Series 66
Quiz yourself by thinking what should be in
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on it to display the answer.
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| What is Liquidation? | show 🗑
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| show | The convertibility of assets into cash.
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| What are long-term capital gains or losses? | show 🗑
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| What is making a market? | show 🗑
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| What is the Maloney ACT? | show 🗑
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| show | Companies that actively buy, sell and trade the securities held in the company's portfolio according to a prescribed investment objective. May be open end, closed end, diversified or non-diversified.
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| What is a Keogh Plan (pronouced Keyhole)? | show 🗑
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| show | Regardless of the type of municipal bond issued, the bond must be accompanied by a legal opinion of counsel. The opinion of counsel affirms that the issue is a municipal issue and that interest is exempt from federal taxiation, among other items.
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| show | Rasing capital through the sale of bonds. Leverage is the use of borrowed funds for investment.
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| What is a life annuity? | show 🗑
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| show | A life annuity with a guarantee that payments will continue for a set number of years. If the annuitant dies before the set period has expired, payments will be made to a beneficiary for its duration.
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| show | Securities that are traded on a national securities exchange such as the New York Stock Exchange.
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| show | A type of shareholder voting in which the number of shares held is multiplied by the number of directors to be elected to determine the number of votes a shareholder may cast. He may allocate the votes for for one director.
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| What is a debenture (Unsecured Bond)? | show 🗑
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| show | A type of mutual fund that has most of tis assets invested in many types of securities, many issuers of a single type of security or both.
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| show | One where at least 75% of its assets are invested so that 5% of its total assets own no more than 10% of the total outstanding stock of any one company.
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| What is a dividend? | show 🗑
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| show | A distrbution of net investment income, usually paid quarterly.
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| What is dollar cost averaging? | show 🗑
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| What happens during the a period of time during DCA? | show 🗑
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| What is due dilligence? | show 🗑
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| What are economic and social risk? | show 🗑
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| What are EE Savings Bonds? | show 🗑
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| show | EE bonds pay a variable rate of interest linked to the rate paid on five-year Treasury secuirites.
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| show | The date the registration of an issue of securities becomes effective with the SEC. The underwriter confirms saless of the newly issued securities after this date.
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| What is an equipment Trust Certificate? | show 🗑
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| show | Stock (common or preferred) is sold to individuals and institutions. In return for the money paid, the individual or institution receives an ownership interest in the corporation.
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| show | Preferred stock entitled to its preferred dividend and also to participate with the common stock in the balance of dividends declared.
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| What is the payable date? | show 🗑
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| show | The name used for a contractual plan in the Investment Company ACT of 1940
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| show | The prospectus offering the contractual plan. Both it and the prospectus of the underlying fund must be delivered to the prospect.
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| What is a point? | show 🗑
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| What is a the POP? | show 🗑
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| show | Either the number of shares owned ( a long position) or owed ( a short positon) by an indvidual. A dealer will also take positions in specific securities to maintan an inventory to facillitate trading.
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| show | The right of the stockholder to maintain his proportionate share of the corporation by purchasing shares in a new issue in direct proportion to those already owned before the new issue is offered to the general public.
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| show | A coupon offered to existing shareholders allow them to keep the same percentage of ownership that the had before another public offering. A right is offered below current market value and often expries 30 days or less.
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| What is a primary distrubtion? | show 🗑
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| show | An annuity contact that repays principal and interest in the future. Interest earned during the accumulation (pay in) period is tax deferred.
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| show | A prelminary prospectus for information purposes. It cannot offer a security for sale. Also knownas a preliminary prospectus.
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| show | The return of a client's interest (net asset value) in a mutual fund. By law, redemption must occur within seven calendar days.
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| What is refunding? | show 🗑
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| show | The date on which the company declares an upcoming dividend.
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| show | An investment method through which investors try to minimize the risk of losing principal. One example is the policy of making purchases and sales according to predetermined objectives without regard for market changes, such as dollar cost averaging.
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| show | Diversification of investment vehicles
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| How are bond's quoted? | show 🗑
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| show | $1000 quotes for both bonds are a percentage fo the bonds face value.
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| show | The difference in price paid for a security and the security's face at issue or in the secondary market.
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| show | An account permitting a client to designate an individual such as a B/D or RR to exercise authroity over the selection, timing and amount of investment for the client. The triple AAA test activity, asset, amount.
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| show | Authorization must be in writing, the account must be approved and acceped by a principal of the B/D firm.
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| What is diversification? | show 🗑
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| show | Declaration, ex-date, record date and payable date. Gives the order in which dividends will be paid and an easy way to figure out how the ex-dividend date is calcluated 2 business days before the record date.
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| show | The day on which the corporation determines the stockholders eligible for dividends. All stockholders of record on that date receive the dividend even though they may subsequently have sold their stock.
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| show | Bonds are rated for saftey by various organizations such as Standard & Poors and Moody's. These firms rate the companies issuing bonds as to their ability to repay and make interest payments. Rating are from AAA, AA, A, BBB to C or D. Lower BBB junk
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| show | The Federal Reserve Board regulation that governs the amount of credit brokerage firms and dealers may extend to clients for the purchase of securities. Regulation T also governs cash accounts.
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| show | For mutual funds, distrbutions (dividends and gains) may be reinvested in the fund to purchase additional shares instead of being sent to shareholders. Reinvested distrubtions are subject to tax.
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| What is the Reinstatement Privilege? | show 🗑
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| show | The Federal Reserve Board regulation governing loans by banks to brokerage firms for the purpose of refinancing clients' margin accounts.
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| What is a Registration Statement? | show 🗑
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| show | A type of delivery which allows three full business days following the trade date for the broker/dealer to deliver the securities and for the buyer to pay. Set by FINRA under the Uniform Practice Code.
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| Under Regulation T what is the date that payment is required? | show 🗑
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| show | An investment company qualifying under IRC Subchapter M, acting as a conduit for income distributions. If 90% of income is passed through to shareholders, the company is not subject to tax on the earnings.
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| show | Actual dollar amounts. Not adjusted for inflation.
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| What is a current yield? | show 🗑
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| What is a custodian? | show 🗑
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| show | One who deals in securities as a principal, buying and selling for his own account.
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| What is preferred Stock? | show 🗑
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| What is a preliminary prospectus or Red Herring? | show 🗑
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| What is a Premium bond? | show 🗑
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| show | The interest rate a major bank charges their best industrial borrowers, set by the bank.
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| Who is a Principal? | show 🗑
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| When is a person acting in a Principal manner? | show 🗑
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| show | The legal document that must be given to every investor who purchases registered securities in a primary offering. It describes the details of the company and the particular offering.
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| What is a proxy? | show 🗑
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| show | The price at which mutual fund shares are sold to the public. In a load fund it equals the net asset vaule plus sales charge.
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| show | The risk that a certain amount of money will not purchase as much in the future as it does today. Also known as inflation risk.
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| show | Retirement plan that qualifies under The Employees Retirement Income Security ACT (ERISA) which generally allows contributions to be tax deductible.
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| show | Are quoted in dollars and cents.
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| What is Statutory Voting? | show 🗑
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| show | They are a dividend paid to common shareholders in the form of additional stock in the corporation rather than in cash.
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| show | Preferred stock which loses its claim to dividends that are not paid. Also called non-cmulative preferred.
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| What is Subchapter M? | show 🗑
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| show | A debenutre junior to regular debentures in a corporate liquidation.
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| What is a syndicate? | show 🗑
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| show | An annuity program available to employees of certain non-profit organizations and public schol systems. A part of the employee's income is excluded from current taxation and used to purchase an annuity. The employee pays taxes when annuitized.
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| What are tenants in common? | show 🗑
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| What is the Third Market? | show 🗑
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| show | An advertisement that announces a securities offering. It indentifies the name of the issuer, the type of security, the underwriters and where additional information is available.
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| show | The day on which the terms of a transaction, such as price and quantity, are established. The transaction will be completed at settlement.
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| Who is the Transfter agent? | show 🗑
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| show | Short-term government debt sold at a discount from face value. T-Bills mature in periods of 4, 13, or 26 weeks. T-Bills do not pay periodic interest payments.
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| show | The interest income is the difference between purchase price and the face value of the bills at maturity. The bills are sold at auction, at which time the discount is determined. The bills do carry a stated interest rate.
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| What are Treasury Bonds? | show 🗑
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| show | Treasury notes are medium-term treasury debt sold at face value. Notes pay interest semi-annually and mature in one to ten years.
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| show | Issued stock repurchased by the company and held by the company. While the stock is held in the company's treasury, it has no dividend or voting rights.
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| show | A broker/dealer in charge of selling securities. For mutual funds, the underwriter is the person or company in charge of distributing and selling the fund shares to the public.
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| What is the Uniform Gifts to Minor ACT UGMA also called the Uniform Transfer to Minors ACT UTMA? | show 🗑
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| show | A FINRA code to make uniform the customs, practices and trading techniques amount members in the securities business, such as regular way settlement.
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| show | The basis of valuation of an annuity, similar to a share of a mutual fund.
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| show | Investment company that invests in a fixed portfolio of securities. Unit investment trusts provide for professional selection of the securities to be held by the trust, but once they are purchased, there is a generally no trading of the securities.
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| How are investors treated in regards to purchasing UIT's? | show 🗑
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| What is a unit refund life annuity? | show 🗑
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| show | A bond not secured by the pledge of some specfic asset of assets of the issuing corporation. Also know as a debenture.
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| show | Another form of annuity issued by life insurance companies. Like fixed annuites, variable annuties guarantee a payment for life once the contract is annutitized. The insurance company still accepts the mortality risk for the client.
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| show | Unlike fixed annuties, the variable annuity contract does not guarantee the amount of the annuity payment or the performance of the account. The annuitant accepts the investment risk, not the company.
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| show | Stock purchase option similar to rights because it allows the holder to purchase stock at a predetered price. Warrants are issued for long periods of time and are usually attached to bonds to make them easier to sell.
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| show | The IRS will disallow a loss if the investor repurchases substantially identical securities within 30 days before or after the sale of security in which the loss was claimed.
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| show | Whereby a client may request the systematic withdrawal of his or her account periodically. Withdrawals may be based on fixed dollar amount, fixed number of shares, fixed percentage or fixed period of time.
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| How are withdrawal plans offered? | show 🗑
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| show | Takes into account the discount or premium paid for the issue and averages the gain (or loss) with the stated interest payment to calculate a yield over a period of time.
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| What is the Securities Investor Protection Corporation? | show 🗑
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| What does SIPC provide? | show 🗑
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| show | Preferred stock that may be converted into common stock at the option of the holder.
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| How long and what is the cooling-off period? | show 🗑
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| What is a corpoartion? | show 🗑
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| What is the cost basis? | show 🗑
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| show | Has the right to receive skipped or missed dividends. Dividends in arrears do not have to be paid; however; dividend distribtuions to common stockholders cannot be paid until any arrearage is paid.
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| What is Par Value? | show 🗑
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| What is Parity? | show 🗑
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| show | A life annuity with two annuitants. If one dies, payments continue during the lifetime of the survivor, although usually at a reduced rate.
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| What is Issued Stock? | show 🗑
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| show | An amendment to the Investor Company ACT of 1940. It permits a registered investment company issuing periodic payment plan certificates (contractual plans) to choose one of two methods of deducting sales charges, either "spread" or "front-end" load.
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| What is the Investment Company ACT of 1940? | show 🗑
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| What is an Investment Company? | show 🗑
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| show | A broker/dealer that is hired by a corporation or government to raise capital by marketing new issues. Sometimes called the underwriter, sponser or distributor.
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| Who is an Investment Advisor? | show 🗑
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| show | The Investment Company ACT of 1940 requires that at least 2/3rds of the board of dirctors remains indepedent from the operations of the investment company.
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| Affiliated position in regards to Interlocking directorate? | show 🗑
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| What is Interest Rate Risk? | show 🗑
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| Interest Rate Risk in Bonds? | show 🗑
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| Who is an insider? | show 🗑
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| What is inflation risk? | show 🗑
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| show | A municipal issue, the proceeds from which a state or municipal authority uses to finance construction of industrial facilities to be leased or purchased by private compaines.
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| Who backs the credit of an Industrial Development Bond? | show 🗑
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| What is an Indvidual Retirement Account? | show 🗑
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| What is financial Risk? | show 🗑
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| show | An underwriting commitment where the underwriter purchases the entire issue at a guaranteed specific price. The underwriter acts as a dealer and assumes the risk of resale.
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| show | The acutal price at which a trading unit of the security may be bought or sold by dealers. The trading unit is 100 shares of stock or five bonds.
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| What is the first market? | show 🗑
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| What is a first Mortagage Bond? | show 🗑
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| show | An annuity contract in which the insurance company makes fixed (guaranteed) dollar payments to the annuitant for the term of the contract (usually until he or she dies. The insurance company guarantees both earnings and principal amount.
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| show | A withdrawal plan pay-out option under which the client receives a payment of a predetermined dollar amount for an undetermined period of time.
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| show | A withdrawal plan option under which the client receives a payment equal to the liquidated value of a set percentage of his mutual fund account.
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| show | Right of an investor who has invested in one fund to transfer to another fund under the same managment without incurring an additional sales charge. The exchange is considered a sale and repurchase under the tax code.
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| What is an Exclusion Allowance? | show 🗑
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| show | The date on and after which purchasers of a security are not entitled to a declared dividend. The price of the security is reduced by the amount of the dividend on the x-date.Two business days prior to the record date on stock. Determined by NYSE
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| What is an expense guarantee? | show 🗑
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| What are face-amount Certificate Companies? | show 🗑
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| Who are the Federal Reserve Board? | show 🗑
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| Who is a Fiduciary? | show 🗑
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| What is a final prospectus? | show 🗑
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| show | A withdrawal plan pay-out option under which the client receives a payment with the value from the liquidation of a set number of shares.
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| What is a fixed time option? | show 🗑
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| What is forward pricing? | show 🗑
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| show | The name given to direct trading of securities between large investors. The Instituional Market.
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| What is a free-look letter (45-day letter)? | show 🗑
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| show | A contractual plan operating under the Investment Company Act of 1940. A sales charge of 50% of the money invested may be deducted in the first year.
