Things I Don't Know Flashcards
True or false: Disclosure of the relationship between an investment advisor and a solicitor is always required.
False. Not required when service involves impersonal advisory services only.
True or false: There is a redemption fee with a money market mutual fund.
False
Requirements for a preorganization subscription to be an exempt transaction:
1 - No payment may be made by any subscriber
2 - No commission may be paid to anyone for soliciting potential subscribers
3 - There may be no more than ten subscribers
True or false: A preorganization certificate may be advertised.
True
The average portfolio maturity of a money market mutual fund cannot exceed ___ days
60
SEC requires that money market funds’ investments be limited to securities that are rated in the top __ ratings categories
2
True or false: Sale of treasury bills to an individual client is an exempt transaction
False. Exempt security but not exempt transaction
Final approval of annual operating budget for US is given by
Congress
True or false: Control over a Qualified Tuition Plan/ Section 529 passes to the student once withdrawals commence
False
Publicly traded corps may furnish a Form ___ instead of an annual report
10-K
True or false: Anyone who represents an issuer in effecting transactions between the underwriter and issuer is excluded from the definition of an agent under the USA
True
Which account does a donor have the most control over? UTMA, Section 529, Coverdell ESA, UGMA
Section 529 - can take money back, keeps control once student starts withdrawing, etc
Defined as a sale: gift of assessable or nonassessable stock
Gift of assessable stock
The SEC may suspend all trading on a specific exchange for up to __ days
90
The SEC may summarily suspend trading on a particular nonexempt security for up to __ days
10
True or false: The SEC may suspend trading on exempt securities
False
Specialized funds have this stated objective
Capital appreciation
Definition of pension consultant
Person who provides investment advice to administrators of employee benefit plans
True or false: an investment advisory contract’s term may not exceed 1 year
False
Two securities Administrator has power to revoke exemption for:
Non-profits and employee benefit plans
True or false: Administrator can revoke any transaction exemption
False. Can revoke all but federal covered security transactions
An investment advisor makes advice his ___ activity
Regular
True or false: Coverdells may only be used by persons who fall within certain income limits
True
If money is not used in a 529 plan, it reverts to the __
Donor
If money is not used in a Coverdell plan, it reverts to the __
Beneficiary
A private placement can be offered to no more than __ noninstitutional investors
10
True or false: Local companies that issue common stock sold only within the state are not required to register with the Administrator
False
True or false: Convertible bonds are more sensitive to the price of the underlying stock than they are to interest rates
True
True or false: Equity index annuities offer unlimited gain
False
True or false: Equity index annuities offer a minimum return
True
True or false: Equity index annuities are considered securities
False
True or false: Benefits of a nonqualified deferred compensation arrangement are guaranteed
False
True or false: If the transaction in which the security is sold is exempt, this would exempt the security from registration
True
What must be given to client participating in wrap fee program?
Appendix 1 of Form ADV Part 2A
True or false: Adviser who issues research reports on corporate securities would not be considered an adviser
False
Loan consent agreement permits a firm to
Loan out a customer’s margin securities
Expense ratio =
Expenses / Average Annual Net Assets
True or false: Municipal bonds are a prohibited investment in an IRA
False. Inappropriate but not prohibited
When interest rates fall, prepayments of mortgages ___
Increase
IA may receive compensation based on share of capital gains if:
The client has $1M in AUM or has net worth of $2.1M
True or false: Investment advisors are excluded from the definition of broker dealer
False
True or false: Agents, issuers, and banks are excluded from the definition of broker dealer
True
When an investment adviser wants to increase its fees, it must
1 - disclose promptly only to those customers who will be affected by the change through a new brochure
2 - disclose in the summary of material changes in the annual updating amendment to the SEC
No need to tell unaffected customers or Administrator
True or false: ETFs have a limited number of outstanding shares
False
True or false: Closed end investment companies are traded on registered stock exchanges
True
True or false: ETFs rarely stray far from NAV
True
Eurodollar bonds are denominated in ___
USD
Eurodollar bonds are issued within or outside of the US?
Outside
European option
Can only be exercised on expiration date
Regulation D (private placement) must file Form D
No later than 15 days after the first sale
True or false: If divorced prior to 2019, alimony is considered eligible income for an IRA
True
True or false: Investment firms must appoint a chief compliance officer?
True
Education IRA =
Coverdell ESA
REITs must distribute ___% of net investment income and must invest ___% of assets in real estate related activities
90% and 75%
USA criminal penalty fine
$5000
