Unit 4 SIE
ABC Growth Fund has total assets of $120 million and liabilities of $5 million. The fund has 5 million outstanding shares. What is the fund's current net asset value (NAV) per share?
$23
BOB Income Fund has total assets of $120 million and liabilities of $5 million. The fund has 5 million outstanding shares. What is the fund's current net asset value (NAV) per share?
$23
XYZ Income Fund has total assets of $12 million and liabilities of $500,000. The fund has 500,000 outstanding shares. What is the fund's current net asset value (NAV) per share?
$23
ABC Growth Fund has met assets of $120 million and liabilities of $5 million. The fund has 5 million outstanding shares. What is the fund's current net asset value (NAV) per share?
$24
XYZ Income Fund has net assets of $12 million and liabilities of $500,000. The fund has 500,000 outstanding shares. What is the fund's current net asset value (NAV) per share?
$24
DEF Growth Fund has net assets of $330 million and liabilities of $15 million. The fund has 10 million outstanding shares. What is the fund's current net asset value (NAV) per share?
$33.00
JIM Growth Fund has net assets of $75 million and liabilities of $3 million. The fund has 1.2 million outstanding shares. What is the fund's current net asset value (NAV) per share?
$62.50
BOB Income Fund has reported average net assets of $120 million and expenses of $600,000. What is the fund's expense ratio?
0.5%
ABC Growth Fund has reported average net assets of $120 million and expenses of $1.44 million. What is the fund's expense ratio?
1.20%
DEF Growth Fund has net assets of $330 million and expenses of $4.95 million. What is the fund's expense ratio?
1.50%
A letter of intent (LOI) must be completed within
13 months
An investor asks for a copy of mutual funds Statement of Additional Information (SAI). The request must be satisfied within
3 business days, free of charge
DEF Income Fund has a public offering price (POP) of $75 per share and a net asset value (NAV) of $72.75. What is the fund's sales charge (SC)?
3%
MNO High Yield Bond Fund has a public offering price (POP) of $120 per share and a net asset value (NAV) of $116.40. What is the fund's sales charge (SC)?
3%
The Windmill Bond Fund has a POP of $12.34 per share. Your customer invests $4,000 at this price. How many shares will they receive?
324.150
The DEF Income Fund has a public offering price of $25 per share. Your customer invests $10,730 at this price. How many shares will they receive?
429.2
The ABC Growth Fund has a public offering price (POP) of $15 per share and a net asset value (NAV) of $14.25. What is the fund's sales charge (SC)?
5%
PQR Treasury Bond Fund has a Public Offering Price (POP) of $50 per share and a net asset value (NAV) of $47.50. What is the fund's sales charge (SC)?
5.0%
Jim's Tech Fund has a public offering price of $75.28 per share. Your customer invests $40,000 at this price. How many shares will they receive?
531.350
GHI Equity Fund has a public offering price (POP) of $30 per share and a net asset value (NAV) of $28.20. What is the fund's sales charge (SC)?
6%
The sales charge for Class A shares may not exceed
8.5% of the total investment
A letter of intent may be backdated to include a prior purchase up to
90 days
The violation of selling mutual fund shares just below the point where the customer would qualify for lower sales charges and not informing the customer that they may qualify for lower sales charges is
A breakpoint sale
A fund's expense ratio is expressed as which of the following?
A percentage of the fund's net assets
A registered representative needs which of the following licenses to solicit a variable annuity sale?
A securities and a life insurance license
A variable annuity (VA) is an investment product designed to provide which of the following?
A supplement to retirement
Regarding sales loads, management fees, and operating expenses for mutual funds, which of the following is true?
All reduce investor returns because they reduce the amount of money available for the fund to invest.
Which of the following regarding open-end (mutual fund) and a closed-end management investment company is true?
An open-end company may sell fractional shares, but a closed-end company may not.
If the portfolio of a variable annuity separate account is directly and actively managed by the insurance company, the separate account must be registered as
An open-end management investment company
Which of the following issues only common stock?
An open-end management investment company
How often is net asset value (NAV) for a mutual fund determined?
