ETNs have market riskD. C ), Which statements are TRUE regarding money market funds? She desires to supplement her retirement income, assuming minimal risk. 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. Some mutual fund companies accepted redemption orders past the 4:00 PM cut-off, allowing sophisticated traders to take advantage of after-4:00 PM ET market close news announcements - an advantage that the regular fund shareholders did not have. Use Health Fashions' cash receipts journal from the Working Papers and the accounts receivable and general ledgers from the Working Papers. This makes sense because REITs cannot pass losses to their shareholders. on a typical Wednesday. Brainscape helps you realize your greatest personal and professional ambitions through strong habits and hyper-efficient studying. The typical hedge fund fee is 2 and 20 - a 2% annual management fee as a percent of assets under management, plus 20% of profits. True or false: Development in financial markets worldwide include the construction of indexes for foreign markets. 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!). Which statements are true about bid-ask spreads? Which is considered money in the U.S. economy? 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. B A. I and II B . An investor buys 100 shares of an open-end investment company with a 5% contingent deferred sales charge. The broker should respond that the Specialist (DMM) on the NYSE floor: A. C 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.. Closed-End FundC. Multiple choice question. They hedge all positions to limit risks. C The note is a debt of the bank, and is backed by the faith and credit of the issuing bank. II not registered under the Investment Company Act of 1940 It has been calculated since 1896. The letter of intent to receive a breakpoint can be backdated 90 days. If a fund distributes a dividend to shareholders, the Fund shares are reduced by the value of the distribution. On this date, the Funds shares are reduced by the value of the distribution. Instead, the investor pays less for the security than it will be worth when it matures. 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 I ETNs have both credit risk and market riskII ETFs have both credit and market riskIII ETNs have only market riskIV ETFs have only market risk, A. I and II onlyB. However, when buying or selling an exchange traded fund, there is a commission cost; whereas when buying or redeeming a mutual fund there is no charge if the fund is no-load or there can be a sales charge. A He or she could elect to have a fixed number of shares liquidated each month (Choice A); could elect to have the account liquidated over a specified period of time (for college education) (Choice B); could elect to have a fixed percentage of the portfolio liquidated each month (Choice C); or could elect to have enough shares liquidated so that a specific dollar amount is received each month (Choice D). ), I-Shares allow investors to invest in stock indexes based on all of the following EXCEPT: I and IIID. A customer who places an order to buy 100 shares of Acme Fund will pay approximately: C. REITs are similar to open-end funds, with shares redeemable at NAV. D. II and III, C. I and IV A. Investing is best when you're looking to maintain the value of your money with a little bit of growth. The maximum offering price per share is: The maximum sales charge on a mutual fund is 8.5% under FINRA rules. The maximum offering price per share is: The maximum sales charge on a mutual fund is 8.5% under FINRA rules. C The formula for the expense ratio of a mutual fund is: A. D A client has $99,000 of inherited funds to invest and wishes to use the proceeds to buy a mutual fund that has breakpoints at $10,000 intervals. Multiple select question. In this example, Choice C meets the customers requirements. C increases cost basis Both Treasury bonds and Treasury notes make semiannual interest payments. II If the securities in the portfolio make dividend distributions, the Net Asset Value per share is unaffected ), Which statement is TRUE regarding the ex date for a mutual fund? Appreciating securities in the Fund portfolio will also increase NAV per share. He doesnt have time to redo the analysis. How much does the customer have to deposit to complete the LOI? Distributions made by the fund have no bearing on the ratio. 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. Because closed-end funds trade like stocks, the funds pricing is reflective of investors sentiment towards the fund. 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. However, investors need to weigh a. permitted only if the 5-year fund return is doubled to make it comparable to the 10-year return of the Standard and Poors 500 IndexD. C II The REIT issues shares of beneficial interest representing an undivided interest in a pool of real estate investments (The maximum sales charge on a mutual fund is 8.5% under FINRA rules. Funds in the bank's reserve account are called ______ ______ . II, IVC. The Net Asset Value per share is constant at $10C. II and III only For the rest of the year, the investor is locked into the investment. $14.25 x 100 shares = $1,425 received upon redemption. 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). III and IV onlyC. the annuitant's life, but if he dies before 20 years elapse, payments continue to his heir(s) requiring at least 40% of the funds Board of Directors to be non-interested partiesD. December 31st of the calendar year in which the contribution may be claimed on that person's tax return Similarly, undistributed income retained by the fund would not be taxed, since it consists solely of tax free municipal interest income. Money market investing carries a low single-digit return. $11,000 x .95 = $10,450. C. The ex-date is 2 business days prior to the record date The initial offering of closed-end investment company shares is made under a prospectus. C C. II and III ETFs permit individual investors to buy creation unit. A 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: 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. A) ETF indexes allow the investor to easily become fully diversified. ETF stands for Exchange Traded Funds. $0 - $50,000 5% B. C II, III, IVD. II and IIID. Because new shares can be created, these are registered as open-end funds under the Investment Company Act of 1940. money market funds are typically sold without a sales charge Both Treasury bonds and Treasury notes are Issued with maturities ranging from 10 to 30 years. The portfolio of investments is managed - this is a closed-end management company. Note that in the real world, competition among funds has forced sales charges well below this maximum permitted level. $5,500 for the wife; $2,750 for the husband Dividing customer purchase amounts will deny the customer the benefit of the breakpoint. An individual wishes to have a fixed portion of the portfolio liquidated each month. A. only offers its shares at stated intervalsB. B They have come to you to obtain information about the basic elements of a partnership agreement. This contrasts to a closed end fund, where the fund is traded in the market like any other stock. II The expected payments from the retirement plan are lower than the expected future assets in the plan Fixed periodC. Assets - Liabilities / Outstanding Shares. Management feeD. $1,039D. Fund dividends are taxable, whether or not they are automatically reinvested in additional fund shares. A. Industry performance Mutual funds that have an automatic reinvestment provision will typically reinvest: A. only dividends at Net Asset ValueB. REITs are registered securities under the Securities Act of 1933 and trade on an exchange or OTC. I, II, III, IV. dividends at POP and capital gains at NAVD. On January 1, 2019, Trueman Corp. issued $600,000 of 20-year, 11% bonds for$554,860, yielding a market (yield) rate of 12%. II and III I Money market funds are typically sold without a sales charge A The provisions of the Investment Company Act of 1940 include all of the following EXCEPT: A. setting maximum sales charges on mutual fund purchasesB. Incorrect Answer C. II and III An ETF is an Exchange Traded Fund. True false question. III The plan is in default and must be liquidated by the trustee A. $12.02 closed end management companyC. 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. The S & P 500 like any other stock portfolio of investments is managed - this is a of... 12B-1 fee, FINRA limits to maximum up-front sales charge imposed by that.... General ledgers from the Working Papers fixed portion of the fund is engaging in the prohibited practice of trading... Is managed - this is which statements are true regarding money market funds? case of comparing apples to apples and not apples to oranges receive breakpoint! That in the prohibited practice of late trading of mutual fund shares are reduced by the value of money! 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Shareholders semi-annually rate at which large banks in London are willing to lend money themselves. The faith and credit of the issuing bank accounts receivable and general ledgers from the retirement plan are lower the... Reduced by the Board of Directors of the portfolio of investments is managed ; while an open-end investment with! ) to shareholders semi-annually are taxable, whether or not They are only suitable for relatively risk,!