Orion Series 65 Quick Quiz 5,6,7,8, & 9

Which of the following statements about the redemption of mutual fund shares are TRUE: II. A mutual fund will redeem fractional shares as well as full shares. III. Redemptions of mutual fund shares are handled under forward pricing.

II and III

An unsecured bond is also known as a(n):

Debenture

A method of valuing an investment, particularly debt securities, by calculating what future cash returns will be worth at the time they are received based on estimates of future inflation and interest rates is known as

Discounted Cash Flow

An investor is considering the purchase of $100,000 maturity value of zero-coupon AAA rated corporate bonds scheduled to mature in 20 years. Among the risks that this investor will be assuming are: I. Default Risk II. Interest Rate Risk

I and II

Which of the following is not considered a money market instrument? I. American depository receipts III. Corporate bonds

I and III

The difference between a fixed annuity and a variable annuity is that the variable annuity: II. offers a payment that may vary in amount IV. attempts to offer protection to the annuitant from inflation.

II and IV

A farmer entered into a forward contract to sell his produce at $2.25 per bushel. At the expiration date of the contract, the price was $2.00 per bushel. The farmer would receive:

$2.25

If a call option with an exercise price of $50 is purchased for $300, the maximum amount the investor can lose is:

$300

Bob, age 60, has invested $17,000 in his nonqualified variable annuity over the years. The total value has reached $26,000. He wishes to withdraw $15,000 to send his son to college. What is his tax consequence on the withdrawal?

$9,000 is taxable; $6,000 is nontaxable.

A bond, preferred stock, or debenture exchangeable at the option of the holder (for common stock of the issuing corporation) is a:

Convertible Security

In the secondary market, Treasury bond prices are most influenced by the:

Inflation Rate

Investment company portfolio managers are apt to classify common stocks into groups. one measurement is the product of multiplying the market price per share times the number of shares outstanding. The result is known as:

Market Capitalization

A review of the prospectus of an open-end investment company reveals that its portfolio consists entirely of CDs, Treasury bills, and repurchase agreements. This is probably a(n):

Money Market Fund

An open-end investment company is also referred to as a(n):

Mutual fund

According to the Investment Company Act of 1940, an open-end investment company must compute its NAV:

No less frequently than once per day.

An investor interested in obtaining the benefit of the professional portfolio management has been tracking a particular investment company for the past several months. In so doing, it becomes obvious that the market price of the shares moves in direct relation to the computed NAV. This investor must be following:

Open-end fund

What happens to outstanding fixed-income securities when interest rates decline?

Prices Increase

Money market instruments are:

Short-term debt

The main benefit that variable life insurance has over whole life insurance is:

The potential for a higher cash value and death benefit.

What would likely happen to the market value of existing bonds during an inflationary period coupled with rising interest rates?

The price of the bonds would decrease.