Unit 5-Other Investment Vehicles

a LGIP may be permitted to maintain a fixed __ NAV

$1

Under guidelines of subchapter M, a Reit can avoid being taxed as a corporation by receiving ___ or more of its income from real estate and distributing __ or more of its net investment income to its shareholders

75% 90%

Hedge funds A)are not regulated under the Investment Company Act and no Securities and Exchange Commission (SEC) registration is required. B)are highly regulated, starting with the requirement to be registered with the SEC. C)are regulated under the Investment Company Act of 1940 with no SEC registration required. D)are nonregulated but still require SEC registration.

A

tax advantaged savings accounts for individuals with disabilities and their families Created as a result of ABLE Act 2014

ABLEs

Intangible drilling costs (IDCs) associated with oil and gas DPPs can generally A)be deducted up to a certain percentage in the earlier years of the program. B)be deducted completely in the first year of the program. C)not be deducted until the end of the programs life. D)not be deducted at all.

B

When speaking to a customer about exchange-traded funds (ETFs), a registered representative could make which of the following correct statements? A)ETFs cannot be purchased using traditional limit or stop orders. B)ETFs have different potential tax consequences than mutual funds. C)ETFs cannot be bought on margin. D)ETFs can be purchased only by paying a sales charge added to the NAV.

B

Which of the following securities are nonexempt from registration under the Securities Act of 1933? A)Corporate debt issues and U.S. government agency issues B)Real estate investment trusts (REITs) and corporate equity issues C)U.S. government Treasury issues and REITs D)Municipal securities and U.S. government agency issues

B

Advantages enjoyed by the limited partners in a partnership might be all of the following except A)having liability limited to the loss of the money invested. B)owning an interest in an investment managed by others. C)being in a fiduciary position with responsibilities to others. D)having income and expenses flow directly through to them.

C

Limited partnership programs are categorized as direct participation programs. The term direct participation refers to the A)general partners directly participating in the day-to-day management of the partnership. B)ability for each partner to have her vote flow through to the general partner. C)flow through of profits and losses of the partnership to the individual limited partners. D)ability of any partner, limited or general, to participate in the running of the partnership.

C

The allowable deduction for equipment used in an oil and gas direct participation program is taken as A)depletion applied when the equipment is sold. B)a one-time expense applied at the end of the program. C)a credit applied at the end of the program. D)depreciation over the life of the program.

D

unique forms of business that raise money to invest in real estate, oil, gas, equipment, leasing and other similar business ventures

DPPs

difference between ETF and mutual fund

ETF is traded on the floor of an exchange

senior, unsecured debt securities issued by a bank or financial institution backed by good faith and credit

ETN

costs associated with drilling, such as wages, supplies, fuel, and insurance that have no salvage value when the program ends deducted in full in the first year of operation

IDCs (Intangible drilling costs)

provide other government entities, such as cities, counties, school districts, and other state agencies with a short term investment vehicle to invest funds

LGIPs

Reits not listed on exchange trade in the

OTC market

___ are permitted from one states plan to another states plan, but no more than every 12 months

Rollovers

ETF is registered as a ___ or __, but it is more like a closed end fund

UIT or open end fund

a REIT is taxed as a

conduit

primary risk associated with ETN

default

tax deductions that compensate the program for the decreasing supply of oil or gas after it is taken out of the ground or sold

depletion allowances

own commercial property

equity reits

considered an equity security, invests in a specefic group of stocks and generally does so to mimic a particular index, such as the S&P 500

exchange traded fund

two types of partnerships

general and limited

organized as limited partnerships and sold as private placements

hedge funds

there are no ___ on making contributions to a 529 plan

income limits

track a __, but do not represent ownership in a pool of securities the way share ownership of a fund does.

index

DPPs are highly illiquid because there

is no secondary market

when DPPs purchase equipment leased to other businesses. primary investment objective is tax sheltered income (income being sheltered by write offs)

leasing programs

contributions are __ for ables, and amounts may be adjusted for inflation

limited

most common type of DDP is

limited partnership

exchange traded REITs

listed REITs

minimum holding requirements for hedge funds

lockup provisions

payments to a savings plan can be

lump sum or periodic payments

ETNs have a __ date

maturity

own mortgages on commercial property

mortgage property

because they are state sponsored, they are defined as a

municipal fund security

include speculative or exploratory programs to locate new oil deposits and income programs that invest in producing wells

oil and gas programs

unincorporated association of two or more individuals

partnerships

Passive losses offset ___ only

passive income

income for an LP is called ___ and is added to ordinary income for tax purposes

passive income

two types of section 529 plans

prepaid tuition plans for state residents savings plans for residents and non residents

can invest in raw land, new construction, or existing properties

real estate programs

LGIPS are not required to

register w the SEC

type of education savings account available to investors. Plan allow money saved to be used for qualified expenses for K-12 and post secondary education

section 529

most states permit ___ withdrawals as long as the donor has opened an in state plan

tax free

withdrawals for nonqualified expenses will be subject to

taxes on any gains and a 10% penalty on gains

REITS are not considered DPPs because

they dont pass through losses

LGIPs are generally formed in a

trust