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| What is a full faith and Credit Bond? | show 🗑
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| show | All long-term financing of a corporation; that is, all outstanding bonds maturing in five years or longer.
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| show | Municpial bond backed by the general taxing power of the issuer. Payment of the obligation may be backed by a specific tax or just the issuer's general tax fund.
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| What is good delivery? | show 🗑
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| show | Proper assignment, good condtion of the securities, proper number of units, at the proper time, not in the name of deceased perosn and with a permanent certificate, if available.
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| What is a growth fund? | show 🗑
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| What are other chartictictices of growth funds? | show 🗑
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| What is hypothecation? | show 🗑
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| show | An annuity contract purchased for a lump sum (single premium) that starts to pay immediately following its purchase.
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| show | A type of mutual fund that seeks to provide a stable current income from investments by investing in securities that pay a higher-than-average return on investments.
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| show | An investor's expression of conditional interest in buying a forthcoming securities issue after the investor has reviewed a preliminary prospectus. An indication of interest is not a commitment to buy.
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| What is a Repurchase Agreement? | show 🗑
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| What is a Revenue Bond? | show 🗑
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| What is a right? | show 🗑
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| show | Less than the underlying stock current market price. The right is issued for a short period of time, 30 days with the option expiring after that time. Rights may be sold in the secondary market.
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| show | The client may qualify for reduced loads at any time the aggregate value of shares previously purchased and the shares currently being purchased in the account is over a breakpoint.
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| How may the investment company base the quanity of shares for breakpoints? | show 🗑
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| What is a round lot? | show 🗑
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| show | Rules adopted by FINRA to guide members in the oberservance of "high standards of commerical honor and just and equitable practices of trade." A code of ethics.
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| show | With mutual funds, the amount added to the net asset value of mutual fund shares. The investor will pay the NAV plus the sales charge, which equal the offering price.
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| show | As defined by the SEC Statement of Policy, it includes any communication, other than advertising, used by an issuer, underwritter or dealer to induce the purchase of shares of an investment company or a variable annuity. A prospectus must be provided.
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| What is the secondary market? | show 🗑
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| show | A bond secured by the pledge of some specific asset or assets of the issuing corporation.
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| What is the Securities ACT of 1933 (The ACT)? | show 🗑
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| Who is the Securities and Exchange Commission? | show 🗑
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| What is a Sinking Fund? | show 🗑
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| show | The holder of an option has the right to buy or sell a security at a predetermined price for a period of time, 9 months.
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| What is the O-T-C Market? | show 🗑
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| What is Outstanding (Stock)? | show 🗑
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| show | An ownership designation where two or more indvididuals may hold fractional interests in an undivided asset. At the death of one of the tenants, the decedent's interest passes to his or her heirs, not to the other tenants.
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| show | An ownership designation whereby the entire asset is owned by two or more individuals equally. At the death or one of the tenants, the decedent's interest passes to the survivors.
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| show | A sale in the secondary market which a buyer provides only part of the purchase price of the securities. The rest is borrowed from the b/d who usually keeps the securities as collateral.
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| Who sets the percentage of the price for a margin sale? | show 🗑
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| show | A direct investment risk. Uncertainty about loss of capital due to changes in the market price of the security.
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| What is market value? | show 🗑
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| show | The ease with which a security can be bought or sold.
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| What is maturity? | show 🗑
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| show | A market for short-term debt issues. Money market instruments are forms of debt that mature in one year or less and are very liquid. Treasury bills make up a the bulk of trading in the money markets.
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| show | Part of a variable annuity contract under which the company agrees to continue annuity payments even if the annuitant lives longer than the mortality tables predicated.
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| What is a Mortgage Bond? | show 🗑
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| What is a municipal bond? | show 🗑
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| show | Interest is federal income tax-free, but capital gains are taxable.
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| show | The body of laws that describes how FINRA functions, defines its powers and determines the qualifications and registration requirements for brokers.
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| What is FINRA department of enforcement? | show 🗑
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| What is NASDAQ? | show 🗑
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| show | A self-regulatory body of the securities industry, established under the Maloney ACT, now known as FINRA, Financial Industry Regulatory Authority.
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| show | A type of commercial money market instrument. Issued by banks in minimums of $100,000 units and bear a specified rate of interest.
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| What is the negotiated market? | show 🗑
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| show | Calculated by subtracting fund liabilities from fund assets. The net asset value is further defined by dividing the net value of the fund by the number of shares outstanding to equal the net value per share.
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| What is a New Issue? | show 🗑
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| show | A mutual fund that does not impose a sales charge.
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| What is a Nominal Yield? | show 🗑
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| show | The net asset value of a mutual fund plus the sales charge.
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| show | An investment company managed according to a specific investment objective that continuously offers and redeems its shares.
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| What is an Aggressive Investment Policy? | show 🗑
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| What is all-or-none Underwriting? | show 🗑
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| show | If the minimum is not reached, the securities sold and the money raised are returned. Commissions will not be paid unless the offering is completed.
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| What is amortization? | show 🗑
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| show | The annuity contract holder.
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| show | A contract between an insurance company and an individual. An annuity generally guarantees lifetime income to the person on whose life the contract is based in return for a lump-sum or a periodic payment to the insurance company.
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| show | The accounting measure to determine the amount of each payment to an annuitant during the pay-out period.
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| What is appreciation? | show 🗑
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| What is the ask price? | show 🗑
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| What is the assumed interest rate? | show 🗑
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| What is the importance of an assumed interest rate? | show 🗑
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| show | A stock exchange where the securities are sold to the highest bidder. It is a two-way auction since some brokers are bidding to sell at the highest possible price while others are bidding to buy at the lowest possible price. The NYSE is an auction market
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| show | Authorized stock is the maximum number of shares a corporation may issue under the terms of its charter. The number of shares authorized may be changed, with the approval of the stockholders.
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| show | A type of mutual fund whose stated investment policy is to have at all times some portion of its investment assets in bonds and stocks, creating a balance between the two types of securities.
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| What is a banker's acceptance? | show 🗑
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| show | A market in that prices of securities are falling or are expected to fall.
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|
||||
| show | Acting as agent for the issuer, the underwriter puts forth his or her best efforts to sell as many shares as possible. The issuer pays the underwriter a commission for those shares sold.
🗑
|
||||
| When does an underwriter have the liability for unsold shares? | show 🗑
|
||||
| show | The price at which a dealer is willing to buy stock from an individual or another dealer.
🗑
|
||||
| show | The issues of normally strong, well-established companies that have demonstrated their ability to pay dividends in good times and bad times, such as General Motors.
🗑
|
||||
| show | State securities laws
🗑
|
||||
| show | Bonds represent the borrowing of money by a corporation or government. The bond is a legal obligation of the company or government to repay principal at the maturity of the bond.
🗑
|
||||
| Where are the terms and repayment found for bonds? | show 🗑
|
||||
| show | Bonds are issued with a par value of $1000 representing the amount of money borrowed by the company.
🗑
|
||||
| show | The issuer promises to pay a percentage of the par value as interest on the borrowed funds. The interest rate is stated on the face of the bond at issue and is called the nominal or coupon rate.
🗑
|
||||
| What is a bond fund? | show 🗑
|
||||
| What is a bond rating? | show 🗑
|
||||
| show | The schedule of sales charge discounts offered by a mutual fund for a lump sum or cumulative investments. Eligibility requirements must be disclosed in the prospectus.
🗑
|
||||
| What is a breakpoint sale? | show 🗑
|
||||
| What is a broker? | show 🗑
|
||||
| What is a bull market? | show 🗑
|
||||
| What is a business day? | show 🗑
|
||||
| What is a Call option? | show 🗑
|
||||
| What is call price? | show 🗑
|
||||
| show | 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.
🗑
|
||||
| show | The long-term gain (selling price minus cost base) on an asset held for a period of longer than 12 months. Short-term gains (12 months or less) are taxed as ordinary income.
🗑
|
||||
| show | The amount of debt and/or equity issued by a corporation.
🗑
|
||||
| What are certificates of deposit? | show 🗑
|
||||
| What is Churning? | show 🗑
|
||||
| show | A management investment company operated in much the same manner as a conventional corporation. The closed-end fund will issue a fixed number of shares for sale (fixed capitalization). The shares may be of several classes.
🗑
|
||||
| show | Shares are bought and sold in the secondary marketplace; the fund does not offer to redeem shares.
🗑
|
||||
| show | An accounting measurement that represents an annuity contract owner's proportionate unit of interest in a separate account (the portfolio) during the pay in period.
🗑
|
||||
| show | Any material designed for use by newspapers, magazines, radio, television, telephone recordings or any other public medium to solicit business. Advertising may not be sent to clients considering a new issue unless accompanied by a prospectus.
🗑
|
||||
| Who is an affiliated person? | show 🗑
|
||||
| What is agency debt? | show 🗑
|
||||
| What are the different forms of agency debt? | show 🗑
|
||||
| show | Portfolio characterized by high turnover of holdings; attempts to cash in on higher-risk rapid capital appreciation situations. Usually pays no dividends.
🗑
|
||||
| What is the Securities Exchange Act of 1934? | show 🗑
|
||||
| show | Requires registration of broker/dealers and registration of representatives.
🗑
|
||||
| show | The difference between the price the underwriter pays the issuer and the public offering price. Also known as the "load" or "sales charge."
🗑
|
||||
| What is Special Situation Portfolio? | show 🗑
|
||||
| What is a specialized portfolio? | show 🗑
|
||||
| What is a spread? | show 🗑
|
||||
| show | A contractual plan operating under the Investment Company ACT amendments of 1970. The maximum sales charge allowable in any one year is 20% of the money invested.
🗑
|
||||
| show | The underwriter agrees to sell the shares not subscribed to by existing shareholders following a preemptive rights offering. The underwriter receives a fee for each share that is exercised.
🗑
|
||||
| show | Allows the investor to qualify for the reduced sales charge currently by promising to invest an amount qualifying for a breakpoint within 13 months from the date of the letter.
🗑
|
||||
| show | The letter is a unilateral agreement; the client is not bound to the terms of the letter. It is also know as a Letter of Intent, LOI.
🗑
|
||||
| show | An SEC statement designed to establish standards for advertising and sales literature and practices in the sale of investment company products and variable annuities.
🗑
|
||||
| What is Net Investment Income? | show 🗑
|
||||
| show | Any net short-term gains from trading securities is also added. The sum of dividends, interest and short-term gains is the gross investment income of the fund.
🗑
|
||||
| What types of fees does the fund subtract? | show 🗑
|
||||
| How is a firm acting if they are trading for, or from, their own inventory? | show 🗑
|
||||
| How is a firm acting if it effects trades on behalf of its customers, without taking the other side of the trade? | show 🗑
|
||||
| What type of annuity is considered a security, fixed or variable? | show 🗑
|
||||
| show | False. The USA is a model law, not the actual law of any state.
🗑
|
||||
| show | The North American Securities Administrators Association (NASAA) is an organization consisting of state Administrators.
🗑
|
||||
| show | Federal Covered Advisers and Federal Covered Securities
🗑
|
||||
| show | The Administrator is responsible for administering and enforcing the securities laws of a state.
🗑
|
||||
| show | Any legal entity, including individuals (clients/agents/IARs), B/Ds, IAs, issuers, corporations, and partnerships.
🗑
|
||||
| In state law, individuals representing B/Ds in effecting securities transactions are referred to as _____________________. | show 🗑
|
||||
| A securities firm that executes trades for its own account of others is deemed a _____________. | show 🗑
|
||||
| Who manages accounts, solicits services, or makes recommendations on behalf of a registered investment adviser? | show 🗑
|
||||
| show | 1) Provides advice regarding securities, 2) Do so as a business 3) Receive specific compensation (the ABC test)
🗑
|
||||
| show | An investment adviser representative (IAR) is to an investment adviser what an agent is to a B/D.
🗑
|
||||
| show | Minors, incompetents, securities, and the deceased
🗑
|
||||
| show | 1. File with the state any documents that were filed with SEC, 2. File Ccnsent to Service of Process, 3 Pay state fees
🗑
|
||||
| The USA refers to an individual who represents a B/D in the sale of securities as an ______________. | show 🗑
|
||||
| show | Business entities, issuers, estates, governments, individuals, (e.g., clients, IARs and agents)
🗑
|
||||
| What is the 3 pronged test for determining whether a firm meets the IA definition? | show 🗑
|
||||
| What is the general definition of an investment adviser? | show 🗑
|
||||
| According to the USA, who is included under the term person? | show 🗑
|
||||
| show | Uniform Securities Act
🗑
|
||||
| show | Investment Adviser
🗑
|
||||
| Identify the acronym: IAR | show 🗑
|
||||
| show | National Securities Markets Improvement ACT
🗑
|
||||
| Identify the acronym:NASAA | show 🗑
|
||||
| show | The test that defines an IA as a firm that provides Advice as part of a Business for Compensation
🗑
|
||||
| show | Registered Investment Adviser
🗑
|
||||
| Who enforces the Uniform Securities Act? | show 🗑
|
||||
| show | Listed on exchange, issued by an investment company, sold as a private placement (Reg. D), and municipal bonds
🗑
|
||||
| show | The process in which information that is filed with the SEC is also filed or shared with the Administrator
🗑
|
||||
| show | False. NSMIA prohibits states from making requirements that are more restrictive than existing federal requirements
🗑
|
||||
| What is the federal law that governs investment advisers? | show 🗑
|
||||
| What is the federal law that governs investment advisers? | show 🗑
|
||||
| show | True. Both the Administrator and a private citizen may bring a case in civil court.
🗑
|
||||
| What is the general definition of an issuer? | show 🗑
|
||||
| show | False. Only those representing a B/D in effecting transactions (as an agent) must register.
🗑
|
||||
| An ________ of an _________ is an individual who represents an issuer in effecting transactions with the general public. | show 🗑
|
||||
| What's an issuer transaction? | show 🗑
|
||||
| What are the justifiable reasons for denying an individual's registration? | show 🗑
|
||||
| An agent whose registration has been revoked must be granted a hearing, if requested, within _____ days of the request. | show 🗑
|
||||
| show | If an agent has withdrawn registration, the Administrator may still take action for 1 year after the withdrawal.
