Series 7 - Investment Companies

B American Stock Exchange (management company)

"SPIDERS" trade on the: A Pink Sheets B American Stock Exchange C Chicago Mercantile Exchange D NASDAQ Stock Market

C lower breakpoints (management company)

A customer buys $10,000 of Government Bond Fund shares from Acme Investors, a fund sponsor and broker-dealer. Acme is the sponsor for a variety of funds within the Acme "family." The ACME family has an "exchange feature" at NAV. The purchase of the fund within the "family" gives the investor all of the following advantages EXCEPT: A portfolio diversification B professional management C lower breakpoints D choice of investment objectives

II, III (management company)

A customer in the 20% tax bracket with a 15-year investment time horizon is considering investing $250,000 with an objective of current income and safety of principal. The registered representative is considering making the recommendation of either a managed investment grade bond mutual fund or an investment grade bond fixed unit investment trust. When presenting the 2 choices to the customer, the registered representative should mention that: I breakpoints are available on mutual funds, but not on unit investment trusts II breakpoints are available on both mutual funds and unit investment trusts III expense ratios for mutual funds tend to be higher than expense ratios for fixed unit investment trusts IV expense ratios for fixed unit investment trusts tend to be higher than expense ratios for mutual funds

D 5.25% on the $10,000 investment made on 1/15/XX and a retroactive adjustment to reduce the sales charge on the 1/2/XX purchase to 5.25% (Management companies)

A mutual fund offers breakpoints with an LOI and ROA. The breakpoint schedule is: $0-$10,000 5.75% $10,001-$25,000 5.25% $25,001-$100,000 5.00% On 1/2/XX, the customer invested $1,000 in the fund. On 1/15/XX, the account value has increased to $1,100 and the customer wishes to invest another $10,000 in the fund. The sales charge that will be imposed on the purchase is: A 0% on the $10,000 investment made on 1/15/XX B 5.25% on the $10,000 investment made on 1/15/XX C 5.75% on the $10,000 investment made on 1/15/XX D 5.25% on the $10,000 investment made on 1/15/XX and a retroactive adjustment to reduce the sales charge on the 1/2/XX purchase to 5.25%

B 7 business days (management company)

A registered representative will lose any compensation earned from a customer's mutual purchase if that customer tenders the shares for redemption within how many business days after the purchase was made? A 3 business days B 7 business days C 10 business days D 30 calendar days

C REITs are securities which are redeemable with the sponsor (Fixed UITs/REITs)

All of the following statements are true about Real Estate Investment Trusts EXCEPT: A REITs may be traded on stock exchange floors B REITs may be traded on NASDAQ C REITs are securities which are redeemable with the sponsor D REITs are securities that are negotiable in the market

C 2X (Leveraged) 20+ Year Treasury ETF (management company)

During a period of falling interest rates, which investment would be most profitable? A 2X (Leveraged) S&P 500 Index ETF B Inverse (Short) S&P 500 Index ETF C 2X (Leveraged) 20+ Year Treasury ETF D Inverse (Short) 20+ Year Treasury ETF

D OTC (management company)

ETFs trade on all of the following markets EXCEPT: A NYSE B AMEX C NASDAQ D OTC

B 1% (management company)

If a mutual fund distributes 99% of its Net Investment Income to its shareholders, how much of the Net Investment Income will be taxable? A 0% B 1% C 99% D 100%

B Bid price at NAV; Ask price at NAV plus the maximum sales charge (management company)

Quotes published in the news media for mutual funds show: A Bid price at NAV; Ask price at NAV plus an average sales charge B Bid price at NAV; Ask price at NAV plus the maximum sales charge C Bid price at NAV less any redemption fee; Ask price at NAV plus an average sales charge D Bid price at NAV less any redemption fee; Ask price at NAV plus the maximum sales charge

D choose the broker who executes the portfolio transactions (she is chosen by the investment advisor) (management company)

Shareholders in a management company have all of the following rights EXCEPT the right to: A vote for the Board of Directors of the fund B vote for the investment adviser C receive semi-annual and annual reports D choose the broker who executes the portfolio transactions

B the Fund Board of Directors (management company)

The ex dividend date for mutual funds is set by: A FINRA B the Fund Board of Directors C the shareholders of the Fund D the SEC

D Market Price plus a commission (Overview)

The minimum price at which a closed end fund share can be purchased is: A Net Asset Value B Net Asset Value plus a commission C Market Price D Market Price plus a commission

I, II, III (management company)

The provisions of the Investment Company Act of 1940 include which of the following? I Minimum initial fund capital of $100,000 II "Interested persons" on the Board of Directors cannot hold over 60% of the seats III Changing the fund's investment objective requires a majority vote of the shareholders IV Setting maximum sales charges on mutual fund purchases

