Exam 2 Flashcards
A person makes an initial application for state registration on September 30. Which statement is true regarding the filing fee?
A. The fee will be prorated and only 3/12s of the annual fee must be paid.
B. The fee will be prorated and only 9/12’s of the annual fee must be paid
C. The fee if is not prorated and the full year filing fee must be paid.
D. No filing fee is due until the annual December 31 renewal
C.
Foreign exchange markets:
A. Are regulated
B. Set exchange rates
C. Trade foreign currencies
D. Are centralized
C
A customer buys a Tips with a 3% coupon. The customer holds the investment for five years, during which the CPI increased by 3% 4% 4% 4% and 5% respectively in years one through five. What is the customers total return over the five year holding period?
A. 3%
B. 4%
C. 7%
D. 38%
D.
A treasury inflation protection security grows principal at the rate of inflation each year and the interest paid each year is based on the inflated principal amount.
In year one the investor will get $1000 times 3% equals $30 of interest. At the end of your one the principle is adjusted by 3% inflation rate. $1000 times 1.03 equals $1030 adjusted principal amount.
In the second year the investor will get $1030 times 3% equals $30.90 of interest. At the end of the second year the principle is adjusted by the 4% inflation rate. $1030 times 1.04 equals $1071.20 adjusted principal amount
Which of the following projects would be financed by a revenue issued bond
A. The construction of a new subway line
B. The construction of a new junior high school
C. The construction of a new Hydro electric generating plant
D. The construction of a new sewage treatment plant
A C and D
SEC rule 12 B-1 allows open and investment companies to charge an annual fee for soliciting new investment into the fund against:
A. Any shares issued as of the date of adoption of the plan
B. Any shares redeemed as of the date of the adoption of the plan.
C. Total net assets of the fund
D. Total income of the fund
C
What formula find the expected return of an investment A. CAPM B. duration C. Sharp ratio D. Standard deviation
A. CAPM Capital asset pricing model. Attempts to find the expected return of an investment by breaking the return down into two components, these are the risk-free rate of return and the risk premium.
And investment advisor is based in California where the minimum net worth requirement is $35,000. Investment advisor which is open branch offices in Washington Oregon and Nevada all of which have $35,000 net worth requirements as well. In order to open the branch office the investment advisor must have a net worth of how much?
$35,000
Net worth requirements to be registered as an investment advisor in a state is based on the advisers principle state of residence.
Which of the following is a federal covered security Treasury bond Municipal bond Investment company share Penny stock
C
Federal covered securities are only required to be registered with the SEC. They cannot be required to be registered in each state. Major exchange listed issues and registered investment company issues are federal covered securities.
A customer of a broker-dealer is a sophisticated investor and is interested in purchasing the shares of XYZ corporation, a company that has recently gone public and is Finley traded in the pink OTC market. The customer contact his agent to buy the shares, but the agent does not see any shares offered in the market so he contacts one of the officers of the company to see if that officer has shares that she wishes to sell. The officer agrees to sell some of her shares under rule 144, so the broker re-contact the customer to tell him that he found that shares the customer wishes to buy. In this scenario, the agent has:
A. Violated the uniform securities act
B. Made an offer to sell to the customer
C. Made an offer to buy to the customer
D. Effected an exempt transaction with the officer
B.
Which of the following is not a security and is not subject to contribution limits IRA Universal variable life Variable annuity Fixed annuity
D
You fixed annuity is considered an insurance product not a security
An investment advisor Representative manages the assets of the ABC corporation profit sharing plan. The trustee of the plan contact the IAR explaining to the IAR that he wants a check drawn from the plan account to buy a building that ABC corporation will occupy. The IAR should:
A. Refused to issue the check
B. Refused to issue the check because it is a breach of the IAR’s fiduciary obligation
C. Issue the check
D. Tell the trustee that the check can only be issued of paperwork is provided showing that ABC corporation has put up collateral equal to the amount of the check
B
He retired investors the safety of principal and current income. All of the following funds would be suitable recommendations except:
A. Government bond fund
B. Special situations fund
C. Money market fund
D. Insured corporate bond fund
B.
Of the choices given the least safe investment is a special situations fund. Such funds invest in companies and special situations such as bankruptcies to reap capital gains if the company recovers
Supply side theory states that the economy is stimulated by which of the following? A. The actions of the federal reserve B. Increased government spending C. Tax rate reductions D. Government incentives to consumers
C.
Which of the following will affect a corporations operating income?
A. An increase in the companies effective tax rate from 20% to 30%
B. An increase in depreciation expense due to the purchase of new equipment
C. An increase in the company is capital expenditures for a new plant facility
D. An increase in the companies interest expense due to the sale of a new bond issue
B.
And individual buy is a multiple dwelling apartment house for investment purposes. He’s hoping of the real estate market will increase in value however, real estate prices decline by 20% due to an unfavorable tax ruling. This is an example of which kind of risk?
Regulatory risk
The lower 15% tax rate applies to:
A. Cash dividends received from stock investments
B. Stock dividends received from stock investments
C. Stock splits received from stock investments
A only
Regarding Ginnie Mae pass through certificates:
A. Certificate paper holders on a monthly basis
B. The certificates pay holders on a semi annual basis
C. Each payment consists of interest only
D. Each payment consist of a combination of interest and principal
A and D
And investment advisor is permitted to borrow money from which of the following clients? A. An affiliated bank B. An unaffiliated bank C. An affiliated broker dealer D. An unaffiliated broker dealer
All of the above
A portfolio manager generates a 15% rate of return on an aggressive growth portfolio compared to a 13% rate of return on the benchmark portfolio and a 10% rate of return on the Standard & Poor’s 500 index over the same period, the managers active rate of return is what?
2%
