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SIE > Ch. 9 > Flashcards

Ch. 9 Flashcards

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SIE Exam flashcards
1
Q

Is income generated by a limited partnership taxed once or twice?

A

Once, and only at the partner level. The program itself is not a taxable entity.

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2
Q

What program generates no cash flow and is based on the speculation of land value appreciation?

A

Raw Land Program

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3
Q

In a limited partnership, which partner has unlimited personal liability and which has limited liability?

A

GPs have unlimited liability, LPs have limited liability

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4
Q

T/F: REITs are exempt from the registration requirements of the Securities Act of 1933.

A

False

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5
Q

Define: REIT

A

Real Estate Investment Trust

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6
Q

The ____ partner is in charge of management and decision making for the partnership.

A

General partner

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7
Q

A REIT could derive income from what different sources?

A

Interest, rent from properties and capital gains

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8
Q

What types of investments do PE and VC funds buy?

A

Privately held and start up companies

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9
Q

Is a hedge fund investment considered liquid?

A

No

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10
Q

May hedge funds sell stocks short and use margin?

A

Yes

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11
Q

T/F: Investors who purchase ETF shares must pay a sales charge

A

False; since they are exchange traded, you pay commissions

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12
Q

What amount of net income must a REIT distribute?

A

90%

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13
Q

_____ Drilling Programs drill in proven areas.

A

Developmental

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14
Q

T/F: Income Programs purchase already producing wells, but offer few intangible drilling costs.

A

True

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15
Q

What does it mean to say “a limited partnership is a pass-through investment”?

A

The results of the business venture (profits and losses) flow through directly to the investor

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16
Q

General Partners must contribute at least ____% of the capital.

A

1%

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17
Q

T/F: Limited Partners may be forced to invest more money into a partnership.

A

True; possible additional capital call

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18
Q

T/F: Limited partnership units are illiquid and require permission of the general partner to sell.

A

True

19
Q

A major advantage to investing in Government Assisted Housing Programs is the availability of _____.

A

Tax credits

20
Q

T/F: ETFs are marginable and may be sold short.

A

True

21
Q

Name some of the different types of Direct Participation Programs (DPPs).

A

General Partnerships, limited partnerships, joint ventures,

22
Q

A limited partnership could be formed by a minimum of how many individuals?

A

Two (one GP and one LP)

23
Q

REITS: ____% of income must be distributed; ____ or less may not own more than 50%; ____+ shareholders; _____% of assets invested in real estate

A

90% of income distributed; 5 or less may not own more than 50%; 100+ shareholders; 75% of assets invested in real estate

24
Q

T/F: Hedge Funds can assess a sales charge of more than 8.5%.

A

True, since Hedge Funds are exempt from Act of 1940

25
Q

Is a Limited Partnership a security?

A

Yes

26
Q

_____ management involves simply attempting to match the market by tracking an index

A

Passive

27
Q

T/F: Hedge Funds are typically registered with the SEC

A

False as hedge funds are exempt under Securities Act of 1933 and Investment Company Act of 1940

28
Q

Trading of REITs is most similar to what type of investment company?

A

Closed-end management

29
Q

For tax purposes, what can passive losses be used against?

A

Only passive income, not capital gains, ordinary income or dividends

30
Q

Who buys hedge funds?

A

Accredited investors under Reg. D

31
Q

What type of oil and gas program drills for new oil reserves in unproven areas?

A

Exploratory

32
Q

Exploratory drilling is also known as ____

A

Wildcatting

33
Q

The risk that an investment cannot be easily converted into cash is know as ____ risk.

A

Liquidity.

34
Q

A non-qualified annuity contract is typically funded with _____-tax funds

A

after-tax

35
Q

T/F: Passive income is derived from dividends and interest generated by securities in a portfolio.

A

False- it is derived from participation in an investment in a Direct Participation Program (limited partnership)

36
Q

T/F: DPP investments are often uncorrelated with the stock and bond markets.

A

True- related to diversification

37
Q

What is the order of liquidation for a limited partnership?

A

1) secured creditor 2) general creditor 3) LP 4) GP

38
Q

T/F: DPPs are pass-through investments.

A

True

39
Q

For income that is passed through a partnership, ___% of it is deductible.

A

20%

40
Q

____% of the gross proceeds represents the maximum allowable underwriting compensation for a limited partnership

A

10%

41
Q

What funds are similar to an index fund, but trade in the secondary market like a stock?

A

ETF

42
Q

Is a REIT a form of Direct Participation Program?

A

No

43
Q

What are the (2) types of partners in a Limited Partnership?

A

GP and LP

44
Q

____ Drilling programs look for oil in proven areas and new oil

A

Balanced Drilling Programs

SIE (20 decks)

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