S66 [11/27]

One of the features of an index annuity is the ability for the principal value to increase based on the performance of the specified index. Which of the following is not used as a method to compute the amount of interest to be credited to the account? A) Participation rate B) Annual reset C) Point to point D) High-water mark

A

Five years ago, an investor purchased an ABC Corporation BBB-rated debenture with a coupon of 6% maturing in 2037. Currently, new BBB-rated debentures maturing in 2037 are being issued with coupons of 7%. Based on the discounted cash flow method, one could say that the present value of the investor's security is A) less than the par value B) equal to the par value C) negative D) more than the par value

A The discounted cash flow method is just a technical way of computing the value of a security that demonstrates the inverse relationship between interest rates and bond prices. The discount rate here is the current market rate of 7%. Because this investor's debenture is paying at a rate of 6%, its cash flow is less valuable than a 7% bond; therefore, it will sell at a discount (below par).

A term used to describe the results of subtracting a corporation's liabilities from its assets is A) net income. B) owners' equity. C) retained earnings. D) operating income.

B

When applying for registration as an agent, which of the following must be disclosed? A) Complete employment history for the past five years B) Certain financial information such as any unsatisfied judgments or liens against the applicant C) Residential history for the past three years D) Highest educational level achieved and the institution attended

B

Which of the following best describes a global mutual fund? A) The portfolio consists of securities of companies domiciled throughout the world, excluding the United States. B) The portfolio consists of securities of companies domiciled throughout the world, including the United States. C) The portfolio consists of a global selection of asset classes, including cash equivalents, equities, debt, and tangible assets. D) The investment adviser under contract to the fund uses a team of managers who are located at the various financial capitals around the globe.

B

One major difference between the customer identification program (CIP) and the new account opening rules of the regulatory bodies is that A) the CIP requires a statement of the customer's goals while the regulators only require current financial information. B) the CIP requires a residence address for individuals while the regulatory bodies will accept a PO Box. C) the CIP requires date of birth while the regulators only require proof of legal age. D) the CIP only applies to individuals while the rules of the regulators apply to retail and institutional accounts.

C

True or False regarding balance sheets? Balance sheets provide a record of a company's earnings over a given period.

False

A client profile is not complete without a family income statement. A typical one would include I. dividends II. credit card debt III. autos IV. mortgage interest

I & IV

True or False regarding balance sheets? Balance sheets provide a snapshot of a company's financial position on a given date.

True

A client profile is not complete without a family balance sheet. A typical one would include I. dividends II. credit card debt III. autos IV. mortgage interest

II & III