Series 65 Final Exam Set

P/E Ratio

price per share/earnings per share

Coverdell ESA: single individuals earning more than _________ per year are not permitted to open a Coverdell account, and married couples lose the ability to contribute when earnings exceed ___________

$110,000, $220,000

Coverdell ESAs currently permit up to _________ in annual contributions, whereas QTPs (Section 529 plans) allow large contributions reaching as high as __________ and above.

$2,000; $250,000

As long as a homeowner has lived in the primary residence at least 2 of the previous 5 years, the first _______________ of profit on a home sale is excluded from tax.

$250,000

Acid Test Ratio Formula

(Current Assets - Inventories) / Current Liabilities

Formula methods of investing that involve selling equities in rising markets and buying them in falling markets would include which of the following: 1. constant dollar plan 2. constant ratio plan 3. dollar cost averaging 4. DRIPs

1 and 2

Which of the following is (are) advantages of irrevocable insurance trusts? 1. Provide estate liquidity. 2. Insurance proceeds are removed from the estate of the insured for tax purposes. 3. The insured has the flexibility to alter the trust arrangements. 4. Once set up, no changes may be made.

1 and 2

What is the duration of a T-Note?

1-10 years

Red Herring

1. Additional info may be added to a red herring at a later date 2. The final offering price does not appear in a red herring 3. A red herring is used to accept indications of interest from investors

Non-Qualified Plans: 1. (Can/Can't) discriminate in favor of highly compensated employees 2. (Is/Is not) subject to ERISA reporting and disclosure requirements 3. Provides (greater/less) flexibility 4. (Does/Does not) provide an immediate income tax deduction for the employer

1. CAN DISCRIMINATE in favor of highly compensated employees 2. Is NOT subject to ERISA reporting and disclosure requirements 3. Provides GREATER flexibility 4. Does NOT provide an immediate income tax deduction for the employer

There are 3 primary expenses involved with brokerage accounts that are not included in the fee disclosure template. Those are:

1. Commissions 2. Markups and Markdowns 3. Advisory Fees

Rank the following securities from the same issuer from most suitable to least suitable for a client whose primary objective is income. Warrant Cumulative preferred stock Convertible preferred stock Common stock

1. Cumulative Preferred Stock 2. Convertible Preferred Stock 3. Common Stock 4. Warrant

Modern Portfolio Theory: 3 Prongs

1. Feasible Set 2. Efficient Set 3. CAPM

C Corp 1. How many times are they taxed? 2. Limited or unlimited liability to the owners?

1. Is taxed on the corporate level and then again when dividends are paid 2. Provides limited liability to the owners

Order of payment against claims: Promissory Notes, Mortgage Bonds, Common Stock, Preferred Stock (put these in order)

1. Mortgage Bonds 2. Promissory Notes 3. Preferred Stock 4. Common Stock

US Treasury Notes: 1. Pay (annual/semiannual) interest as a percentage of par value 2. They have (intermediate/long term) maturities) 3. They mature at (par/face value) 4. They are (noncallable/callable)

1. Pay SEMIANNUAL interest as a percentage of par value 2. They have INTERMEDIATE maturities (2, 3, 5, 7, and 10 years) 3. They mature at PAR VALUE 4. They are NONCALLABLE

US Treasury Bonds: 1. Pay (annual/semiannual) interest as a percentage of par value 2. They have (intermediate/long term) maturities) 3. They mature at (par/face value) 4. They are (noncallable/callable)

1. Pay SEMIANNUAL interest as a percentage of par value 2. They have LONG-TERM maturities (generally 10-30 years) 3. They mature at PAR VALUE 4. They are CALLABLE

Interest payments from TIPS, and increases in the principal of TIPS are: 1. (Subject to/exempt from) federal tax 2. (Subject to/exempt from) state tax 3. (Subject to/exempt from) local income taxes

1. SUBJECT TO federal tax 2. EXEMPT FROM state tax 3. EXEMPT from local income taxes

Regulation T addresses:

1. loan value of securities 2. initial margin requirements 3. mixed margin accounts 4. NOTE: it does NOT address maintenance margin

Registration with the SEC is optional for: 1. pension consultants once their AUM reach $_______ ; 2. small and mid-size advisers who would be required to register in _____ or more states; and 3. those advisers with at least $_______ in AUM, but not $_________ in AUM.

