Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

Series 7 > Packaged Securities > Flashcards

Packaged Securities Flashcards

You may prefer our related Brainscape-certified flashcards:
Series 7 Top-off Exam flashcards
1
Q

Packaged securities is the collective term for _________. (Three things.)

A
  1. Investment companies
  2. Variable annuities
  3. REIT’s
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

A REIT must have ___% of assets invested in _______. (5 things.)

A

Greater than or equal to 75%

  1. Real estate.
  2. Cash
  3. Gov’t. bonds
  4. Other REIT’s
  5. Mortgatges
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

A REIT must pay out _____% of its annual taxable income as dividends, exclusive of _____.

A

Greater than or equal to 90%

Capital gains

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

A REIT must have at least ____ shareholders with a concentration of _____% outstanding shares with 5 or fewer share holders.

A

100

Less than or equal to 50%

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

For a REIT, at least _____% of its gross income must be derived from ________. (3 things.)

A

75%

  1. Rent
  2. Gains from sales
  3. Mortgage interest
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

Programs that allow the investor to participate directly in the flow through of tax advantages.

A

Direct Participation Programs

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

Where are mutual fund shares purchased and redeemed?

A

Directly from the fund.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

Mutual funds sell on a continuous or fixed basis?

A

Continuous.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

What do mutual funds invest in?

A

Fixed income, Equity, Real Estate, and Cash

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

Closed -end companies sell on a continuous or fixed basis?

A

Fixed.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

Do Exchange Traded Funds operate on an active or passive management strategy?

A

Passive

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

What differentiates ETF’s from closed-end funds?

A

ETF’s track various indices; and may be purchased on margin and sold short.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

Investment company that offers a fixed, unmanaged portfolio, generally of stocks and bonds, as redeemable “units” to investors for a specific period of time.

A

Unit Investment Trust

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

What are Unit Investment Trust designed to provide?

A

Capital appreciation and/or dividend income.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

Privately organized investment vehicles (often designed as limited partnerships) that manage publicly and privately held securities or derivatives.

A

Hedge Funds.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

This type of hedge fund management style takes positions in securities based upon a belief in the direction of their price.

A

Market Directional.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

This type of hedge fund management style utilizes strategies that attempt to be on the right side of trades involving securities of companies in events such as mergers, acquisitions, and bankruptcy.

A

Corporate Restructuring

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

Name three types of corporate restructuring hedge fund strategies.

A

Distressed securities
Merger arbitration
Event driven funds

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

Funds that purchase severely undervalued securities hoping that a reorganization will benefit their value.

A

Distressed securities

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

When two companies combine and the shares of the acquired company experience an increase in value, with the expectation that the acquired company will achieve better results.

A

Merger arbitration

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

This takes advantage of many situations involving corporate restructuring including spin-offs, with a view of selecting the security expected to benefit from the restructuring.

A

Event driven funds

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

The movement of the price of a futures contract towards the spot price of the underlying cash commodity as the delivery date approaches.

A

Convergence

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
23
Q

Convergence trading includes: (4 things.)

A
  1. Fixed income arbitrage
  2. Convertible bond arbitrage
  3. Statistical arbitrage
  4. Relative Value Arbitrage
How well did you know this?
1
Not at all
2
3
4
5
Perfectly
24
Q

This hedge fund strategy looks to take advantage of earning alpha or beta from whatever opportunity presents itself.

A

Opportunistic

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
25
Q

Alpha

A

Excess return over market yield.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
26
Q

This hedge fund strategy invests in equities, fixed income, and currencies across the globe looking to benefit from favorable conditions in the different markets.

A

Global Macro

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
27
Q

This contains several hedge funds with varying strategies. It uses tactical asset allocation among the funds to select the ones whose strategies are apt to outperform and exit those expected to deliver a mediocre performance.

A

Fund of funds.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
28
Q

This refers to securities that are not publicly traded.

A

Private equity.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
29
Q

When public companies buy all their own stock to become private.

A

Leveraged buy out

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
30
Q

Term that means to fund start-ups.

A

Venture capital.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
31
Q

A hybrid of debt and equity financing that is typically used to finance the expansion of existing companies. This type of financing is basically debt capital that gives the lender the rights to convert to an ownership or equity interest in the company if the loan is not paid back in time and in full.

A

Mezzanine financing.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
32
Q

A structured product that offers returns from a basket of equities an have a fixed term of 5-7 years, after which they return principal and gains.

A

Principle Protected Securities (PPS)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
33
Q

These are designed to facilitate highly customized risk-return objectives. This is accomplished by taking a traditional security, such as a conventional investment-grade bond, and replacing the usual payment features (e.g. periodic coupons and final principal) with non-traditional payoffs derived not from the issuer’s own cash flow, but from the performance of one or more underlying assets.

A

Structured products

34
Q

A corporation or trust engaged in the business of investing the pooled capital of investors in financial securities. This is most often done either through a closed-end fund or an open-end fund (also referred to as a mutual fund).

A

Investment Companies

35
Q

What are the three types of investment companies?

A
  1. Closed end funds
  2. Open end funds (mutual funds)
  3. Unit Investment trusts (UIT’s)
36
Q

These funds offer a fixed number of shares in their IPO, and thereafter are traded on the NASDAQ.

A

Closed end funds

37
Q

Funds that seek to invest in markets where the securities tend to be more illiquid are usually ________.

