Series 7 need to work on

Question 1

letter of intent are good for

if the letter of intent is not completed

share appreciation and income paid by the fund..

Answer 1

a maximum of 13 months and may be backdated 90 days

the sales charge amount that applies is based on the total amount actually invested

don’t count toward completion of the letter

Question 2

when calculating what investor receives when the investor redeems shares. amount is

Answer 2

shares *NAV

Question 3

When is the sales charge deducted from purchases of mutual fund shares made under a letter of intent?

Answer 3

when each purchase is made

letter of intent with additional contributions will have same reduced sales charge deducted.

if customer does not invest amount stated in letter, the full sales load applies to the total investment

Question 4

closed end funds in relation to sales charge

Answer 4

do not have a sales charge. investor pays commission or pays markup or markdown

Question 5

open end funds in relation to sales charge

Answer 5

all sales commissions and expenses for open end fund embedded in the POP or other fees

Question 6

class c shares appropriate for investors

Answer 6

who have short time horizons because they become very expensive over a long period of time

Question 7

when doing exchanges within a family of funds like converting an investment in one fund for an equal investment in another fund of the same family. talk about gains and losses in the first fund in respect to capital gains and taxes

Answer 7

any gain or loss from the redemption of shares must be reported for tax purposes

Question 8

a front end sales load is

Answer 8

the difference between the public offering price and the nav of a mutual fund share.

Question 9

what is not appropriate to invest for the separate account

Answer 9

municipal bonds

Question 10

An accumulation unit in a variable annuity contract is

Answer 10

an accounting measure used to determine the contract owner’s interest in the separate account.

Question 11

A variable annuity’s separate account is:

Answer 11

used for the investment of funds paid by contract holders.

regulated under both securities and insurance laws.

Question 12

A customer is receiving annuitized payments from a variable annuity. The annuitized payments are viewed for tax purposes as

Answer 12

part earnings and part cost basis

Question 13

Contributions to a nonqualified variable annuity are

Answer 13

not tax deductible

Question 14

A customer has a non-qualified variable annuity. Once the contract is annuitized monthly payments to the customer are:

Answer 14

partially a tax-free return of capital and partially taxable.

The investor has already paid tax on the contributions but the earnings have grown tax-deferred. When the annuitization option is selected, each payment represents both capital and earnings. The money paid in will be returned tax free, but the earnings portion will be taxed as ordinary income.

Question 15

the largest monthly check an annuitant can receive for the rest of his life is generated by

Answer 15

straight life

Question 16

Once a variable annuity has been annuitized:

Answer 16

each annuity unit’s value varies with time, but the number of annuity units is fixed.

Question 17

treasury bills

Answer 17

traded at discount to par

direct obligation of us government

not callable

Question 18

in most cases, assets comprised in CDO are liquid or not liquid

Answer 18

not very liquid

Question 19

coupon rates are usually _____ than nonconvertible bond rates of the same issuer

Answer 19

lower

Question 20

Bondholders may not take action against the corporation if it fails to make interest payments for

Answer 20

income bonds

Question 21

ginnie maes

Answer 21

They are quoted in 1/32nds.

They are traded with an accrued interest computed on a 30/360 basis.

Question 22

Zero-coupon bonds must be ______ for tax purposes.

Answer 22

accreted

Question 23

corporate debentures

Answer 23

certificates of indebtedness

they are unsecured bonds issued to finance capital expenditures or to raise working capital

Question 24

Z tranche cmos would not be suitable for

Answer 24

an investor needing funds in a specified amount of time, due ot the unpredictable nature of when payment will be recieved.

very volatile

Question 25

Freddie mac

Answer 25

a publicly owned and traded U.S. government agency that issues pass-through securities based on a pool of conventional residential mortgages purchased from financial institutions.

Question 26

Sallie mae

Answer 26

Sallie Mae is the name for the Student Loan Marketing Association, which does not issue mortgage-backed securities. Ginnie Mae, Fannie Mae, and Freddie Mac do issue mortgage-backed securities.

Question 27

If interest rates increase, the interest payable on outstanding corporate bonds will

Answer 27

remain unchanged

Question 28

U.S. government securities that are deposited with a trustee and against which certificates are sold representing principal payments only on the securities are referred to as

Answer 28

stripped strips(stripped bonds)

These are zero-coupon bonds issued by the U.S. government and are subject to annual taxation on the per-year accreted amount.

Question 29

cmo tax wise

Answer 29

fully taxable at all levels

Question 30

GNMA pass-through certificates pay principal and the interest how often

Answer 30

monthly

Question 31

CMOS liquid or not

Answer 31

are liquid

Question 32

Planned amortization class (PAC) CMOs were designed to provide which of the following benefits compared to plain vanilla tranches?

Answer 32

Reduce prepayment risk for tranche holders.

Question 33

A customer purchases ten 8% Treasury notes at 101-16. What is the dollar amount of this purchase?

Answer 33

Though the denomination of the T-notes purchased is not given, always assume par ($1,000) unless told differently in the question. Remember that government notes and bonds are quoted in 32nds. Therefore, a quote of 101-16 means 101 plus 16/32. 101 plus 1/2 = $1,015; $1,015 × 10 bonds = $10,150.=answer

Question 34

Interest income from all of the following are exempt from state and local taxation EXCEPT:
A)
Treasury bonds.
 B)
FNMA mortgage-backed issues.
 C)
Series EE savings bonds.
 D)
Treasury bills.

Answer 34

As a general rule, the interest income from U.S. government and agency securities is subject to federal taxation only; it is generally exempt from state and local taxation. However, the interest income from mortgage-backed securities is fully taxable.

Question 35

salie mae tax exempt from

Answer 35

state and local levels