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153 Cards in this Set
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1. Tax-exempt funds hold only _____ and offer advantages for those in _______ tax brackets. 2. State or municipal government fixed income instruments generate ______ interest income and may be _______ from state tax if a member of issuing state. 3. These funds are only suitable for investors in _____ tax brackets, why? |
1. municipal bonds, high 2. federally tax-exempt, exempt 3. high, because other investors are better suited for the higher (taxable) yields of corporate bond funds |
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1. Government fixed income funds typically hold ________ and ______ and offer safety and typically less volatility. 2. In return for this limited credit risk, these funds offer ______ yields. |
1. treasury, government agency debt 2. low |
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1. Fixed income securities are those with a consistent yield like _______ and ________. They provide a return of _________ known in advance. 2. Is the income guaranteed? 3. Is the return higher or lower than other securities? 4. Fixed income securities help _______ in volatility in investors overall portfolios. |
1. debt securities, preferred stocks 2. fixed payments 3. yes 4. lower 5. reduce |
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1. Blend funds hold no ______ securities, but contain a mix of _____ and ______ stock. These funds are designed to _________ in value by means of capital gains. 2. Balanced funds provide a combination of _______ and ________, and their goal is to achieve _________ and _________, as well as preservation of capital. |
1. fixed income securities growth, value appreciate 2. fixed income instruments, equities growth in value, income |
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1. Value funds primarily hold stocks that are deemed to be _____ and have significant _____ potential. 2. The mutual fund manager generally utilizes a ______ strategy with value funds, in order to what? 3. These funds tend to _______ during a market advance and _______ in a decline. |
1. undervalued in price, upside 2. "buy and hold" - in an attempt to give the securities enough time for any market inefficiencies to be corrected 3. underperform, outperform |
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1. What kinds of securities are aggressive growth funds invested in? 2. Companies in aggressive growth funds have strong ______ divisions and retain their ________ for expansion. 3. What is the upside to investing in funds with such high volatility? 4. What risks do aggressive growth funds have? |
1. cutting-edge technology companies or startup companies whose earnings are unproven 2. R&D, earnings 3. substantial gains in advancing markets (potential) 4. market risk and timing risk |
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1. What kinds of securities do growth/income funds hold? 2. Growth/income funds tend to be _____ volatile than pure growth funds and tend to _______ perform growth funds during market advances. 3. What kinds of risks do growth/income funds have? |
1. well-established companies that pay some dividends but still retain earnings for expansion 2. less, underperform 3. market risks, purchasing power risk if dividend payments and capital appreciation fail to keep up with cost of living expenses
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1. High-yield fixed income funds typically hold corporate debt with low credit ratings, known as __________. 2. What kinds of risk do these carry? Are they more or less volatile? 3. Do high-yield fixed income funds supplement a well-diversified portfolio, or a poorly diversified portfolio? 4. Who are these funds best suited for (kind of investor?) 5. These funds typically include _________ share price in return for the _______ yield. |
1. junk bonds 2. high default risk, more volatile 3. well-diversified portfolio 4. aggressive long-term investors interested in yield rather than safety 5. above average, higher |
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1. Are money market funds considered short-term or long term debt instruments? 2. They attempt to maintain a $_____ per share value, although it's not guaranteed. 3. A money market fund invests in _____-term (____year maximum maturity) high quality debt such as: 4. These funds have a high degree of ___________. 5. What is a risk of money market funds? 6. Money market funds can fall into 2 categories: ______ and ________. 7. Which category is more suitable for most investors (in lower tax brackets)? Which category is more suitable for investors in higher tax brackets? Why? |
1. short-term 2. $1 3. short, 1 year maximum commercial paper, banker's acceptances, negotiable (jumbo) CDs, and repurchase and reverse repurchase agreements, T-Bills and T-Notes and T-Bonds with less than 1 year remaining to maturity 4. capital preservation 5. over the long term they may not produce returns sufficient to keep up with inflation 6.taxable and tax-exempt 7. taxable money market funds are best for lower tax brackets, tax-exempt funds are best for high tax brackets because they invest in federally tax-exempt money market instruments which offer lower yields than other money market instruments, so investors in higher tax brackets can benefit from the tax-free money which these funds provide |
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1. Specialized funds are also known as ______ or _______ funds, and concentrate a major portion of their assets in a specific _______, _________ or ________. 2. Are specialized funds suitable for the average investor with a lower risk tolerance? Why or why not? 3. These funds have potential for substantial ______, but are vulnerable to what risks? |
1. sector or industry industry, market sector, geographic region 2. No, because they are not diversified enough 3. gains, risks in industry specific or sector specific economic trends as well as international sectors are vulnerable to currency exchange risk and foreign legislative risk |
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Define industry (sector) concentration. |
Sector funds allocate a majority of their assets to investments in one industry (i.e. manufacturing, technology, pharmaceuticals, etc.) |
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1. Define a geographic concentration fund. 2. What risk is involved with this fund? 3. What kind of investors would this fund be most suitable for? |