1. pension consultants once their AUM reach $200 million; 2. small and mid-size advisers who would be required to register in 15 or more states; and 3. those advisers with at least $100 million in AUM, but not $110 million in AUM.

What is the duration of a T-Bond?

10-30 years

Dividends are taxed at a maximum rate of...

15%

What is the duration of a T-Bill?

4-52 weeks

Loans from a 401(k) are repaid in how many years?

5 years

If Maria turned 72 on August 16, 2020, when must the first required minimum distribution (RMD) be made from her IRA? A) April 1, 2021 B) December 31, 2020 C) April 1, 2022 D) December 31, 2021

A April 1st of the following year (2021)

Wrap fee accounts would tend to be most suitable for investors who follow A) a buy-and-hold philosophy B) a strategic approach to the market C) a passive approach to investing D) a tactical approach to investing

A tactical approach to investing

Which of the following statements regarding hedge funds is correct? A) Hedge funds are usually structured as a partnership. B) Hedge fund managers, like mutual fund managers, are compensated largely based on assets under management. C) Hedge funds are typically favored by inexperienced investors to hedge against losses they may experience as they gain investment savvy. D) Hedge funds are passively managed in an attempt to provide predictable returns for investors.

A) Hedge funds are usually structured as a partnership.

A margin account could be opened for which of the following? A) Partnership B) Coverdell ESA C) UTMA account D) IRA

A) Partnership There is no legal reason why a partnership (or other business structure) cannot open a margin account. A margin account could never be opened for retirement accounts, Coverdell ESAs, and UTMA/UGMA accounts.

What is most likely to happen to outstanding fixed-income securities when interest rates decline? A) Prices go up B) Yields go up C) Coupon rates go up D) No change

A) Prices go up

How often are Adjustable-Rate Preferred Stock rates adjusted? A) Quarterly B) Semiannually C) Annually D) Monthly

A) Quarterly

When completing an individual tax return on Form 1040, one of the most important numbers is the adjusted gross income (AGI). Which of the following would NOT be included in AGI? A) Tax-exempt interest received from municipal bonds B) Salary and commissions C) Qualifying dividends on common stock D) Alimony received from pre-2019 divorce decree

A) Tax-exempt interest received from municipal bonds

An ADR is used to A) facilitate trading in foreign securities in U.S. markets by U.S. citizens living in the United States B) reduce currency risk when investing in foreign securities C) facilitate trading in U.S. securities in foreign markets by U.S. citizens living abroad D) finance foreign trade in which U.S. citizens are engaged

A) facilitate trading in foreign securities in U.S. markets by U.S. citizens living in the United States

Associated Wealth Managers (AWM) is registered with the SEC as a registered investment adviser. As a consequence, if there have been any material changes, AWM must A) send a copy of its brochure, or a summary of the changes, to all clients within 120 days of the end of its fiscal year B) send a copy of its brochure, or a summary of the changes, to all clients within 60 days of the end of its fiscal year C) send a copy of its brochure, or a summary of the changes, to all clients within 90 days of the end of its fiscal year D) send a copy of its brochure, or a summary of the changes, within 7 days of receiving a request from a client

A) send a copy of its brochure, or a summary of the changes, to all clients within 120 days of the end of its fiscal year

Zero Coupon Bonds are more/less volatile than coupon-bearing bonds

More volatile

The Investment Advisers Act of 1940 would consider each of the following investment advisers to be exempt from registration EXCEPT A) an adviser whose only clients are insurance companies B) an adviser whose only clients are banks C) an adviser whose only clients are venture capital funds D) an adviser who maintains an office in only one state, advises only residents of that state (none of whom is a private fund), and gives advice relating solely to securities not traded on any national exchange

An adviser whose only clients are banks

Current Yield formula

Annual Dividends Per Share / Current Market Price

12-b1 Distribution charges approved how often?

