Packaged Products
Which of the following is true regarding mutual fund NAV?
A. It fluctuates only weekly
B. It equals assets minus liabilities divided by shares outstanding
C. It is always equal to the public offering price
D. It is set by supply and demand
What is it equals assets minus liabilities divided by shares outstanding?
This account is where trading for variable annuities occur?
What is the separate account?
Which of the following is considered an alternative investment?
A. Mutual fund
B. Hedge fund
C. Money market fund
D. Corporate bond
What is a Hedge fund?
Which best describes a put option?
The right to sell stock at a fixed price
The right to sell stock at a fixed price
Which statement about the Securities Act of 1933 is TRUE?
A. It regulates secondary market trading
B. It requires full disclosure for new issues
C. It governs broker-dealer registration
D. It regulates margin requirements
What is:
B. It requires full disclosure for new issues
A mutual fund that invests in both stocks and bonds is a:
A. Sector fund
B. Balanced fund
C. Growth fund
D. Hedge fund
What is balanced fund?
The investor receives a fixed rate of interest and the investment risk is assumed by the insurance company
What is a fixed rate annuity?
Private equity funds generally invest in:
A. Publicly traded stocks
B. Government securities
C. Privately held companies
D. Municipal bonds
What are privately held companies?
An option premium consists of:
A. Intrinsic value only
B. Time value only
C. Intrinsic value + time value
D. Market value only
Whats is:
C. Intrinsic value + time value
In a firm commitment underwriting, the underwriter’s primary risk is that:
The securities will not sell at the public offering price (POP).
A unit investment trust (UIT) typically:
A. Is actively managed
B. Issues redeemable shares
C. Trades in the secondary market
D. Allows portfolio managers to replace holdings
What issues redeemable shares?
The performance of a variable annuity is based on:
A. The insurance company’s profitability
B. The performance of the separate account
C. Guaranteed interest rates
D. The fixed account only
What is the performance of the separate account?
Which of the following describes a business development company (BDC)?
A. A closed-end investment company
B. A hedge fund
C. A municipal fund security
D. An insurance product
What is a closed-end investment company?
The maximum gain for a long put is:
A. Unlimited
B. Strike price minus premium
C. Premium paid
D. Market price
What is:
B. Strike price minus premium
Which document is used to establish the legal relationship between syndicate members?
A. Agreement Among Underwriters
B. Syndicate letter
C. Trust indenture
D. Registration statement
What is:
A. Agreement Among Underwriters
Which type of investment company is most likely to use leverage?
A. Open-end funds
B. Closed-end funds
C. UITs
D. Money market funds
What is Closed-end fund?
Which of the following must be registered as a security?
A. Fixed annuity
B. Variable annuity
C. Whole life insurance
D. Term insurance
What is Variable annuity?
Interval funds allow investors to:
A. Redeem shares daily
B. Redeem shares only at specific times
C. Buy shares only once per year
D. Trade on exchanges
What is Redeem shares only at specific times?
A customer buys 1 ABC July 50 call at 4. What is the breakeven?
What is:
$54
Which rule allows an issuer to sell securities only to residents of one state?
A. Rule 144
B. Rule 147
C. Reg D
D. Rule 145
What is:
B. Rule 147
A mutual fund’s public offering price (POP) equals:
What is NAV plus sales charge?
What is the primary purpose of an ABLE (529A) account?
What is tax-advantaged savings for disabled individuals?
Which investment is structured as unsecured debt issued by a bank?
A. Hedge fund
B. ETN
C. Private equity fund
D. BDC
What is ETN?
Long 1 ABC Dec 60 call means the investor:
A. Must buy shares
B. Must sell shares
C. Has the right to buy shares
D. Has the right to sell shares
What is:
D. Has the right to sell shares
Which condition is required under Rule 144 for affiliates selling securities?
A. Unlimited resale
B. No holding period
C. Volume limitations
D. SEC approval
What is:
C. Volume limitations
Which of the following is true about UITs?
A. They are managed by investment advisers
B. They have fixed portfolios that do not change
C. They trade intraday
D. They issue non-redeemable shares
What are they have fixed portfolios that do not change?
Who typically sponsors a 529 plan?
What is States or state agencies?
A REIT must invest at least what percentage of assets in real estate–related activities?
What is 75%?
REIT must have 75% of its income in real estate, 75% of its assets in real estate and 90% of the income must be distributed to shareholders.
A covered call is best described as "_____ ______."
Because covered call generate income.
What is:
"Income Strategy."
This participant is responsible for purchasing securities directly from the issuer in a firm commitment?
What is:
Investment banker
. NAV per share will increase if a mutual fund’s:
A. Liabilities increase
B. Portfolio value rises
C. Shares outstanding increase
D. Fund pays a dividend
What is if portfolio value rises?
If a customer surrenders a variable annuity early, they may face:
A. A surrender charge
B. A back-end load
C. A rights-of-accumulation fee
D. Breakpoint penalties
What is A surrender charge?
ETFs differ from mutual funds because ETFs:
A. Are redeemed by the issuer
B. Trade throughout the day
C. Are sold only at NAV
D. Cannot be purchased on margin
What is Trade throughout the day?
An option with only time value is:
A. In the money
B. Out of the money
C. Deep ITM
D. Exercised
What is:
B. Out of the money
The underwriting spread is best described as:
What is:
The Underwriter’s gross profit
A fund designed to track the performance of a specific market benchmark is called a:
What is Index fund?
A customer who wants guaranteed minimum income should choose:
A. Variable annuity
B. Fixed annuity
C. ETN
D. 529 plan
What Fixed annuity?
ETFs usually have lower expenses than mutual funds because:
A. They are actively managed
B. They are not legally registered
C. They are passively managed
D. They can only hold government securities
What is they are passively managed?
A call option is “in the money” when:
A. Market price < strike price
B. Market price = strike price
C. Market price > strike price
D. Time value is zero
What is:
C. Market price > strike price
This document specifies how the securities will be distributed and at what price?
What is:
Underwriting agreement
An investor buying Class A shares of a mutual fund should be most aware of:
A. Back-end loads
B. High annual 12b-1 fees
C. Front-end sales charges
D. Contingent deferred charges
What is Front-end sales charges?
Which risk is the investor exposed to in a variable annuity?
A. No risk, guarantees protect the investor
B. Only inflation risk
C. Market risk
D. Liquidity risk only
What is Market risk?
Which type of investor is most suitable for hedge funds?
A. Investors seeking low risk
B. Retail investors with limited assets
C. Accredited or institutional investors
D. Investors needing daily access to funds
What is Accredited or institutional investors?
A customer owns 100 shares at $30 and sells a $35 call. This is:
A. Long call
B. Uncovered call
C. Covered call
D. Protective put
What is:
C. Covered call
Rule 147A differs from Rule 147 primarily because it:
What is:
Allows internet advertising
Which mutual fund feature reduces the sales charge based on the amount invested?
What are breakpoints?
A customer buying a variable annuity is most concerned about:
What is Investment performance of the separate account?
This alternative investment exposes investors to credit risk because returns depend on the financial health of the issuer?
What is ETN?
(Because ETNs are unsecured, their performance depends on the issuer’s ability to repay)
Which options position benefits most from time passing? And why?
What is a short/seller/writer of an option.
Time passion related to time value. Time value=the chance an options contract will be exercised by the buyer. As time passes the chance goes down, meaning the sellers likelihood of losing the stocks also goes down.
Rule 145 applies to securities issued as a result of:
What is:
Mergers and acquisitions