I, III (Series 6 people can sell mutual funds, UIT, and variable annuities) (Fixed UITs/REITs)

What can you sell with a series 6 license? I Municipal Investment Trusts II Real Estate Investment Trusts III Municipal Bond Funds IV Revenue Bonds

D Securities that are redeemable with the sponsor (Overview)

What is a characteristic of a Unit Investment Trust? A High portfolio turnover B Disclosure of the identity of the investment adviser C Board of directors overseeing investments D Securities that are redeemable with the sponsor

A "Buy shares of different funds of the same sponsor and the total purchase qualifies for a breakpoint" (management company)

When discussing mutual funds with a customer, all of the following statements are prohibited EXCEPT: A "Buy shares of different funds of the same sponsor and the total purchase qualifies for a breakpoint" B "The income yield of the fund consists of both the dividend distributions and the capital gains distributions" C "If you buy the fund with a few friends, the purchase will be large enough for a breakpoint" D "Buy the fund shares now just before the dividend is paid so you can get immediate income"

D prohibited (management company)

When making a presentation to a client that wishes to purchase a mutual fund, the representative compares the 5-year return of the fund to the 10-year return of the Standard and Poor's 500 Index to illustrate the fund's performance. This action is: A permitted B permitted only if the fund has been in existence for no more than 5 years C permitted only if the 5-year fund return is doubled to make it comparable to the 10-year return of the Standard and Poor's 500 Index D prohibited

D A comparison of a municipal bond fund and an income fund should use after-tax return for both (management company)

Which of the following is a fair comparison of two mutual funds? A Income funds and growth funds should be compared based on yield per share after tax B A comparison of two income funds should use a ten-year period for one and a five-year period for the other C A comparison of two growth funds should use total initial investment, disregarding sales charges D A comparison of a municipal bond fund and an income fund should use after-tax return for both

II, IV, (Fixed UITs/REITs)

Which of the following securities CANNOT be sold by an individual holding an investment companies/variable annuities registered representative's (Series 6) license? I Municipal Investment Trusts II Real Estate Investment Trusts III Municipal Bond Funds IV Revenue Bonds

I, II, IV (Fixed UITs/REITs)

Which of the following statements are TRUE regarding REITs? I REITs are similar to closed end investment companies II REITs issue shares of beneficial interest representing an undivided interest in a pool of real estate investments III REITs are similar to open end investment companies IV REITs are registered under the Securities Act of 1933

II, IV (management company)

Which of the following statements are TRUE regarding the Federal tax treatment of a "regulated" mutual fund investing solely in municipal securities? I Investors have a Federal tax liability on the interest income received from the fund II Investors have no Federal tax liability on the interest income received from the fund III The investment company has Federal tax liability on the undistributed income that it retains IV The investment company has no Federal tax liability on the undistributed income that it retains

B If market prices are fluctuating, the plan will produce a lower average per share cost (management company)

Which statement is TRUE regarding dollar cost averaging? A If market prices remain constant, the plan will produce a lower average per share cost B If market prices are fluctuating, the plan will produce a lower average per share cost C If prices rise, smaller dollar purchases must be made; while if prices fall, larger dollar purchases must be made D The plan requires that a constant dollar amount be maintained in equity securities, with any excess invested in debt

I, II, III, IV (management company)

Which statements are TRUE regarding ETFs (Exchange Traded Funds)? I ETFs are available on broad-based stock indexes II ETFs are available on narrow-based stock indexes III ETFs are available on international stock indexes IV ETFs are available on bond indexes

I, IV (management company)

Which statements are TRUE regarding money market funds? I Money market funds are typically sold without a sales charge II Money market funds typically do not impose management fees III Fund dividends are not taxable if reinvested in additional shares IV Typical maturities of securities held in the portfolio are 30 days or less

I, II, III, IV (management company)

Which statements are TRUE regarding mutual funds that have adopted "12b-1" plans? I Acceptance of the plan requires a majority vote of the outstanding shares; the Board of Directors; and the disinterested members of the Board II Discontinuance of the plan requires majority vote of the outstanding shares or the disinterested members of the Board III Mailings to prospective purchasers of the fund are an acceptable "12b-1" charge IV Expense ratios for funds that have adopted 12b-1 plans can be expected to be higher than for similar funds without 12b-1 fees

II, IV (management company)

Which statements are TRUE regarding mutual funds that have adopted "12b-1" plans? I Mailings to existing shareholders of the fund are an acceptable "12b-1" expense II Mailings to existing shareholders of the fund are not an acceptable "12b-1" expense III Expense ratios for funds that have adopted 12b-1 plans can be expected to be lower than for similar funds without a 12b-1 fee IV Expense ratios for funds that have adopted 12b-1 plans can be expected to be higher than for similar funds without a 12b-1 fee