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Series 7 > sie chapter 2 pt 3 > Flashcards

sie chapter 2 pt 3 Flashcards

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Series 7 Top-off Exam flashcards
1
Q

facs and uits are managed or not managed

once the portfolios are composed they are changed or not changed

A

no managed

not changed

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2
Q

do facs and uits trade in the secondary market

they are redeemable only through the

A

no

issuer

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3
Q

actively manages a securities portfolio to achieve a stated investment objective

A

managed investment company

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4
Q

raise capital for its portfolio by conducting common stock offering, much like any publically traded company that raises capital to invest in its business

initial offering of shares is limited

A

closed end investment companies(publically traded funds)

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5
Q

what determines the bid price(price at which investor can sell and ask price(price at which investor can buy)

A

supply and demand

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6
Q

closed end investment companies only investment company security that trades in secondary market

T or F

A

T

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7
Q

Closed end investment companies may issue

A

common stock, preferred stock, and debt securities

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8
Q

only issues one class of security, which is common stock

A

open end investment companies(mutual funds)

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9
Q

mutual funds themselves can purchase

A

common stock, preferred stock, and bonds

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10
Q

an insurance contract designed to provide retirement income

A

annuity

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11
Q

because an annuity can provide an income for the rest of someone’s life, the contract has a

A

mortality guarantee

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12
Q

if the investment manager of an insurance company is responsible for selecting the securities to be held in the separate account, the second account is

A

directly managed and must be registered under the investment company act of 1940 as an open end management investment company

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13
Q

if the investment manager of the insurance company passes the portfolio management responsibility to another party, the separate account is

A

indirectly managed and must be registered as a unit investment trust under the investment company act of 1940

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14
Q

fixed annuity promises

who is at risk

A

a stated rate of return

insurance company

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15
Q

mutual funds are redeemable or not redeemable

A

redeemable

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16
Q

redeemable securities means that

A

they do not trade in the secondary market

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17
Q

class a(front end load) shares

A

have front end sales charges loads, the sales charges are paid at the time an investor buys shares and the sales charge is taken from the total amount invested.

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18
Q

Class b(back end load shares)

A

back end sales charge is paid at the time an investor sells shares previously purchased(has them redeemed)

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19
Q

Class c(level load Shares)

A

have a one year 1% cdsc, a 75% 12b-1 fee and a .25% shareholder service fee

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20
Q

no load shares

A

fund does not charge any type of sales charge.

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21
Q

short term buying and selling of mutual fund shares to take advantage of inefficiencies in mutual fund pricing

A

market timing

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22
Q

NAV=

A

total assets- total liabilities

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23
Q

a prospectus can or cannot be altered

A

cannot

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24
Q

Statement of additional information

A

Mutual funds(open end) and well as closed end funds are required tp have an sai available for delivery within 3 business days on an investors request without charge

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25
Q

Financial reports

A

the investment act of 1940 requires that shareholders receive financial reports at least semiannually.

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26
Q

an investment company must send a copy of

A

its balance sheet to any shareholder who requests one in writing between semiannual reports

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27
Q

fund companies are permitted to charge up to how much

A

8.5%

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28
Q

operating expenses

A

include salaries and administrative fees.

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29
Q

fund portfolio management fee

A

paid to those hired to manage the investments in the fund portfolio

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30
Q

every funds single greatest expense is the

this is charged

as a percentage of what

A

annual fee

annually as a percentage of the total assets under management

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31
Q

Permits a mutual fund to collect a fee for promoting, selling, or undertaking activity in connection with the distribution of its shares

A

12-1 asset- based fee

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32
Q

direction participation programs

A

unique forms of business that raise money to invest in real estate, oil and gas, equipment leasing, and other similar business ventures.

33
Q

capital growth potential is achieved through

A

appreciation of property

34
Q

cash flow income generated through

A

rent

35
Q

tax deductions

A

from mortgage interest expense and depreciation allowances for “wearing out the building” and capital improvements

36
Q

tax credits are

A

very strong incentives as they reduce tax liability dollar for dollar

37
Q

intangible drilling costs

A

costs such as wages, supplies,, fuel, and insurance that have no salvage value when the program ends

38
Q

depletion allowances

A

tax deductions that compensate the program for the decreasing supply of oil or gas after it is taken out of the ground and sold

39
Q

limited partnerships

A

investment opportunities that permit the economic consequences of a business to flow or pass through to investors.

