Series 65 Exam 5

a company with tax consequences similar to a partnership.

A limited liability company is

Timing.

A popular funding technique that involves investing the same amount at regular intervals is known as dollar cost averaging. Participating in this funding approach tends to lessen which risk?

Complex trust.

A professional tennis player comes to you seeking advice on setting up a trust. She is interested in giving to charity also wants discretion as to when income is distributed to the beneficiaries, her parents. Which trust do you advise she use?

dollar cost averaging.

An individual is a participant in the 403(b) plan offered by his employee. If he were to invest $200 per month into one of the growth sub accounts offered under the plan, he would be:

value.

An investment adviser is doing some research on a company and notices that the current market price is $21 per share. The most recently reported EPS is $3 and the company is a 19 cent dividend. On the balance sheet, the company is carrying a significant amount of cash. This company would probably be attractive to this adviser if his investment style was:

growth investing.

An investment strategy where a higher price is paid for a stock based on returns is:

domicile of the investor.

An investor diversifying a corporate bond portfolio does NOT consider:

$2,000 short-term gain.

An investor purchases 100 shares of a stock at $100 per share on January 1st. On July 1st, the shares are sold for $120 per share. The tax consequences are:

long-term capital loss.

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:

dollar cost averaging.

An investor wishes to save for her retirement. She arranges to have $250 per month withdrawn from her account to be invested into a commodity fund. This type of saving plan is called:

look for companies whose sales, earnings, or market share are increasing at an above average ratio.

As compared to value investors, growth investors tend to:

1, 2, 4, and 4

Asset allocation is an important element of the portfolio management process because 1. different asset classes have different risk and return characteristics 2. research indicates that asset allocation is much more important than security selection 3. portfolios that are focused on different asset classes will have very different returns over time 4. investors may prefer returns in different forms (e.g., income or capital appreciation)

2 & 3

Assets that might be found on a family balance sheet include: 1. car loan. 2. gold watch. 3. Keogh plan. 4. salary.

Growth.

Buying stocks with high PE ratios normally reflects which of the following investment styles?

C corporation.

If 150 investors want to form a corporation limit their financial liability to the amount of money they invest and do not want to be responsible for any debt that the corporation incurs, they would most likely form a(n):

Buy and hold

Investors wishing to employ a passive strategy for their bond portfolios would likely elect which of the following?

the need for liquidity is more important.

It would be correct to state that when an investor has a shorter time horizon:

there is no statutory limit on the number of investors in an LLC.

One respect in which an LLC differs from an S corporation is that

its fair market value (FMV) on the date of the deceased's death.

Property included in a deceased' gross estate is generally valued for estate tax purposes at:

strategic management

The management style that is most similar to buy and hold is:

the company's financial statements.

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:

seek securities that are undervalued or selling for less than their intrinsic value.

Value investors:

Tactical asset allocation.

Which of the following portfolio management styles would most likely incur the highest transactions costs?

1 & 2

Which of the statements about C corporations are TRUE!? 1. A C corporation pays income tax on it's earnings at the corporate level. 2. The income of C corporations is subject to double taxation. 3. Dividends paid by a C corporation are not subject to income tax at the shareholder level.

No tax.

Your daughter is getting married and ,to celebrate, you give her fiance a beautiful watch that you purchased for $5,575. What are the tax consequences of this gift?

$0.00

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?

expected return.

The Capital Asset Pricing Model (CAPM) is most commonly used to determine an investor's:

portfolio optimization.

The concept of creating a model portfolio, through asset allocation principles, that both increases return and reduces risk is known as:

Rebalancing.

Which of the following is a characteristic of the passive investment style?

municipal bond interest.

Which of the following is federally tax exempt for a corporation?

An analyst picks company names out of a hat.

Which of the following market analysts is using the efficient market theory?

Current income and cash flow requirements.

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?

trustee.

In a trust account, the person who makes the account management decisions is the:

contrarian.

In the field or 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:

Establish an emergency fund.

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?