Brainscape's Knowledge GenomeTM


Top Flashcards (Certified)
All Flashcards

Series 65 > Unit 3 > Flashcards

Unit 3 Flashcards

1
Q

WHAT IS A POOLED INVESTMENT?

A

POOL OF FUNDS CONTRIBUTED BY A NUMBER OF INVESTORS

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

INVESTMENT COMPANY

A

CORP OR TRUST THROUGH WHICH INVESTORS MAY ACQUIRE INTEREST IN LARGE SECURITIESBY POOLING THEIR FUNDS WITH OTHER FUNDS

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

WHY DO INVESTORS USE INVESTMENT COMPANIES?

A

BELIEVE A PROFESSIONAL MONEY MANAGER SHOULD BE ABLE TO OUTPERFORM AVERAGE INVESTOR

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

HOW DO INVESTMENT COMPANIES RAISE CAPITAL?

A

SELLING SHARES TO PUBLIC

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

WHO REGULATES INVESTMENT COMPANIES?

A

INVESTMENT ACT OF 1940 PROVIDES FOR SEC TO REGULATE INVESTMENT COMPANIES

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

WHAT ARE THE 3 TYPES OF INVESTMENT COMPANIES?

A

FACE-AMOUNT CERTIFICATE COMPANIES (FACC)
MANAGEMENT INVESMENT COMPANIES
UNIT INVESTMENT TRUSTS (UITs)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

FACE AMOUNT CERTIFICATE (FACC)

A

CONTRACT BETWEEN INVESTOR AND ISSUER WHERE ISSUER GURANTEES PAYMENT OF STATED SUM AT A SET DATE . IN RETURN, INVESTOR AGREES TO PAY A SET AMOUNT IN LUMP OR INSTALLMENTS

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

MANAGEMENT INVESTMENT COMPANY

A

ACTIVELY MANAGES A SECURITIES PORTFOLIO TO ACHIEVE A STATED INVESTMENT OBJECTIVE. EITHER CLOSED END OR OPEN END. DOES NOT INCLUDE HOLDING COMPANIES.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

CLOSED-END FUNDS
-WHERE TRADED?
-PRICE
-CAPITAL STRUCTURE
-SOLD IN FULL OR FRACTIONAL SHARES?

A

PUBLICLY TRADED FUNDS
ISSUE A FIXED NUMBER OF SHARES FOR A LIMITED TIME (IPO)
TRADED ON STOCK EXCHANGE OR IN SECONDARY MARKET
SUPPLY AND DEMAND AFFECT PRICE
MARKET PRICE IS INDEPENDENT OF NAV
CAN HAVE COMMON STOCK, PRERRED STOCK, AND BONDS
FULL ONLY, NO FRACTIONAL

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

OPEN-END FUNDS
-PRICE
-CAPITAL STRUCTURE
-SOLD IN FULL OR FRACTIONAL SHARES?

A

-MUTUAL FUNDS
-CONTINUOUSLY ISSUE NEW SHARES AND REDEEM OLD ONES
-PRICES BASED ON NAV AT END OF DAY CANNOT BE BELOW NAV
-MUST ISSUE COMMON STOCK
-CAN BE SOLD IN FULL OR FRACTIONAL

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

NET ASSET VALUE (NAV)

A

=(ASSETS-LIABILITIES)/NUMBER OF OUTSTANDING SHARES

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

OPEN END FUNDS CANNOT…

A

PURCHASE ON MARGIN
HAVE A JOINT ACCOUNT
SELL SECURITIES SHORT
ACQUIRE MORE THAN 3% OF OUTSTANDING VOTING SECURITIES OF ANOTHER COMPANY

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

MANAGEMENT INV COMPANIES CANT HAVE MORE THAN —% OF INTERESTED PERSONSON OF THE INV COMPANY?

A

60%

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

AFFILIATED PERSON

A

PERSON DIRECTLY OR INDIRECTLY OWNING, CONTROLLING OR HOLDING WITH POWER TO VOTE, 5% OR MORE OF THE OUSTANDING SHARE OF THE INV COMPANY.

OR A PERSON UNDER COMMON CONTROL OF INVEST COMPANY

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

CONTROL PERSON

A

PERSON OWNING 25% OR MORE OF OUTSTANDING SHARES

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

HOW OFTEN DO INVESTMENT COMPANIES NEED TO FILE REPORTS WITH SEC AND ITS SHAREHOLDERS?

A

SEC - ANNUALLY
SHAREHOLDERS - SEMIANNUALLY

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

WHERE DOES INVESTMENT COMPANY KEEP ITS ASSETS?

A

WITH A CUSTODIAN/CUSTODIAN BANK
DOES NOT HAVE TO BE FDIC INSURED
MAY USE BD

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

WHAT MUST BE SENT TO A PROSPECTIVE INVESTOR BEFORE SOLICITATION?