Annually

Total Capitalization formula

Net Worth (Assets - Liabilities) + Long Term Debt

a life insurance policy where the premium increases each time the policy is renewed while the face amount remains level

Renewable level term

What does standard deviation measure?

Unlike beta, which only measures systematic risk, standard deviation reflects both systematic and unsystematic risk, revealing the total risk of the investment.

A balance sheet must be submitted if the adviser collects prepaid fees of.... (significant prepayment of fees)

more than $1200, 6 or more months in advance

The current yield of a callable bond selling at a premium is calculated A) as a percentage of its call price B) as a percentage of its market value C) as a percentage of its par value D) to its maturity date

As a percentage of its market value. Current Yield = Annual Dividends Per Share / Market Price Per Share

Assets formula

Assets = Liabilities + Stockholders' Equity

Which of the following is NOT defined as a security under the Uniform Securities Act? A) An investment in a managed pool of rental condominiums B) A Roth IRA C) Unsecured debentures sold in a private placement only to accredited investors D) Bills, notes, and bonds issued by the U.S. Treasury

B) A Roth IRA A Roth IRA is an investment vehicle, not a security.

Which risk should an investor not concern himself with in regards to a Treasury STRIP? A) Inflation Risk B) Credit Risk C) Market Risk D) Interest Risk

B) Credit Risk Treasury STRIPS are zero-coupon treasuries and therefore the risk of default is tied to the US Government.

An investor seeking current income would find which type of preferred stock the most suitable? A) Convertible Preferred Stock B) Cumulative Preferred Stock C) Straight (Noncumulative) Preferred Stock D) Adjustable-Rate Preferred Stock

B) Cumulative Preferred Stock Cumulative Preferred Stock pays dividends in arrears (current dividends plus the total accumulated dividends) before any dividends may be distributed to common stockholders.

Samantha Wells, a British citizen temporarily working in the United States, wants to form a business venture with other investors. She is looking for favorable tax treatment of earnings and losses. She also wants to limit the number of investors, but is willing to share control of the enterprise with others to attract them. What business form do you advise to her? A) Limited Partnership B) General Partnership C) C Corporation D) S Corporation

B) General partnership Only US citizens can be a part of an S Corp.

Which of the following are characteristics of commercial paper? (I) Backed by money market deposits (II) Negotiated maturities and yields (III) Issued by insurance companies (IV) Not registered with the SEC A) II and IV B) I and III C) III and IV D) I and II

B) I and III Commercial paper represents the unsecured debt obligations of corporations needing short-term financing. Both yield and maturity are open to negotiation. Because commercial paper is issued with maturities of no more than 270 days, it is exempt from registration under the Securities Act of 1933.

Which of the following could reduce the amount that an individual may contribute to a Traditional IRA? I. Roth IRA contributions made for the year II. High income level III. Participation in an employer-sponsored plan IV. Marital status

B) I only The maximum annual contribution applies as a total among your Roth and your traditional IRA. So, if the maximum is $6,000 and you put $3,000 into your Roth, you could only put $3,000 into your traditional IRA. You could do a total of $7,000 if you were 50 or older. High income level and participation in an employer-sponsored plan will affect the amount you may deduct but not the amount you may contribute. Even though a married couple can have their own IRAs or set up a spousal IRA if one is nonworking, that doesn't reduce the amount that either spouse can contribute.

