Exam 14

Which of the following factors has an inverse relationship to a bond's duration?

yield to maturity

Mr. Wright died with the following assets and liabilities: $200,000 in securities left to his wife, a $650,000 home left to his wife (the home cost $150,000), a $250,000 life insurance policy with his daughter as beneficiary, and $75,000 in debts and estate expenses. What is Mr. Wright's gross estate? $250,000 $1,025,000 $1,100,000 $600,000

$1,100,000 (adjusted gross estate would be $1,025,000)

Bob, age 60, has invested $17,000 in his nonqualified variable annuity over the years. The total value has reached $26,000. He wishes to withdraw $15,000 to send his son to college. What is his tax consequence on the withdrawal?

$9,000 is taxable; $6,000 is nontaxable (the first dollars withdrawn are all taxable until the amount of withdrawal meets or exceeds the growth in the account)

how much income must be paid out as dividends to investors in an REIT?

90% (gross inc and assets are 75% markers)

when will a private placement of funds lose exemption?

A private placement will lose exemption if those who sell the offering are paid commissions

When an agent transfers employment from a broker-dealer registered with the SEC to a broker-dealer registered solely in this state what must happen?

ALL OF THEM MUST TELL ADMIN

Based on the following information, which stock is most attractive to a value investor? Dividend yield of 1.3% Net worth per share of $13, current market price of $23 per share P/E ratio of 32:1 Book value of $22 per share, current market value of $17 per share

Book value of $22 per share, current market value of $17 per share (UNDERVALUED)

When a customer wants income from an annuity and chooses the option of life with 20-year period certain, how will distributions be taxed?

As ordinary income based on an exclusion ratio

Which of the following would probably not be an attractive investment during periods of rising inflation? Gold Real estate Oil stocks Corporate bonds

Corporate bonds

A technical analyst is least likely to consider which of the following when selecting securities? Trend lines Short interest ratio Advance/decline line Corporate earnings

Corporate earnings

analyst referring to an investment's indicative value is what sec?

ETN

Which of the following should be the first step taken by the financial planner?

Establish an emergency fund (not set goals)

The Investment Company Act of 1940 requires that a mutual fund do which of the following?

Have $100,000 minimum capitalization prior to making a public offering Provide semiannual reports to shareholders

State laws provide for exclusions from the definition of investment adviser. Which of the following persons is specifically excluded under the Uniform Securities Act?

Investment adviser representatives (ECONOMISTS ALWAYS INCLUDED)

Reinvestment Risk is lower or higher rate?

LOWER YOU ****ING MORON

A man is planning to start his own glass-sculpturing business. He wants to be able to deduct his anticipated losses for the first 2 years. He anticipates that the enterprise will borrow money from lenders and is willing to personally guarantee the debt. He also wants to attract other investors but does not want to give up control of the day-to-day business decisions. What business form do you recommend? General partnership C corporation Limited partnership S corporation

Limited partnership

Under the Investment Company Act of 1940, which of the following are considered management companies? Open-end companies Closed-end companies Unit investment trusts Face-amount certificate companies

Open-end companies Closed-end companies

Which of the following industries is most exposed to regulatory risk? Entertainment companies Publishing companies Consumer retailers Public utilities

Public utilities

if a BDs reg is revoked what happens to agents?

Revocation of the registration of that agent's broker-dealer will result in that agent's effective registration being put "on hold."

larger coupons mean what kind of duration?

SHORTER

Which of the following is required to effectuate annual renewal of the registration of an investment adviser representative affiliated with a federal covered adviser? Form U4 Consent to service of process State licensing fee Renewal notice to the SEC

State licensing fee

The Administrator may deny an application for registration as an agent if an applicant is insolvent, true or false?

TRUE

the schedule should be made available on the broker-dealer's public website without requiring any login or password, true or false?

TRUE

Which of the following is most likely to be the most important factor in determining whether market manipulation has occurred? The market in which the action took place The scope of the action. The type of security. The intent of the action

The intent of the action

describes a global mutual fund?

The portfolio consists of securities of companies domiciled throughout the world, including the USA

Which of the following is NOT related to the variability of a portfolio's returns? Market timing Security selection Asset allocation Total return

Total return

are banks and trust companies excluded from definition of IA?

YES

When current interest rates are at 6%, you would expect a bond with a nominal yield of 4% to be selling at?

a discount

An individual investor specifies to her investment adviser representative that her portfolio must produce a minimum amount of cash each year. This would be considered? a unique circumstance. a tax constraint. a legal and regulatory constraint. a liquidity constraint.

a liquidity constraint.

A broker-dealer acting as a principal in a trade would do what with a mark-up?

add a markup to the offering price when selling shares to a client

A federal covered investment adviser may enter into a contract with a client that provides for performance-based compensation when?

compensation is based on gains, less losses, for a period of no less than 1 year the formula used to calculate compensation includes realized capital losses and unrealized depreciation the client must meet certain minimum financial standards

financial risk is

credit risk/default risk

if nom yield less than int rate bond is selling at a?

discount

An investment adviser to a private fund wishes to qualify for the exemption offered under the Uniform Securities Act when the fund has no more than 100 investors. In order to qualify?

every investor must have either at least $1 million in assets managed by the investment adviser, or a net worth, excluding the value of the primary residence, in excess of $2.1 million

To reflect a more accurate picture of economic results, gross domestic product is adjusted for inflation to match foreign GDP downward by the balance of payments to include bank reserves

for inflation

The major risk for highly rated corporate bonds is interest rate changes stock market volatility liquidity tax law changes

interest rate changes

The risk to bondholders that bonds may lose value during periods of increasing inflation is known as? reinvestment risk marketability risk interest rate risk credit risk

interest rate risk

Under Section 401 of the Uniform Securities act, the term "agent" does not include an individual who represents an issuer in effecting transactions in a security

issued by and representing an interest in or a debt of, or guaranteed by, any bank organized under the laws of the United States, or any bank, savings institution, or trust company organized and supervised under the laws of any state

net profit margin =

net profit / sales

All of the following would flow through as a loss to limited partners except? depletion. principal repayment on partnership debt. interest payments on partnership debt. accelerated depreciation.

principal repayment on partnership debt.

The purpose of the Investment Advisers Act of 1940 is to provide?

standards at the federal level for the regulation of investment advisers

Margin regulations are determined by the Board of Governors of the Federal Reserve System. The authority for them to do so is found in what Act?

the Securities Exchange Act of 1934

Over time, a country's trade deficit (imports > exports) will lead to a decline in the value of its currency because?

the country's imports will exceed exports creating selling pressure on its currency

An analytical tool used to project the current value of a common stock using projected future dividends is? the dividend discount model the price-to-earnings ratio the dividend payout ratio the future value computation

the dividend discount model

Under modern portfolio theory (MPT), all portfolios that can be constructed from a given set of stocks is referred to as? the correlation coefficient the capital market line the feasible set the efficient set

the feasible set

A BCP shouldn't be based on? the size of the firm the firm's annual net income the number of locations of the firm the types of services provided

the firm's annual net income

A major benefit of a revocable trust is that?

the grantor retains control of the assets.

An investment advisory firm requires all new clients to complete a 4-page questionnaire before conducting the first meeting. This would be known as? (something stupid)

the information-gathering stage