A

Closed end funds

38
Q

A company that pools money from many investors to buy stocks, bonds, money market instruments, etc.

A

Mutual funds.

39
Q

How is the price paid for mutual fund shares set?

A

NAV

40
Q

NAV

A

Net Asset Value

41
Q

Hybrid of open and closed end funds. They typically issue redeemable securities in a one time public offering of a fixed number of shares.

A

Unit Investment Trusts (UIT’s)

42
Q

This is a marketable security that tracks an index, a commodity, bonds, or a basket of assets like an index fund. Unlike mutual funds, these trade like a common stock on a stock exchange, and experience price changes throughout the day as they are bought and sold.

A

Exchange Traded Funds (ETF’s)

43
Q

This must comply with far more oversight than any other form of security.

A

Investment company distributions.

44
Q

T/F

Firms can buy shares of mutual funds on their own account in the expectation that the price will rise.

A

False.

45
Q

T/F
Funds set share price, and reps cannot take smaller commission or discount a selling price to take shares away from a competitor.

A

True

46
Q

Which of the following does not have to be SEC registered?

Closed end; Open end, UIT, hedge fund

A

Hedge fund

47
Q

Which of the following are not redeemable?

Closed end; Open end, UIT, hedge fund

A

Closed end

48
Q

Which of the following will be exchange traded?

Closed end; Open end, UIT, hedge fund

A

Closed end and UIT

49
Q

Which of the following’s price is set by the NAV?

Closed end; Open end, UIT, hedge fund

A

Open end and Hedge

50
Q

NAVPS

A

Net Asset Value Per Share

51
Q

NAVPS calculation

A

(Market Value of all Assets-Liabilities)/Shares Issued

52
Q

This is the share’s bid price.

A

Net Asset Value Per Share

53
Q

T/F

NAVPS is the same as the offering price.

A

False

54
Q

Sales charge is a % of the _______ price.

A

Offering

55
Q

This is done when investors want to invest an additional set $ amount into their fund every month.

A

Dollar Cost Averaging

56
Q

T/F

Mutual funds allow for fractional share ownership for the dollar cost averaging investor.

A

True.

57
Q

T/F

Sale or redemption of a mutual fund will not be taxed, regardless of gain or loss.

A

False.

58
Q

When a client redeems shares by selling them back to the fund, they will do so at ______ price.

A

NAVPS.

59
Q

Mutual funds will have a sales charge of ____% for the underwriter and ____% for the selling group member.

A

1%; 7%

60
Q

What is it called when mutual funds eliminate the underwriter.

A

No load funds.

61
Q

For load mutual funds, the dollar amount for the purchase of the fund’s shares that qualifies the investor for a reduced sales charge (load). The purchase may either be made in a lump sum or by staggering payments within a prescribed period of time. The latter form of investment purchase in a fund must be documented by a letter of intent.

A

Breakpoint

62
Q

Allows a shareholder to receive reduced sales charges when the amount of mutual funds purchased, plus the amount already held, equals this kind of breakpoint. In addition, there is no time limit on how long the mutual fund needs to be held to qualify for a this.

A

Rights of Accumulation (ROA)

63
Q

A fund that invests exclusively in muni’s and passes the federal income tax exemption on to its shareholders.

A

Municipal Bond Funds

64
Q

Very secure fund that invests in short term instruments such as T-Bills and ban issues CD’s. Usually low yielding, but this is good when interest rates are rising.

A

Money Market Funds

65
Q

Funds that invest in fixed income securities including preferred stock.

A

Bond Funds

66
Q

This is essentially a full investment portfolio within a mutual fund.

A

Balanced Fund.

67
Q

What do mutual fund distributions consist of?

A

Ordinary dividends and capital gains.

68
Q

Unless specified differently in the prospectus, mutual funds will _______ dividends.

A

Distribute.

69
Q

Short term capital gains distributed from one mutual fund can/cannot offset capital losses from another fund.

A

Cannot.

70
Q

In addition to distributing dividends and capital gains, a fund may make a payment to investors that is greater than earnings and profits. This is not taxable.

A

Return of investment.

71
Q

Even though variable annuities usually invest in mutual funds, they differ in three ways:

A
  1. Pay out periodically for the rest of the clients life.
  2. They have a death benefit that will go to the beneficiary.
  3. VA’s are tax deferred.
72
Q

Beneficiary for a death benefit will receive:

A

All the money in the account or some guaranteed minimum. (Whichever is more.)

73
Q

Name the two phases of a variable annuity.

A

Accumulation and Pay-out

74
Q

For VA’s, a surrender charge will usually apply if money is withdrawn within _____ of purchase.

A

6-8 years

75
Q

1035 Exchange

A

Exchanging an existing VA for a new one will not incur sales charges.

76
Q

Equal to a percentage of the accounts value to compensate insurance company for risks assumed under the contract.

A

Mortality and Expense Risk Charge

77
Q

Insurer may deduct charges annually to cover record keeping and other expenses.

A

Administrative Fees

78
Q

Investor indirectly pays fees and expenses imposed by the mutual fund that are underlying investment options for the VA.

A

Underlying Fund Expenses.

79
Q

Mortality and Expense Risk Charge is usually ______%.

A

1.25

80
Q

Administrative fees are usually a flat fee of $___ or ___%.

A

$25-30 or .15%.

Series 7 (10 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions