Exam 10
change of residence/amended Form U4 must be filed
within 30 days
A "like" from a client on an investment adviser representative's Facebook page post that announced the birth of her most recent child is considered or not considered a testimonial?
NOT
A broker-dealer makes an offer of private placement securities to 15 individual investors within a 30-day period, exempt or not exempt?
NOT EXEMPT
stock of a bank holding company traded on the OTC Link, exempt or not exempt from reg?
NOT EXEMPT
A $1,000 bond with a nominal yield of 8% will pay how much interest each year?
$80
what qualifies you to be reg as a Fed advisor?
110 mm or more
You have a client who sold her $5 million whole life insurance policy through a life settlement broker. If she dies 2 years later, what happens?
the new owner receives the $5 million death benefit
A customer of an investment adviser inadvertently mails some stock certificates to the IA. The IA does not maintain custody of customer assets. If the certificates were received on a Monday, NASAA rules would requires that the certificates be returned
no later than thursday
When a corporation establishes a qualified money purchase plan they are?
obligated to make annual contributions at the rate stated in the plan
An investor owns a common stock that has been paying a dividend at an annual rate of $2.00. If the investor buys 100 shares of the stock at $50 and sells it 3 months later for $52, the approximate annualized rate of return is?
20% (only one quarter of dividends) so 5% per quarter x 4 = 20%
both bonds have the same maturity date, a change in interest rates will have a more profound effect upon the market price of a 3% or 6% coupon bond?
3%
ABC Advisers, Inc., registered with the Administrator, employs an investment adviser representative who left the employment of another investment advisory firm 6 months ago, what needs to happen?
ABC must notify the Administrator of this association promptly.
35% federal income tax bracket currently owns some corporate bonds with a coupon yield of 7%. In order to receive the same income after taxes, he would need to buy municipal bonds with a coupon of?
Because the 7% on the corporate bond is fully taxable, the client receives a net of 4.55% ($70 per bond less 35% in taxes {$24.50}, or $45.50 per year). Interest on municipal bonds is tax free, so a 4.55% coupon
What is the term used to describe a person on the floor of a stock exchange who stands ready to buy or sell shares of specified stocks?
specialist
difference between present value and net present value represents
the initial cash outlay
A partner with a 5% interest in an advisory firm leaves the firm and the remaining partners do not inform their clients because the departing partner held a minority interest in the firm, illegal or legal?
ILLEGAL
characteristics that best exemplify a value stock?
Low price-to-book, low price-to-earnings ratio
The sole proprietor of an insurance business that exclusively provides advice on fixed-income annuity contracts need to reg?
NO
Platinum Investment in Growth Group, Inc. (PIGGI) is registered in and has its principal office in State W. PIGGI has near-term plans to open offices in State A and B. In an effort to test the waters, PIGGI mails several hundred flyers to prospects in those 2 states. Under the Uniform Securities Act, can these flyers be legally mailed?
NO, not under reg in those states
JKL Pension Consultants, a management firm providing services to employee benefit plans, and currently has $179 million AUM, Fed advisor?
NO, not until 200 mm
hedge fund characteristics
Purchasers of hedge funds are generally required to be accredited investors/not uncommon for there to be a lock-up period that may last for as long one year or even longer
The federal law dealing with privacy matters for financial institutions is
Regulation S-P
highest annual contributions?
SEP IRA
indication of the profitability of the enterprise?
Sales-to-earnings ratio
Qualified expenses could include tuition for attendance at a foreign university in a 529, true or false?
TRUE
A TIPS bond with a par value of $1,000 has a coupon rate of 4%. During years 1 and 2, the inflation rate has been 6%. What effect will this have on the TIPS 2½ years later?
The next interest payment will be $23.19
zero-coupon bond characteristics
The rate of return is locked in/There is no reinvestment risk/The imputed interest is taxed as ordinary income on an annual basis
a Yankee bond?
U.S. dollar-denominated bond issued by a non-U.S. entity outside the United States (out out but in dollars)
An analyst observes that the beta of a security is 1.3, the market return is 6%, and the risk-free rate is 1%. The analyst forecasts that the security will return 7% over the next year. Based on these assumptions, the security is?
Under the CAPM, the required return is the RF rate plus the beta times (the market return - RF rate). Using the numbers in this question, it is 0.01 + 1.3 (0.06 - 0.01) = 0.075 which is 7.5%. Because the forecasted return of 7% is less than the required return of 7.5%, this security is considered to be overvalued.
which sec is most commonly recommended to fund a child's college education?
Zero-coupon Treasury bonds
effects of a country devaluating its currency?
a credit to that nation's trade account balance/an increase in that nation's exports
Yield curve analysis entails?
bonds of a single issuer over varying maturities
A European style option differs from an American style option primarily in that it?
can only be exercised on its expiration date
Mitigate Interest rate risk with bonds by?
holding bonds to maturity/laddering the portfolio/buying bonds with short-term maturities
The amount of money in the economy determines the overall price level over time, therefore the Federal Reserve should control the growth in the amount of money in the economy in a gradual and predictable way, describes what?
monetarist economics
One of the differences between broker-dealers and investment advisers is the disclosures that must be made when the IA is acting as a principal or agent in a transaction with an advisory client. In the case of a firm registered in both capacities, those disclosures would not be required when?
there was a transaction with a client of both entities, but the trade was not based upon advisory services rendered
One of the components of a cash flow statement is cash flow from investing activities like
transactions and events involving the purchase and sale of land, buildings, and equipment