40
Q

reits that are subject to disclosure documents(registered with the sec) are ____

the ones that are not registered with the sec are

A

public reits

private reits

41
Q

if a reit is traded on the stock exchange then its

A

listed reit

42
Q

an owner of a real estate investment trust holds

A

an undivided interest in a pool of real estate investments

43
Q

reits are or are not investment companies

A

are

44
Q

reits are or are not to be considered dpps

A

not

45
Q

hedge funds are regulated or unregulated

A

considered unregulated as they currently do not have to be registered with the sec

46
Q

hedge funds are unregulated but do require

A

investors to be a sophisticated investor(accredited investor)

47
Q

it is unusual for hedge fund organizers to

A

also be investors in the fund

48
Q

Exchange traded funds

A

invests in a specific group of stocks and generally does so to mimic a particular index

49
Q

disadvantages of etfs

A

commissions
overtrading
market influences on price

50
Q

advantages of etfs

A

pricing and ease of trading
margin can be sold short (MF cannot)
operating costs lower than MF
Tax efficiency

51
Q

senior unsecured debt securities issued by a bank or financial institution.

A

exchange traded notes

52
Q

company that manages a portfolio if real estate, mortgages, or both to earn profits.

organized as a trust in which investors buy shares or certificates of beneficial interest, either on stock exchanges or in the over the counter market

A

real estate investment trust

53
Q

an open end management company may charge what amount annually and still advertise itself as a no-load fund

A

.25%

54
Q

an investment established by states to provide other government entities such as cities or counties a place to invest funds short term is

A

LGIP

55
Q

Variable annuities are ____ fixed annuities are ___

A

securities, not

56
Q

a private unregulated investment company organized in such a way so as to invest and achieve high returns utilizing debt leverage and derivative products such as options and margin is

A

a hedge fund

57
Q

risk that changes in the overall economy will have adverse effect on individual securities regardless of the company’s circumstances

Generally cause by factors that affect all businesses, such as war, global security threats, or inflation

A

systematic risk

58
Q

no matter how diversified a portfolio of investments is, it will still be subject

A

systematic risk, you cannot diversify this away

59
Q

risk that when overall market declines, so too will any portfolio made of securities the market comprises

A

market risk

60
Q

a potential change in bond prices caused by change in the market interest rates after an issuer offers its bonds.

A

interest rate risk

61
Q

risk that future cash flows – either coupons (the periodic interest payments on the bond) or the final return of principal – will need to be reinvested in lower-yielding securities

A

reinvestment risk

62
Q

the effect of continually rising prices on investment returns

A

inflation risk

63
Q

measures the volatility of an asset

A

beta

64
Q

beta < 1= ___stable than the market

A

more

65
Q

beta>1__stable than the market

A

less and would be more volatile than the market

66
Q

the potential for an investor o lose some or all of her money–under circumstances unrelated to an issuers financial strength

A

capital risk

67
Q

this is an operating risk, generally caused by poor management decisions

A

business risk

68
Q

relates primarily to those companies that use debt financing

A

financial risk

69
Q

risk that a bond might be called before maturity and an investor will be unable to reinvest the principal at a comparable rate of return

A

call risk

70
Q

a period during which a bond cannot be called

A

call protection

71
Q

the risk that a borrower will repay the principal on a loan or debt instrument(bond) before its maturity and thus

A

prepayment risk

72
Q

the possibility that an investment denominated in one currency could decline if the value of that currency declines in its exchange rate with the us dollar.

A

currency risk

73
Q

currency is quoted at the

A

spot rate

74
Q

the risk that an investor might not be able to sell an investment quickly at a fair market price

A

liquidity risk or market ability risk

75
Q

changes in the rules that a business must comply.

A

regulatory risk

76
Q

results from changes in the law

A

legislative risk

77
Q

potential instability in the political underpinnings of the country

A

political risk

78
Q

capture the risk of country defaulting on its commercial debt obligations.

A

sovereign risk

Series 7 (27 decks)

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