Which of the following entities would issue a Schedule K-1? A) C corporation B) Limited partnership C) REIT D) Sole proprietorship

B) Limited partnership

Which of the following risks are LEAST associated with owning Preferred Stock? A) Market Risk B) Liquidity Risk C) Inflation Risk D) Interest Rate Risk

B) Liquidity Risk

Your client's wife retired as a 3rd grade teacher in 2009, where she was covered under the school system's 403(b) plan. If she resumes employment with a corporate employer, and that new employer has a 401(k) plan, is she entitled to defer RMDs from the 403(b) plan past the regular age 72 date? A) RMDs may be deferred as long as the individual is employed on a full-time basis. B) RMDs may be deferred only from the plan sponsored by the current employer. C) RMDs may never be deferred for those who were participants in a 403(b) plan. D) RMDs may be deferred only if the current employer offered a 403(b) plan.

B) RMDs may be deferred only from the plan sponsored by the current employer.

Which of the following categories of assets is most likely classified as an alternative asset? A) Convertible bonds B) Real assets C) Preferred stocks D) Cash

B) Real Assets

Under the Securities Exchange Act of 1934, which of the following statements is NOT true about the authority of the SEC to investigate violations of securities laws? A) The SEC may investigate violations of the Securities Act of 1933. B) The SEC may investigate violations of the Uniform Securities Act. C) The SEC may investigate violations of FINRA's rules. D) The SEC may investigate violations of the Securities Exchange Act of 1934.

B) The SEC may investigate violations of the Uniform Securities Act. The Uniform Securities Act is under the jurisdiction of the states, not the federal government or one of its agencies.

Among the reasons to consider investing in a variable annuity would be all of the following EXCEPT: A) a guaranteed death benefit for death before annuitization B) capital gains treatment on any realized gains upon withdrawal C) basically, no limit on the amount that can be contributed D) avoiding probate upon the death of the investor

B) capital gains treatment on any realized gains upon withdrawal In return for granting tax deferral on all gains in the account, the IRS taxes everything over the investor's cost basis as ordinary income. There is never a capital gain with a variable annuity. Some insurance companies will place a limit on the amount that may be invested, especially for older clients, but unlike IRS rules on retirement plans, this is strictly a company-by-company decision, not a law. Variable annuities are generally sold with a death benefit provision guaranteeing that the beneficiary will receive the higher of the amount invested or the current value of the account. Because there is a specifically named beneficiary, annuities do not go through the probate process.

An employee wishing to obtain long-term capital gain treatment would prefer the employer to offer: A) non-qualified stock options B) incentive stock options C) portable stock options D)listed stock options

B) incentive stock options

2 primary risks of ADRs:

Business and Currency

Which investment strategy has the lowest tax impact for the client?

Buy and Hold

Probably the most significant benefit of saving for retirement using a Roth IRA is A) tax-deferred accumulation B) larger contributions than a traditional IRA C) tax-free treatment at withdrawal D) tax-deductible contributions

C) tax-free treatment at withdrawal

Call or Put? Owner has the RIGHT to buy the stock. Seller has the OBLIGATION to sell.

Call

Only in the case of a _________________, can the ask price be lower than the NAV

Closed-Ended Fund

P/E ratio is ONLY used for which type of stock?

Common Stock

Hedge Funds are more (concentrated/diversified) than mutual funds.

Concentrated

Industrial production is which type of indicator? (Leading, Concurrent, lagging)

Concurrent indicator

For investors looking for fixed income through preferred stocks, which type of preferred stock would be their LEAST appropriate choice? A) Convertible Preferred Stock B) Cumulative Preferred Stock C) Straight (Noncumulative) Preferred Stock D) Adjustable-Rate Preferred Stock

D) Adjustable-Rate Preferred Stock

Which of the following are characteristics of a REIT? I. It is traded on an exchange or over the counter. II. It is professionally managed. III. It passes through both gains and losses to investors. IV. It is a type of limited partnership. A) I and IV B) III and IV C) II and III D) I and II

D) I and II A REIT shares some features with a limited partnership, but it is a different type of business entity. REITs are traded on exchanges and OTC and are professionally managed. Both REITs and limited partnerships provide pass-through of gains to investors, but REITs do not provide pass-through of losses. Please note: We recognize that, over the past few years, there has been an enormous growth in non-traded REITs (exactly what that says - they don't trade; there is no liquidity). However, we have received no feedback about that issue and, unless something in the question refers to a non-traded REIT, assume that all REITs are publicly traded either on the stock exchanges or OTC.