🗑
|
||||
| A prospectus mailed by an agent in one state to a client in another state is considered an offer in which state(s)? | show 🗑
|
||||
| True of False: A gift of assessable stock is considered both an offer and sale. | show 🗑
|
||||
| show | No
🗑
|
||||
| Is the conversion of a bond into a stock considered an offer or sale? | show 🗑
|
||||
| If shares of stock are freely given with the purchase of a bond, is this considered an offer and sale? | show 🗑
|
||||
| True or False: An Administrator may issue a cease-and-desist order before a violation has occurred. | show 🗑
|
||||
| show | False. An injunction may only be issued by a court.
🗑
|
||||
| Under the Uniform Securities Act, the statute of limitations for fraud is _______ years. | show 🗑
|
||||
| show | The statute of limitations for criminal violations of the Uniformed Securities Act is 5 years.
🗑
|
||||
| Statue of limitations for USA civil violations is ____ yrs. of occurrence or ___ yrs. of discovery, whichever is first. | show 🗑
|
||||
| Maximum criminal penalties under the USA are $ ______ fine and/or ______ years in prison. | show 🗑
|
||||
| show | Yes, the Administrator has broad inspectorial power, which stretches beyond his own state.
🗑
|
||||
| Administrative cease-and-desist orders may be appealed in a state court if application is made within _____ days. | show 🗑
|
||||
| show | An offer is any attempt or solicitation to acquire or dispose of a security for value.
🗑
|
||||
| A _______ is any agreement or contract to dispose of a security for value. | show 🗑
|
||||
| show | False. Registration may be denied for any felony conviction or securities-related misdemeanor conviction.
🗑
|
||||
| show | By paying the appropriate amount
🗑
|
||||
| show | True. Cancellation may be due to the death of an agent, or a firm no longer being in business.
🗑
|
||||
| If a cease-and-desist order is issued against an agent, the agent must file an appeal within ____ days. | show 🗑
|
||||
| show | No
🗑
|
||||
| True or False: A client who receives a letter of rescission after selling the security may still initiate civil action. | show 🗑
|
||||
| If an offer is made using television or radio, where is the offer considered to have been made? | show 🗑
|
||||
| show | In the state from which it originated and the state to which it is directed.
🗑
|
||||
| show | False. With newspapers, the offer is only considered to be made in the state in which it is published.
🗑
|
||||
| show | With newspaper offers, no offer is made if more than two-thirds of the circulation is outside of the publishing state.
🗑
|
||||
| show | False. A gift of assessable stock is considered both an offer and a sale and is regulated by the USA.
🗑
|
||||
| True or False: The tendering of a convertible bond is considered a sale according to the USA. | show 🗑
|
||||
| Is being charge with a felony or securities-related misdemeanor grounds for statutory disqualification? | show 🗑
|
||||
| show | If the registrant has died, ceased doing business, been declared mentally incompetent or cannot be located
🗑
|
||||
| show | False
🗑
|
||||
| True or False: The exercise of convertible securities would constitute a sale under the USA. | show 🗑
|
||||
| True or False: A warrant attached to the sale of a bond would constitute a sale of the warrant. | show 🗑
|
||||
| May the Administrator levy fines on a registrant? | show 🗑
|
||||
| May the Administrator initiate criminal or civil liability action against a registrant? | show 🗑
|
||||
| When will an offer fall under an Administrator's jurisdiction? | show 🗑
|
||||
| If the Administrator believes a person has violated or is about to violate the USA, may a stop order be issued? | show 🗑
|
||||
| show | No, but she does need to be able to refer to a rule or order when starting the investigation.
🗑
|
||||
| show | No, the Administrator may subpoena books, records, and witnesses from outside the state.
🗑
|
||||
| If found civilly liable for violating the USA, what is the penalty? | show 🗑
|
||||
| Who is the official that monitors and administers a state's securities laws? | show 🗑
|
||||
| show | Within 15 days of the Administrator receiving a written request from the registrant
🗑
|
||||
| show | False. However, the gift of assessable stock is considered both an offer and a sale.
🗑
|
||||
| If a registrant wishes to withdraw her registration, when does the withdrawal become effective? | show 🗑
|
||||
| For how long does a Administrator maintain jurisdiction over a registrant after a withdrawal of registration? | show 🗑
|
||||
| IF the Administrator believes a person has violated or is about to violate the USA, may an injunction be issued? | show 🗑
|
||||
| A person may appeal a stop order issued by the Administrator within ______ days. | show 🗑
|
||||
| show | The appeal of an administrative order is made before a court of competent jurisdiction (state court)
🗑
|
||||
| show | No. The order remains in effect until the outcome of the hearing.
🗑
|
||||
| show | The maximum criminal penalty for violations of the USA is 3 years in prison and/or up to $5,000 fine.
🗑
|
||||
| show | The statute of limitations for criminal violations of the USA is 5 years.
🗑
|
||||
| Statute of limitations for USA civil violations is _____ yrs. of occurrence or ____ yrs. of discovery, whichever is first. | show 🗑
|
||||
| What is a letter of rescission? | show 🗑
|
||||
| show | A customer must respond to a letter of rescission within 30 days or lose the right to sue.
🗑
|
||||
| Define jurisdiction | show 🗑
|
||||
| An _____ is any attempt or solicitation to dispose of a security for value. | show 🗑
|
||||
| show | Stock in which the issuer is allowed to demand additional funds from existing stockholders.
🗑
|
||||
| show | No. This is a prohibited action.
🗑
|
||||
| show | A hearing will be held 15 days after a written request.
🗑
|
||||
| True or False: An individual may be denied registration due to lack of experience. | show 🗑
|
||||
| show | A registration withdrawal is effective 30 days after the filing.
🗑
|
||||
| show | Investigate the complaint
🗑
|
||||
| show | Yes, because the firm established an office in the state.
🗑
|
||||
| Is a bank whose trust department occasionally executes securities transactions considered a B/D? | show 🗑
|
||||
| If a corporation raises capital bye selling new shares of its stock to the public, is it considered a B/D? | show 🗑
|
||||
| Is a bank holding company that occasionally executes securities transactions considered a B/D? | show 🗑
|
||||
| show | No. The firm is excluded from the B/D definition.
🗑
|
||||
| show | No. The firm is excluded from the B/D definition in OH (no office in OH and only deals with existing Iowa clients).
🗑
|
||||
| Is an individual who represents a B/D in the sale of Treasury bonds considered an agent? | show 🗑
|
||||
| show | Yes, since anyone representing a B/D in the sale of securities is and agent.
🗑
|
||||
| Is an individual who represents an issuer in the sale of municipal bonds considered an agent? | show 🗑
|
||||
| show | No, since the individual is involved in an exempt transaction.
🗑
|
||||
| show | Yes, since anyone representing a B/D in the sale of securities is an agent.
🗑
|
||||
| Is an individual who represents the issuer in the sale of Treasury bonds considered an agent? | show 🗑
|
||||
| show | No, the corporation is an issuer and issuers are excluded from the B/D definition.
🗑
|
||||
| show | Yes. bank holding companies are not excluded from the B/D definition.
🗑
|
||||
| Is a firm with no office in a state that only deals with institutional clients in the state considered a B/D? | show 🗑
|
||||
| Is a firm with no office in Ohio that effects trades in Ohio with 6 clients residing in Iowa considered a B/D? | show 🗑
|
||||
| show | Yes, since anyone representing a B/D in the sale of securities is an agent.
🗑
|
||||
| show | Yes, since anyone representing a B/D in the sale of securities is an agent.
🗑
|
||||
| Is an individual who represents an issuer in the sale of municipal bonds considered an agent? | show 🗑
|
||||
| show | No, since the individual is involved in an exempt transaction.
🗑
|
||||
| Is an individual who represents the issuer in the sale of Treasury bonds considered an agent? | show 🗑
|
||||
| show | Yes, since anyone representing a B/D in the sale of securities is an agent.
🗑
|
||||
| Is an individual who represents a bank in the sale of the bank's stock considered an agent? | show 🗑
|
||||
| Is an individual who represents a B/D in the sale of a bank's stock considered an agent? | show 🗑
|
||||
| Is an individual who represents a B/D in the sale of stock to a bank considered an agent? | show 🗑
|
||||
| Is an individual who represents an issuer in the sale of stock to a bank considered an agent? | show 🗑
|
||||
| show | No, since the individual is involved in an exempt transaction.
🗑
|
||||
| Is Jim an agent if he works in ABC's retirement dept. and, once a year, places ABC stock in employees' accounts? | show 🗑
|
||||
| True or False: A Consent to Service of Process is an example of an exculpatory clause. | show 🗑
|
||||
| True or False: A Consent to Service of Process must be filed by B/Ds, but not their agents. | show 🗑
|
||||
| True or False: A successor advisory firm must pay a new filing fee, but need not file a new application. | show 🗑
|
||||
| B/D records must be kept for at least ____ years. | show 🗑
|
||||
| show | If a B/D's net capital falls below the required minimum, it must notify the Administrator within 1 business day.
🗑
|
||||
| show | False. The agent may engage in transactions with the client for 60 days if registration is pending in the new state.
🗑
|
||||
| show | Yes, provided the client is in the state temporarily.
🗑
|
||||
| True or False: Canadian agents are not permitted to effect trades with existing Canadian clients temporarily in the U.S. | show 🗑
|
||||
| show | Another agent registered with the same B/D, or another B/D under common control
🗑
|
||||
| A B/D located and licensed in Canada may contact what types of individuals in the U.S.? | show 🗑
|
||||
| True or False: In state law, individuals representing issuers in effecting securities trades are ALWAYS deemed agents. | show 🗑
|
||||
| show | Agent, issuer, bank, or a B/D with no office in the state that only deals with institutions or its existing clients
🗑
|
||||
| May the Administrator set minimum net capital requirements for B/Ds? | show 🗑
|
||||
| show | Exclusion signifies that a person does not meet the definition of a B/D or IA in the state.
🗑
|
||||
| show | A surety bond is posted to cover the potential costs of legal action taken against certain persons.
🗑
|
||||
| An individual who represents an issuer in selling registered, non-exempt securities for compensation is an ________. | show 🗑
|
||||
| show | No. An agent's registration is only in effect while associated with a B/D or issuer.
🗑
|
||||
| show | Both the agent and the B/D
🗑
|
||||
| True or False: A partner, officer, or director of a B/D is always considered an agent of the B/D. | show 🗑
|
||||
| If a B/D is not registered in a state, may an agent of the B/D do business in the state without being registered there? | show 🗑
|
||||
| show | Yes, as long as the agent is registered in at least one other state and is not subject to disqualification.
🗑
|
||||
| show | Yes. Since she is an existing client of the Canadian B/D, business may continue in the state.
🗑
|
||||
| May an agent of a B/D located in Mexico do business with a client in the U.S. without registering in the state? | show 🗑
|
||||
| show | No. The de minimis exemption only applies to IAs and IARs
🗑
|
||||
| What is the purpose of a Consent to Service of Process? | show 🗑
|
||||
| show | Any issuer, B/D, IA, IAR, or agent initially registering to engage in business within a state
🗑
|
||||
| show | No. It is only required at initial registration.
🗑
|
||||
| State registration expires annually on ______________. | show 🗑
|
||||
| show | At noon on the 30th day after filing an application, provided there are no proceedings pending
🗑
|
||||
| If a B/D is registered with the SEC, is registration required in any state in which it intends to do business? | show 🗑
|
||||
| True or False: If a B/D registers in a state on March 3, it must pay a registration fee for the full year. | show 🗑
|
||||
| show | No. Firms that meet the B/D definition are required to register in the state.
🗑
|
||||
| Is there an exemption for agents conducting business in a state? If so, what are the guidelines? | show 🗑
|
||||
| May the Administrator set net capital requirements for B/Ds? | show 🗑
|
||||
| show | Yes. The Administrator may not set a requirement that exceeds the SEC requirement.
🗑
|
||||
| If the Administrator requires an IA, B/D, or agent to post a bond, is a deposit of cash or securities acceptable? | show 🗑
|
||||
| A B/D must maintain its books and records for a minimum of ____ years. | show 🗑
|
||||
| show | Central Registration Depository
🗑
|
||||
| True or False: An IA firm acquired by a competitor must pay a new filing fee. | show 🗑
|
||||
| show | No. Registration is not required since the client is an existing client who is temporarily in Florida.
🗑
|
||||
| True or False: B/Ds must file advertising and sales literature with the Administrator. | show 🗑
|
||||
| show | Yes. An individual representing an issuer of securities being offered publicly must register as an agent.
🗑
|
||||
| Is a certified public accountant who provides tax advice considered an IA under the USA? | show 🗑
|
||||
| True or False: A publisher of a financial magazine is considered an IA under the USA. | show 🗑
|
||||
| show | No
🗑
|
||||
| show | No. Provided the attorney's advice is incidental to his profession, he is excluded from the IA definition.
🗑
|
||||
| True or False: A B/D who promotes wrap accounts to its clients would have to register as an IA under the USA. | show 🗑
|
||||
| show | False. Since the B/D is not charging a fee for the advice, it is excluded from the IA definition.
🗑
|
||||
| True or False: According to the USA, a B/D providing asset allocation plans to its clients for a fee is an IA. | show 🗑
|
||||
| show | False. Banks are excluded from the IA definition.
🗑
|
||||
| True or False: A firm producing investment research for B/Ds to deliver to clients is considered an IA under the USA. | show 🗑
|
||||
| True or False: The USA classifies an agent of a B/D who also manages wrap accounts as an IA. | show 🗑
|
||||
| show | False. The CEO would be considered an IAR, not an IA.
🗑
|
||||
| show | Yes
🗑
|
||||
| Is an employee of a B/D who solicits new customers for an IA considered an IAR? | show 🗑
|
||||
| show | True. There is no indication that the agent is managing accounts and charging a fee.
🗑
|
||||
| Individuals employed by an IA who only perform ____________________ duties are excluded from registration under the USA. | show 🗑
|
||||
| show | No. The manager's responsibilities do not include providing advice about securities or managing accounts.
🗑
|
||||
| An individual employed by an IA to manage the research dept. would be required to register as an ______ under the USA. | show 🗑
|
||||
| show | No
🗑
|
||||
| show | An electronic system used to register investment advisers is called Investment Adviser Registration Depository (IARD).
