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What is an administrator?
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The total return on an investment in stock takes into account what?
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Series 65 misc
Compiled Series 65 flash cards
| Question | Answer |
|---|---|
| What is an administrator? | 1) A person authorized by a court of law to liquidate an intestate decedent's estate. 2) An official or agency that administrator's a state's securities laws. |
| The total return on an investment in stock takes into account what? | Dividends Capital Gains Capital Losses |
| What type of firm pays income taxes at the corporate rate? | C Corporation |
| A young couple has saved for five years to come up with a down payment of $30,000 on a new house that thye plan to purchase in 6 months. An IAR would recommend: | 6-month CD Money Market Fund Money market funds and 6-month CDs are both very safe investments that are both very safe and liquid |
| A Registered Investment Adviser has a retired client who wants to put money aside for 5 years. Preservation of Capital is important. the RIA would recommend: | Money market funds Bank Certificates of deposit 5 year Treasury Bonds |
| What investments use the Total Return as a basis of performance? | Common stock Treasury Bonds Stock Portfolio |
| What is the real rate of return adjusted for? | Inflation |
| If an investor buys a security at $95, which than rises to $103, and then ends the year at $99, and has a $2.00 dividend, what is the investor's total return? | The total return is based on dividends plus increase in value which is $99 - $95, or $4 plus $2 dividends, $6. Expressed as a percentage of original cost, the return is $6/$95 or 6%. |
| What are shareholders rights? | 1) Right to engraved certificate physical evidence of ownership 2) Declared Dividends paid quarterly 3) Transpancy (right to examination of books) 4) Right to buy more shares 5) Right to vote fundamental issues (BOD change charter change by-laws) |
| What are capital stock and equity stock? | Both preferred stock and common stock are capital stock and equity stock Captial stock is used to raise money for a corporation (capital) Equity stock represents ownership in the company. |
| What is common outstanding stock? | Issued stock, that has been purchased and retained by investors for dividends, voting rights, and return on principal. |
| What is common issued stock? | Issued stock has been authorized and distributed to investors reserved for: Raising new capital for expanison Paying stock dividends Providing stock purchase plans or stock options Excerise of outstanding stock purchase of warrents |
| What are the characteristics of common authorized stock? | Authrized common stock is listed in the company charter and mandates how many shares can be issed for sale. A company often only sells a portion of issued stock & reserves shares for future expendichiors. |
| What are the four classifications of common stock? | Authorized Issued Outstanding Treasury |
| How to calculate net worth on a balance sheet? | Net worth- A company's net worth is computed by subtracting all liabilities from the value of the total assets: Assets - liabilites = net worth Two ways to express equation Assets = liabilities + net worth Assets - Liabiities = net worth |
| Who administers a trust? | The trustee |
| What are the basic features of a security? | Represent ownership in a company (Capital or equity) Preferred or common Traded on an (Auction exchange) NYSE specialist Interdealer exchange OTC (Negotiated) Represented on the balance sheet |
| A group of investors have capitalized on a business venture more than adequately. Earnings however, will probably not occur until after 3 years. What is the best buiness structure to use? | Limited Liability Company |
| Parents of a high school student are planning to send the child to college in one year. An RIA would recommend a portfolio that: | Specializes in Municipal bonds |
| What is the calculation of a dividend yeild? | Annual dividend/current market price = dividend yield |
| What is the time horizon for a portfolio of a retired individual? | The expected lifetime The retired individual must make sure he or she has adequate income over the remaining lifetime. |
| How does a company disclose the compostion of it total capitalization (equity and debt)? | With a balance sheet Summarizes the company's Assets Liabilities Equity |
| A healthy couple in their mid-thirties is planning for retirement at age 65. What is the approximate time horizon for their investment portfolio? | 40 + years |
| In determining a financial profile of a customer for an investment portfolio what is not considered? | Employment history |
| General micro system's 9% bonds mature in 10 years and are trading at 92. What is the approximate yield to maturity? | 10.2% |
| total return for a bond is: | Yield to maturity |
| What best describes an expected return? | The most likely return |
| Liqudity risk the risk that: | The risk of not being able to sell or redeem the investment quickly. |
| The T-Bill rate is 6%. A stock with a total yield of 9 and a beta of 1 will have a higher risk-adjusted return. | Risk adjusted return is the risk-free rate (in this case 6%)plus the premium of the nominal rate over the risk free rate, dividend by the investments beta. The stock has a risk-adjusted return of 9%. Calculated as 6% + 3/1 |
| What is a Call Provision (stoc or bond)? | An issuing corporation retains the privilege of recalling (redeeming) its issues of equity or debt. The provision must be clearly stated on the face of the certificate at issue. |
