SIE Ch 7

A prospectus can no longer be used if financial information is older than

16 months

What is the maximum front end sales charge for a mutual fund

8.5% of the POP

Which of the following is false regarding ETNs?

ETNs pay periodic interest

Which of the following is an investment company with the objective of achieving the same return as a particular market index?

Exchange traded Fund

An investor is interested in a REIT that will provide immediate income. The investor would best be served by

Mortgage REIT

A customer owns 100 shares of XYZ Mutual Fund, an open-end investment company. When the customer sells the shares, he will receive

NAV computed after the order is received

Which of the following statements is not correct with respect to closed-end investment companies

They continuously offer new shares They offer a fixed amount, shares are then traded at a premium or discount on the secondary market

All of the following reduce gross assets to net assets except

Underwriting assessments All fund "expenses" have the effect of reducing the gross asset value. Underwriting and sales charges are added to the POP and are not reductions in gross assets

If you own securities that represent an undivided interest in a fixed portfolio, with which type of investment company are you invested?

Unit Investment Trust

Which type of investment companies do not charge a management fee

Unit Investment Trust

Which of the following is false regarding a letter of intent

a letter of intent can be backdated 6 months It can be backdated for 3 months to include previous investments and will allow another 10 months of investments for a total of 13 months

A redeemable security is

a security with no secondary trading

The investment company concept allows the individual investor to

achieve wide diversification with a relatively small investment

Passive ETFs are similar to index funds in all of the following ways except

active management

All of the following are characteristics of UITs except

actively managed portfolio it is fixed so remains unchanged

Due to drought conditions, a high net worth, experienced investor believes that the prices of a broad range of agricultural commodities will increase. Which of the following might be an appropriate investment for this investor

agricultural sector total return ETN

An Emerging Market Currency ETN may be an appropriate investment for which of the following persons

an experienced investor looking for a simple way to gain exposure to a portfolio of emerging market currencies

A sales breakpoint for a mutual fund sale is available to

an individual account holder

An investment adviser receives a fee for his services. This fee is classified as

an operating expense of the fund

An investment company can perform certain activities only with the approval of a majority of the shareholders. Which of the following is a board of directors allowed to do without a shareholder vote

appoint officers of the investment company

The shareholders of a mutual fund have certain rights associated with the ownership interests they hold in the company. These rights include all of the following except

approval of investment advisory agreement

A closed-end management company has shares that

are not redeemable

A new investor recently opened a mutual fund account and is planning to make monthly investments with the goal of accumulating a sizeable retirement account in the next 20 years. What mutual fund feature best helps him in accomplishing this goal

automatic reinvestment of dividends and capital gains at NAV

One of the significant advantages of investing in mutual funds is

automatic reinvestment of dividends and capital gains at NAV

A broad market index ETN carries all of the following risks except

business risk

An investor purchased 100 shares of an investment company and paid the market price plus a commission

closed-end investment company shares open-end shares are purchased at NAV plus sales charge

When making mutual fund recommendations, a registered representative should not

concentrate on short-term to highlight investment opportunities

All of the following apply to exchange privileges within a family of funds except

even though shares are redeemed, it is not a taxable event because the shareholder does not receive the proceeds

A mutual fund that charges the maximum sales charge of 8.5% allowable by the Investment Company Act of 1940 does not have to offer

exchange rights

If you were purchasing a security on installments and the investment matured at a fixed dollar amount in the future, you would own a

face amount certificate

If you were purchasing a security on installments and the investment matured at a fixed dollar amount int he future, you would own a

face amount certificate

Which type of investment company issues certificates that can be redeemed for a fixed amount on a specified date

face amount certificate

Which type of investment company issues debt instruments that offer the investor a predetermined rate of interest

face amount certificate

Mutual fund sales breakpoints are allowable only if

information concerning scheduled breakpoints is given to shareholders and prospective investors

Which of the following is subject to higher maintenance requirements when purchased on margin

leveraged ETFs

Why would an investor choose an index fund as a holding in her portfolio

lower management fees

Which of the following is the largest expense item of the fund

management fee

Which of the following would not be in an equity REIT portfolio

mortgage

A hybrid REIT invests in

mortgages and real property

The payment to mutual fund investors who redeem their shares will be based on the

next computed bid price as of the day the shares are received

The method by which a mutual fund offering price will be determined is

outlined in the prospectus

Which of the following accurately describes an ETN?

principal at maturity is based on an index

An equity REIT invests in

real estate

Bill owns shares in a closed-end investment company. He can dispose of his shares by

sale on the open market

All of the following are characteristics of an Exchange Trade Fund except

sell directly to investors true: trade near their NAV, can be purchased on margin 30 days after IPO, provide intraday liquidity

Which of the following is a privilege offered by a mutual fund family

the ability to exchange shares of one mutual fund for share in another mutual fund under the same family of funds with no additional sales charge

All of the following must be included within a prospectus except

the components that originally comprised the fund's assets

UITs have fixed portfolios, which means that

the content of the portfolio is fixed for the life of the trust

All of the following are contained in a fund's prospectus except

the funds current portfolio of securities

Which of the following is the main difference between two mutual funds: Domestic Blue Chip A and Domestic Blue Chip B

the method of computing sales charges

An investor purchasing a mutual fund will pay what price

the next calculated public offering price after purchase

The NAV will not change if

the portfolio sells securities and retains the cash

The statistic that measures fund performance and includes reinvested distributions and share appreciation, net of sales charges and expenses for the period is

total return

ETNs are

unsecured debt backed by credit of issuing bank have no principal protection do not pay periodic interest based on market index

What are the tax consequences of changing from one fund to another within a family of funds?

will have a taxable consequence because it is a purchase and sale

With regard to sales breakpoints, any schedule changes must be communicated to existing shareholders within what period of time

within 1 year