Unit 13

Question 1

The major disadvantage to a limited partner in a DPP is:

Answer 1

lack of liquidity

Question 2

When a mutual fund distributes a capital gain, the tax implication is based whose holding period?

Answer 2

The fund’s holding period.

Question 3

A private equity fund manager is NOT required to register as an investment adviser if the fund exclusively accepts investments from _____________.

Answer 3

qualified clients

Question 4

What is a qualified client?

Answer 4

Individuals with either a net worth of $2.2 million or greater, or who have assets under management of $1.1 million or greater.

Question 5

Special purpose acquisition company (SPAC) shares are originally issued…….

Answer 5

in an SEC-registered IPO

Question 6

NAV Calculation

Answer 6

NAV = (Assets - Liabilities) ÷ Shares Issued

Question 7

_________________ are unsecured bonds that are issued by broker-dealers and listed on stock exchanges.

Answer 7

Exchange-traded notes (ETNs)

Question 8

Special purpose acquisition companies (SPACs) are suitable for which type of investor?

Answer 8

A risk tolerant investor who is searching for large gains

Question 9

What type of insurance is referred to as ordinary, is permanent, offers fixed premiums, and also fixed benefits?

Answer 9

Whole life

Question 10

Payments into an annuity (i.e., the premiums) are most impacted by a person’s ___________.

Answer 10

profession

Why? Because high-earning individuals can contribute more than lower earners.

Question 11

If an investment adviser is providing advice to, or directly managing, a registered investment company (e.g., mutual fund), it must register with the……….

Answer 11

SEC because it’s considered a federal covered adviser

Question 12

True or False:
Hedge funds are typically registered with the SEC under the Securities Act of 1933

Answer 12

False

Hedge funds are private investment pools that are typically sold under an exemption (Regulation D Rule 506) and are therefore not required to register with the SEC under either the Securities Act of 1933 or the Investment Company Act of 1940. Since hedge funds are not subject to the Act of 1933 or Act of 1940, they are not required to sell with a prospectus.

Question 13

_____ life insurance may be called permanent, ordinary, or straight life insurance.

Answer 13

Whole

Question 14

Regarding the redemption of mutual fund shares, the fund must pay the investor within __ days of receipt of the redemption.

Answer 14

7

Question 15

The biggest benefit of a universal life insurance policy is the flexibility of the __________________.

Answer 15

death benefit

Question 16

Although the investment policy statement of a blind pool REIT will not provide much detail regarding the assets into which it will invest, the syndicator must disclose ___________________

Answer 16

the contributions of the
limited partners.

Question 17

An equity-indexed annuity is a type of (fixed/variable) annuity.

Answer 17

fixed

Question 18

REITs are required to generate at least __% of their income from investing in real property

Answer 18

75%

Question 19

REITs are required to distribute at least __% of their income to its shareholders each year

Answer 19

90%

Question 20

Beneficiaries (are/are not) required to pay taxes on death benefits from life insurance policies.

Answer 20

are not

Question 21

True or False:
Once a client has annuitized her annuity, it cannot be rolled over into an IRA.

Answer 21

True

Question 22

True or False:
REITs only pass through income

Answer 22

True