Series 65: Unit 5 Quiz 2

One of your clients expresses interest in purchasing a unique piece of art in digital form. More than likely, the client is referring to A. a new way to decorate the home. B. a nonfungible token. C. a way to add liquidity to the portfolio. D. cryptocurrency.

A nonfungible token

Which of the following terms best describes ETNs and leveraged ETFs? A. Forms of hedge funds B. Registered investment companies C. Speculative investments D. Alternative investments

Alternative investments

The Canadian government is looking to create their own digital coin that will allow them to regulate digital assets safely and securely. What is the name of this developing stablecoin? A. Bitcoin B. Ethereum C. Central Bank Digital Currency D. CanadaCoin

Central Bank Digital Currency

If near-term liquidity is the only objective for a client, which of the following pairs of investments represents the most/least liquid? A. 10-year corporate bonds/U.S. T-bills B. Common stock listed on the New York Stock Exchange/unit in a direct participation program (DPP) C. Variable annuity accumulation unit/money market mutual fund shares D. Annuity units of a variable annuity/unit in a direct participation program (DPP)

Common stock listed on the NYSE/unit in a direct participation program (DPP)

A client with limited assets seeking additional income in retirement would probably find which of the following investment choices to be the least suitable? A. ETFs B. Treasury bonds C. Insured bank CDs D. ETNs

ETNs

One type of alternative investment considered to be a pooled investment vehicle is the inverse exchange-traded fund (ETF). Inverse ETFs, also known as bear or short funds, are managed to A. be profitable only when interest rates are rising. B. perform contrary to a benchmark market index such as the S&P 500. C. outperform a benchmark market index such as the S&P 500. D. be used only by professional traders and market makers.

Perform contrary to a benchmark market index such as the S&P 500

Which of the following statements regarding the general partner (GP) in a direct participation program (DPP) is not true? A. A GP has a fiduciary relationship to the limited partners (LPs). B. The GP is the active investor in a limited partnership and assumes responsibility for all aspects of the partnership's operations. C. The GP cannot borrow from the partnership, compete with the partnership, or commingle personal funds with partnership funds. D. The GP, as the active manager of the partnership, does not maintain a financial interest in the partnership and only receives income distributions from profits on the business prior to the limited partners.

The GP, as the active manager of the partnership, doesn't maintain a financial interest in the partnership and only receives income distributions from profits on the business prior to the limited partners

You have a client who wishes to allocate a portion of his funds to investment real estate in an attempt to generate additional income. That goal could be reached by investing in any of the following except A. REITs. B. raw land. C. real estate limited partnerships. D. rental real estate.

Raw land

Which of the following is not a characteristic of owning a limited partnership? A. Tax-free income B. An investment managed by others C. Flow-through of income and expenses of a business to the individual limited partner D. Legislative risk

Tax-free income

What is the maximum amount of bitcoin that will ever be in circulation? A. Indefinite number of coins B. 21 million coins C. 21 billion coins D. 194,425 coins

21 million coins

Which of the following is NOT registered with the SEC under the Investment Company Act of 1940? A. Exchange-traded notes B. Open-end investment companies C. Exchange-traded funds D. Unit investment trusts

Exchange-traded notes

A bullish client invests into a 3x leveraged fund based on the S&P 500 Index. If the index should rise by 10%, your client's investment would be expected to A. increase by 20% B. decrease by 30% C. increase by 50% D. increase by 30%

Increase by 30%

In a DPP, a general partner is all of the following except A. one who appoints the property manager. B. a key executive who makes day-to-day business decisions. C. one who has limited liability. D. one who buys and sells the program's property.

One who has limited liability

In search of higher returns, many investors have turned to alternative investments, such as structured products. Non-exchange-traded structured securities products (SSPs) typically have A. moderate liquidity. B. a place in the portfolio of conservative investors. C. some form of embedded derivatives. D. FDIC insurance coverage.

Some form of embedded derivatives

Your client who owns a DPP that generated a $10,000 passive loss for the year could A. only deduct the passive loss against passive income. B. deduct $10,000 against capital gains. C. deduct $10,000 against ordinary income. D. deduct $3,000 against ordinary income and carry over the rest.

Only deduct the passive loss against passive income

Inverse ETFs are suitable primarily for investors A. wishing to leverage their income. B. who are bullish on the market's future. C. with a very short time horizon. D. who follow a passive investment strategy.

W/ a very short time horizon

Lisa is considering investing in gold. She owns a portfolio of stocks, bonds, and money market securities. Relative to her existing portfolio, the primary benefit of the gold investment is most likely A. gold is a renewable resource, so Lisa can profit from the investment for many years. B. the investment horizon is longer than that of stocks and bonds, balancing the duration of the portfolio. C. gold values are tied to cyclical industries. D. low correlation between traditional asset returns and gold.

Low correlation btwn traditional asset returns and gold

Among the characteristics of leveraged exchange-traded funds is that A. they can only be sold to accredited investors. B. leveraged ETFs may be purchased on margin. C. leveraged ETFs generally obtain the leverage through bank borrowing. D. they are generally suitable for investors with a long time horizon.

Leveraged ETFs may be purchased on margin

Which of the following is a motivation for creating structured products? A. Structured products are less expensive for investors to buy and trade. B. Structured products reduce costs to issuers. C. Structured products improve market completeness. D. Structured products improve profits for broker-dealers.

Structured products improve market completeness