SIE Unit 4

Question 1

Unit Investment Trust

Answer 1

Investment company organized under a trust indenture; portfolio designed to meet company objectives and then redeemable interests are sold

Question 1

Face-Amount Certificate

Answer 1

Contract where issuer guarantees payment of a stated sum to an investor at some set date in the future

Question 2

Closed-end Investment Company

Answer 2

Raises capital by conducting a common stock offering;limited number of shares available

Question 3

Open-end Investment Company

Answer 3

Only issues one class of security, which is common stock but on a continuous basis

Question 4

Characteristics of Class A Shares

Answer 4

Sales charge taken at the time an investor buys the shares; breakpoint schedule

Question 5

Characteristics of Class B Shares

Answer 5

Sales charge taken when previously bought securities are sold; higher fees

Question 6

Characteristics of Class C Shares

Answer 6

High annual charges; best for short-term investment horizons

Question 7

Combination Priviledge

Answer 7

Separate investments in two or more funds may be combined to reach a breakpoint

Question 8

Exchange Priviledge

Answer 8

Allow an investor to convert an investment in one fund for an equal investment in another fund in the same family

Question 9

Expense Ratio

Answer 9

Compares management fees and operating expenses with the fund’s net assets

Question 10

Pipeline Tax Theory

Answer 10

Triple taxation can be avoided if mutual fund acts as a conduit for the distribution of net investment income

Question 11

Can annuitizing an annuity be reversed

Answer 11

No

Question 12

Purpose of a variable annuity

Answer 12

Supplemental retirement savings

Question 13

What Cause Changes In Net Asset Value

Answer 13

Declines or increases in fund value itself or dividend issues

Question 14

Separate variable annuity account directly managed by insurance company must be registered as..

Answer 14

An open-end management investment company

Question 15

True about an open-end company, but not a closed-end one

Answer 15

Open-end may sell fractional shares

Question 16

Who sets ex-div date of a mutual fund

Answer 16

Board of Directors

Question 17

Elements of Expense Ratio

Answer 17

Manager’s fee, admin costs, BOD’s costs, 12b-1 fees

Question 18

When Statement of Additional Information Request Must Be Satisfied

Answer 18

3 business days

Question 19

When Ex-Dividend Date Is For A Mutual Fund

Answer 19

Day after record date

Question 20

What Earmarking Means

Answer 20

Designating

Question 21

Date That Is Not Set By BoD

Answer 21

Ex-Dividend Date

Question 22

Fees That No-Load Shares Charge

Answer 22

Anything not considered a sales charge

Question 23

Where Return on Variable Annuity Comes From

Answer 23

Selected subaccounts within a separate account

Question 24

What Is Unlawful Regarding Mutual Fund Prospectus

Answer 24

Calling a section to an investor’s attention that is interesting

Question 25

Avenues Through Which An Investor Can Take Advantage of Intraday Price Changes

Answer 25

Closed-end funds, ETFs