A

PROSPECTUS, BECAUSE THERE ARE CONTINUOUS NEW OFFERINGS

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

COUNTRY FUNDS

A

INVESTMENT IN SECUIITIES OF COMPANIES IN FOREIGN COUNTRIES
CLOSED-END BECAUSETHEY ARE DIFFICULT TO LIQUIDATE

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

PUBLIC OFFERING PRICE (POP)

A

OPEN-END COMPANIES

INVESTOR BUYS SHARES DIRECTLY FROM THE COMPANY OR ITS UNDERWRITERS

PRICE IS NAV PLUS SALES CHARGES

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

EXPENSE RATIO =

A

ANNUAL OPERATING EXPENSES/AVG DOLLAR VALUE OF FUNDS ASSETS UNDER MANAGEMENT

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

CAN MUTUAL FUNDS BE PURCHASED IN FRACTIONAL SHARES?

A

YES, STOCKS CANNOT

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

CAN CLOSED END FUNDS BE PURCHASED IN FRACTIONAL SHARES?

A

NO

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

HOW OFTEN IS NAV CALCUATED IN OPEN END INVESTMENTS AND CLOSED END?

A

OPEN - DAILY
CLOSED - WEEKLY

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
MUTUAL FUND DISTRIBUTORS METHODS FOR COLLECTING FEES
FRONT END LOADS BACK END LOADS 12b-1 FEES
22
FRONT END LOADS SALES CHARGE
REFLECTED IN PUBLIC OFFERING PRICE AND ADDED TO NAV, CLASS A SHARES LOWER OPERATING COSTS
23
BACK END LOADS SALES CHARGES
-CONTINGENT DEFERRED SALES CHARGE. -DECREASE ANNUALLY THEN CONVERTS TO CLASS A -CLASS B SHARES
24
12b-1 ASSET-BASED FEES
PERCENTAGE OF FUNDS AVERAGE NET ASSETS DURING THE YEAR, REFLECTS MARKETING AND DISTRIBUTION SERVICES ONLY -CLASS C SHARES -CANNOT CONVERT TO CLASS A
25
CLASS I SHARES
SOLD ONLY TO INSTITUTIONAL INVESTORS
26
CLASS R SHARES
SOLD ONLY TO RETIREMENT PLAN PARTICIPANTS
27
BREAKPOINTS
SCHEDULE OF DECLINING SALES CHARGES BASED ON THE AMOUNT INVESTED -APPLIES TO ANY PERSON (COUPLES, PARENTS, MINOR CHILDREN, AND CORPORATIONS. -DOES NOT APPLY TO INVESTMENT CLUBS OR ASSOCIATES FOR INVESTING
28
BREAKPOINT SALE
SELLING OF SHARES TO MAKE HIGHER COMMISSIONS JUST BELOW THE DOLLAR AMOUNT BELOW THE POINT WHERE SALES CHARGE IS REDUCED - ILLEGAL
28
RIGHT OF ACCUMULATION
PERMITS INVESTOR TO AGGREATE SHARES IN RELATED ACCOUNTS IN FUND FAMILY TO REACH BREAKPOINT DISCOUNT WITH NO TIME LIMIT
29
LETTER OF INTENT (LOI)
ONE SIDED CONTRACT THAT INVESTOR IS INTENDING TO PURCHASE ADDITIONAL SHARES WITHIN 13 MONTHS TO REACH BREAKPOINT. CAN SIGN UP TO 90 DAYS AFTER INITIAL PURCHASE BUT CANNOT COVER MORE THAN 13 MO TOTAL
30
RIGHTS OF ACCUMULATION
ALLOWS AN INVESTOR TO COMBINE PREVIOUS INVESTMENTS IN THE FUND WITH TODAY'S INVESTMENT TO DETERMIN TODAY'S SALES CHARGE -APPLY ONLY TO SUBSEQUENT INVESTMENTS -DO NOT REQUIRE A COMMITMENT
31
WAYS TO REACH BREAKPOINT
-LUMP SUM PURCHASE -LOI -RIGHTS OF ACCUMULATION
32
SALES CHARGE OF MUTUAL FUNDS IS BASED OFF..
PERCENTAGE OF POP 8.5 % IS MAX ALLOWABLE
33
PRIVATE FUNDS
-LIMIT OWNERSHIP -NO MORE THAN 100 INVESTORS -INVESTORS MUST BE QUALIFIED PURCHASERS -GENERALLY HELD LONGER
34
QUALIFIED PURCHASERS
INDIVIDUALS WITH AT LEAST $5M IN INVESTMENTS OR ENTITIES WITH $25M IN INVESTMENTS
35
DIRECT INVESTMENTS WITH PRIVATE FUNDS
FUNDS HAVE 10% OR HIGHER VOTING INTEREST IN THE COMPANY WITH GOAL OF INFLUENCING MANAGEMENT AND OPERATIONS
36
PORTFOLIO INVESTMENTS OF PRIVATE FUNDS
