Third Mock Exam

Question 1

True or false: Equity REITs are prohibited from using leverage to acquire properties

Answer 1

False. Typically use mortgage leverage to buy property.

Question 2

True or false: When an IRA distribution is paid in equal amounts over the owner’s life, a premature distribution would be exempt from penalty

Answer 2

True

Question 3

Over time a country’s trade deficit will lead to a decline in the value of its currency because

Answer 3

The country’s imports will exceed exports creating selling pressure on its currency

Question 4

True or false: Sales made my fiduciaries are exempt transactions

Answer 4

True

Question 5

Under the SEC, investment advisor registrations become effective __ days after filing and expire ___

Answer 5

45; never unless withdrawn, cancelled, suspended, or revoked by SEC

Question 6

Under the SEC, withdrawal from registration takes effect ___ days after filing

Answer 6

60

Question 7

Death benefit of a variable life policy must be calculated at least

Answer 7

Annually

Question 8

BD with an office in the state must register as investment adviser if it charges for

Answer 8

Investment research or advice even if to institutions

Question 9

Investment strategy designed to maximize risk, preserve investor’s principal, and provide somewhat stable income

Answer 9

Defensive

Question 10

True or false: Section 529 plan is considered a security

Answer 10

True

Question 11

Investor’s holding period return would be less than the bond’s yield to maturity if

Answer 11

The coupons were reinvested at a rate below the yield to maturity

Question 12

Yield to maturity assumes

Answer 12

Reinvestment of bond’s interest at the coupon rate

Question 13

Letter of intent can be backdated __ days and can be for a max period including backdating of __ months

Answer 13

90; 13

Question 14

True or false: Some shares are held in escrow until a letter of intent is completed

Answer 14

True

Question 15

True or false: Agent may be required to post a bond

Answer 15

True

Question 16

True or false: Agent may turn clients over to another agent without client’s consent

Answer 16

True

Question 17

Expense ratio =

Answer 17

Expenses / average annual net assets

Question 18

An investment adviser firm organized as a general partnership must notify its clients ____ as to the departure of a general partner

Answer 18

Within a reasonable time period

Question 19

Leading, lagging, or coincident indicator: Stock prices as measured by S&P 500

Answer 19

Leading

Question 20

Leading, lagging, or coincident indicator: GDP

Answer 20

None

Question 21

Leading, lagging, or coincident indicator: CPI

Answer 21

Lagging

Question 22

Leading, lagging, or coincident indicator: Industrial production

Answer 22

Coincident

Question 23

When the discount rate is increased, there is ____ in prime rate.

Answer 23

Increase

Question 24

Private fund managers are exempt from SEC registration until their AUM in the US reach

Answer 24

$150 million

Question 25

True or false: Stock index options are securities

Answer 25

True

Question 26

Management style used if earnings moment is used to select stocks

Answer 26

Growth

Question 27

True or false: Life settlements must be quoted with several buyers and not just one

Answer 27

True

Question 28

Net equity in account with long and short stock and credit and debit balances

Answer 28

(Market value of long stock + Credit balance) - (Market value of short stock + Debit balance)

Question 29

PE ratio is low compared to industry average, dividend yield is high, large rainy day fund

Answer 29

Value stock

Question 30

Leading, lagging, or coincident indicator: money supply

Answer 30

Leading

Question 31

Leading, lagging, or coincident indicator: new housing permits

Answer 31

Leading

Question 32

Leading, lagging, or coincident indicator: orders for durable goods

Answer 32

Leading

Question 33

Leading, lagging, or coincident indicator: duration of unemployment

Answer 33

Lagging

Question 34

Type of risk treasury securities have

Answer 34

Interest rate risk

Question 35

Accredited investors include

Answer 35

Financial institutions, wealthy persons with requirements, persons involved in mgmt of co

Question 36

Risk decreased with diversification

Answer 36

Business risk

Question 37

Technical analysts are not concerned with

Answer 37

Book value and dividend returns

Question 38

Investment strategy where higher price is paid for stock based on expected return

Answer 38

Growth investing