Orion Series 65 Exam 5 - Chapters 14-15-16-17

A professional tennis player comes to you seeking advice on setting up a trust. She is interested in giving to charity and also wants discretion as to when income is distributed to the beneficiaries, her parents. Which trust do you advise she use?

Complex trust.

If a new client has $200,000 to invest and wants to retire in 15 years, which of the following client information is least necessary for an adviser to recommend a suitable investment program?

Current income and cash flow requirements

The management style that is most similar to buy and hold is:

strategic management.

There are several popular investment styles and, in many cases, portfolio managers use a blended approach to security selection. If a portfolio manager adhered to a pure value style, he would put most of his focus on:

the company's financial statements.

An investor wishes to save for her retirement. She arranges to have $250 per month withdrawn from her account to be invested into a commodity fund. This type of saving plan is called:

dollar cost averaging.

An investor diversifying a corporate bond portfolio does NOT consider:

domicile of the investor.

An investment strategy where a higher price is paid for a stock based on expected returns is:

growth investing.

One respect in which an LLC differs from an S corporation is that

there is no statutory limit on the number if investors in an LLC

In a trust account, the person who makes the account management decisions is the:

trustee.

Which of the following is federally tax exempt for a corporation?

Municipal bond interest.

When the stock market performs better than expected, the clients portfolio may be out of balance, what should be done?

Rebalance the clients account

Which of the following is a characteristic of the passive investment style?

Rebalancing.

A popular funding technique that involves investing the same amount at regular intervals is known as dollar cost averaging. Participating in this funding approach tends to lessen which risk?

Timing.

Property included in a deceased's gross estate is generally valued for estate tax purposes at:

its fair market value (FMV) on the date of the deceased's death.

An investor purchases 500 shares of stock on January 10th at $50 per share and sells it on August 4th of the following year for $40 per share. As a result, the investor has realized a:

long-term capital loss.

As compared to value investors, growth investors tend to:

look for companies whose sales, earnings, or market share are increasing at an above-average rate.

Asset allocation is an important element of the portfolio management process because: I. Different asset classes have different risk and return characteristics II. Research indicates that asset allocation is much more important than security selection. III. Portfolios that are focused on different asset classes will have very different returns over time IV. investors may prefer returns in different forms (eg. income or capital appreciation)

I, II, III, and IV

Which of the following portfolio management styles would most likely incur the highest transaction costs?

Tactical Asset Allocation

Which of the following portfolio management styles would most likely incur the highest transaction costs?

Tactical asset allocation.