S66 11/19

An investor begins contributing $600 on the third day of each month to a purchase plan for the KAPCO Total Return Fund. For the first six months, the per share prices were: $10 $12 $15 $20 $12 $8 What is this investor's breakeven point?

$11.80

Mr. Hawkins sets up a revocable trust for the benefit of his adult daughter, Madeleine. His wife may draw from it only if she needs to. Income on the trust will be taxed to A) Madeleine as the primary beneficiary B) the trust because it is a separate legal entity C) Mr. Hawkins as the donor D) Mrs. Hawkins as the contingent beneficiary

C

The Alpha-Gamma Mutual Fund reports a large number of their investors liquidating shares of the fund, so much so that the dollar amount of liquidations exceeds the incoming cash for new purchases. This would lead to a condition known as...?

Net redemptions

DERP Corporation's 5% convertible debentures maturing in 2030 are currently selling for 120. The conversion price is $40. One would expect the DERP common stock to be selling A) somewhat below $48 per share. B) somewhat above $30 per share. C) somewhat below $30 per share. D) somewhat above $48 per share.

A

When developing a client profile, it is important to note both the financial and nonfinancial considerations. These can be categorized as those that are objective and those that are subjective. Included in the list of subjective considerations would be A) risk tolerance B) balance on the home mortgage C) the family balance sheet D) cash value of life insurance

A

Which of the following is not an assumption of the capital market theory? A) All investors want to achieve a maximum return for minimum risk. B) All market participants borrow and lend at different risk-free rates. C) There are no taxes or transaction costs. D) Market participants have the same expectations about the returns and standard deviations of all assets.

B

For purposes of safeguarding customer information, which of the following would be considered a covered account? A) An account in the name of the State of X employee pension fund B) An account in the name of the Wells Morgan Bank C) A margin account in the name of Mary Beth Simmons D) A margin account in the name of the Interglobal Hedge Fund

C

Under SEC Release IA-1092, who of the following would be considered to be in the business of rendering investment advice? A) Agents of a broker-dealer who recommend trades to their clients and receive commissions based on transactions B) An accountant who provides investment advice to clients as an incidental part of the business C) A financial planner who charges no fee for developing a financial plan but takes commissions on recommended trades D) An individual who provides investment advice to family members but receives no compensation

C

Which of the following is an improper activity under the Uniform Securities Act? A) An investment adviser charges a customer a fee for advice leading to the sale of a security, receives a commission on the sale, and discloses the amount of the commission to the customer. B) An investment adviser collects a commission on the sale of insurance products that he recommended, disclosing that a commission would be earned. C) A dealer charges commissions for securities it sells from its inventory and discloses the amount of the commission to the customer. D) An investment adviser charges two customers two different fees for a similar service.

C

An investor purchases a single premium deferred index annuity with an initial premium of $200,000. Soon after the purchase, the investor receives a statement from the insurance company showing an initial balance of $210,000. The most likely reason for the $10,000 increase is A) the insurance agent's commission was added to the account. B) the underlying index has had outstanding performance. C) the insurance company paid a dividend. D) this is a bonus annuity.

D

Common stock of KAPCO, Inc., trades on the NYSE. Which of the following securities would not be exempt from registration under the Uniform Securities Act? A) Stock rights to acquire KAPCO common stock B) KAPCO noncumulative preferred stock C) KAPCO, Inc., subordinated debentures, traded on the OTC Pink Market D) Limited partnership interests in a shopping center with KAPCO, Inc., as the general partner

D

In general, the most passive investment style for a portfolio would be A) buy and hold. B) value. C) contrarian. D) indexing.

D

Jason, a recently divorced individual, is currently 55 years old and has built up approximately $400,000 in several initially funded and rollover individual retirement accounts (IRAs). He now wants to take an early distribution from one of these IRAs. Which one of the following distributions will escape the imposition of a tax penalty for early withdrawal? A) A distribution made upon separation of service from Jason's current Employer B) A distribution made on account of financial hardship as determined by Jason's financial planner C) A distribution made to Jason's ex-wife under a qualified domestic relations order (QDRO) D) A distribution made in payment for higher-education costs of Jason's granddaughter

D

Under both federal and state law, the concept of a discretionary account is defined. It would be considered discretion when an agent A) can decide the specific time at which the transaction will be made. B) makes the decisions in the account once the client assures the agent that the proper authorizations are in the mail. C) can decide the specific price. D) picks the specific security that is the subject of a transaction.

D

In designing a client's portfolio, a registered investment adviser representative of Greater Wealth Advisory Services recommends the purchase of several stocks from the inventory of Greater Wealth's wholly owned broker-dealer. Under the Investment Advisers Act of 1940 this activity requires written...?

Disclosure to the client and consent prior to completion of the transaction.

Which of the following statements best represents a bond's present value? A) Present value represents the internal rate of return (IRR) of the bond. B) Present value is the discounted future repayment of principal. C) Present value is the sum of all the discounted future interest payments. D) Present value is the sum of all the discounted future payments.

D