Suitability And retirement Shit

Question 1

What is so special about B shares?

Answer 1

B shares have back sales loads (pay the sales fee when you sell your shares)

But they can be good for long time horizon investors because those sales charges dissipate after 5-7 years

Question 2

What is so special about A-class shares for a mutual fund? What are they not suitable for?

Answer 2

The sales charge on A-shares is paid when the purchase is made (front-end load)

They can be suitable for long time horizon investments, but generally not small investments because they don’t have enough money to qualify for breakpoints (discounts)

Think alpha, think early, early bird gets the worm, early bird discount…

Question 3

Which tranche of CMO is most volatile in response to a change in interest rates?

Answer 3

Zero-tranche CMOs

Question 4

Mortgage-backed securities like CMOs lend themselves to what kind of risk?

Answer 4

Prepayment risk (receiving the funds earlier than anticipated)

Question 5

When are variable annuities generally not deemed suitable!

Answer 5

Variable annuities are not generally deemed suitable unless other investments have been utilized first

Question 6

Is liquidating assets or cashing out life insurance to purchase a Variable annuity generally considered suitable or unsuitable?

Answer 6

Unsuitable

Question 7

When over 1/3 of a portfolio is allocated to speculative products like options, futures, or high yield bonds, they are generally considered _____

Answer 7

Aggressive

Question 8

Is an investor (directly or indirectly) exposed to currency risk when purchasing ADRs ?

Answer 8

Yes, but more so indirectly because dividends are paid in the currency of the country of origin, and then need to be EXCHANGED to US currency

Question 9

When are c-shares most suitable?

Answer 9

For short-term investment time horizons

Sally sells c shells by the c shor(t)

Question 10

Can the payout option of an annuity contract be changed once the payout option has been selected ?

Answer 10

No