| What is a call price? | The price paid (usually a premium over the par value of the issue) for callable preferred stock or bonds redeemed by issuer prior to maturity of the issue because interest rates have fallen. |
| What is a call option? | An option to buy a specified number of shares of stock at a definite price within a specified period of time. |
| What is a business day? | A day the New York Stock Exchange is open for business (trading). |
| What is a bull market? | A market in which prices of securities are moving higher or are expected to move higher. |
| What is a broker? | The role of a brokerage firm when it acts as an agent for a customer and charges the customer a commission for its services. |
| What is a breakpoint sale? | The sale of investment company shares in dollar amounts just below the point at which the sales charge is reduced on quantity transactions so as to share in the higher sales charges applicable. This is a violation of the Rules of Fair Pracitice. |
| What is a breakpoint? | The schedule of sales charge discounts offered by a mutual fund for lump sum or cumulative investments. Eligibility requirements must be disclosed in the prospectus. |
| What are bond ratings? | The quality of a bond issue as determined by independent bond rating services. AAA being of the highest quality. Both Moody's Investor's Service and Standard & Poor's Corporation have such services. |
| What is a bond fund? | A type of mutual fund whose investment policy is to provide stable income with a minimum of capital risks. It may invest in corporate, government or municipal bonds. |
| An account that charges the client a single fee that covers transactions and management is____________________ | A wrap account |
| The Securities ACT of 1933 regulates_______________ | New issues |
| What is the primary purpose of the Securities ACT of 1933? | Provide investors with full and fair disclosure regarding new issues. Also providing them with a prospectus |
| True or False the SEC judges an offerings investment merit and provides approval. | False |
| What are the securities that are exempt from both the 1933 and the USA. | Government/municipal bonds, commercial paper, banker's acceptances, bank issues, non-profit and small business issues. |
| Though some securities are exempt from registration, nothing is exempt from the _____ provisions of the ACT. | Anti-fraud |
| How do non managed, fee-based accounts differ from wrap accounts? | A fee is charged to cover transaction costs (often a percentage of assets), but no management is performed. |
| A corporation that issues convertible bonds is borrowing money at a ___________ rate. | Lower |
| When do corporate bond trades settle? | T + 3 three business days after the trade date |
| Under the USA, are banks and bank holdings companies excluded from the IA definition? | No, only banks are as well as savings institutions and trust companies are excluded, but bank holding companies are not. |
| Is registration with the SEC required of an adviser that manages $27 million in assets? | No, if the IA manages between $25-$30 million in assets, it is the choice of the IA to register with the SEC or state. |
| For how long does the registration of a state-registered adviser remain in effect? | Until December 31, unless renewed by the adviser. |
| Give examples of candidates included in the expanded IA definition due to SEC Release IA-1092. | *Sports and entertainment reps *pension consultants *financial planners *Nationally known rating organizations Moody's Standard and Poors |
| True or False Bank holdings companies are not considered IAs under the Investment Advisers Act of 1940 | True |
| True or False: Bank holding companies are excluded from the IA definition under the USA. | False they are exempt under the Investment Advisers ACT of 1940 |
| What type of information will be found in an investment adviser’s ADV Part I? | Firm name Number of employees Nature of business History of officers/directors Legal/disciplinary action in past 10 years |
| Is an IA always required to include a balance sheet in its ADV Part II? | No. A balance sheet is required if the IA has custody of the client’s funds or if the IA requires prepayment of fees. |
| Any material changes to Form ADV must be filed __________. | Promptly (within 30 days). |
| What type of changes would be considered material changes that require prompt amendment of an adviser's ADV? | Significant items, such as a name or location change |
| When are non-material (routine) changes to Form ADV required to be filed? | Routine items require an amendment within 90 days after the end of the IA’s fiscal year. |
| Identify some non-material (routine) charges to Form ADV. | A change in the number of discretionary accounts or a change in the dollar amount under management by the adviser |
| What is the purpose of Schedule 1 of Form ADV and when is it filed? | Used to determine if IA is eligible for continued SEC registration, filed 90 days from the end of the IA's fiscal year. |
| When and by whom is Form ADV-E filed? | Filed within 30 days from completion of an audit of the IA's books, filed by the auditor conducting the audit |
| When is form ADV-W filed? | When an advisor withdrawals his registration W means withdrawal |
| What is the general definition of an investment adviser? | A firm that provides advice/analysis regarding securities, as part of a business, and for compensation |
| According to the USA, who is included under the term person? | A corporation, a living person, an estate anything besides a dead person, a crazy person or minor child |
Created by:
chad1475