Practice Test 3 Flashcards
What are the pay-to-play rules?
- If AI is NOT allowed to vote, may donate up to $350
- If AI IS allowed to vote, may donate up to $150
- If AI donates more than $350 or $150 then the adviser is prohibited from receiving advisory fees from the elected official’s municipality for 2 years
When are fees assessed on no-load mutual fund shares?
Annually
What is AML
Anti-Money Laundering
When is the Internal Rate of Return used?
When determining the rate that makes the net present value of an investment zero.
The IRR makes the present value of an investment equal to the market price of the investment.
This type of BD sends orders to a MARKET MAKER in order to execute orders for retial customers
Introducing broker
What is current ratio?
Current assets divided by current liabilities.
$16 million ÷ $6 million = 16:6 million
Reduced: 8:3
Alternative: 16÷6= 2.6
What option equals to 2.6?
8÷3 = 2.6
What are 529 qualified expenses?
- Tuition
- Student loans
What are NOT 529 qualified expenses?
- travel
- health insurance
- application fees
What is risk premium?
The total return and the risk-free rate of return
A measure of non-systematic risk.
Alpha
A BD’s failing to adequately supervise its agents is:
grounds for the denial, revocation or suspension of a registration by an administrator
What’s the equation for current ratio?
Current assets/Current liabilites
What is included in current assets to determine current ratio?
Cash
Accounts receivable
Inventory
Max contribution to a 529
$34k annually
$170k every five years
What is the annual gift tax limit?
$17k
What is the lifetime gift tax limit?
$12.92 Million
Gifts that exceed the annual gift tax exclusion are
Only taxable if they exceed the lifetime gift tax exclusion of $12.92 million
A way to estimate a company’s share price by dividing a company’s future (expected) dividend by a discount.
dividend discount model
(Stock Price = dividend / discount rate)
When is the interal rate of return (IRR) used?
When determining the rate that makes the net present value of an investment ZERO
What corporation is double-taxed?
C Corporation
Portability
The ability for a surviving spouse to use the deceased spouse’s unused lifetime gift tax exclusion
Difference between futures and forward contracts.
Future contracts may be bought and sold.
Forward contracts require both parties to agree before the contract may be bought or sold.
Change of fees is a material change, therefore, when and how is the change reported?
Promptly through Form ADV.
Are 457 plans required to follow ERISA guidelines?
No, because 457 plans are non-qualified
The difference between future contracts and forward contracts is that
Future contracts MAY be bought and sold.
Forward contracts, both parties must agree.
What are the elements of a trust
a settlors intention to create trust
a specific subject matter
a trustee
a beneficiary
When are fees assessed in no-load mutual funds?
ANNUALLY
Schedule A is filed at
INITIAL REGISTRATION