🗑
|
||||
| A surety bond may be required if an investment adviser has _____________ or __________ of client assets. | show 🗑
|
||||
| In place of a surety bond, the Administrator will accept a deposit of _______ or _____________. | show 🗑
|
||||
| show | The application for registration of an agent or IAR becomes effective in 30 days.
🗑
|
||||
| The application for withdrawal of registration of an agent or IAR becomes effective in _____ days. | show 🗑
|
||||
| show | IA records must be kept for at least 5 years.
🗑
|
||||
| What form is used to notify Administrators that an IA is maintaining custody of client assets? | show 🗑
|
||||
| show | Investment advisers with custody must have an annual audit done by a(n) independent CPA.
🗑
|
||||
| An IAR has an office in State A and has 4 clients who reside in the state. Is the IAR required to register in State A? | show 🗑
|
||||
| show | He must register in State B since he has an office in the state. The number of clients is not relevant.
🗑
|
||||
| show | She must register in any state where she has 6 or more individual clients (even if she has no office in the state).
🗑
|
||||
| show | No. IARs of federal covered advisers are only required to register in states in which they have an office.
🗑
|
||||
| show | Yes. IARs of state-regulated IAs register where they have an office and where they have 6 or more individual clients.
🗑
|
||||
| What type of advice may lawyers, accountants, teachers and engineers provide and not be considered an IA? | show 🗑
|
||||
| List the 4 categories of professionals who are excluded from the IA definition. | show 🗑
|
||||
| show | Yes. The Administrator may not set a requirement that exceeds the federal (SEC) requirement.
🗑
|
||||
| show | Yes, but no state may impose a requirement that exceeds the requirement of the IA's home state.
🗑
|
||||
| May federal covered adviser's books and records be subject to inspection by an Administrator? | show 🗑
|
||||
| show | Statements must be sent quarterly.
🗑
|
||||
| If an IA maintains custody of client funds, are unannounced audits required? | show 🗑
|
||||
| show | False. The Administrator must be notified in writing using Form ADV.
🗑
|
||||
| show | When an IA has no more than 5 non-institututional clients in the state in the previous 12 months
🗑
|
||||
| Does the de minimis exemption apply to investment adviser representatives? | show 🗑
|
||||
| show | IAs with no place of business in a state, and whose clients are institutions are not required to register in that state.
🗑
|
||||
| show | IAs, B/Ds, investment, insurance, or trust companies, banks, savings and loan associations, and pension plans
🗑
|
||||
| show | No. The National Securities Markets Improvement Act (NSMIA) exempts federal covered advisers from state registration.
🗑
|
||||
| show | Under the USA, the de minimis exemption limits an IA to no more than 5 clients within the previous 12 months.
🗑
|
||||
| show | Yes, no office in the state and a) its clients are institutions or b) 5 or fewer retail clients in the last 12 months
🗑
|
||||
| show | Yes, if the IAR has no office in the state and has 5 or fewer retail clients in the state in the past 12 months.
🗑
|
||||
| True or False: An IA with 5 or fewer retail clients in the state in the past 12 months need not register under the USA. | show 🗑
|
||||
| show | True
🗑
|
||||
| Under the USA, are banks and bank holding companies excluded from the IA definition? | show 🗑
|
||||
| show | Until December 31, unless renewed by the adviser
🗑
|
||||
| IAs file their applications electronically through the ___________________________________. | show 🗑
|
||||
| show | Yes. The Administrator may not set a requirement that exceeds the IA's home state.
🗑
|
||||
| Is an IAR who is employed by a federal covered adviser required to register in the state? | show 🗑
|
||||
| show | Advice that is incidental to their profession. If a separate fee is charged for the advice, the exclusion is lost.
🗑
|
||||
| An IA must maintain its books and records for a minimum of ____ years. | show 🗑
|
||||
| show | No. If the IAR has no place of business in the state, no state registration is required.
🗑
|
||||
| With what system do IAs file their registration applications? | show 🗑
|
||||
| True or False: Bank holding companies are not considered IAs under the USA. | show 🗑
|
||||
| Identify the acronym: IARD | show 🗑
|
||||
| show | Form ADV
🗑
|
||||
| show | The legal responsibility for, or control over, someone’s assets
🗑
|
||||
| show | True
🗑
|
||||
| Is an option on a commodity futures contract a security? | show 🗑
|
||||
| Would an interest in a real estate condominium development be considered a security? | show 🗑
|
||||
| True or False: Precious metals are not considered securities. | show 🗑
|
||||
| show | Yes
🗑
|
||||
| show | No, but Keogh plan participation is considered a security.
🗑
|
||||
| show | Yes
🗑
|
||||
| Is a certificate of interest in a mining lease a security? | show 🗑
|
||||
| show | No, but variable contracts (e.g., variable annuities or variable life insurance) are considered securities.
🗑
|
||||
| Is an endowment life insurance policy a security? | show 🗑
|
||||
| show | Yes, but a term or universal life insurance policy is not considered a security.
🗑
|
||||
| Is a universal life insurance policy considered a security? | show 🗑
|
||||
| Is Keogh plan participation considered a security? | show 🗑
|
||||
| show | No
🗑
|
||||
| Is treasury stock considered a security? | show 🗑
|
||||
| Is a debenture considered a security? | show 🗑
|
||||
| show | Yes
🗑
|
||||
| show | Yes. Warrants are financial instruments that allow investors to acquire stock at a preset price.
🗑
|
||||
| Is a preorganization certificate considered a security? | show 🗑
|
||||
| Is an IRA account considered a security? | show 🗑
|
||||
| show | No, but an option on a futures contract is a security.
🗑
|
||||
| Is a multi-level distributorship considered a security? | show 🗑
|
||||
| Is a limited partnership a security? | show 🗑
|
||||
| show | Yes
🗑
|
||||
| show | Yes
🗑
|
||||
| True or False: Securities issued by provinces and municipalities of Canada are subject to state registration. | show 🗑
|
||||
| Are bonds issued by the City of New York exempt from state registration? | show 🗑
|
||||
| show | True. An exemption is provided to securities issued by foreign governments with whom the U.S. has diplomatic relations.
🗑
|
||||
| Securities issued by any government with whom the U.S. has _____________ relations are exempt from state registration. | show 🗑
|
||||
| show | True
🗑
|
||||
| ________ issued by insurance companies are exempt from state registration. | show 🗑
|
||||
| show | Those listed on national exchanges (NYSE, AMEX, NASDAQ) and investment company securities (e.g., mutual fund shares)
🗑
|
||||
| show | True
🗑
|
||||
| True or False: Securities of a Canadian company, but listed on the NYSE, are exempt from state registration. | show 🗑
|
||||
| show | No. Securities issued by non-profit organizations are exempt from registration.
🗑
|
||||
| What criteria must be met for commercial paper to be exempt from registration? | show 🗑
|
||||
| show | No. This is an example of an exempt transaction.
🗑
|
||||
| show | No. These secondary market transactions are considered exempt from registration according to the USA.
🗑
|
||||
| show | False. Because the BAs were not issued in at least $50,000 denominations, registration is required.
🗑
|
||||
| Is a private placement defined as an exempt transaction or as an exempt security under the USA? | show 🗑
|
||||
| Under the USA, private placements are exempt if securities are offered to ____ or fewer retail clients over ____ months. | show 🗑
|
||||
| What does the USA consider a security issued by an investment company that is registered under the Inv. Co. Act of 1940? | show 🗑
|
||||
| show | False. Transactions with banks and trust companies are considered exempt transactions.
🗑
|
||||
| If an NYSE stock trades in the secondary market, does the USA consider it an exempt security or exempt transaction? | show 🗑
|
||||
| show | Exempt security
🗑
|
||||
| Are securities traded on the OTCBB or the Pink Sheets exempt? | show 🗑
|
||||
| show | True. Securities issued by a railroad, common carrier, or public utility are exempt at the state level.
🗑
|
||||
| show | Securities issued by public utilities are considered exempt securities.
🗑
|
||||
| show | No
🗑
|
||||
| True or False: According to the USA, debt issued by a fraternal organization would NOT be considered exempt. | show 🗑
|
||||
| Non-issuer trading of securities subject to reporting requirements of the Act of 1934 are _________ transactions. | show 🗑
|
||||
| True or False: Occasional, secondary market transactions in an OTCBB stock are considered exempt transactions. | show 🗑
|
||||
| show | No. It is considered an exempt transaction.
🗑
|
||||
| Is an unsolicited, non-issuer transaction in an OTC stock exempt from state registration? | show 🗑
|
||||
| show |
True
🗑
|
||||
| Registration by Filing (Notification) requires issuers to be in business at least _____ months preceding registration. | show 🗑
|
||||
| An intra-state offering would use which method of state securities registration? | show 🗑
|
||||
| What method of state securities registration requires issuers to wait to hear from the Administrator before selling? | show 🗑
|
||||
| To use Filing (Notification) to register stock, the offering price must be at least $______ per share. | show 🗑
|
||||
| show | Registration by Filing (Notification) requires that the underwriting commission be no more than 10%.
🗑
|
||||
| Registration by Coordination has a minimum cooling-off period of _____ days. | show 🗑
|
||||
| Which method of state securities registration would likely be used for an IPO being offered in several states? | show 🗑
|
||||
| Registration by Coordination requires issuers to meet requirements of the USA as well as what other Act? | show 🗑
|
||||
| show | False. Nasdaq securities are federal covered securities.
🗑
|
||||
| True or False: A state may require notice filing by an issuer of an NYSE security. | show 🗑
|
||||
| show | False
🗑
|
||||
| show | An investment of money, in a common enterprise, with expectation of a profit due to efforts of third-party management.
🗑
|
||||
| True or False: Securities issued by registered investment companies are considered federal covered securities. | show 🗑
|
||||
| True or False: Issuers of federal covered securities may be required to pay a registration fee to a state Administrator. | show 🗑
|
||||
| True or False: Securities traded on the NYSE may be required to pay a registration fee to a state Administrator. | show 🗑
|
||||
| show | The number of shares being offered. A new registration is required to change offering price or underwriter compensation.
🗑
|
||||
| show | No
🗑
|
||||
| Regarding federal covered securities, may an Administrator prohibit the sale of the security in his state? | show 🗑
|
||||
| Regarding federal covered securities, may an Administrator require the issuer to complete the notice filing? | show 🗑
|
||||
| show | Exemption signifies that a person or security is not subject to registration under the USA.
🗑
|
||||
| show | False. Any variable products are considered securities. However, fixed insurance products are not securities.
🗑
|
||||
| True or False: IRAs and Keogh plans are considered securities. | show 🗑
|
||||
| True or False: Options on commodities are securities. | show 🗑
|
||||
| State registration remains in effect for ___ year(s). | show 🗑
|
||||
| show | False
🗑
|
||||
| Identify the three forms of state securities registration. | show 🗑
|
||||
| show | Notification (filing)
🗑
|
||||
| True or False: Paperwork related to coordination is filed with the Administrator at the same time as the SEC filing. | show 🗑
|
||||
| show | 5 days
🗑
|
||||
| show | Yes. Nothing is exempt from fraud.
🗑
|
||||
| show | False. This is an exempt transaction.
🗑
|
||||
| show | NSMIA indicates that securities listed on the NYSE, AMEX, NASDAQ and Toronto Exchange are federal covered securities.
🗑
|
||||
| If registering an IPO, an issuer would most likely use what form of state registration? | show 🗑
|
||||
| What form of state registration is not available in all states? | show 🗑
|
||||
| show | The only form of state registration that has its effective date set by the Administrator is qualification.
🗑
|
||||
| True or False: Securities issued by municipalities of Mexico are exempt under the USA. | show 🗑
|
||||
| show | True
🗑
|
||||
| show | Transactions between the issuer and its underwriter are considered exempt transactions.
🗑
|
||||
| May a state prevent the sale of a federal covered security in its state? | show 🗑
|
||||
| show | False
🗑
|
||||
| True or False: An IA with fewer than 15 retail clients in the past 12 months is exempt from registering under the USA. | show 🗑
|
||||
| show | True. However, if a majority change occurs, client consent is required since this would be considered an assignment.
🗑
|
||||
| show | Filing false registration documents, issuer's business is illegal, spread is unfair, or failing to pay the filing fee.
🗑
|
||||
| show | True. Any transaction by an executor, administrator, trustee in bankruptcy, or conservator is considered exempt.
🗑
|
||||
| show | The party claiming the exemption
🗑
|
||||
| show | False. The orders must be approved promptly afterward.
🗑
|
||||
| May a wife enter trades in a husband’s account? | show 🗑
|
||||
| show | Churning is described as excessive trading designed to generate commissions.
🗑
|
||||
| show | Traders effecting transactions back and forth to create a misleading appearance of activity
🗑
|
||||
| The _____________________ has the authority to regulate margin requirements. | show 🗑
|
||||
| show | Regulation T governs the extension of credit by B/Ds.
🗑
|
||||
| show | Payment is required within 5 business days for both (100% in a cash account, 50% in a margin account).
🗑
|
||||
| show | False
🗑
|
||||
| For an agent to exercise discretion over a client's account, the client must have signed a ________________________. | show 🗑
|
||||
| show | False
🗑
|
||||
| B/D securities and client securities must be segregated; in other words, they may not be ______________. | show 🗑
|
||||
| show | No, this prohibited practice is referred to as "painting the tape."
🗑
|
||||
| show | Yes. Sam is engaging in arbitrage.
🗑
|
||||
| True or False: Soliciting orders for unregistered, non-exempt securities is prohibited. | show 🗑
|
||||
| show | Accepting orders for unregistered, non-exempt securities is allowed if clients attest that the trade was unsolicited.
🗑
|
||||
| True or False: According to the USA, investment advisers may generally charge performance-based fees. | show 🗑
|
||||
| show | True
🗑
|
||||
| show | An IAR may exercise discretion over a client's account based on oral authorization from the client for up to 10 days.
🗑
|
||||
| show | Yes
🗑
|
||||
| May a margin account be opened without the customer's signature? | show 🗑
|
||||
| show | No. This is referred to as "selling away."
🗑
|
||||
| Before an IA may assign a client's contract to another advisory firm, it must obtain _________________________. | show 🗑
|
||||
| show | Before an IA may assign a client's contract to another advisory firm, it must obtain the client's consent.
🗑
|
||||
| An IA that is also a B/D may execute agency cross trades, earning commission on both sides, if one side is ____________. | show 🗑
|
||||
| __________________ is the prohibited act of a B/D trading for its own account ahead of a customer's block order. | show 🗑
|
||||
| show | True
🗑
|
||||
| show | No. Since discretion is limited to time and/or price, written authority is not required.
🗑
|
||||
| What 3 details must be provided by a client so a B/D may accept a discretionary order without written authorization? | show 🗑
|
||||
| True or False: The initial transaction in a margin account requires a written margin agreement promptly after the trade. | show 🗑
|
||||
| show | False
🗑
|
||||
| show | Transactions should be executed at a price that is reasonably related to the current market price.
🗑
|
||||
| show | Both oral and written disclosure of the relationship
🗑
|
||||
| True or False: If a B/D receives a formal complaint from a client, it may be ignored if the complaint seems baseless. | show 🗑
|
||||
| show | No. This is unethical since it is considered a guarantee against loss.
🗑
|
||||
| show | No. Material provided to clients must include all facts about the issue, not just the positive ones.
🗑
|
||||
| show | When selling mutual funds, an agent must adequately disclose the sales charge.
🗑
|
||||
| show | False. Selling dividends is prohibited. Since the dividend is imbedded in the share price, there is no monetary benefit.
🗑
|
||||
| show | No. This is a prohibited practice and would be considered an unsuitable recommendation.
🗑
|
||||
| show | False. The agent may still have omitted material facts.
🗑
|
||||
| show | False. Past performance is not indicative of future results.
🗑
|
||||
| To whom are written or electronically-sent grievances (complaints) forwarded? | show 🗑
|
||||
| An agent makes this statement to a client: "Go with us; we're approved by the Administrator and SEC." Is it acceptable? | show 🗑
|
||||
| According to the USA, all investment advisory contracts must be in __________ form. | show 🗑
|
||||
| show | Firms must keep client information confidential unless disclosure is authorized by the client or a regulatory authority.
🗑
|
||||
| show | Yes. Full discretionary control (having the ability to remove funds from the client's account) is considered custody.
🗑
|
||||
| show | Yes
🗑
|
||||
| Define "assignment" as it relates to IA contracts. | show 🗑
|
||||
| What may an investment adviser do with full discretion, but not with limited discretion? | show 🗑
|
||||
| Define churning. | show 🗑
|
||||
| May an adviser borrow money from a client? | show 🗑
|
||||
| show | Yes, if the adviser or B/D is in the business of lending money.
🗑
|
||||
| What is required of an IA that uses third-party research? | show 🗑
|
||||
| Is an adviser required to disclose the source of raw data used to determine the recommendations to its customers? | show 🗑
|
||||
| May an adviser release account information to the spouse of a client? | show 🗑
|
||||
| show | Fees are not fixed, but must be in line with other advisers. Fees are subject to administrative review.
🗑
|
||||
| show | Under the USA, all IA contracts must be in writing and must disclose services provided and related fees.
🗑
|
||||
| show | The firm must obtain written permission of its clients to assign the contracts. If not, the contracts will be voided.
🗑
|
||||
| show | Provide written notification to clients
🗑
|
||||
| show | No. The contracts are still with the original IA firm. The change of IAR does not constitute an assignment.
🗑
|
||||
| How are advisory fees most commonly charged? | show 🗑
|
||||
| Does an IA have custody when it is in possession of checks drawn by its client and made out to third parties? | show 🗑
|
||||
| May an agent and a client share in an account? | show 🗑
|
||||
| What is needed for an investment adviser to exercise discretion over a client's funds? | show 🗑
|
||||
| show | B/Ds need prior written authorization.
🗑
|
||||
| The solicitation of buyers for unregistered, non-exempt securities is _____________. | show 🗑
|
||||
| show | What is selling away?
🗑
|
||||
| Define commingling. | show 🗑
|
||||
| May an agent share in the profits of a client's account? | show 🗑
|
||||
| If an agent has been given time and price discretion on a client order, is written power of attorney required? | show 🗑
|
||||
| show | Yes. Full discretionary control (having the ability to remove funds from the client's account) is considered custody.
🗑
|
||||
| show | Upon the death of the grantor of the POA
🗑
|
||||
| When does a standard power of attorney become automatically canceled? | show 🗑
|
||||
| show | Parking stock is the repeated practice of placing stock in the account of someone who is not the rightful owner.
🗑
|
||||
| What is a consent to service of process? | show 🗑
|
||||
| Identify the acronym: NAFTA | show 🗑
|
||||
| Identify the acronym: POA | show 🗑
|
||||
| show | After executing a large block order, but before the trade is reported, a B/D trades for its own account.
🗑
|
||||
| show | A firm/individual executing trades for its own account with knowledge of an impending large block customer order.
🗑
|
||||
| show | False. Some accidental or unintentional actions are considered unethical and, therefore, illegal.
🗑
|
||||
| show | No, this is a prohibited action known as selling dividends.
🗑
|
||||
| show | Yes, since this is a material fact, it must be disclosed before the customer buys the stock.
🗑
|
||||
| True or False: An agent must always have reasonable grounds for recommending a particular security. | show 🗑
|
||||
| An agent of a B/D lends $5,000 to his brother, is this acceptable? | show 🗑
|
||||
| Define conversion. | show 🗑
|
||||
| show | An agent executing trades that have not been recorded on the books and records of a B/D.
🗑
|
||||
| True or False: If an agent disagrees with a customer's order, he may disregard the order. | show 🗑
|
||||
| True or False: If a conflict of interest exists, an IA must always terminate a relationship with a client. | show 🗑
|
||||
| Define an agency cross transaction. | show 🗑
|
||||
| True or False: The Administrator may issue an injunction. | show 🗑
|
||||
| show | Full purchase price, plus interest, court costs, and attorney fees, minus any income received from the security
🗑
|
||||
| Statute of limitations on a civil suit is ___ years from occurrence or ___ years from discovery, whichever comes first. | show 🗑
|
||||
| The maximum criminal penalties under the USA are a fine of $_______ and ____ years in prison. | show 🗑
|
||||
| show | No. Testimonials may not be circulated to clients.
🗑
|
||||
| show | The Securities Act of 1933 regulates new issues.
🗑
|
||||
| What is the primary purpose of the Securities Act of 1933? | show 🗑
|
||||
| show | False
🗑
|
||||
| show | Government/municipal bonds, commercial paper, bankers' 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. | show 🗑
|
||||
| show | Regulation A exemption is allowed if issuers raise no more than $5 million over 12 months (a capital, not share, limit).
🗑
|
||||
| The ____________________ is the disclosure document concerning a Regulation A issue. | show 🗑
|
||||
| show | True
🗑
|
||||
| What is the rule that issuers must follow to qualify for an intrastate exemption? | show 🗑
|
||||
| show | 35 is the maximum number of non-accredited investors allowed in a Private Placement.
🗑
|
||||
| The private placement disclosure document is the _____________________. | show 🗑
|
||||
| May a preliminary prospectus (red herring) be sent during the cooling-off period? | show 🗑
|
||||
| show | Indications of interest are non-binding on both the customer and B/D.
🗑
|
||||
| show | Return the check to the customer
🗑
|
||||
| show | The final offering price will not appear in a red herring.
🗑
|
||||
| show | Blue-Sky Laws
🗑
|
||||
| True or False: Blue-Sky Laws apply to broker-dealers and agents operating within a state. | show 🗑
|
||||
| show | True. The MSRB also regulates municipal advertising
🗑
|
||||
| show | It calls attention to the new issuance of securities
🗑
|
||||
| Who is responsible for the formulation and interpretation of rules for the municipal industry? | show 🗑
|
||||
| The Securities Exchange Act of 1934 regulates the ____________________. | show 🗑
|
||||
| show | The Securities and Exchange Commission (SEC)
🗑
|
||||
| show | Officers, directors, partners, greater than 10% owners, and immediate family members of all listed
🗑
|
||||
| show | 1. No shorting of the stock and 2. No keeping of short-swing profits
🗑
|
||||
| show | Insiders must return short-swing profits, which are those earned on stock held less than 6 months.
🗑
|
||||
| Trading on material, non-public information is considered __________________. | show 🗑
|
||||
| __________ is a manipulative activity designed to keep the price of a stock from rising (and is prohibited). | show 🗑
|
||||
| show | Pegging is a manipulative activity designed to keep the price of a stock from falling (and is prohibited).
🗑
|
||||
| show | Yes, both parties, the tipper (officer) and the tippee (the son), have violated the Insider Trading Act.
🗑
|
||||
| The criminal penalties for insider trading by individuals is a maximum of $____________ and/or ____ years in prison. | show 🗑
|
||||
| show | The civil penalty for insider trading, which is three times the profit made or loss avoided
🗑
|
||||
| show | $25 million per violation
🗑
|
||||
| After the initial offering, where are shares of a closed-end management company purchased? | show 🗑
|
||||
| show | Market price plus a commission
🗑
|
||||
| show | True. Shares can trade at a premium or discount to NAV based on supply and demand forces.
🗑
|
||||
| show | 12b-1 fee
🗑
|
||||
| show | The SEC can sue for three times the damage (profit made or loss avoided).
🗑
|
||||
| show | Yes. Insiders are required to wait until an earnings report is released publicly before selling shares.
🗑
|
||||
| show | It may have no front-end or deferred sales charge, and a 12b-1 fee may not exceed .25%.
🗑
|
||||
| According to the Investment Company Act of 1940, who are considered affiliated persons of an investment company? | show 🗑
|
||||
| show | 5 years in prison and/or a $10,000 fine
🗑
|
||||
| show | The cooling-off period for a federal securities registration is a minimum of 20 days.
🗑
|
||||
| show | To obtain indications of interest
🗑
|
||||
| show | To ensure the accuracy and completeness of all information being distributed to the public
🗑
|
||||
| What information will not be found in a preliminary prospectus? | show 🗑
|
||||
| show | No more than 35
🗑
|
||||
| Accredited investors have net worth of at least $_________ or pre-tax income in each of the last two years of $________. | show 🗑
|
||||
| show | A new issue being offered in one state only is exempt from federal registration under SEC Rule 147
🗑
|
||||
| show | 100%
🗑
|
||||
| The SEC may suspend trading in a security for up to _____ days. | show 🗑
|
||||
| The SEC may suspend trading on an exchange for up to _____ days with notification to the ____________. | show 🗑
|
||||
| Schedule _____ must be filed within _____ days if an investor acquires more than 5% of a publicly traded company. | show 🗑
|
||||
| A person subject to an SEC order may appeal the order to the U.S. Court of Appeals within _____ days. | show 🗑
|
||||
| Identify the acronym: SRO | show 🗑
|
||||
| show | Municipal Securities Rulemaking Board
🗑
|
||||
| Identify the acronym: FINRA | show 🗑
|
||||
| show | A report filed by investment managers with discretion over securities that exceed $100 million
🗑
|
||||
| Define securities information processor. | show 🗑
|
||||
| show | A written communication for mutual fund shares that contains limited information (less than a regular prospectus).
🗑
|
||||
| show | Yes, as long as she offers to give the customer the standard prospectus.
🗑
|
||||
| What's a no load fund? | show 🗑
|
||||
| show | Educational background
🗑
|
||||
| show | An account that charges the client a single fee that covers transactions and management
🗑
|
||||
| How do nonmanaged, fee-based accounts differ from wrap accounts? | show 🗑
|
||||
| If a client gives little information when opening an account, what securities may an agent recommend to the client? | show 🗑
|
||||
| An IA directs transactions to a B/D who rebates 15% of the commissions to the IA for the business. Is this acceptable? | show 🗑
|
||||
| show | Update the client's information that is on file
🗑
|
||||
| What is soft-dollar compensation? | show 🗑
|
||||
| What forms of soft-dollar compensation are acceptable? | show 🗑
|
||||
| show | Rent, travel expense reimbursement, hardware, furniture, entertainment, meals
🗑
|
||||
| show | True
🗑
|
||||
| show | False. The UPIA indicates that advisers are responsible for managing risk, not avoiding risk.
🗑
|
||||
| show | False. The management of risk is what is important. Investments such as options or commodities may reduce overall risk.
🗑
|
||||
| show | A fee-based (wrap) account
🗑
|
||||
| show | False. Liquid investments would be considered current assets.
🗑
|
||||
| True or False: When formulating a financial plan, it is always important to consider the client's liquidity needs. | show 🗑
|
||||
| What step must an IA complete when faced with a conflict of interest? | show 🗑
|
||||
| The program where a single fee is charged in lieu of commissions and advisory fees is generally called a ______ program. | show 🗑
|
||||
| show | False. These programs charge a percentage of assets to manage a portfolio of no-load mutual funds.
🗑
|
||||
| show | True
🗑
|
||||
| show | Uniform Prudent Investor Act
🗑
|
||||
| show | An IA directs client transactions to a specific B/D in return for research and brokerage services.
🗑
|
||||
| show | To be allowed, a soft-dollar arrangement must benefit the client.
🗑
|
||||
| Identify some permissible uses of soft-dollar arrangements. | show 🗑
|
||||
| show | Advertising, travel expense reimbursement, meals and entertainment, and computers
🗑
|
||||
| Define fiduciary. | show 🗑
|
||||
| show | IARs, executors of an estate, custodians in a UTMA/UGMA account, trustees, and pension plan administrators
🗑
|
||||
| show | Make a reasonable inquiry into a customer's background and provide suitable advice based on known information.
🗑
|
||||
| show | Yes. If an IAR lacks expertise in a certain area (e.g., insurance), it's acceptable to recommend outside assistance.
🗑
|
||||
| show | Both advertising and sales literature require principal approval.
🗑
|
||||
| Is an adviser to a mutual fund considered an IA under the USA? | show 🗑
|
||||
| Since ABC Advisers has $32 million under management, it must register with the ______. | show 🗑
|
||||
| An IA with more than $____ million under management must register with the SEC. | show 🗑
|
||||
| An adviser with offices in _____ or more states will register with the SEC. | show 🗑
|
||||
| show | False. The IA must be registered with the SEC, not a state.
