65 Study Questions

Treasury bills are issued with a minimum denomination of...

$100

Under the federal income tax rules for the sale of a home, the first ______ of a gain is tax exempt for single filers and the first ______ of a gain is tax exempt for married couples filing jointly. The balance of the gain is taxable as a _______.

$250,000, $500,000, long-term capital gains.

What is the approximate expense ratio of a no load mutual fund?

50 basis points

When a corporation invests in common and preferred stocks of other companies,_______of the dividend income is excluded from taxable income.

50%

What does dollar weighted return allow an investor to see?

A snapshot of their investments in relation to their financial goals.

If a corporation issues either preferred stock or bonds which are convertible, their price will fluctuate _____with the movement of common stock therefore allowing the holder of the convertible to______ in the _______of common stock, if converted.

Along, participate, capital appreciation.

R squared

Also known as the correlation coefficient, measures the correlation of the returns of a specific portfolio compared to the return of the market as a whole. Values range from 0 to 1.

ERISA is designed to protect retirement funds from poor management by _______ who handles the company retirement policy.

An employer

A warrant accompanying a debenture would constitute...

An offer

How often are mutual fund 12b-1 fees assessed?

Annually

When an S corporation has had a good year and has realized capital gains which will be distributed to all shareholders, how will these distributions be reported by the shareholders when they file their tax returns?

As shareholder capital gains

For someone who is speculating and trying to time the economic cycle with various investments, when would the purchase of US government bonds be most advisable?

As the economy is undergoing a sustained contraction during a recessionary period.

The customer buys at the...

Ask

The customer sells at that...

Bid

Generally, if stock prices are rising and such moves are above the moving averages for that stocks price over the past measured period It would be a signal to a technical analyst to...

Buy the stock

A decline in what two economic indicators would probably cause the federal reserve to increase the money supply?

CPI and GDP

The residual right of common shareholders refers to their right to...

Claim company assets in bankruptcy after creditors' interests have been satisfied

As a general rule, an investment advisor may not be compensated on the basis of capital gains (performance based fees). Two exceptions to this rule under the investment advisors act of 1940 are:

Clients with more than $1.1 million in assets under management; and clients with a minimum net worth of $2.2 million, excluding the persons primary residence.

Securities listed on a customers balance sheet should be listed according to the _______value.

Current market

What ratio will give an indication of how financially leveraged a company or entity is?

Debt to capital ratio=debt/capital

A corporation calls and it's dead when interest rates are...

Declining

If guidelines are not given for trust assets as to the treatment of income beneficiaries versus remaindermen, then both types of beneficiary must be viewed...

Equally, participating equally in gains and losses.

The administrator is permitted to deny or revoke an exemption from registration under the USA with regards to...

Exchange listed securities, the securities of nonprofit organizations, certain investment contracts associated with employee benefit plans, and exempt transactions.

CAPM is used to calculate...

Expected return

The administrator is not permitted to deny or revoke...

Federal exemptions.

What are securities that are excluded from the definition of a security under the USA?

Fixed life policies, endowment policies, fixed annuity contracts, commodity futures contracts, collectibles, precious metals, real estate, pension and profit-sharing plans.

The effects of open market operations would include to cause effects on_______exchange markets and_______capital movements.

Foreign, international

The cash inflows from an investment are assumed to be a reinvested at what rate?

IRR

A thinly traded stock will come with what type of risk?

Liquidity risk

Stock prices in the OTC market are determined by...

Negotiation between buyers and sellers

Quantitative analysis hast to do with what type of data?

Numerical data that can be measured. Levels of risk cannot be measured.

REIT's issue shares that are...

OTC and on an exchange. They do NOT issue redeemable shares.

Net redemptions

On a particular day, a mutual fund would have had more investors redeeming their shares than they had investors purchasing new shares.

Ownership of a bond being transferable only upon proper endorsement is a characteristic of what?

Registered bond certificates

Competitive risk

Risk that the firm will not remain competitive with other firms in terms of technology, products, or general competition.

An investor owns stock which has appreciated in value and wants to sell the stock but also wants to receive the upcoming dividend. When can the investors sell the stock and still get the dividend?

Sell the stock on or after the ex-dividend date.

To assess the performance of a small cap stock fund you compare it's results against...

The Russell 2000

What is the best ratio to evaluate liquidity of a company?

The current ratio

_______ Is generally not considered when looking at a value stock indicators.

The current ratio

An investment performance is best measured by...

The investments total return.

What does time weighted return allow an investor to compare?

The performance of one manager to the performance of another manager.

In the bankruptcy process, real estate is sold for a value higher than the amount earned on the mortgage for that real estate. How are the proceeds that exceed the mortgage used?

The proceeds that exceed the mortgage balance are used to pay all other claims and creditors.

Inflation adjusted return is also known as...

The real return and the real interest rate

Standard deviation

The statistical measurement that indicates how much an investments returns have fluctuated, compared to its average return, over a given period of time.

What are considered exempt securities under the USA?

US government securities, municipal securities, securities issued or guaranteed by the country of Canada or its provinces, US banks/savings and loans, credit unions, US insurance companies, exchange list of securities, nonprofit issues, promissory notes and commercial paper, public utility and common carrier, investment contract with employee stock purchase.

A current and updated amendment to an investment advisors registration must be electronically filed with the SEC according to the investment advisors act of 1940 how often?

Within 90 days from the close of the investment advisors fiscal year

Is being suspended by another stock exchange in and of itself sufficient grounds for an administrator to deny registration?

Yes