DOES NOT REQUIRE A CONTROL POSITION AND BUILDS PORTFOLIO OF STOCKS, BONDS, AND DERIVATIVES
37
PRIVATE LIQUIDITY FUND
PROVATE FUND SEEKING TO GENERATE INCOME BY INVESTING IN SHORT TERM OBLIGATIONS EXEMPT FROM SEC UNREGISTERED LESS PUBLIC INFO
38
VENTURE CAPITAL FUNDS
LIMITED PARTNERSHIPS WHERE DECISIONS ARE MADE BY GENERAL PARTNERS WITH CAPITAL COMING FROM LIMITED PARTNERS
39
HEDGE FUNDS
LIMITED PARTNERSHIPS HAVE HIGH INVESTMENT MINIMUMS NO MORE THAN 100 INVESTORS DOES NOT REGISTER WITH SEC LACK OR TRANSPARENCY FAR RISKIER INVESTMENT CAN USE LEVERAGE, DERIVATIVES AND FUTURES REDUCE VOLATILITY AND RISK POOLED INVESTMENTS
40
HURDLE RATE
INCENTIVE FEE WILL ONLY BE PAID IF FUND RETURN EXCEEDS A SET THRESHOLD RETURN
41
FUNDS OF HEDGE FUNDS
LOWER PURCHASE REQUIREMENTS FOR ORDINARY INVESTORS ALLOWS FOR DIVERSIFICATION CONTAINS SEVERAL DIFFERENT HEDGE FUNDS
42
UNIT INVESTMENT TRUSTS (UIT)
INVESTMENT COMPANY UNMANAGED INVESTMENT COMPANY ORGANIZED UNDER A TRUST INDENTURE -NO BOARD -NO INVESTMENT ADVISOR -NOT ACTIVELY MANAGED -UNDIVIDED INTEREST IN PORTFOLIO OF SPECIFIED INTEREST -FIXED ONCE COMPILED
43
EXCHANGE TRADED FUND (ETF)
REGISTERS AS EITHER UIT OR OPEN-END ETF -INVESTS IN A SPECIFIC INDEX SIMILAR TO INDEX MUTUAL FUND -CAN BE PURCHASED ON MARGIN OR SOLD SHORT
44
REAL ESTATE INVESTMENT TRUST (REIT)
MANAGES A PORTFOLIO OF REAL ESTATE INVESTMENTS -SHAREHOLDERS RECEIVE DIVIDENDS FROM INVESTMENT INCOME OR CAPITAL GAINS -OWN COMMERCIAL PROPERTY AND/OR COMMERCIAL -MUST INVEST 75% OF ASSETS -MUST DERIVE 75% OF GROSS INCOME FROM REAL ESTATE SOURCES -MUST DISTRIBUTE AT LEAST 90% OF TAXABLE INCOME TO SHAREHOLDERS TO AVOID BEING TAXED
45
BENEFITS OF POOLED INVESTMENTS
DIVERSIFICATION PROFESSIONAL MANAGEMENT
46
BENEFITS OF MUTUAL FUNDS
DIVERSIFICATION PROFESSIONAL MANAGEMENT CHOICE OF OBJECTIVES CONVENIENCE LIQUIDITY MIN INITIAL INV CONVENIENT TAX INFO COMBINATION PRIVILEDGE (FAMILY OF FUNDS TO REACH BREAKPOINT) CONVERSION PRIVILEDGE WITHIN FAMILY OF FUNDS
47
RISKS OF MUTUAL FUNDS
MARKET RISK (EXCEPT MONEY MARKET FUND) FEES AND EXPENSES NET REDEMPTIONS
48
NET REDEMPTIONS
EXCESS OF SHAREHOLDER REDEMPTIONS OVER NEW SHARE PURCHASES
49
BENEFITS OF PRIVATE FUNDS
OPPORTUNITY FOR LARGE PROFIT HAVE A SAY IN MANAGEMENT DIVERSIFICATION
50
RISKS OF PRIVATE FUNDS
-BUSINESS RISK (LARGE PERCENT OF STARTUPS DO NOT SUCCEED) -LIQUIDITY RISK (RARE TO FIND SECONDARY MARKET) -LACK OR TRANSPARENCY (UNREGISTERE)
51
BENEFITS OF HEDGE FUNDS
-DESIGNED FOR POSITIVE RETURN IN BOTH RISING AND FALLING MARKETS -A LOT OF CHOICES TO MEET OBJECTIVES -MAY REDUCE RISK -DIVERSIFICATION
52
RISKS OF HEDGE FUNDS
-EXPENSES -COULD BACKFIRE -LOCKED UP IN LOCKUP PERIOD (NO SECONDARY MARKET) -SALE OF PARTNERSHIP MAY REQUIRE GENERAL PARTNER APPROVAL
53
BENEFITS OF REITS
-INVEST IN REAL ESTATE WITHOUT DIRECT RISK -PROPERTIES HAVE GREATER NEGOTIATING POWER -MOVE OPPOSITE TO STOCK MARKET -REASONABLE INCOME/CAPITAL APPRECIATION
54
RISKS OF REITS
-LOWER CONTROL -PRICE VOLATILITY VS DIRECT OWNERSHIP - DIVIDENDS ARE TAXED AS ORDINARY INCOME -LIQUIDITY IS LIMITED -PROBLEM LOANS COULD RESULT IN LOSS
55
HOW MUCH MUST A REIT DISTRIBUTE IN ORDER TO NOT BE TAXED?
90%

Series 65 (3 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2025 Bold Learning Solutions. Terms and Conditions