Packaged Products Quizzes

Question 1

Primary Function of a custodian bank

Answer 1

Safekeep the assets of the fund

Question 2

A variable Annuity is what type of vehicle?

Answer 2

Participating Unit Investment Trust

Question 3

Sales Charge Percentage Calculation?

Answer 3

Ask-Bid/ Ask

Question 4

Mutual Funds with auto reinvest will invest in?

Answer 4

Dividends at NAV and Capital gains at NAV

Question 5

Who most Likely invests in BDC

Answer 5

High Net worth Investor Seeking Dividends

Question 6

Max sales charge imposed on a mutual fund purcahse?

Answer 6

81/2% of POP

Question 7

Mutual fund shares are

Answer 7

Managed, Redeemable, open end funds

Question 8

Closed end funds are

Answer 8

Securities traded on Stock market, negotiable, managed

Question 9

Mutual fund offering price calculation

Answer 9

NAV / 100 - sales charge %

Question 10

What are defined as “investment companies” under act of 1940?

Answer 10

Face Amount Certificate company, UIT, Management Company

Question 11

What is the benefit of buying Raw Land?

Answer 11

It is not depreciable or depletable, no tax credits are allowed and the ONLY reason to buy is for the appreciation potential

Question 12

What does a letter of intent do?

Answer 12

Can cover a period of 13 months, inclusive of a 90 day backdate. The extra shares can be purchased at the lower sales charge and are held in escrow until the letter is complete.

Question 13

What are ETF’s?

Answer 13

Exchange Traded Funds: index funds such a SPDR’s (S&P 500 index fund), DIAmonds (Dow industrial Average), and Qubes( NAsdaq 100 index Fund shares)
ETF’s are compared to index mutual fund and traded throughout the day and can be purchased on margin. They are less expensive to purchase compared to mutual funds.

Question 14

The main difference between a closed end fund and an open end fund?

Answer 14

Capitalization.

Question 15

What is true of mutual fund offerings?

Answer 15

Fund shares can only be sold to the public at the Public Offering Price as stated in the Prospectus

Question 16

What type of REIT offers an immediate depreciation benefit

Answer 16

Existing Housing

Question 17

REIT’s may be organized as what?

Answer 17

Trusts. reiTrust

Question 18

A well drilled on leases adjacent to proven reserves in known as?

Answer 18

A step out well

Question 19

Which investments are suitable for a retiree?

Answer 19

Government Bond fund, Money Market Fund or Insured
Coporate bond fund.
NOT Special situations funds - these are only for wealthy investors.

Question 20

An oil and gas program designed to take advantage of the depletion allowance would be?

Answer 20

An Income program

Question 21

Exploratory Program

Answer 21

Limited partnership that drills for oil and gas far away from existing fields- known as “wildcat” wells. These programs provide high initial deductions and low mineral rights costs. This is a high risk, high return program.

Question 22

Developmental Program

Answer 22

An oil and gas partnership that drills adjacent to existing fields.
Cost of drilling is 100% deductible

Question 23

Income Program

Answer 23

Buys exiting older wells intended to strip out remaining oil with the oil revenue partly sheltered by a depletion deduction

Question 24

Combination Program

Answer 24

Oil and gas program that combines exploratory, developmental, and income programs into one overall combined program.

Question 25

What are types of Direct Participation Programs? What are the benefits?

Answer 25

New contruction RELP, Existing Housing Real Estate Limited Partenership, Raw Land RELP
These allow for the partners to directly participate in income and loss. These are stock companies that invest in real estate in a closed end investment company form. These investments do not allow for flow through of loss to shareholders.

Question 26

How many funds can a hedge fund invest in?

Answer 26

Unlimited

Question 27

How are limited partnerships taxed?

Answer 27

Net taxable gain or loss is computed at the partner level, the partnership is NOT a taxable entity.

Question 28

What is the depletion deduction based on?

Answer 28

The percentage is based on any oil that is sold.

Question 29

What is a growth fund?

Answer 29

A mutual fund that invests solely in the common stocks of companies that exhibit higher than average gains in earnings.

Question 30

What would a RELP most commonly invest in?

Answer 30

Strip malls and apartment buildings. This provides income. RELPS finance through a mortgage so there are interest deductions as well as depreciation deductions.

Question 31

What is true of management fees imposed by mutual funds?

Answer 31

Management fees are deducted from fund gross investment income before any dividend distributions are made

Question 32

What is the MAIN objective of investing in Equity REIT’s?

Answer 32

Income and Growth

Question 33

What is an ETN?

Answer 33

Exchange Traded Note. A structured product that is a debt of an issuing bank that gives a return tied to a benchmark index, which can not only be a stock index but also a commodity index. The ETN is listed on an exchange and trades like a stock.