Time Value of Money

Question 1

Real Rate of Return

Answer 1

((1+after tax rate of return) / (1+inflation rate) - 1) x 100

Question 2

If NPV is positive

Answer 2

IRR is greater than required rate of return

Question 3

If NPV is negative

Answer 3

IRR is less than required rate of return

Question 4

If NPV is zero

Answer 4

IRR is equal to required rate of return

Question 5

Serial Payment

Answer 5

Allow a client to achieve their goal by making an inflation adjusted payment rather than a fixed payment

Question 6

Securities Act of 1933

Answer 6

purchasers of new securities be provided with a detailed prospectus before a transaction

Question 7

Securities Act of 1934

Answer 7

regulates secondary market and created SEC

Question 8

Investment Company Act of 1940

Answer 8

authorized SEC to regulate UITs and funds and separate accounts in variable life and annuities

Question 9

Investment Advisors Act of 1944

Answer 9

Defines role of investment advisor, investment advice, and who must register with state and federal regulators.

Question 10

Securities Investors Protection Act of 1970

Answer 10

established SIPC to supervise and insure securities firms