Which of the following are regulated under the Securities Exchange Act of 1934? I. New issues II. Broker-dealers III. Transfer agents A) I and III B) I, II, and III C) I only D) II and III

D) II and III The Securities Exchange Act of 1934 was designed to regulate securities transactions, securities markets, and the securities firms who do the trading. While the Securities Act of 1933 covers requirements relating to new issues, the Securities Exchange Act of 1934 covers almost everything else in the securities industry. Its greatest impact is on the securities firms and the people who sell securities (i.e., broker-dealers and their agents) in the secondary market. Of the choices listed, new issues would be regulated by the Securities Act of 1933.

Which of the following is generally believed to present a more accurate picture of a portfolio manager's performance? A) Real rate of return B) Net present value C) Dollar-weighted return D) Time-weighted return

D) Time-weighted return

Which of the following U.S. government securities do NOT bear a stated interest rate but are sold at a discount through weekly auctions? A) Treasury notes B) TIPS C) Treasury bonds D) Treasury bills

D) Treasury BillsfSt Treasury bills bear no stated interest rate. They are sold at a discount through weekly auctions and are actively traded in the money market. Treasury notes and Treasury bonds both carry stated interest rates.

Wrap fee accounts would tend to be most suitable for investors who follow A) a buy-and-hold philosophy B) a strategic approach to the market C) a passive approach to investing D) a tactical approach to investing

D) a tactical approach to investing

In order to qualify as a REIT, A) a mortgage REIT must have at least 75% of the assets in government-insured mortgages. B) at least 75% of the income must be paid out as dividends to investors. C) at least 90% of the assets must be invested in real-estate related assets. D) at least 75% of the assets must be invested in real-estate related assets, cash, and U.S. government securities.

D) at least 75% of the assets must be invested in real-estate related assets, cash, and U.S. government securities. At least 90% of its income must be distributed to investors.

Under the USA, all of the following issues would be exempt from registration EXCEPT A) stock issued by savings and loan association authorized to do business in this state B) bonds issued by the city of New Orleans C) an investment contract issued in connection with an employee stock purchase plan D) stock issued by an insurance company not offering policies in this state

D) stock issued by an insurance company not offering policies in this state If the insurance company was offering policies in the state, then they would be exempt from registration.

During a trip to visit grandchildren, one of your clients suffers a massive heart attack and dies, intestate. Directions for handling the account could only come from A) the person with a durable power of attorney B) the spouse C) the person named as executor of the estate D) the person appointed as administrator of the estate

D) the person appointed as administrator of the estate

A buy stop order may be used for all of the following EXCEPT: A) to acquire a long position as a stock breaks through resistance B) to protect a profit in a short position C) to protect against loss in a short position D) to protect a profit in a long position

D) to protect a profit in a long position Buy stop orders go into effect when the price of the security reaches or exceeds the specified "stop" price. As such, they are commonly used by short sellers who either wish to protect a profit they've already made, or protect against a loss if the stock should go up. Buy stops can also be used by those wishing to acquire stock when it breaks through a resistance level. However, when one is already long the stock, turning in an order to buy more is not going to offer any protection.

If a retiree is paid an annual amount equal to 30% of the average of his last 3 years' salary, which of the following retirement plans offers this type of payment?

Defined Benefit Plan

Mutual funds are more (concentrated/diversified) than hedge funds

Diversified

Simple trusts - How often must they distribute their DNI?

must distribute their DNI on an annual basis, unlike complex trusts

The alternative asset investments class is least associated with which of the following characteristics?