🗑
|
||||
| What document, regularly provided to clients, will IAs use to notify clients of the location of their securities? | show 🗑
|
||||
| show | A balance sheet is provided with Form ADV if IAs require pre-paid fees of $500 or more, 6 months or more in advance.
🗑
|
||||
| show | If an IA has custody or discretion, it must include a balance sheet with their Form ADV and brochure.
🗑
|
||||
| An IA's Brochure must have the same information that appears in what part of Form ADV? | show 🗑
|
||||
| show | Assets are held by a qualified custodian. Clients must be notified of custodian's name, address, and manner of holding.
🗑
|
||||
| If an IA has $_____ million or more under management, it must register with the SEC. | show 🗑
|
||||
| show | An IA with between $25 and $30 million under management may register with either the state or the SEC.
🗑
|
||||
| Regardless of assets under management, IAs must register with the SEC if any client is a ______________________________. | show 🗑
|
||||
| show | The rule governing the disclosure requirement of an IA to its clients is called the Brochure Rule.
🗑
|
||||
| show | 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.
🗑
|
||||
| show | An adviser with more than $30 million of assets under management must register with the SEC.
🗑
|
||||
| show | An IA is required to deliver the brochure to its clients no later than the signing of the contract.
🗑
|
||||
| If an IA delivers a brochure at the time of contract signing, clients must be given ____ days to cancel without penalty. | show 🗑
|
||||
| show | If an IA contract stipulates cancellation penalties, a brochure must be provided 48 hours before the contract signing.
🗑
|
||||
| show | No. However, such fee arrangements may be permitted by rule or order of the Administrator
🗑
|
||||
| What is required of an IA to assign an advisory contract to another adviser? | show 🗑
|
||||
| An IA has custody if it inadvertently receives client securities and hasn't returned them within ____ business days. | show 🗑
|
||||
| show | Sports and entertainment reps, pension consultants, financial planners, and nationally known rating organizations
🗑
|
||||
| True or False: Bank holding companies are not considered IAs under the Investment Advisers Act of 1940. | show 🗑
|
||||
| show | True
🗑
|
||||
| What type of information will be found in an investment adviser's ADV Part I? | show 🗑
|
||||
| show | 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 ___________. | show 🗑
|
||||
| What types of changes would be considered material changes that require prompt amendment of an adviser's ADV? | show 🗑
|
||||
| When are non-material (routine) changes to Form ADV required to be filed? | show 🗑
|
||||
| Identify some non-material (routine) changes to Form ADV. | show 🗑
|
||||
| show | Used to determine if IA is eligible for continued SEC registration; filed 90 days from the end of the IA's fiscal year.
🗑
|
||||
| show | Filed within 30 days from completion of an audit of the IA's books; filed by the auditor conducting the audit
🗑
|
||||
| show | When an adviser withdraws its registration
🗑
|
||||
| Under the IA Act of 1940, are banks and bank holding companies excluded from the IA definition? | show 🗑
|
||||
| ADV Part I is a disclosure document for use by the _____ and the ________________. | show 🗑
|
||||
| show | ADV Part II may be used as a disclosure document for clients of the IA.
🗑
|
||||
| When must the adviser's balance sheet be included in the ADV Part II? | show 🗑
|
||||
| Who operates the IARD? | show 🗑
|
||||
| show | Within 45 days of filing, the SEC will either grant the registration or institute denial proceedings.
🗑
|
||||
| When should routine changes to an adviser's ADV be filed? | show 🗑
|
||||
| When should significant changes to an adviser's ADV be filed? | show 🗑
|
||||
| What types of changes would be considered significant changes to the adviser's ADV? | show 🗑
|
||||
| show | Within 90 days of the end of the adviser's fiscal year.
🗑
|
||||
| show | If an IA is no longer eligible for SEC registration, they have 90 days to file ADV-W and register at the state level.
🗑
|
||||
| show | All clients reside in the state where the IA's office is located, and no advice is given for exchange-listed securities.
🗑
|
||||
| Is an IA managing more than $30 million in assets with only insurance companies as clients subject to SEC registration? | show 🗑
|
||||
| show | Fewer than 15 (none of whom may be investment companies)
🗑
|
||||
| show | Until it has been withdrawn, cancelled, or revoked by the SEC.
🗑
|
||||
| What is Part II of Form ADV? | show 🗑
|
||||
| show | If an adviser has $30 million in assets under management, it must register with the SEC.
🗑
|
||||
| In lieu of an IA-prepared brochure, what document may be delivered to IA clients? | show 🗑
|
||||
| True or False: Delivery of a disclosure document is required for all IA contracts. | show 🗑
|
||||
| show | The client may terminate the contract without penalty within 5 business days from the signing of the contract.
🗑
|
||||
| show | False. The SEC requires the delivery of a special disclosure document when opening a wrap account for a client.
🗑
|
||||
| True or False: An IA must physically deliver its brochure to clients at least annually. | show 🗑
|
||||
| show | When assigning an IA contract to another IA, consent must be obtained from the client prior to assignment.
🗑
|
||||
| show | No. An exculpatory provision would serve to absolve an adviser from blame or liability and is prohibited.
🗑
|
||||
| show | Under the IA Act of 1940, an IA may charge performance fees for clients with at least $750,000 under management.
🗑
|
||||
| show | Under the IA Act of 1940, an IA may charge performance fees for clients with a net worth of at least $1,500,000.
🗑
|
||||
| show | True
🗑
|
||||
| The IA Act of 1940 requires IAs to retain notices, ads, or other communications circulated to more than _____ clients. | show 🗑
|
||||
| The IA Act of 1940 stipulates that any communication directed to more than ____ person(s) is considered advertising. | show 🗑
|
||||
| Criminal penalties for violating the IA Act of 1940 may not exceed $_______ and/or imprisonment not exceeding ___ years. | show 🗑
|
||||
| Identify the acronym: NRSRO | show 🗑
|
||||
| What is Form ADV? | show 🗑
|
||||
| show | The form filed by investment advisers to withdraw registration
🗑
|
||||
| What is Form ADV-E? | show 🗑
|
||||
| With whom would an IA register if it has $20 million under management and advises an investment company? | show 🗑
|
||||
| show | The Investment Adviser Registration Depository (IARD)
🗑
|
||||
| show | The giving of continuous advice as to the investment of funds on the basis of the individual needs of each client.
🗑
|
||||
| What are the minimum educational requirements for those rendering investment advice? | show 🗑
|
||||
| show | Assets under management, the number of accounts, clients, employees, and IA representatives
🗑
|
||||
| show | Form required for IAs with general partners who are nonresidents of the U.S.; gives the SEC the right to receive legal papers.
🗑
|
||||
| show | No. However, she may require the IA to notice file.
🗑
|
||||
| show | No. Accountants are excluded from the IA definition if their advice is incidental to their business.
🗑
|
||||
| show | Lawyers, Accountants, Teachers and Engineers—these are the professionals excluded from the IA definition.
🗑
|
||||
| If a B/D is promoting wrap accounts, does it need to register as an IA? | show 🗑
|
||||
| Is the publisher of a newspaper required to register as an investment adviser? | show 🗑
|
||||
| show | No, government securities advisers are excluded from the definition.
🗑
|
||||
| show | No, the IA meets the de minimis exemption under SEC rules (i.e., fewer than 15 clients).
🗑
|
||||
| show | Services costing less than $200 per year that are not tailored to meet the investment objectives of specific clients
🗑
|
||||
| Define wrap account. | show 🗑
|
||||
| Will a client always pay lower fees in a wrap account? | show 🗑
|
||||
| show | A client has just learned that his account will now be handled by another IAR. Is this considered an assignment?
🗑
|
||||
| show | No, since only a minority of the partners have changed. A majority would have to retire to be considered an assignment.
🗑
|
||||
| show | 5 years
🗑
|
||||
| show | Journals, blotters, ledgers, position records, and trade confirmations.
🗑
|
||||
| Does an IA need written consent before executing each agency cross trade with an advisory client? | show 🗑
|
||||
| What is a principal trade? | show 🗑
|
||||
| show | No, one side must be unsolicited.
🗑
|
||||
| show | Any person who, directly or indirectly, solicits any client for, or refers any client to, an IA.
🗑
|
||||
| May a solicitor receive compensation from an IA? | show 🗑
|
||||
| show | No
🗑
|
||||
| show | An advertisement in which an individual recommends the IA’s services based on personal experiences with the firm.
🗑
|
||||
| show | No. However, she may spell out "Investment Adviser Representative."
🗑
|
||||
| An appeal of an SEC order must be filed within _____ days. | show 🗑
|
||||
| show | False. Each owner must provide information to open a joint account.
🗑
|
||||
| show | False, only those named in the Corporate Resolution
🗑
|
||||
| A ___________________ is required to open an account for a partnership. | show 🗑
|
||||
| Money-market securities have a maturity of __________________. | show 🗑
|
||||
| show | T-Bills, Bankers' Acceptances (BAs), Commercial Paper, Negotiable CDs.
🗑
|
||||
| In a qualified annuity, how is the payout taxed? | show 🗑
|
||||
| Who is eligible to contribute to a qualified annuity? | show 🗑
|
||||
| $_______ or ____% of earned income is the maximum contribution to an IRA. | show 🗑
|
||||
| If Joe is 55 years old, how much could he contribute to his IRA? | show 🗑
|
||||
| A contribution of $_______ can be made to a Spousal IRA for a non-working spouse. | show 🗑
|
||||
| What is the penalty for making excess contributions to an IRA? | show 🗑
|
||||
| show | False. Excess contributions are non-deductible and will not grow on a tax-deferred basis.
🗑
|
||||
| show | Cash
🗑
|
||||
| What are some of the acceptable investments for IRA contributions? | show 🗑
|
||||
| show | Collectibles, insurance, and metals (except U.S. gold and silver coins)
🗑
|
||||
| show | Anyone with earned income may contribute to an IRA.
🗑
|
||||
| When is an individual (single filer) eligible to make tax-deductible contributions to a Traditional IRA? | show 🗑
|
||||
| show | Rollovers must be completed within 60 days.
🗑
|
||||
| Only one rollover is allowed per rolling ____ months. | show 🗑
|
||||
| There is a ____% penalty for early withdrawals from an IRA. | show 🗑
|
||||
| show | True
🗑
|
||||
| show | By April 1st of the year after an individual turns age 70 1/2
🗑
|
||||
| How is a Roth IRA contribution different from a Traditional IRA contribution? | show 🗑
|
||||
| How are withdrawals from a Traditional IRA treated for tax purposes? | show 🗑
|
||||
| How are withdrawals from a Roth IRA treated for tax purposes? | show 🗑
|
||||
| Early withdrawal without penalty is allowed for what reasons? | show 🗑
|
||||
| ERISA gave the U.S. Government jurisdiction over ___________________ plans. | show 🗑
|
||||
| show | Yes, the plan's trustee must abide by the Uniform Prudent Investor Act.
🗑
|
||||
| show | Employees who are 21 years or older with one year of full-time service
🗑
|
||||
| What is the maximum annual contribution to a 401(k)? | show 🗑
|
||||
| show | Keogh Plan
🗑
|
||||
| show | 100% of pre-tax income up to $49,000 each year
🗑
|
||||
| Contributions to a Keogh plan are solely based on _________________ income. | show 🗑
|
||||
| May an employee of a corporation who contributes to a corporate pension plan also contribute to a Keogh plan? | show 🗑
|
||||
| show | Yes, but since the Keogh is a qualified plan, the IRA contributions may not be tax-deductible.
🗑
|
||||
| _____ Plans are college savings plans with high contribution limits set by the state sponsor. | show 🗑
|
||||
| Describe the tax treatment of contributions made to a 529 Plan. | show 🗑
|
||||
| show | $13,000 per year
🗑
|
||||
| True or False: 529 Plans allow for a 5-year front-end contribution of $65,000, which avoids gift tax. | show 🗑
|
||||
| Grandparents contributing to a grandchild's 529 Plan may give how much money and still avoid gift tax consequences? | show 🗑
|
||||
| show | A savings plan which funds both elementary and higher education is referred to as the Coverdell Education Savings Plan.
🗑
|
||||
| show | An after-tax contribution of $2,000 is allowed per year.
🗑
|
||||
| show | The Education IRA (Coverdell)
🗑
|
||||
| show | The earnings would be subject to ordinary income tax plus a 10% penalty.
🗑
|
||||
| show | Yes
🗑
|
||||
| show | A plan that allows employers to contribute 25% of employee income up to $49,000 per year
🗑
|
||||
| show | The right an employee gradually acquires by length of service at a company to receive employer-contributed benefits
🗑
|
||||
| True or False: SEPs require employees to become immediately vested in the full amount contributed. | show 🗑
|
||||
| If an employer makes a Keogh contribution on its own behalf, what must be done for its employees? | show 🗑
|
||||
| show | Money-market fund
🗑
|
||||
| A limited partnership could be formed by a minimum of how many individuals? | show 🗑
|
||||
| show | General partner and limited partner
🗑
|
||||
| show | General partners have unlimited liability, while limited partners have limited liability.
🗑
|
||||
| show | The general partner is in charge of management and decision-making for the partnership.
🗑
|
||||
| What actions are considered a violation for the general partner of a limited partnership? | show 🗑
|
||||
| What are some of the acceptable actions for the limited partner? | show 🗑
|
||||
| show | Certificate of Limited Partnership
🗑
|
||||
| What does the Partnership Agreement define? | show 🗑
|
||||
| To invest in a limited partnership, an investor must complete the _________________________. | show 🗑
|
||||
| ____________ Partners are the primary contributors of capital. | show 🗑
|
||||
| show | The results of the business venture (profits and losses) flow through directly to the investor.
🗑
|
||||
| Is income generated by a limited partnership taxed once or twice? | show 🗑
|
||||
| List some important considerations when determining the suitability of recommendations made to customers. | show 🗑
|
||||
| To open any account on behalf of a corporation, what document must agents and IARs examine? | show 🗑
|
||||
| show | True. The corporation pays tax on its earning and any distributions are taxed to the owners (shareholders).
🗑
|
||||
| show | The maximum number of shareholders in an S Corporation is 100.
