Units 1-3

Which of the following types of investment company is permitted to capitalize with common stock and preferred stock?

A closed-end investment company

A scale of declining sales charged based on the amount invested

Breakpoints

Declines over time so investors pay the charge at redemption

Class B Shares (back-end load)

Shares sold only to participants in retirement plans, such as a 401(k), and have no front-end or back-end load, but may have a 12b-1 fee that is lower than class b and class c shares, but higher than class a shares

Class R Shares

A _________ is issued based on the general credit of the corporation. There are no pledged assets included.

Debenture

If a bond has a YTM greater than its coupon, the bond is trading at a

Discount

Rank Discount Yields from Lowest to Highest

Nominal, CY, YTM, YTC

All purchasers of restricted stock generally have a holding period requirement of

Six Months

Which type of securities are not rated because the backing of the US implies no default risk?

Treasury Securities

Treasury bills are always issued at a

discount

Owners of a corporation's equity securities

have limited liability

The Investment Company Act of 1940 prohibits registered open-end investment companies from engaging in any of the following practices except

issuing common stock

Class I shares are sold only to institutional investors and have ______ fees and expenses

lower

When discussing investment companies, the term sales load most commonly refers to

the fund's sales charge, expressed as a percentage of the public offering price

Access, as owners, to information about corporate earnings before the general public is a feature of which type of stock

Common Stock

pays past and current preferred dividends before paying dividends on common stock

Cumulative preferred stock

If the YTM of a bond is less than its YTC, the bond is trading at a

Discount

When interest rates are going up, prices of older bonds are going _____

Down

Loads are reflected in a fund's public offering price.

Front-End Loads

If the bond has a YTC lower than its CY, it is trading at

Premium

Closed-end investment companies trade their shares in the _______ _________.

Secondary Market

True or False: No Brady Bond carries a US government guarantee

True

True or False: The price of shares of a closed-end company are based on supply and demand, therefore, can sell at, above, or below the fund's net asset value.

True

Rank Premium Yields from Lowest to Highest

YTC, YTM, CY, Nominal

Which type of bonds are more volatile than bonds with coupon payments

Zero Coupon Bonds

Advantages of Brady bonds to an American investor include all of the following except:

because they are US dollar denominated, they bear no currency risk to US investors

Eurobonds pay in

foreign

comes from a section of the Investment Company Act of 1940, which allows mutual funds to charge these fees for certain distribution and marketing expenses.

12-b 1 Fee

The GEMCO Growth Fund, an open-end investment company, calculates its net asset value per share to be $9.15. Orders that were received prior to the cut-off time are excecuted at a public offering price of $10 per share. From this information you that the sales charge is

8.5%

Daniella has a number of investment company products within her retirement portfolio. One of these investments trades on an exchange and may trade at a premium or discount to its net asset value. These features are most likely found in what type of investment?

Closed-end investment company

What are the 3 types of Municipal Bonds

General Obligation Bonds, Revenue Bonds, Tax Equivalent Yield

A company that actively manages securities portfolio to achieve a stated investment objective.

Management Investment Company

Eurodollar bonds pay in what currency?

US Dollars

Guaranteed Bonds are

Unsecured Debt

A bond issue that may be retired in advance of maturity at the option of the issuer is said to have

a callable feature

A bond indenture states that payment of interest and principal will come from the collection of ad valorem taxes. This is most likely

a municipal general obligation bond