Efficient Pricing. Alternative asset investments are usually very inefficiently priced.

CAPM Formula: Expected Return = ?

Expected Return = RF Rate + (Expected Market Return - RF Rate)(Beta)

A form submitted to update the SEC on financial standing

Form 10K

A form submitted after major events

Form 8K

A (futures/forward) contract is a private and customizable agreement that settles at the end of the agreement and is traded over-the-counter

Forward

What kind of analyst 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.

Fundamental analyst

A (futures/forward) contract has standardized terms and is traded on an exchange, where prices are settled on a daily basis until the end of the contract.

Futures

Growth Stocks: (High/Low) P/E ratio and (High/Low) Dividend Yield

High P/E ratio and low dividend yield

Economic indicators are used by analysts in an attempt to forecast future economic conditions. Which of the following would reveal an indication of a lowering of the inflation rate?

High unemployment

The 2 most common forms of DCF used in the valuation of common stock are: I) Dividend Discount Model II) Price-to-Earnings Ratio III) Discounted Book Value Model IV) Dividend Growth Model

I and IV: Dividend Discount Model and Dividend Growth Model

Which of the following would be included in the Uniform Securities Act definition of "sale"? I: An offer of common stock in a new issue properly registered or exempt from registration in the state II: A gift of assessable stock III: An investor exercising warrants attached to a convertible bond purchased 5 years ago IV: An investor pledging stock she owns to a bank as collateral for a loan

II: A gift of assessable stock III: An investor exercising warrants attached to a convertible bond purchased 5 years ago A gift of assessable stock is always considered a sale. Exercise of warrants is a sale of the underlying stock. Pledging stock as collateral is never a sale.

a high-quality, short-term debt security with maturity of 1 year or less

Money Market Instrument

If general interest rates increase, the interest income of an open-end bond fund whose sales exceed redemptions will likely A) It cannot be determined from the information given B) remain unchanged C) increase D) decrease

Increase

stock prices and manufacturing orders are which type of indicator? (Leading, Concurrent, lagging)

Leading indicators

When discussing the suitability of investing in DPPs, which two types of risks should be focused on?

Legislative and Liquidity risks

Does a General Obligation bond (GO BOND) have less or more risk to the investor than other bonds?

Less risk

Debt-to-Equity Ratio formula

Long term debt / Total Capitalization

Market Capitalization formula

Market Capitalization = (Market price per share) X (Shares Outstanding)

Parity Price Formula

Market Price of the Convertible Security / Conversion Ratio

The unethical business practice of purchasing and selling a security for the purpose of creating an appearance of market activity

Matched Orders

Which of the following statements regarding a unit investment trust is not true? A) It charges no management fee. B) It is considered an investment company. C) It invests according to stated objectives. D) Overall responsibility for the fund rests with the board of directors.

Overall responsibility for the fund rests with the board of directors. A unit investment trust has no board of directors; rather, it has a board of trustees. A UIT must follow a stated investment objective (as must any investment company) and does not charge a management fee because it is not a managed portfolio.

Which part of FORM ADV may be used to satisfy the brochure requirements of the Act?

Part 2

ERISA rules ONLY apply to which type of plans?

Private sector plans

Call or Put? Owner has the RIGHT to sell the stock. Seller has the OBLIGATION to buy.

Put

Quick Ratio Formula

Quick Assets (All assets other than inventory) / Current Liabilities

Real rate of return

Real return reduces nominal return by an inflation factor.

Rule [506(b)/506(c)] offerings can be advertised, while [506(b)/506(c)] offerings cannot. [506(b)/506(c)] offerings are limited to 35 nonaccredited investors, while [506(b)/506(c)] offerings do not have a limit. The bad actor provisions only apply to [506(b)/506(c)] offerings. Rule [506(b)/506(c)] offerings are limited exclusively to accredited investors, while nonaccredited investors can participate in [506(b)/506(c)] offerings.