🗑
|
||||
| How are S Corporations treated for tax purposes? | show 🗑
|
||||
| What is the primary purpose of forming a family limited partnership (FLP)? | show 🗑
|
||||
| show | A legitimate business purpose is required. (If created solely for tax benefits, the IRS may disallow the benefits.)
🗑
|
||||
| show | General partners (GPs) have unlimited liability, while the limited partners (LPs) have limited liability.
🗑
|
||||
| The tax treatment of a limited liability company (LLC) is similar to the treatment of what other entity? | show 🗑
|
||||
| What are the contents of an estate? | show 🗑
|
||||
| show | Creator, maker, grantor, donor, trustor, settlor
🗑
|
||||
| The __________ is the person who has fiduciary control over a trust. | show 🗑
|
||||
| show | A simple trust must distribute earnings, but not principal. Complex trusts may retain earnings or distribute principal.
🗑
|
||||
| show | It will reduce estate taxes and also avoid probate.
🗑
|
||||
| show | It avoids probate
🗑
|
||||
| show | When investing for an estate, the most suitable investments are normally short-term.
🗑
|
||||
| show | The estate of the deceased
🗑
|
||||
| show | During the donor's lifetime
🗑
|
||||
| show | In a trust, all actions of the trustee must be for the benefit of the beneficiary.
🗑
|
||||
| To whom will the earnings produced in an irrevocable trust normally be taxed? | show 🗑
|
||||
| show | The earnings generated in a revocable trust will be taxed to the grantor.
🗑
|
||||
| show | A testamentary trust, since it is established by the estate of the grantor
🗑
|
||||
| show | IAs have greater responsibility to their clients than B/Ds. This is referred to as the IA's fiduciary responsibility.
🗑
|
||||
| A revocable trust will eliminate __________, but will not reduce _________ tax. | show 🗑
|
||||
| An irrevocable trust will eliminate __________ and will reduce _________ tax liability. | show 🗑
|
||||
| A trust is required to be managed for the benefit of the _____________. | show 🗑
|
||||
| Name the person who establishes a trust. | show 🗑
|
||||
| Define an estate. | show 🗑
|
||||
| show | Alternative Minimum Tax
🗑
|
||||
| show | Tax-Sheltered Annuity (a qualified contract)
🗑
|
||||
| show | Required Minimum Distribution (only required of Traditional IRAs)
🗑
|
||||
| show | Individual Retirement Account
🗑
|
||||
| show | Employment Retirement Income Security Act
🗑
|
||||
| show | Education Savings Account (Coverdell)
🗑
|
||||
| show | Simplified Employee Pension Plan
🗑
|
||||
| Identify the acronym: UGMA/UTMA | show 🗑
|
||||
| show | A business that is owned by one person who is responsible for all management decisions and entitled to all profits
🗑
|
||||
| show | The investment policy statement
🗑
|
||||
| show | Nonqualified retirement plans need not meet IRS requirements for employee coverage, contribution limits, and vesting.
🗑
|
||||
| Name two examples of nonqualified retirement plans | show 🗑
|
||||
| show | False. Taxes are paid by the trust, not by the beneficiary.
🗑
|
||||
| List some of the common financial goals. | show 🗑
|
||||
| show | Take the information given and create a plan based on that information. An IAR may not make assumptions.
🗑
|
||||
| Without incurring gift taxes, individuals may give gifts of up to $________ per year to any number of persons. | show 🗑
|
||||
| True or False: Spouses may give an unlimited amount to one another and not be subject to the gift tax. | show 🗑
|
||||
| Regarding clients, list some of the non-financial considerations an IAR must consider? | show 🗑
|
||||
| show | A document that describes a retirement plan’s investment strategy, as well as the specific needs of the plan
🗑
|
||||
| True or False: Employees are fully vested in their own contributions. | show 🗑
|
||||
| show | False. This statement describes a defined benefit plan.
🗑
|
||||
| show | Employees of state and local governments
🗑
|
||||
| show | Once per rolling 12 months
🗑
|
||||
| show | After he turns 59 1/2
🗑
|
||||
| S-Corporations are not subject to ________________. | show 🗑
|
||||
| show | A C-Corporation
🗑
|
||||
| What is the proper order of liquidation for a corporation at bankruptcy? | show 🗑
|
||||
| With options, what terms are synonymous with buyer? | show 🗑
|
||||
| A call option gives the owner the right to _____. | show 🗑
|
||||
| show | Writer, short
🗑
|
||||
| If exercised against, the writer of a call is obligated to _______________________. | show 🗑
|
||||
| A put option gives the owner the right to ______. | show 🗑
|
||||
| If exercised against, the writer of a put is obligated to _______________________. | show 🗑
|
||||
| True or False: Options are derivatives since the contract value is based on the changing value of the underlying stock. | show 🗑
|
||||
| show | The stock's market price versus the strike price, time left until expiration, and volatility of the underlying security
🗑
|
||||
| Calls and puts are the two ________ of options. | show 🗑
|
||||
| Sandra buys 1 ABC Dec 70 Call at 4. What is Sandra's strategy? | show 🗑
|
||||
| show | Bearish
🗑
|
||||
| An investor holds 1 XYZ Jan 80 Put at 5. What is her strategy? | show 🗑
|
||||
| show | The annuity with growth dependent on the performance of securities in a separate account is called a variable annuity.
🗑
|
||||
| True or False: Variable annuities are subject to registration requirements of the Act of 1933 and sold by prospectus. | show 🗑
|
||||
| show | Qualified
🗑
|
||||
| show | Non-Qualified
🗑
|
||||
| show | Only the earnings portion is subject to tax as ordinary income
🗑
|
||||
| The money invested in an annuity is used to buy ________________________. | show 🗑
|
||||
| show | At annuitization (payout), accumulation units are exchanged for annuity units.
🗑
|
||||
| show | A fixed number of annuity units with a fluctuating value per unit
🗑
|
||||
| _________________ is the payout option that provides payments for the annuitant's whole life and will cease at death. | show 🗑
|
||||
| What is the benefit of the Straight-Life payout option to the annuitant? | show 🗑
|
||||
| show | Straight-Life with Period Certain
🗑
|
||||
| What payout option requires the insurance company to provide payments for as long as one of two people remain alive? | show 🗑
|
||||
| show | They understand risks, meet suitability standards, have read disclosure information, and know the required investment.
🗑
|
||||
| show | To become a limited partner, the general partner's signature is required on the Subscription Agreement.
🗑
|
||||
| Over-development and high leverage are the risks associated with a __________________ Program. | show 🗑
|
||||
| What type of oil and gas program drills for new oil reserves in unproven areas? | show 🗑
|
||||
| ________________ Drilling Programs drill in proven areas. | show 🗑
|
||||
| show | True
🗑
|
||||
| show | Passive losses can only be used as deductions against passive income.
🗑
|
||||
| show | False, passive income is derived from an investment in a limited partnership.
🗑
|
||||
| What happens when an investor's passive losses exceed her passive income? | show 🗑
|
||||
| True or False: Limited partnership units are illiquid and require permission of the general partner to sell. | show 🗑
|
||||
| show | A straddle, which is the purchase or sale of both a call and a put with the same stock, expiration and strike price.
🗑
|
||||
| An investor buys 1 XYZ Dec 70 call at 4 and buys 1 XYZ Dec 70 put at 4. What is the investor's strategy? | show 🗑
|
||||
| show | Stability
🗑
|
||||
| Investors wishing to generate income on a stock position should ______ an option. | show 🗑
|
||||
| show | True
🗑
|
||||
| What is a covered call position? | show 🗑
|
||||
| show | Bullish since they are long the stock. The put is purchased to protect downside risk.
🗑
|
||||
| show | To provide premium income on stable stock. Also note the premium provides a partial hedge against downside risk.
🗑
|
||||
| show | The breakeven point is strike price + premium = 124.20
🗑
|
||||
| What is the breakeven point? Sell 1 RFQ Feb 85 Call at 4.50 | show 🗑
|
||||
| What is the breakeven point? Long 1 MNO March 55 Put at 6.20 | show 🗑
|
||||
| What is the breakeven point? Short 1 XYZ Apr 35 Put at 1.80 | show 🗑
|
||||
| show | The breakeven point is cost of the stock - premium = 56.00
🗑
|
||||
| show | No
🗑
|
||||
| Who typically buys hedge funds? | show 🗑
|
||||
| May hedge funds sell stocks short and use margin? | show 🗑
|
||||
| What is a fund of funds? | show 🗑
|
||||
| What is the dollar limit that may be contributed annually to a non-qualified annuity? | show 🗑
|
||||
| True or False: The AIR is a guaranteed minimum rate of return. | show 🗑
|
||||
| If performance in a given period is greater than the AIR, the next payment will ___________. | show 🗑
|
||||
| show | If performance in a given period is below the AIR, the next payment will decrease.
🗑
|
||||
| If performance in a given period equals the AIR, the next payment will __________________. | show 🗑
|
||||
| True or False: Performance must be negative for a variable annuity's payment to fall. | show 🗑
|
||||
| show | No, these contracts are not yet considered securities by the SEC
🗑
|
||||
| What technique can be used to roll assets from one annuity into another without taxation? | show 🗑
|
||||
| show | Variable contract assets are placed in the insurance company's separate account.
🗑
|
||||
| Prospectus delivery is required for all ___________ insurance contracts. | show 🗑
|
||||
| show | The client
🗑
|
||||
| show | The insurance company
🗑
|
||||
| show | Yes, for a portion of the contract's cash value (often 85%)
🗑
|
||||
| show | No. It is pure insurance.
🗑
|
||||
| show | Traditional contract assets are placed in the insurance company's general account.
🗑
|
||||
| show | Yes. The minimum will be paid regardless of account performance.
🗑
|
||||
| show | Yes. If the account performance is positive, the benefit will increase.
🗑
|
||||
| May a firm advertise a hedge fund being offered through a Reg. D private placement to the general public? | show 🗑
|
||||
| show | True. All payments cease upon the annuitant's death.
🗑
|
||||
| Which annuity payout option provides for the greatest monthly payment? | show 🗑
|
||||
| A client has annuitized her contract under the straight-life option and soon dies. What is her death benefit? | show 🗑
|
||||
| show | Assumed Interest Rate
🗑
|
||||
| show | Variable Life Insurance
🗑
|
||||
| show | Equity-Indexed Annuity (also known as an Equity-Indexed Contract or EIC)
🗑
|
||||
| All variable contract premiums are placed in the insurance company's ________account. | show 🗑
|
||||
| Are life insurance death benefits taxable? | show 🗑
|
||||
| What is a 1035 Exchange? | show 🗑
|
||||
| show | The person whose life is covered by an insurance contract
🗑
|
||||
| show | A life insurance policy that pays a death benefit to a beneficiary if the insured dies within the term specified
🗑
|
||||
| show | A life insurance policy that has a fixed death benefit, fixed premium payments, and builds cash value over time
🗑
|
||||
| show | A permanent life insurance policy designed so the policy owner may adjust the death benefit and premium payments
🗑
|
||||
| Describe variable life insurance. | show 🗑
|
||||
| show | An agreement to buy or sell a specific amount of a commodity on a stipulated date in the future
🗑
|
||||
| True or False: Forward contracts are exchange traded. | show 🗑
|
||||
| What are the two main uses for futures? | show 🗑
|
||||
| True or False: LEAPS and interest Rate Swaps are derivatives. | show 🗑
|
||||
| show | Reinvesting dividends in a mutual fund creates a taxable event.
🗑
|
||||
| show | A Section 3(c)1 hedge fund is exempt from registration.
🗑
|
||||
| show | True. However, investors should understand the fee structure of a hedge fund.
🗑
|
||||
| List some of the characteristics of hedge funds. | show 🗑
|
||||
| show | Stocks, Bonds, Real Estate, Cash
🗑
|
||||
| Equities (stocks), fixed income (bonds), real estate, money markets (cash) are examples of _____________. | show 🗑
|
||||
| show | False. Stocks, bonds, real estate, and cash are asset classes.
🗑
|
||||
| show | Cyclical stock fluctuates with the business cycle (auto companies).
🗑
|
||||
| _________ stock pays higher than average dividends. | show 🗑
|
||||
| show | Defensive stock is resistant to recession (utility companies).
🗑
|
||||
| What instruments are used to facilitate trading of foreign securities in the U.S.? | show 🗑
|
||||
| What is the formula for calculating current yield? | show 🗑
|
||||
| show | False. There is an inverse relationship between interest rates and prices.
🗑
|
||||
| Given a yield change, ____________ bonds move more in price. | show 🗑
|
||||
| show | Interest rate minus the inflation rate (e.g., Bond yielding 8% when inflation is 3% has a real interest rate of 5%).
🗑
|
||||
| Which interest rates are generally more volatile? | show 🗑
|
||||
| show | The risk that today’s investment will not be worth as much when the money is received in the future.
🗑
|
||||
| What are TIPS? | show 🗑
|
||||
| The principal value of TIPS may be adjusted based on changes to the __________________________. | show 🗑
|
||||
| True or False: The interest rate on TIPS is fixed, but the principal may be adjusted. | show 🗑
|
||||
| Municipal bond interest is exempt from __________ tax. | show 🗑
|
||||
| show | Stop and stop-limit orders are triggered when a round lot trades at, or through, the stop price.
🗑
|
||||
| show | If long stock, a sell stop order can be used to limit downside risk.
🗑
|
||||
| If short stock, a buy stop order can be used to limit _________ risk. | show 🗑
|
||||
| Stop orders become _________ orders once triggered/activated. | show 🗑
|
||||
| show | Stop-limit orders become limit orders once triggered/activated.
🗑
|
||||
| show | The next trade after activation.
🗑
|
||||
| show | No, stop orders execute at the market price (which is uncertain) once they are activated.
🗑
|
||||
| True or False: Stop-limit orders are guaranteed execution if the trigger is touched. | show 🗑
|
||||
| show | A broad-based index measures the market as a whole.
🗑
|
||||
| A _______-based index measures the movement of a particular sector or industry. | show 🗑
|
||||
| show | Asset allocation is the balancing of investment classes according to an investor's investment objectives.
