FINRA SIE Ch. 9 Practice Questions
All of the following statements concerning hedge funds are TRUE, EXCEPT the funds:
Must register under the Investment Company Act of 1940 if offered to U.S. residents
A customer who has consistently invested in mutual funds is considering a first-time investment in a hedge fund. When comparing mutual funds to hedge funds, which of the following statements is NOT TRUE?
Mutual funds pool investors' money and manage the portfolio, whereas hedge funds manage each investor's assets separately.
Which of the following often provides capital to start-up businesses?
Private equity funds
An equity inverse exchange-traded fund (ETF) is most similar to:
Selling stock short
Which of the following statements concerning hedge funds is TRUE?
These investments are typically sold to accredited investors.
Which of the following descriptions characterizes leveraged exchange-traded funds (ETFs)?
They are designed to deliver a multiple of the performance of an index or other benchmark
The person who distributes interest in a DPP is referred to as the:
Syndicator
Which of the following descriptions characterizes inverse exchange-traded funds (ETFs)?
They are designed to deliver the opposite of the performance of an index or other benchmark
Which of the following statements is TRUE concerning registered nontraded real estate investment trusts (REITs)?
They are required to distribute the same percentage of taxable income as exchange-traded REITs
What is the typical maturity for an ETN?
10 to 30 years
A REIT will receive preferential tax treatment if it distributes at least what percentage of its income to shareholders?
90%
Which of the following limited partnerships is the least likely to generate income?
A raw land limited partnership
Which of the following requires a limited partner to deposit additional funds?
An assessment
An investor with an investment objective of speculation wants to purchase a security that will increase by the same percentage as a decline in the S&P 500 Index. Which of the following securities should be recommended?
An inverse exchange-traded fund (ETF)
Which of the following is NOT a pass-through entity?
C Corporation
Which of the following is NOT a type of direct participation program (DPP)?
C Corporation
When selling limited partnership interests, a registered representative is NOT required to:
Certify that the customer is an institution
A registered representative is NOT permitted to exercise discretion as it relates to which of the following investments?
DPPs
Which of the following may be subject to a capital call?
DPPs
Which of the following investments generally distributes dividends and capital gains, mirrors a securities index, and can be purchased on margin?
ETF
Which of the following statements BEST describes exchange-traded notes (ETNs)?
ETNs are debt instruments linked to the performance of a commodity, currency, or index
SPDR is considered a type of:
Exchange-traded fund
If the credit rating of an issuer is lowered, which investment will lose the most value?
Exchange-traded notes (ETNs)
An investor is interested in selling 500 shares of her listed REIT. The sale will be handled in a manner that's similar to the:
Liquidation of a stock on the NYSE
Which of the following is NOT a benefit of investing in a real estate investment trust (REIT)?
Passive losses
Which of the following statements is TRUE concerning exchange-traded funds (ETFs)?
The securities may be used by individuals to pursue a market timing strategy
If a REIT generates at least 75% of its income from rents or mortgage interest, and pays out at least 90% of its income to the shareholders, for tax purposes the income distributed by the REIT will be taxable to:
The shareholders and not the REIT
Which of the following statements concerning ETFs is TRUE?
These funds' values may fluctuate throughout the trading day.
Regarding ETFs, which of the following statements is TRUE?
Typically, ETFs may be sold short