Rule 506(c) offerings can be advertised, while Rule 506(b) offerings cannot. Rule 506(b) offerings are limited to 35 nonaccredited investors, while Rule 506(c) offerings do not have a limit. The bad actor provisions apply to BOTH rules. Rule 506(c) offerings are limited exclusively to accredited investors, while nonaccredited investors can participate in Rule 506(b) offerings.

Which type of IRA has the highest allowable contributions?

SEP IRA

Which section of ERISA deals with fiduciary responsibility?

Section 404c

College savings plan where (1) contribution limits are higher and (2) there are no earnings limits

Section 529 Plan

Which efficient market hypothesis suggests that an investor can achieve above-market returns by only utilizing insider information?

Semi-Strong

If a corporation issues mortgage bonds, all of the following would be affected EXCEPT A) working capital B) shareholder's equity C) total assets D) total liabilities

Shareholder's Equity

Rule of 72

n = 72 / r, where n = # of years it will take for an investment to double and r = interest rate

EPS formula

net income/shares outstanding

Which type of joint ownership is most commonly used for real estate?

Tenants in Common (TIC)

Insurance: (1) No Cash Value, (2) Does not last past age 100, (3) Low Premium, (4) Suitable for young buyers with family responsibilities

Term

An investment adviser representative of a federal covered investment adviser registers with A) the FINRA. B) the NASAA. C) the SEC. D) the Administrator.

The Administrator. IARs register only on the state level.

All the following factors support fundamental analysis while assessing a wide range of qualitative factors except A) the company's stock price trend. B) the company's management team's quality and experience. C) the company's business model. D) the company's competitive position.

The company's stock price trend. The company's stock price trend is important to technical analysis. Remember that a technician "charts prices and volume over time". The others are factors to consider in fundamental analysis..

What is the total amount that may be invested in a Coverdell Education Savings Account in 1 year? A) The current maximum per parent B) The current maximum per family member C) The current maximum per child D) The current maximum per couple

The current maximum per child

Insurance: (1) Flexible Premium, (2) NO Guaranteed cash value, (3) Flexible death benefit, (4) Premium paid plus interest determines cash value

Universal Life

Dollar Cost Averaging Formula Average Cost Per Share = ?

Total $ Invested / # of Shares = Average cost per share

Gross Profit Formula

Total Revenue - COGS

Which of the following securities are the most interest rate sensitive? Utility stocks Growth stocks Preferred stocks Common stocks

Utility Stocks and Preferred Stocks Utility stocks are interest rate sensitive because they are highly leveraged. Preferred stocks are interest rate sensitive because they have a set dividend and fluctuate in price like bonds when interest rates change.

Insurance: (1) Fixed Premium, (2) NO Guaranteed cash value, (3) Minimum guaranteed death benefit, (4) Separate account performance determines cash value

Variable Life

Insurance: (1) Fixed Premium, (2) Guaranteed cash value, (3) Guaranteed death benefit, (4) Premium to general account

Whole life

If an employer installs a Keogh Plan, it must include all employees age _____________, with ________ year(s) of service.

age 21 and up, with 1 year of service.

Dividend Yield Formula

annual dividend per share / dividend price per share

Yield curve analysis plays an important role as a benchmarking and forecasting tool for the future direction of interest rates. In most cases, this analysis involves examining

bonds of a single issuer over varying maturities.

The portfolio manager of the Insatiate Bond Fund, an open-end investment company, believes that interest rates are going to increase in the near future. As such, it would be wise for that manager to A) shift into higher-rated bonds. B) lengthen the average duration of the portfolio. C) shorten the average duration of the portfolio. D) increase the equity portion of the portfolio.

c) shorten the average duration of the portfolio

Real interest rate of a fixed income investment

interest received - inflation rate