🗑
|
||||
| show | Federally tax-exempt, but may be subject to state and local tax
🗑
|
||||
| ______ is the measure of an asset's volatility compared to the market as a whole. | show 🗑
|
||||
| show | 1
🗑
|
||||
| If an asset outperforms the market when prices are up/underperforms when prices are down, its beta is _____ than 1.00. | show 🗑
|
||||
| To find a stock's current yield, the formula is: ____________ ÷ ____________ | show 🗑
|
||||
| show | A model of the relationship between expected risk and expected return
🗑
|
||||
| show | True
🗑
|
||||
| True or False: Inflation is a persistent rise in the general level of prices. | show 🗑
|
||||
| Would inflationary periods be characterized by rising or falling interest rates? | show 🗑
|
||||
| The _______________________ is often considered the most important measure of inflation. | show 🗑
|
||||
| show | The longer/greater the duration, the greater the bond's price sensitivity.
🗑
|
||||
| show | The measure, expressed in years, of a bond's price sensitivity to interest rate changes
🗑
|
||||
| What business structure provides flow-through tax treatment and has a P & L reported on the owner's personal tax return? | show 🗑
|
||||
| show | Present value is the dollar amount to be invested today to meet a specific dollar objective at a set future point.
🗑
|
||||
| __________ value determines how much a dollar amount invested today will be worth at a set point in the future. | show 🗑
|
||||
| What is used to determine how a given present value will become a needed future value. | show 🗑
|
||||
| show | The money doubled every 12 years. The 10 grew to 20, the 20 to 40, and the 40 to 80. Using the Rule of 72, 72 ÷ 12 = 6%.
🗑
|
||||
| Assuming a 12% rate of return, how long will it take $50,000 to double? | show 🗑
|
||||
| Modern Portfolio Theory (MPT) focuses on differing __________ of assets rather than on _____________ securities. | show 🗑
|
||||
| What are the three main concepts underlying the Modern Portfolio Theory? | show 🗑
|
||||
| show | The possible return of an asset multiplied by the likelihood of occurrence
🗑
|
||||
| Standard deviation is a measure of the dispersion of ____________ returns. | show 🗑
|
||||
| show | 67% within 1 standard deviation, 95% within 2 standard deviations, and 99% within 3 standard deviations
🗑
|
||||
| What is used as the basic measure of risk for an investment? | show 🗑
|
||||
| The greater the dispersion of historical returns of a security, the _________ its standard deviation. | show 🗑
|
||||
| ______________ measures the degree to which the movements of two variables are related. | show 🗑
|
||||
| show | If two investments closely track one another, this is referred to as positive correlation.
🗑
|
||||
| If two investments go in opposite directions from one another, this is referred to as ___________ correlation. | show 🗑
|
||||
| show | If there is no relationship between the movement of two investments, they are considered to be uncorrelated.
🗑
|
||||
| True or False: Perfect negative correlation is -1.00, while a perfect positive correlation is 1.00. | show 🗑
|
||||
| show | True
🗑
|
||||
| MPT has found that having asset classes with a slight ___________ correlation provides the best long-term performance. | show 🗑
|
||||
| show | The line representing portfolios (excluding risk-free alternatives) showing the lowest risk for a given level of return
🗑
|
||||
| show | Strategic asset allocation assumes that the markets are efficient.
🗑
|
||||
| True or False: Tactical asset allocation is changing a portfolio's asset mix because of market and economic factors. | show 🗑
|
||||
| show | False. Buy and hold involves no rebalancing.
🗑
|
||||
| show | Tactical asset allocation assumes that markets are inefficient.
🗑
|
||||
| show | Non systematic risk
🗑
|
||||
| show | Systematic risk
🗑
|
||||
| show | True
🗑
|
||||
| What type of risk does beta measure? | show 🗑
|
||||
| If a security's beta is more than 1, is it considered more or less volatile than the market as a whole? | show 🗑
|
||||
| show | Growth stocks
🗑
|
||||
| show | Defensive stocks
🗑
|
||||
| During a declining market, would you expect a high beta security to out perform or under perform the market as a whole? | show 🗑
|
||||
| show | Under perform
🗑
|
||||
| show | True
🗑
|
||||
| A stock with a positive alpha would generally be considered a _________ opportunity by an analyst. | show 🗑
|
||||
| Another name for a security's risk-adjusted return is its ________. | show 🗑
|
||||
| show | Poor management, obsolete products, changing market conditions
🗑
|
||||
| show | False. The longer the time horizon, the less concerned he would be with market fluctuations.
🗑
|
||||
| show | Higher
🗑
|
||||
| What is the risk that Congress may enact tax law changes that negatively impact the value of an investment? | show 🗑
|
||||
| show | Concentration risk
🗑
|
||||
| show | Liquidity risk is the inability to sell an investment easily.
🗑
|
||||
| What uses computer simulations to present random outcomes of an investment strategy? | show 🗑
|
||||
| What is considered an optimal portfolio? | show 🗑
|
||||
| What measures risk-adjusted return? | show 🗑
|
||||
| show | Market risk
🗑
|
||||
| What is the formula for determining an asset's total return? | show 🗑
|
||||
| Is market risk considered a form of diversifiable or non-diversifiable risk? | show 🗑
|
||||
| show | Diversifiable risk
🗑
|
||||
| What is the risk that changes in tax law or environmental regulations could impact securities prices? | show 🗑
|
||||
| Identify the risk of existing bond prices declining while interest rates are rising. | show 🗑
|
||||
| To determine a bond's real interest rate, the bond's yield is subtracted by the rate of ___________. | show 🗑
|
||||
| show | False. An asset with a low beta would be less volatile and would, therefore, be expected rise less in a rising market.
🗑
|
||||
| show | An investor's net return is the gross return minus taxes paid.
🗑
|
||||
| show | The total return received from holding an asset or portfolio of assets
🗑
|
||||
| show | [Income + (ending value - beginning value)] ÷ beginning value
🗑
|
||||
| show | 200%, which is calculated by multiplying the holding period return (50%) times 4 quarters
🗑
|
||||
| What is the formula for determining a bond's current yield? | show 🗑
|
||||
| What is the formula for determining a stock's current yield? | show 🗑
|
||||
| True or False: The longer a bond's duration, the less sensitive the bond's price will be to changes in interest rates. | show 🗑
|
||||
| Would investing in stocks or bonds be a better hedge against inflation? | show 🗑
|
||||
| show | An investor buys stock which returns 2% for the year instead of a T-Bond yielding 6%. The opportunity cost is 4%.
🗑
|
||||
| Identify the acronym: CPI | show 🗑
|
||||
| What type of mean is used to calculate the expected return? | show 🗑
|
||||
| An investment earns 10%, 50%, and 30% in three years. How would the annualized average rate of return be calculated? | show 🗑
|
||||
| Identify the acronym: CAPM | show 🗑
|
||||
| show | Modern Portfolio Theory
🗑
|
||||
| show | The Rule of 72
🗑
|
||||
| Jim invested $25,000 in an annuity with a 6% return. How long will it take for the money to double? | show 🗑
|
||||
| show | Rule of 72 says divide 72 by the years needed for money to double. In 12 years, money has doubled twice (72 ÷ 6 = 12%).
🗑
|
||||
| _________ value projects what an investment will be worth at some point in the future. | show 🗑
|
||||
| __________ value is the amount of money that must be invested today to result in a certain sum at a future time. | show 🗑
|
||||
| show | A bond's inflation-adjusted rate of return may also be referred to as the real interest rate.
🗑
|
||||
| show | False. Tactical asset allocation is considered an active approach.
🗑
|
||||
| True or False: Strategic asset allocation is considered an active asset allocation approach. | show 🗑
|
||||
| show | Efficient. Rather than trying to time the market, they may rebalance their portfolio periodically (e.g., quarterly).
🗑
|
||||
| Do those who favor market timing (active strategies) believe markets are efficient or inefficient? | show 🗑
|
||||
| show | Transaction costs and tax consequences are minimized.
🗑
|
||||
| show | Opportunity risk
🗑
|
||||
| True or False: When the market suffers a large, general decline, all stocks are affected. | show 🗑
|
||||
| Identify the risk: A particular enterprise may not perform well due to poor management or increased competition. | show 🗑
|
||||
| Is indexing considered an active or passive portfolio management strategy? | show 🗑
|
||||
| What method of investing is characterized by regularly investing a set amount of money, regardless of share prices? | show 🗑
|
||||
| Describe a growth investor. | show 🗑
|
||||
| Describe a value investor. | show 🗑
|
||||
| How is market capitalization (cap) determined? | show 🗑
|
||||
| What are Large-Cap stocks? | show 🗑
|
||||
| show | Stocks of companies that are more volatile and growth-oriented than the Large-Cap stocks
🗑
|
||||
| What are Small-Cap stocks? | show 🗑
|
||||
| What are Micro-Cap stocks? | show 🗑
|
||||
| show | The 3-month return is 2.5% ($1.25 ÷ $50). A quarterly return may be annualized by multiplying by 4 (2.5% x 4 = 10%).
🗑
|
||||
| show | Sue received the 6% rate of interest, but her bond lost 3% of its value. (-$30 + 60) ÷ $1,000 = 3%.
🗑
|
||||
| A bond is yielding 8%, when the rate of inflation is 3%. What is the real interest rate? | show 🗑
|
||||
| show | Bond A. Bond A's real interest rate is 4.5% (7.5% - 3%) and Bond B's real interest rate is 4% (8% - 4%).
🗑
|
||||
| show | Present value
🗑
|
||||
| show | Future value of money
🗑
|
||||
| show | The time value of money
🗑
|
||||
| If a bond is trading at a discount to its value based on DCF, will an investor earn more or less than a comparable bond? | show 🗑
|
||||
| If a bond is trading at a premium to its value based on DCF, will an investor earn more or less than a comparable bond? | show 🗑
|
||||
| show | nvestors want to minimize risk and maximize returns
🗑
|
||||
| What is the name for the graph of optimal portfolios? | show 🗑
|
||||
| Which would have the least risk—large-, mid-, or small-cap companies? | show 🗑
|
||||
| show | Small cap stocks would have the most risk.
🗑
|
||||
| show | True
🗑
|
||||
| show | False
🗑
|
||||
| show | A market in which prices reflect all known information; therefore, nothing will be overvalued or undervalued.
🗑
|
||||
| show | Strong-, Semi-Strong and Weak-Form
🗑
|
||||
| show | False, in a weak-form efficient market only fundamental analysis will be useful.
🗑
|
||||
| show | False, strong-form market efficiency states that no one can beat the market.
🗑
|
||||
| Which form of market efficiency declares only insiders can regularly beat the market? | show 🗑
|
||||
| What type of trading strategy would be used if you believe markets are efficient? | show 🗑
|
||||
| show | True
🗑
|
||||
| True or False: The S&P 400 is a large-cap index. | show 🗑
|
||||
| What type of trading strategy would be used if you believe markets are inefficient? | show 🗑
|
||||
| show | A strategy that anticipates the next turn in the business cycle and shifts assets into the sectors that will benefit.
🗑
|
||||
| show | Registration statements, 10-K, 10-Q, 8-K, proxy statements, and possibly Schedule 13D
🗑
|
||||
| show | Assets = Liabilities + Stockholder Equity
🗑
|
||||
| Define capital structure. | show 🗑
|
||||
| show | Current ratio and the quick asset ratio (acid test) both measure a company's liquidity.
🗑
|
||||
| show | The quick asset ratio is more stringent since it excludes inventory from the current assets.
🗑
|
||||
| A company with more debt than equity outstanding is considered ____________. | show 🗑
|
||||
| True or False: A bottom up approach to investing uses the economy as a main factor in determining which stocks to buy. | show 🗑
|
||||
| show | Value investors look for stocks of companies that are intrinsically undervalued.
🗑
|
||||
| show | Low P/E ratios, history of profitability, high dividend payout, and low market-to-book ratio
🗑
|
||||
| What is the formula for the P/E ratio? | show 🗑
|
||||
| show | Growth investors are concerned with a company's future earnings potential.
🗑
|
||||
| show | The contrarian style of investing is one that bets against market trends.
🗑
|
||||
| What is a dollar-weighted return? | show 🗑
|
||||
| show | A time-weighted return is a geometric mean (average) that eliminates the effect of varying cash inflows (dividends).
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| show | Arithmetic means (averages) can misrepresent compounding effects on an investment's return.
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| True or False: Systematic risk may be avoided through diversification. | show 🗑
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| Market, interest rate, and inflation risk are all types of ___________ risk. | show 🗑
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| Business, regulatory, political, and liquidity risk are all types of ____________ risk. | show 🗑
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| show | Business risk
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| show | Regulatory risk
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| show | Political risk
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| What is the risk that investors may be unable to dispose of a securities position quickly and at a fair price? | show 🗑
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| True or False: Investors who are planning to hold bonds until maturity have no risk. | show 🗑
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| show | The risk that an investor will not be able to reinvest their principal at the same interest rate.
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| show | True
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| Define currency risk. | show 🗑
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| What would happen to the U.S. trade deficit if the dollar is weakening? | show 🗑
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| To what risk would structured debt products (e.g., CMOs) be subject? | show 🗑
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| show | (Return on Investment - Risk-Free Return) ÷ Standard Deviation
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| show | The Sharpe Ratio is used to determine if returns are from wise investments or the result of excess risk.
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| Buy limit orders are placed ________ the market. | show 🗑
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| Sell limit orders are placed ________ the market. | show 🗑
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| List some items that may be found on an income statement? | show 🗑
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| How is a company’s market capitalization calculated? | show 🗑
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| show | The investment will generate a positive return.
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| show | The investment will generate a negative return.
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| What return will an investment have if its net present value is equal to zero? | show 🗑
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| What is required to make the dollar weighted return and the time weighted return equal? | show 🗑
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| True or False: Dollar weighted return (DWR) takes into account the deposits into or withdrawals out of the portfolio. | show 🗑
|
Review the information in the table. When you are ready to quiz yourself you can hide individual columns or the entire table. Then you can click on the empty cells to reveal the answer. Try to recall what will be displayed before clicking the empty cell.
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To hide a column, click on the column name.
To hide the entire table, click on the "Hide All" button.
You may also shuffle the rows of the table by clicking on the "Shuffle" button.
Or sort by any of the columns using the down arrow next to any column heading.
If you know all the data on any row, you can temporarily remove it by tapping the trash can to the right of the row.
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Created by:
chad1475