Chapter: 6
Pertaining to the 1934 Act, the SEC can conduct an investigation if it believes a person has violated, is violating, or is about to violate the rules and regulations of which of the following: NYSE the California State Security Act MSRB Pacific Stock Exchange [A] I, II, III [B] I, II, IV [C] I, III, IV [D] II, III, IV
All choices except II pertain to investigations, which can be conducted by the SEC. In choice II, the California State Security Act would be handled by the State Securities Administration.
Under the Securities Act of 1933, the definition of a security includes which of the following? Common stocks Bonds and Debentures Fractional interests in oil, gas, and other mineral rights Warrants [A] I & II only [B] II & III only [C] I & IV only [D] I, II, III, IV
All choices offered are included in the definition of a "security" under the Securities Act of 1933.
Under the Investment Company Act of 1940, an affiliated person of the fund may: [A] Borrow money from the fund. [B] Borrow securities from the fund. [C] Sell securities personally to the fund. [D] Buy shares of the fund
An affiliated person of a fund would be allowed to purchase shares of the fund but would NOT be allowed to borrow money or securities from the fund or to sell shares they own personally to the fund.
Investment Companies are regulated under the Investment Company Act of 1940. According to the 1940 Act which two of the following are true: Open-end investment companies are also called Mutual Funds. The 1940 Act regulates an investment company that decides to invest in another investment company. Investment companies are not allowed to have custodians carry the assets of the investment company. The 1940 Act regulates the minimum return that must be provided to investors in an investment company investment. [A] I & II [B] II & IV [C] I & III [D] III & IV
The Investment Company Act of 1940 regulates the investment of one investment company in another investment company, states that Open-end investment companies are Mutual Funds and that investment companies employ custodians to hold company assets. The 1940 does NOT regulate or have any minimum requirement for the return earned on an investment company investment.
What are the two primary differences between an open-end investment company and a closed-end investment company? Open-end investment companies have a fixed capitalization, while the capitalization of a closed-end investment company is constantly changing. Open-end investment companies have a capitalization that is constantly changing, while the capitalization of a closed-end investment company is fixed. Open-end investment companies offer redeemable shares, while closed-end investment companies offer shares that sell in the primary market, but then trade in the listed or OTC markets. Open-end investment companies offer shares that sell in the primary market, but then trade in the listed or OTC markets, while closed-end investment companies offer redeemable shares. [A] I and III [B] I and IV [C] II and III [D] II and IV
The primary difference between open-end and closed-end investment companies is capitalization. Open-end investment companies are just that, open-ended. The capitalization is constantly changing as they sell and redeem shares. Open-end investment companies sell shares directly to the public, who must redeem with the issuer at a later date. Closed-end investment companies are just that, closed-ended. The capitalization is fixed. There is an initial public offering of shares, after which shares trade in the listed market or over-the-counter. When an investor is ready to sell, they simply do so in the secondary market. There is no redemption with closed-end shares.
Under the Investment Advisors Act of 1940, which of the following statements is true regarding a firm's use of the term "investment counselor"? [A] A firm may use the term synonymously with investment advisor. [B] A firm may use the term if it also publishes lists of securities along with buy and sell recommendations. [C] The use of the term investment counsel is prohibited under the Act. [D] A firm may use the term only it if derives a substantial part of its business from providing continuous investment advice according to clients' individual needs.
The term "Investment Counsel" may be used if a substantial part of the investment advisor's business consists of providing investment supervisory services, i.e. providing continuous advice according to clients' individual needs.
