This nurse is not wealthy enough for a hedge fund investment. They are exempt from securities regulation since the general public cannot invest, except for the anti-fraud rules. Their yields are interpreted as real interest rates. Inform the client that he or she must invest another $6,000, otherwise the price paid per share will be recalculated and will be higherD. D. II and IV, REITs are NOT permitted to distribute which of the following to their shareholders? Distribute the amount in excess of the $50,000 LOI requirementC. D Note that most funds process redemptions much more quickly than this. An ETF based on the price movements of 20+ year Treasuries would have the largest profit when interest rates fall. Which of the following may have caused the increase? I and III C. II and III (b) They work as an intermediary between the savers and the investors by mobilising funds between them. I Asset depreciationII Asset appreciationIII Capital gains distributionIV Dividend distribution, A. I only B. I and IIC. The members of the board of directors are elected at the annual meeting. large capitalization growth stocks, All of the following statements are true regarding money market funds EXCEPT: b. ETF stands for Exchange Traded Funds. On that date, the price of the shares is reduced for any distributions. I, II, III, IV, All of the following statements are true for both mutual funds and variable annuities that are in the accumulation phase EXCEPT: A. I and III Money market funds typically invest in government securities, certificates of deposit, commercial paper of companies, and other highly liquid, low-risk securities. Also note that FINRA specifically looks for market timing customers that attempt to avoid detection by flying under the radar by using multiple account numbers or trading in amounts just beneath the audit thresholds. This dilution can occur because the manager of the fund may have to incur extra trading costs to rebalance the portfolio because of the massive amount of daily fund redemptions and purchases being made by the market timers. Which is considered money in the U.S. economy? II an exchange traded fund 5- Risk, Return and the Historical Record, Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield, Fundamentals of Financial Management, Concise Edition, Carl S Warren, James M Reeve, Jonathan E. Duchac, Trends Chpt 22 Quality Improvement and Patien. Which of the following is an Exchange Traded Fund? $0 - $10,000 8 % Initial payments are made at an interest rate that is above the prevailing prime rate but stepped down to the Treasury rate over time B. The reason why these funds are called "money" funds is that the securities held in the portfolios have very short maturities (less than 30 days) and turn over into cash quickly. Which of the following investments is the most illiquid? trades in the marketD. Tax deductibility of contributions made to the contract if distributions are not taken until age 59 1/2 or later Ask is the same thing as Public Offering Price. If you buy the fund with a few friends, the purchase will be large enough for a breakpointD. The customer must be paid the money within: A married couple, where both individuals work, earns in excess of $119,000 in year 2017. In this example, Choice C meets the customers requirements. A leveraged ETF uses borrowing (margin) and options to magnify price movement as compared to the reference index. REIT shares are listed and trade on an exchange (like a closed-end fund), so they are readily marketable. She should be told that these are lightly regulated, high risk investments that are only suitable for wealthy, sophisticated investors. The last price for Acme Fund is $10.25, so 100 shares will cost $1,025 plus a commission. I set by the Board of Directors of the FundII 2 business days prior to the Record DateIII the date on which the funds NAV per share is reduced for any distributions, A. I and IIB. custodial feesC. II private sector retirement plans I ETNs are a type of investment company offeringII ETFs are a type of investment company offeringIII ETNs are a debt instrumentIV ETFs are a debt instrument. Thus, a closed-end fund share is purchased at the prevailing market price plus a commission (or a mark-up if it is an OTC principal transaction). This comes with higher fees, but this customer is 22 years old and is newly rich. In an effort to answer the question of why so many people are moving from states that usually vote for Democrats (so-called blue states) to states that usually elect Republicans (red states) an economist conducted a study. It appears that the hedge fund is engaging in the prohibited practice of late trading of mutual fund shares Value Stock strike or striking price pricing of the fund shares must conform to the requirements of the Investment Company Act of 1940. One specific type of violation is market timing - the practice of frequently buying and selling a funds shares to exploit inefficiencies in how the mutual fund company computes NAV per share. Thus, if the market is fluctuating fairly evenly, periodic investments of the same dollar amount result in a lower average cost per share. This makes sense because REITs cannot pass losses to their shareholders. Such late trading is prohibited under the Investment Company Act of 1940. After the LOI is completed, the additional NAV from the asset appreciation is added to the account balance, and establishes a new higher base level ($25,000 deposited plus $5,000 asset appreciation = $30,000) from which the sales charge will be calculated on any future purchases. You can argue this one either way, but we go with the fund of hedge funds. With a fund of hedge funds, a professional manager picks the best hedge fund investments. However, since these are negotiable securities, they do have market risk. III. D lower average return on investmentD. An ETF is an Exchange Traded Fund. money market Front end sales chargeB. However, all mutual funds charge an annual management fee, which is an annual expense against the funds investment income. The expense ratio is found by taking Total Expenses / Total Net Assets. 5 % (Dollar cost averaging requires that an investor make periodic payments (say monthly) of a fixed dollar amount (say $100 per month) to buy a given security. The representative tells the hedge fund customer of the conversation, after which the customer places daily orders to buy and sell that funds shares in amounts of $750,000. The customer will pay $10.075 per share (rounded). The provisions of the Investment Company Act of 1940 include all of the following EXCEPT: Acme $9.90 10.25 +.10 1 When compared to stocks or corporate debt issues, the risk to principal is generally quite low. c. They have management fees higher than other mutual funds. 9% of the amount invested. considered to be a fairly safe asset due to the ability to be monitored and predicted over a short term. Require payment of premium This is a tricky question. All of the following statements are true EXCEPT the: A. customers yield will decreaseB. Both Treasury bonds and Treasury notes commonly trade in denominations of $1,000. III A fund can achieve high performance for a few years by taking greater risk and then have a period of poor performance No collateral is required to borrow from this market. A. For the rest of the year, the investor is locked into the investment. C Which statements are true of money market instruments? The ex-date for a mutual fund is set by the Board of Directors. I the price of the stock remains fixed Option B is correct Tax-free mon View the full answer Previous questionNext question COMPANY About Chegg $1,039D. The customer will pay what price per share? II The penalties imposed for early withdrawal from the plan I, III, and IV. will decrease requiring a majority vote of the outstanding shares to change a fund's investment objective such an activity is illegal and any redemption requests placed at 4:00 PM must be processed based upon the next days NAV computationD. III The capital gain is taxable if it is automatically reinvested in the fund Furthermore, the longer maturity and lower coupon issues fall the fastest as market interest rates rise. Multiple select question. C A. A. A Dollar cost averaging does not work if the price of the stock remains fixed, nor does it protect against loss in a falling market. A pure no-load fund does not impose sales charges of any kind to buy into the fund; nor to redeem shares. SPDR III and IVC. I, II, III. IV The capital gain is not taxable if it is automatically reinvested in the fund This action is: A. appropriate for the customerB. An individual or corporation making a purchase is considered to be one purchaser and qualifies for the breakpoint. A leveraged inverse ETF combines both. A customer who places an order to buy 100 shares of Acme Fund will pay approximately: Bid The best answer is C. An ETN is an Exchange Traded Note. II not registered under the Investment Company Act of 1940 They are directly accessible to individual investors. C managed or unmanagedC. B III A fixed number of units is purchased with each payment 20 years to the annuitant or beneficiary, All of the following sources of REIT income are counted towards the 75% test required by Subchapter M EXCEPT: We believe, however, that the question hinges on the fact that the customer is new to being rich and professional management of his hedge fund investments is probably a good idea. Note that the maximum is a percentage of all dollars invested; it is not a percentage of Net Asset Value. He will produce the 31,500 units over four months at a level of 7,875 per month. annual management fee against net assets of 2% plus a performance fee based on 20% of profitsC. neither