Series 66 - Unit 17
Which of the following would be considered a precious metal? A) Platinum B) Lead C) Copper D) Tin
A) Platinum Along with silver and gold, platinum is a commonly traded precious metal in the commodities markets
The returns on gold and other precious metals exhibit .
low correlation with stock and bond returns
Your client who owns a DPP that generated a $10,000 passive loss for the year could
only deduct the passive loss against passive income
most leveraged and inverse ETFs
reset daily
It would be correct to state that an inverse ETF
utilizes derivatives to achieve its objectives.
alternative investment (alts) examples
ETNs, Leveraged ETFs, and derivatives
viator
The buyer becomes the new owner of the life insurance policy, pays future premiums, and collects the death benefit when the insured dies. At one time, most viatical settlements were from people with a life-threatening illness. Now, individuals who are not facing a health crisis may sell their life insurance policies to get cash.
Alternative investments include four major categories:
real assets, hedge funds, private equity, and structured products
viatical settlement
the sale of a life insurance policy to a third party (the investor).
Corporations issue securities, primarily stocks and bonds, while limited partnerships issue
units representing the limited partner's interest in the venture
GPs
- make the decisions that bind the partnership - buys and sells property - manages the partnerhsip property and money - supervises all aspects - maintains a min 1% financial ints
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) Treasury bonds B) ETFs C) ETNs D) Insured bank CDs
ETNs
Alternative assets are most often characterized by
inefficient pricing, providing potential abnormal returns or alpha returns.
DPPs
- one of the alt investments - limited partnership - allow flow-through to investors - pay no divs - pass income, giains, losses, deductionts and credits to investors
Being a limited partner in a direct participation program is analogous to being
a holder of common stock in a corporation.
DPPs are appropriate for investors who can
benefit from substantial tax deductions or credits, are not bothered by illiquidity, understand the business risks and benefits involved, and can stay in the program until completion.
Traditional investments include
cash, bonds, and stocks, regardless of the adjective used
Leveraged funds use
derivative products to generate the leverage, not bank borrowing
When a policy is sold through the life settlement process, the insured receives more than the cash value, but
less than the face amount of the policy.
Among the differences between an investment in a limited partnership offering and in a corporation is that
limited partnership offerings do not pay dividends; corporations do.
Because an exchange-traded fund is purchased and sold on an exchange, the rules generally applying to all exchange products, such as
purchasing them on margin, would apply.
A life settlement, involves
selling an existing life insurance policy for an amount in excess of the cash value, but less than the death benefit.
If the business operates at a loss, the limited partner's
share of that loss is treated as a passive loss on the investor's tax return.
Section 1031 permits a
tax-free exchange of one property for another. this has the effect of deferring any gain until final disposition of the property.
ETNs
- debt instruments - type of exchange traded debt security offering a return linked to a market index or other benchmark
investor who buys a LP must
complete and sign a subscription agrrement, which includes a statements of teh investors net worth and annual inc and a power of attorney form appointing the GP as agent of the partnership
When comparing active to passive real estate investing, the primary benefit to active is
control The investor determines what type of projects (e.g., single family home, apartment building, or commercial property) and then selects the specific property or properties.