Orion Series 65 - Exam 3 Quick Quizzes
According to the Investment Company Act of 1940, an open-end investment company must compute its NAV:
no less frequently that once per day Reference: 7.1.1.3.2 in the Licence Exam Manual
A farmer entered into a forward contract to sell his produce at $2.25 per bushel. At the expiration date of the contract, the price was $2.00 per bushel. The farmer would receive
$2.25 Reference: 9.1.5 in the Licence Exam Manual
If a call option with an exercise price of $50 is purchased for $300, the maximum amount the investor can lose is
$300 Reference: 9.1.1 in the Licence Exam Manual
Bob, age 60, has invested $17,000 in his nonqualified variable annuity over the years. The total value has reached $26,000. He wishes to withdraw $15,000 to send his son to college. What is his tax consequence on the withdrawal?
$9,000 is taxable; $6,000 is nontaxable Reference: 8.1.5 in the Licence Exam Manual
Which of the following are NOT considered money market instruments? I. American depository receipts II. Commercial paper III. Corporate bonds IV. Jumbo (negotiable) certificates of deposit
I and III Reference: 6.1.1 in the License Exam Manual
The difference between a fixed annuity and a variable annuity is that the variable annuity: I. offers a guaranteed return II. offers a payment that may vary in amount III. will always pay out more money than the fixed annuity IV. attempts to offer protection to the annuitant from inflation
II and IV Reference: 8.1.2 in the Licence Exam Manual
A method of valuating an investment, particularly debt securities, by calculating what future cash returns will be worth at the time they are received, based on estimates of future inflation and interest rates is known as
Discounted cash flow Reference: 5.3.3.2 in the License Exam Manual
An investor is considering the purchase of $100,000 maturity value of zero-coupon AAA related corporate bonds scheduled to mature in 20 years. Among the risks that this investor will be assuming are I. Default risk II. Interest rate risk III. Pre-payment risk IV. Reinvestment risk
I and II Reference 5.3.2.4 in the License Exam Manual
Which of the following statements about the redemption of mutual fund shares are TRUE? I. A mutual fund may, but is not required to redeem its shares if requested by a shareholder. II. A mutual fund will redeem fractional shares as well as full shares. III. Redemption of mutual fund shares are handled under forward pricing.
II and III Reference: 7.1.1.3 in the Licence Exam Manual
What happens to outstanding fixed-income securities when interest rates decline?
Prices increase Reference: 5.3.2.3 in the License Exam Manual
What would likely happen to the market value of existing bonds during an inflationary period coupled with rising interest rates?
The price of the bonds would decrease Reference: 5.3.2.3 in the License Exam Manual
An investor interested in obtaining the benefit of professional portfolio management has been tracking a particular investment company for the past several months. In so doing, it becomes obvious that the market price of the shares moves in direct relation to the computed NAV. This investor must be following
an open-end fund Reference: 7.1.1.3 in the Licence Exam Manual
A bond, preferred stock, or debenture exchangeable at the option of the holder (for common stock of the issuing corporation) is a:
convertible security Reference: 5.2.2 in the License Exam Manual
An unsecured bond is also known as a(n):
debenture Reference; 5.1.2 in the License Exam Manual
In the secondary market, Treasury bond prices are most influenced by the:
inflation rate Reference: 5.3.2.3 in the License Exam Manual
Investment company portfolio managers are apt to classify common stocks into groups. One measurement is the product of multiplying the market price per share times the number of shares outstanding. The result is known as:
market capitalization Reference: 7.1.3.1 in the Licence Exam Manual
A review of the prospectus of an open-end investment company reveals that its portfolio consists entirely of CDs, Treasury bills, and repurchase agreements. This is probably a(n):
money market fund Reference: 7.1.3 in the Licence Exam Manual
An open-end investment company is also referred to as a(n):
mutual fund Reference: 7.1.1.3.2 in the Licence Exam Manual
Money market instruments are:
short-term equity Reference: 6.1.1 in the License Exam Manual
The main benefit that variable life insurance has over whole life insurance is:
the potential for a higher cash value and death benefit Reference: 8.2.4 in the Licence Exam Manual