At least once per business day
Your customer invests in a mutual fund that has a contingent deferred sales charge that begins at 5% and declines over a holding period of five years until it reaches zero. Your investor is likely purchasing what share class?
B shares
Which of the following are included in the semiannual financial reports a mutual fund must provide to its shareholders?
Balance sheet showing assets, liabilities, and net assets Income statement detailing profit and loss for the period
Which of the following are associated with manipulative, deceptive, or fraudulent devices?
Breakpoint sale Chuming
Your customer invests in a mutual fund that charges a 1% fee upon sale if they liquidate in the first year. Your customer is likely purchasing what share class?
C shares
All of these are part of the expense ratio of a mutual fund except
CDSC
Which of the following would be unlawful regarding use of a mutual fund prospectus?
Calling an investor's attention to a section that may be interesting
Which class of shares have a front end sales charge?
Class A shares
Which class of shares have a 12b-1 fee as the primary sales charge?
Class C shares
Which of these investment companies trade in the secondary market?
Closed end funds
Which of the following investment companies has an actively managed portfolio?
Closed-end company
A mutual fund may purchase which of the following investments?
Common and preferred stocks, bonds, and other types of investments
Which of the following may be purchased in the secondary market?
Common shares of a closed-end investment company
Which of the following may be purchased on a stock exchange?
Common shares of a closed-end investment company
Which of the following securities may trade above or below their net asset value?
Common shares of a closed-end investment company
All of the following may be purchased in the secondary market except
Common shares of an open-end investment company
Which of the following is part of the expense ratio of a mutual fund?
Costs incurred by the board of directors
Which of the following investments are governed under the rules set down in the Investment Company Act of 1940?
Face Amount Certificates
Your client has $250,000 to invest. His objective is a life-time monthly income that he can receive after he retires. Part of his customer profile stresses that he has had uncomfortable experiences in the past with the stock market and is not inclined to invest in anything that is subject to market fluctuations. Based on the client's profile, which of the following would be the best recommendation?
Fixed annuity
Which of the following investment companies terminates business on a predetermined date?
Fixed unit investment trust (UIT)
What is the most common way investors pay mutual funds's sales charge?
Front-end load
Which of the following is not part of the expense ratio of a mutual fund?
Front-end load
Which of the following characteristics are associated with the face-amount certificates (FAC)?
In return for a future payment, the investor agrees to pay the issuer a set amount of money
An investment company that features a managed portfolio of securities is known as which of the following?
Managed investment company
Which of the following investments is managed by an investment adviser?
Managed investment company
A mutual fund has been in existence for 25 years. The prospectus must disclose the fund's performance
Over the last 1, 5, and 10 years
A customer with no other mutual fund investments wishes to invest $47,000 in the Windmill Growth Fund. If the Class A shares are eligible for a breakpoint sales charge discount at the $50,000 investment level, the action least appropriate for an agent is to
Place the order as instructed
Which of the following would have no effect on the NAV per share of a mutual fund share?
Portfolio securities had to be sold for a big capital loss.
Which of the following is not part of a mutual fund's expense ratio?
Sales load
Which of the following would be included in a mutual fund's list of expenses?
Shareholder records and service
Which of the following prospectus must be provided no later than confirmation of the sale?
Statutory prospectus
Growth in a variable annuity is which of the following?
Tax deferred until withdrawn
Your customer fails to invest sufficient new money as required under a letter of intent (LOI). What will happen as a result of this failure?
The customer must deposit funds to cover the difference in the sales charges or lose the escrowed shares
A customer sells shares of the ABC Growth Fund and invests the proceeds into the Windmill Income Fund. Both investments are in Class A shares. What are the tax consequences for these transactions?
The customer will realize any capital gains or losses and will pay a new sales charge.
A diversified growth fund charging 0.4% of net assets per year as a 12b-1 fee may NOT make which of the following statements?
The fund is a no-load fund.
All of the following are advantages of owning a mutual fund except
The fund may be purchased at any time during the trading day
Which of the following is not a feature shared by mutual funds and closed-end funds?
The fund may offer various withdrawal plans that allows different payment methods at redemption
Under the IRC Subchapter M, if the WWF Fund only distributes 85% of its net investment income to its shareholders, then which of these is true?
