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66 ReTest > All Chapters > Flashcards

All Chapters Flashcards

1
Q

In a not held order a client must specify:

A

(action) buy/sell, (asset) security, and (amount) quantity

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2
Q

Ensures the accuracy and completeness of all the information given to the public.

A

Due diligence meeting

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3
Q

_____ issued by insurance companies are exempt from state registration.

A

Bonds

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4
Q

The minimum cooling off period for federal covered securities is:

A

20 days

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5
Q

Criminal penalties for violation the Investment Advisers Act of 1940 may not exceed $_____ and/or imprisonment for ___ years.

A

$10,000; 5 years

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6
Q

Selling a block of securities that are not register is a(n):

A

exempt transaction

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7
Q

The minimum cooling off period for registration by coordination is:

A

10 days

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8
Q

The minimum cooling off period for registration by notification is:

A

5 days

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9
Q

The Russell 2000 is a _____ benchmark.

A

small-cap

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10
Q

A(n) _____ trust excludes assets from the donor’s estate.

A

irrevocable trust

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11
Q

A broker-dealer is considered an:

A

underwriter

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12
Q

Securities Exchange Act of 1934 regulates:

A

broker-dealers, stock exchanges, transfer agents, and SROs

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13
Q

A surety bond is used to:

A

cover the costs of possible legal actions

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14
Q

S-Corporation gains would be exempt from _____, but would be taxable to the individual as a _____.

A

corporate taxes; capital gain

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15
Q

The grantor of a trust may be the:

A

trustee and/or beneficiary if desired

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16
Q

If a security is only going to be offered in one state, registration by _____ is typically used.

A

qualification

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17
Q

To determine whether churning has occurred, regulators typically examine:

A

the suitability of solicited trades

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18
Q

Elements that are required to project the lump sum amount that a person will need at retirement are:

A

life expectancy, inflation rates, and investment return

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19
Q

Modern Portfolio Theory defines risk as the:

A

variability of expected returns about the mean

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20
Q

Under CAPM risk is defined as the:

A

deviation in returns

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21
Q

The biggest disadvantage investing in a growth fund is the potential loss of:

A

principal

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22
Q

Retail communication containing a(n) _____, or promoting a(n) _____ of the member firm, must be pre approved by a principal.

A

investment or financial recommendation; product or service

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23
Q

Retail communication containing an investment or financial recommendation or promoting a product or service of the member firm, must:

A

be pre approved by a principal

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24
Q

An adviser is considered in the business of providing advice when it holds itself out as a(n) _____ or makes _____.

A

adviser; client-specific recommendations

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25
Q

Form of market efficiency declaring that only insiders can regularly beat the market.

A

Semi-strong form

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26
Q

Form of market efficiency declaring that no person can beat the market.

A

Strong form

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27
Q

Form of market efficiency declaring that only fundamental analysis will be useful.

A

Weak form

28
Q

A security’s risk-adjusted return is it’s:

A

alpha

29
Q

An asset’s volatility compared to the market as a whole is it’s:

A

beta

30
Q

Compounding is the term that best describes the process to calculate:

A

future value

31
Q

To calculate an investment’s future value a process known as _____ is used.

A

compounding

32
Q

Used to calculate the anticipated return for a portfolio of securities.

A

Expected Rate of Return

33
Q

The main concepts of Modern Portfolio Theory are:

A

Expected Return, Standard Deviation and Correlation

34
Q

In a non-qualified annuity the earnings portion is subject to tax as:

A

ordinary income

35
Q

When conducting a capital needs assessment for a client an IAR must consider:

A

Future Earnings Potential, Expenses, Life Expectancy, and Inflation Expectations

36
Q

In a qualified annuity, the entire payout is taxed as:

A

ordinary income

37
Q

Simple trusts

A

Must distribute earnings, but not principal

38
Q

Complex trusts

A

May retain earnings or distribute principal

39
Q

Stock that allows the issuing entity to demand additional funds from existing stockholders.

A

Assessable stock

40
Q

Investment services provided by means of written material or oral statements that do not meet the objectives or needs of specific clients.

A

Impersonal advisory services

41
Q

A _____ is an offer to buy back a security from a client when that security was sold in violation of the USA.

A

letter of recision

42
Q

A trade executed by a financial firm that is acting as a broker for both the buyer and seller.

A

An agency cross transaction

43
Q

If an IPO is being registered, an issuer is most likely using _____ for state registration.

A

coordination

44
Q

(Return on Investment - Risk Free Return) / Standard Deviation best describes the:

A

Sharpe Ratio

45
Q

A formula that takes total current liabilities away from total current assets is the:

A

working capital

46
Q

Dividing total current assets by total current liabilities gives the:

A

current ratio

47
Q

Subtracting inventory from total current assets and dividing it by current liabilities gives the:

A

Quick Asset Ratio (Acid Test)

48
Q

(Bonds + Preferred Stock) / (Common Stock at par + Capital Surplus + Retained Earnings)

A

Debt-to-Equity Ratio

49
Q

(Net Income - Preferred Dividends) / Number of Outstanding Common Shares

A

Earnings per Share

50
Q

Dividing the market price by earnings per share will give the:

A

Price per Earnings Ratio

51
Q

Dividend/ Discount Rate =

A

Stock’s Price

52
Q

Original Principal x (1 + rate of interest) ^ compounding periods

A

Future Value

53
Q

Future Value / (1 + rate of interest) ^ compounding periods

A

Present Value

54
Q

Taxable Interest Rate x (100% - Tax Bracket)

A

After Tax Yield

55
Q

Tax-Free Interest Rate / (100% - Tax Bracket)

A

Taxable Equivalent

56
Q

(Ending Value - Beginning Value + Investment Income) / Beginning Value

A

Total Return

57
Q

According to the Investment Advisers Act, an investment adviser whose personal investing is inconsistent with recommendations made to clients generally has a(n):

A

obligation to disclose this to the customer

58
Q

A Universal Life Policy has a cash value based on:

A

the current market or a minimum interest rate, whichever is greater

59
Q

SEPs are funded by employers with:

A

tax-deductible dollars

60
Q

A measure of profitability is:

A

Earnings per Share (EPS)

61
Q

To calculate the debt-to-equity ratio the market value of the debt and shares can be found on the:

A

corporate balance sheet

62
Q

A form filed with the IRS on behalf of a limited partner is the:

A

K-1

63
Q

Point-to-point indexing compares index value on:

A

two particular dates

64
Q

In order to avoid taxation when distributing an estate, any amount that exceeds the estate tax exclusion should:

A

only be donated to charities

65
Q

When an investment adviser analyzes the market by first analyzing individual companies this is a(n):

A

bottom-up approach

66
Q

When an investment adviser analyzes the market by first analyzing the sector as a whole, this is a(n):

A

top-down approach

66 ReTest (1 decks)

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