Solomon Ch1 Deck 7

Question 1

13F threshold is met if an investment manager manages 100M on

Answer 1

the last trading day of the month

Question 2

First Schedule 13F for the year in which the $100M threshold if first met is filed

Answer 2

within 45 days of close of that calendar year

Question 3

When an issuer is using a tender offer to go private, in addition to following tender offer rules they must also file Schedule 13E-3 describing

Answer 3

Whether decision fair to shareholders
purpose
alternatives considered
why any directors were against or abstained

Question 4

Most common proxy used for hypothetical market portfolio when determining beta

Answer 4

S&P 500

Question 5

RELP

Answer 5

Real Estate Limited Partnership

Question 6

RELPS pass through to shareholders

Answer 6

both income and losses to shareholders

Question 7

REITs pass through to shareholders

Answer 7

income but not losses (which are reflected in downward pressure on stock)

Question 8

REITs have unit shares that are

Answer 8

fully transferrable

Question 9

REITS must derive at least 95% of gross income from

Answer 9

real estate sources AND dividends and interest from other sources

Question 10

REITS must have no more than 25% of assets in

Answer 10

Securities or taxable REIT subsidiaries

Question 11

Dividend distributions from REITs are not

Answer 11

qualified dividends (i.e. they are taxed as ordinary income)

Question 12

Inventory Records must be

Answer 12

certified according to SEC Rule 4200

Question 13

Risk of fluctuation in market value of fixed income products due to interest rate movements

Answer 13

Interest Rate Risk

Question 14

GARP investors seek stocks with earnings growth

Answer 14

consistently ABOVE market average

Question 15

GARP investors seek stocks with PE ratios that are

Answer 15

low

Question 16

Rights warrants and options are all

Answer 16

derivatives

Question 17

Section 906 of Sarbox requires that when filing any report that includes financial statements

Answer 17

the company’s CFO must also file a certification that the financial statements are accurate

Question 18

Change in working capital calculation

Answer 18

Change in working capital = (AR2013 +Inv2013-AP2013) - (AR2012+Inv2012-AP2012)

Question 19

A debenture is backed by

Answer 19

general credit of the issuing company

Question 20

Return on investment calculation

Answer 20

ROI = (gain from investment-cost of investment)/cost of investment

Question 21

Sarbox 404 material weakness means

Answer 21

weakness in internal controls that create a possibility of misstatements on financial statements

Question 22

Sarbox 404 material weaknesses found by an outside auditor must be

Answer 22

disclosed to investors in annual report

Question 23

shows stock sales, changes in retained earnings, stock purchases and treasury stock, unrealized gains and losses

Answer 23

statement of shareholder’s equity