The fund must pay taxes on 100% of the net investment income The shareholder must pay taxes if the income is received in cash or reinvested
Which of the following would cause a mutual fund's net asset value (NAV) per share to fall?
The fund pays a dividend to shareholders The market value of the portfolio declines
When the owner of an annuity elects to annuitize, they begin to receive income payments that are guaranteed for the life of the annuitant. Who provides this guarantee?
The insurer
After the owner of a variable annuity elects to annuitize, they begin to receive lifetime income payments. The calculation that determines the amount of those payments includes several factors. Which of the following is not one of those factors?
The projected rate of inflation
A customer wants to invest $9,500 in the ABC Growth Fund. The fund has a breakpoint at $10,000. You disclose this to the customer and explain the advantage of investing an additional $500. The customer acknowledges the information and goes ahead with the purchase of $9,500. Which of the following is true of this situation?
The representative has met the disclosure obligation and may enter the order.
How often may a mutual fund calculate a new net asset value (NAV)?
There is no limit to the number of times this may occur.
What is the time period required for a customer to qualify for a breakpoint discount under rights of accumulation?
There is no time limit
An investor has asked a mutual fund company for a copy of its Statement of Additional Information (SAI). How long does the fund have to comply with the request?
Three business days from the date of the request
Which of the following investment companies does not typically feature a portfolio manager?
Unit investment trust
Which of the following is a type of investment company security as defined by the Investment Company Act?
Variable annuity subaccount
Which of the following is a type of investment company security as defined by the Investment Company Act?
Variable life insurance subaccount
All of the following statements are true except
a bond mutual fund may issue bonds
If a registered representative allows a customer to unknowingly buy investment company shares in an amount just under a dollar bracket that would qualify for a reduced sales charge, or encourages such a purchase, this is known as
a breakpoint sale violation
The violation of selling mutual fund shares just below the point where the customer would qualify for lower sales charges and not informing the customer that they may qualify for lower sales charges is called
a breakpoint sale.
A company has just conducted a stock offering, by prospectus, through an investment banker. The proceeds of the offering are used to purchase a portfolio of securities. The stock, now in the hands of the public, is freely traded in the secondary market, and the portfolio is managed to generate maximum profit according to a specific investment objective. The company must be
a closed-end company
All of the following actions would cause the NAV per share of the mutual fund to increase except
a large number of investors making deposits in the fund.
Advantages to the investor offered by investment companies include
ability to invest small amounts in many different securities & increased purchasing power in the marketplace
Class B mutual fund shares are also known as
back-end load shares
If an investor purchases a mutual fund based solely on seeing the summary prospectus, the investor must
be able to access a full prospectus no later than confirmation of sale.
The ex-date for a dividend from a mutual fund is set by whom?
board of directors
Regarding open-end and closed-end investment companies, all of the following are true except
both offer an unlimited number of shares in a continuous public offering
Which of the following investment companies do not redeem their shares?
closed-end funds
All of the following would be included in the expense ratio of a fund except
front-end or back-end load.
Mutual funds that market directly to the public, using no underwriter and charging no sales charge, are called
no-load funds
Investment Company Act of 1940 classified all of the following as investment companies except
private investment companies
Benefits of mutual funds include all of the following except
reinvested dividends are not taxed until withdrawal.
All of the following describe mutual funds except?
shares may be sold either on an exchange or over the counter
All of the following are criteria that suggest a variable annuity is suitable for the customer except
the customer is funding the annuity by leveraging their primary residence.
All of the following are true regarding breakpoints for mutual funds except
the first breakpoint investors can achieve is mandated by industry rule to be at the $10,000 investment threshold
All of the following must be on the cover page or beginning of the summary prospectus of a mutual fund except
the name of the investment advisor
A breakpoint sale is
the sale of investment company shares in dollar amounts just below the point at which the sales charge is reduced on quantity transactions to incur the higher sales charge.
Which of the following investment companies typically has a fixed portfolio?
unit investment trust
An investor has purchased Class A mutual fund shares. The net asset value (NAV) per share of the fund is the price the investor
will receive upon redemption of the shares
