Orion Series 65 Unit 5

Buying stocks with high PE ratios normally reflects which of the following investment styles? A) Growth. B) Value. C) Special situations. D) Turnaround.

A) Growth

If a husband makes a gift of $100,000 to his wife, a U.S. citizen, how much of the gift is subject to gift taxes? A) $100,000.00 B) $90,000.00 C) $0.00 D) $50,000.00

C) $0.00

If a new client has $200,000 to invest and wants to retire in 15 years, which of the following client information is least necessary for an adviser to recommend a suitable investment program? A) The age of the client. B) The amount of income he requires for his retirement years. C) Current income and cash flow requirements. D) Tolerance toward risk.

C) Current income and cash flow requirements.

Which of the following is a characteristic of the passive investment style? A) High portfolio turnover. B) Income rather than growth objective. C) Rebalancing. D) Tactical management.

C) Rebalancing.

A limited liability company is A) an insurance company B) traded on major exchanges C) a company with tax consequences similar to a partnership D) a limited partnership

C) a company with tax consequences similar to a partnership

Which of the following market analysts is using the efficient market theory? A) Before he invests in a company, an analyst visits its headquarters to see whether management is running the company effectively. B) An analyst sells stock when he sees small investors buying. C) An analyst has developed a system for identifying reversals in downward trend-lines. D) An analyst picks company names out of a hat.

D) An analyst picks company names out of a hat.

Which of the following is federally tax exempt for a corporation? A) Foreign corporate stock dividends. B) Capital gains. C) Preferred stock dividends. D) Municipal bond interest.

D) Municipal bond interest.

A professional tennis player comes to you seeking advice on setting up a trust. She is interested in giving to charity and also wants discretion as to when income is distributed to the beneficiaries, her parents. Which trust do you advise she use? A) Charitable lead trust. B) Simple trust. C) Charitable remainder trust. D) Complex trust.

D) complex trust

In the field of portfolio management, there are a number of different management styles. One of those styles involves committing additional capital to the market when others are reducing their exposure, or eliminating positions while others are increasing theirs. This style is generally referred to as: A) active. B) value. C) growth. D) contrarian.

D) contrarian

Assets that might be found on a family balance sheet include: I. car loan. II. gold watch. III. Keogh plan. IV. salary.

II and III

a form of business entity in which the shareholders (called members) are taxed individually at their respective tax rates as is the case in a partnership.

limited liability company (LLC)

a legal entity that designates a person (the trustee) to manage the trust's assets for the benefit of another person (the beneficiary or beneficial owner).

trust

An investor purchases 500 shares of stock on January 10th at $50 per share and sells it on August 4th of the following year for $40 per share. As a result, the investor has realized a: A) long-term capital loss. B) short-term capital gain. C) long-term capital gain. D) short-term capital loss.

A) long-term capital loss.

The management style that is most similar to buy and hold is: A) strategic management. B) contrarian. C) tactical management. D) active management.

A) strategic management.

Investors wishing to employ a passive strategy for their bond portfolios would most likely elect which of the following? A) Barbell B) Buy and hold C) Bullet D) Laddering

B) buy and hold

As compared to value investors, growth investors tend to: A) take more of a long-term approach to their investments. B) look for companies whose sales, earnings, or market share are increasing at an above- average rate. C) look for companies that are undervalued or overlooked by other investors. D) be very price-conscious when purchasing stocks.

B) look for companies whose sales, earnings, or market share are increasing at an above- average rate.

An investment strategy where a higher price is paid for a stock based on expected returns is: A) dollar cost averaging. B) return on investment. C) futures investing. D) growth investing.

D) growth investing.

In a trust account, the person who makes the account management decisions is the: A) beneficiary. B) non-trustee custodian. C) investment adviser representative. D) trustee.

D) trustee

The Jones family has scheduled an initial visit with a financial planner. Mr. Jones has an annual salary of $70,000 and this is their first attempt at financial planning. Which of the following should be the first step taken by the financial planner? A) Establish an emergency fund. B) Pay off credit card debt. C) Determine a reasonable fee for designing the plan. D) Set goals and dates for reaching them.

A) Establish an emergency fund.

An investor purchases 100 shares of a stock at $100 per share on January 1st. On the following July 1st, the shares are sold for $120 per share. The tax consequences are: A) $2,000 short-term loss. B) $2,000 short-term gain. C) $2,000 long-term loss. D) $2,000 long-term gain.

B) $2,000 short-term gain.

The concept of creating a model portfolio, through asset allocation principles, that both increases return and reduces risk is known as: A) risk reduction fundamentals. B) rebalancing. C) corrective adaptation. D) portfolio optimization.

D) portfolio optimization.

There are several popular investment styles and, in many cases, portfolio managers use a blended approach to security selection. If a portfolio manager adhered to a pure value style, he would put most of his focus on: A) projecting future earnings based on past earnings. B) the company's financial statements. C) using technical analysis. D) lagging indicators.

B) the company's financial statements.