66

A mutual fund must redeem its tendered shares within how many days after receiving a request for their redemption?

7

There are several financial models that refer to the "risk-free" rate of return. Which of the following instruments is used to measure that rate?

91-day treasury bill

Under the Uniform Securities Act, which of the following persons must register as a broker-dealer in a state?

A firm with no place of business in the state that has 25 clients in the state over the preceding 12 months A firm with a place of business in the state that deals exclusively with issuers A firm with a place of business in the state that deals exclusively with financial institutions

Under the Investment Advisers Act of 1940, which of the following is excluded from the definition of a person associated with an investment adviser?

A minority partner of an investment advisory firm An employee who manages client accounts for an investment advisory firm A clerk in an investment advisory firm A majority stockholder of an investment advisory firm A clerk in an investment advisory firm

In which of the following cases is the exemption from registration with the SEC not based on the value of assets under management?

An investment adviser that acts as an adviser solely to one or more venture capital funds It is only in the case of the adviser to venture capital funds where there is no dollar limitation on AUM.

For initial registration as an agent in a State, which can be required?

Consent to Service of Process Filing Fee Registration Application Fingerprints

If a businessowner's goal is to establish an entity that features ease in raising capital, which of these entities is the most appropriate?

LLC

Which of the following is a discounted cash flow computation?

NPV

If a federal covered investment adviser wishes to sell his business to another advisory firm, which of the following statements is TRUE?

No approvals are required. An investment adviser does not need the approval of clients to sell the business. However, technically, the sale means that the advisory contracts will be assigned and that cannot be done without client consent. In an event such as this, the clients would be given the choice of having the new firm manage their assets or taking their accounts elsewhere.

Which of the following might be used by an analyst to approximate a reasonable price for a common stock?

The dividend discount model

The sale of securities by issuers to financial institutions is a(n):

exempt transaction

Which of the following statements regarding an agent's authority to place orders for a client's account under NASAA's Statement of Policy on Unethical or Dishonest Business Practices of Broker-Dealers and Agents is TRUE?

The agent may, without the client's approval, place a sell order for the purpose of avoiding losses but may not place a buy order without the client's authorization. The agent is not required to obtain authorization to place orders for a client's account unless a conflict of interest is involved. ------ The client's oral approval is sufficient for a specific order. Written approval from the client authorizing a stated amount of a specified security is required before placing an order.

Which of the following must be included in an investment advisory contract under NASAA rules?

The fact that prepaid fees will not be returned if the contract is terminated early The fact that assignment of the contract is only permitted with customer consent Whether the contract grants discretionary authority to the adviser

On last year's annual updating amendment filed with the SEC, Alpha Investment Advisers indicated that it had more than $140 million in assets under management. Due to a reduction in the size of the firm, this year's annual updating amendment shows that assets under management have fallen to the $75 million level and are expected to remain there. Which of the following actions are required for Alpha?

Withdraw from SEC registration within 180 days of the adviser's fiscal year-end

An investment adviser that claims that it is a "fee only" adviser could be compensated based on:

a percentage of assets under management a flat annual or hourly fee for all work performed

A BD application is received by the State Administrator for a new broker-dealer subsidiary of a British securities firm. The application includes the disclosure that the parent firm was suspended from membership on the London Stock Exchange 4 years ago because of unauthorized trading by its Singapore branch. The State Administrator

can deny based on the suspension of the foreign regulator

The intentional omission of material facts when offering or selling a security can result in:

criminal liabilities and penalties

Savant Investment Managers (SIM) has a client with a short position in PQR common stock. The position was initiated at a price per share of $50, and with PQR currently selling at $30 per share, the client is interested in a method that will allow him to protect some of the unrealized profit without an expenditure of funds. His representative at SIM could suggest

entering a buy stop order at $35.

Because a trust account is managed for the beneficial interest of the beneficiary, the investment adviser representative can

have a check drawn on the account payable to the trustee for expenses

A Federal Covered Adviser can be audited by the State Administrator:

if the administrator suspects fraud

An agent made written disclosure to his employing broker-dealer that he intends to execute a series of private securities transactions with individuals who do not have accounts with his broker-dealer. The agent did not acquire express written permission from the broker-dealer and did not receive compensation for executing the transactions, but did receive written acknowledgment of receipt of the agent's notice. In this case, the agent

is guilty of selling away.

What would be the time horizon for a 65-year-old client who has just retired?

it depends on their life expectancy

One of your clients wishes to give her daughter $200,000 to start her own business. The daughter expects to be finished with graduate school and an internship in 8 years. The expected rate of return is 9%. Using the Rule of 72, calculate the amount the client must deposit today to meet that future goal.

l. With an earnings rate of 9%, the rule tells us that money will double in 8 years (72 divided by 9 = 8). With an 8-year accumulation period and a goal of $200,000, the deposit required to reach that by doubling is $100,000.

If the risk-free rate of return is 3.5%, the expected market return is 9.5%, and the beta of a stock is 1.3, what is the required return on the stock according to the capital asset pricing model?

r 0.035 + (1.3 × [0.095 - 0.035]) = 0.035 + 0.078 = 0.113, or 11.3%.

Advisers that manage $110 million or more in customer assets are required to do...?

register with the SEC file notice with the state in which their principal office is located if notice filing is required by the Administrator

ABC Furniture Company wishes to raise capital by issuing some securities in its home state. The CEO of the company feels that registration with the Administrator is unnecessary because the issue is exempt. Should ABC be ordered to appear at a hearing, the burden of proving its issue is exempt is on

the company

In portfolio theory, the alpha of a security or a portfolio is

the difference in the expected return of the portfolio, given the portfolio's beta, and the actual return the portfolio achieved

An investment advisory firm advertises a stock-picking system that helps investors choose the timing and selection of securities for purchase. Under the Investment Advisers Act of 1940, which of the following must be disclosed in the advertisement?

the difficulty and limitations of the system

A fundamental analyst researching a stock is concerned with:

the economic climate the inflation rate how an industry is performing a company's historical earnings trends how it is capitalized and its product lines, management, and financial statement ratios, such as the P/E ratio

If the risk and return profiles of all the possible risky portfolios were plotted on a graph, those portfolios that would be the most attractive to investors would lie on

the efficient frontier

A management investment company owns portfolio securities with a current market value of $100 million. The company owes $10 million for securities purchased but not yet paid for and accrued management fees of $5 million. If there are 2,611,437 shares outstanding, the net asset value per share is closest to

the net assets are the $100 million portfolio value minus the liabilities of $10 million for the unpaid securities plus the $5 million in accrued management fees. That leaves $85 million divided by the 2,611,437 shares outstanding which is approximately $32.55.

When an investment adviser chooses to use a solicitor, the Investment Advisers Act of 1940 requires all of the following conditions.

the solicitor must provide the customer with a copy of the investment adviser's brochure either the solicitor or the adviser must disclose to the customer any additional costs of providing advisory services due to solicitor involvement the solicitor must not be subject to disciplinary actions involving finance or dishonesty

If an investor buys a utility stock with a stable 5% dividend, and after a year the investor's total return in the stock is 10%, the most likely reason for this is

the stock appreciated by 5%

For larger accounts, a broker-dealer is least likely to waive its normal fee for

transferring the account to another broker-dealer

An investment adviser is registered in State A and State B. An investment adviser representative of that firm:

must register in any State where the representative solicits customers to buy investment advice

An Investment Adviser has just submitted a U-4 registration application for a newly hired salesperson to be registered as an Investment Adviser Representative of the firm. This individual can start soliciting potential clients:

once the State Administrator approves the application