futures contracts nor call options, Ch. tax exempt fund. Explain to the customer that if the additional $6,000 is not deposited, the account will be liquidated. A closed-end fund has a 1 time stock issuance and then closes its books to new investment and then lists its stock on an exchange or NASDAQ. To prevent market timing, most mutual funds have placed restrictions on excessive trading in their prospectuses and monitor accounts for excessive short-term trading. Individuals can invest in the money market by buying money market funds, short-term certificates of deposit (CDs), municipal notes, or U.S. Treasury bills. due to required industry firewalls, registered representatives are prohibited from talking to the administrative personnel of mutual fund companies. It is typically 1/2 - 1% of assets annually. The typical hedge fund fee is 2 and 20 - a 2% annual management fee as a percent of assets under management, plus 20% of profits. A. An order placed to buy or redeem mutual fund shares is filled at: A. yesterdays opening Net Asset ValueB. Need help? Access is limited to institutions and high net worth or high income individuals. It appears that the hedge fund is engaging in the prohibited practice of late trading of mutual fund sharesB. Their common stock can be bought or sold freely on stock exchanges. A. REITs invest in real estate or loans secured by real estate. A 22-year old, unmarried, new customer contacts you, explaining that he just inherited $10,000,000 and wishes to invest the money aggressively to produce superior returns. It appears that the representative has violated industry firewall requirements, because registered representatives are prohibited from talking to the administrative personnel of mutual fund companies. Net Investment Income / Distributions to ShareholdersB. This type of ETF is long 20+ year Treasuries in the hopes that prices will rise, and because it is a 2X leveraged ETF, it has margined the bond positions so that as interest rates fall, the price should rise at 2 times the normal rate of increase of a similar maturity unleveraged bond portfolio. Types of funds Growth, growth and income, income, balanced, index, specialized (sector fund), and special situations fund Tax deductions and tax credits I, II, IVD. If the price of the security is fluctuating, the average purchase cost per share will be lower for the investor than simple mathematical average price of the shares over the same period. A closed end funds Net Asset Value is $8.50. The US Department of Energy has assessed that the Covid-19 pandemic most likely came from a laboratory leak in China, according to a newly updated classified intelligence report. B. I and IV ), During a period of rising interest rates, which investment would be profitable? 2X (Leveraged) S&P 500 Index ETFB. DIAmonds are an American Stock Exchange traded index fund based on all stocks: A. rated AA or betterB. I Investment in U.S. minted gold coins is permitted It also requires that at least 40% of the Board of Directors be non-interested parties - that is, they are not affiliated with the sponsor, custodian, transfer agent, or firms in the selling group. A dividend income from investments, d (To qualify as a regulated investment company, 75% of REIT income must be real estate related. Acme $9.90 10.25 +.10 The P/E ratio tells us how much stock purchasers must pay per ________ ________ __________ that the firm generates. >$45,000 - $65,000 5 % growth fundD. II and IV. dividends at POP and capital gains at NAVD. I, II, III, IV. A. A. I and III. Limited partners who form a partnership to make the purchaseD. An order placed to buy or redeem mutual fund shares is filled at that days closing Net Asset Value adjusted by any sales charges or redemption fees. It must be adjusted for stock splits. only capital gains at Net Asset ValueC. You comply with the customer's request and the administrative personnel inform you that the limit is $1,000,000. B. REITs raise capital by borrowing from banks and issuing mortgages. D It appears that the hedge fund is engaging in the prohibited practice of market timing of mutual fund shares C Note that most funds process redemptions much more quickly than this. At this point, the customer wants to buy another $15,000 of the fund. Capital by borrowing from banks and issuing mortgages of premium this is a tricky question registered representatives are from., but we go with the customer will pay $ 10.075 per share ( rounded ) the limit $. During a period of rising interest rates, which investment would be profitable under. As compared to the customer 's request and the administrative personnel inform you the. Annual meeting this action is: A. appropriate for the rest of the shares is at! $ 65,000 5 % growth fundD d Note that the hedge fund is $ 1,000,000 safe due. 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