1. a fund with geographic concentration purchases securities of companies from a common geographic region, such as the Midwest, Southwest, or Northeast. 2. Risky because dependent on one region 3. Sophisticated investors, who are already diversified and would like to concentrate a small portion of their portfolios |
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1. Define asset allocation. 2. How does asset allocation help with risk? 3. How does asset allocation help with reducing costs regarding diversification? 4. Explain rebalancing. |
1. The investment style of allocating assets over the various asset classes, such as stocks, bonds, and cash equivalents. 2. It reduces overall risk since the assets are diversified across multiple classes. 3. It can reduce the costs associated with asset diversification since they can purchase a single investment that is diversified in itself rather than having to purchase multiple instruments and pay several transaction fees. 4. The process of buying more securities from a class in which the portfolio has become deficient, and selling securities from a class that has grown too large |
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1. Define an international fund. 2. Do these funds have a higher or lower degree of risk? 3. What kinds of risks do they carry? |
1. A mutual fund that invests in a concentration of its assets in overseas companies and markets 2. Higher degree of risk 3. Regulatory, political, economic, legislative, currency exchange risk |
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1. What do mortgage-backed securities typically invest in? 2. These entities issue ________ and _______. 3. These provide monthly _______ and ________, so this mutual fund pays a monthly _______ to its shareholders. 4. What kind of investor is this most suitable for? 5. These funds generally carry a higher degree of _____ risk than government bond funds but also a _______ yield. |
1. Securities issued by agencies such as Ginnie Mae, Freddie Mac, Fannie Mae, or possibly private corporations. 2. CMOs and REMICs 3. principal and interest, dividend 4. Investors who seek regular income 5. default risk, higher yield |
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1. Define an index fund. 2. What kinds of securities does this fund invest in? 3. This type of fund is _______, meaning that there is no active research, buying and selling. 4. Because index funds are not actively managed, their _______ are typically much lower than an actively managed funds ________. |
1. a mutual fund whose goal is to achieve the same return as a particular market index, such as the Dow 30 or the S&P 500. 2. Invests only in securities that are included in that index. 3. Passively managed 4. expenses, expenses |
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1. What do precious metals fund typically invest in? 2. When and why are these funds typically invested in?
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1. Gold, silver and platinum 2. Economic declines, as a hedge against inflation |
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1. Define a fund of funds (FOF). 2. By investing in a FOF, the investors gains exposure to several different ______ in one fund. This gives the investor more diversified exposure to a variety of income-producing securities and investment styles. 3. How are expenses fees on FOFs in relation to other funds? Why? |
1. A mutual fund that holds shares in several funds in the pursuit of its stated objective. 2. investment objectives 3. expense fees on some FOFs can be higher than on regular funds because the FOF (with its own expense ratio) invests in other mutual funds which have their own expenses, the FOF has a double layer of expenses |
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1. Define a principal-protected fund. 2. Are expenses ratios higher or lower than that of other funds? 3. Principal-Protected funds are also known as _____ or ______ funds. 4. Name and define the 3 common characteristics a principal-protected fund has. 5. What is the post-guarantee phase? |
1. new types of mutual funds that guarantee for a set period of time (5-10 years), that the capital invested by shareholders in the mutual fund will be kept safe. 2. higher expense ratios 3. capital preservation, guaranteed 4. a. guarantee principal - an initial investment (minus sales charge) is guaranteed even if the stock market falls. In many cases it is backed up by an insurance company. b. lock-up period - a period of anywhere from 5-10 yrs that offers the guarantee on the shares only if the shareholder doesn't sell those shares prior to the end of that period c. a mixture of stocks and bonds - a portion of the fund is invested in zero-coupon bonds and other debt securities, and another portion in stocks and equity investments during the guarantee period. 5. after the lock up period, the post-guarantee phase begins and during this phase the fund is either liquidated or continues to operate without guarantees |
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1. The establishment and implementation of a mutual fund's investment policies is the responsibility of the fund's _____________. They are elected by the ___________. 2. In accordance with the Investment Company Act of 1940, a minimum of _____% must be unaffiliated with the fund (outside directors). The remaining _____% can include: 3. However, if the fund has a ______ fee or if any conflicts of interest exist, the majority must be outside board member (over ____%) |
1. board of directors, shareholders 2. 40%, 60%, fund's employees, underwriters, or its investment advisor 3. 12b-1 fee, over 50% |
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1. The board of directors selects ______ to carry out the operations of the investment company, and to oversee their performance. These appointments include _______, ________ and _________. 2. The board also has the responsibility of establishing _________ and __________ for the fund. 3. Are board members involved with management of the investment portfolio? If not, who is? |
1. officers investment advisor, transfer agent, custodian 2. dividend and capital gain policies 3. no, the investment advisor does |
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Many of the board's activities are dependent upon shareholder approval. The rights of shareholders include the following: (6) |
1. voting rights/proxies 2. approving changes in investment objectives and policies 3. approving investment advisory agreements 4. approving changes in fees 5. electing directors 6. ratifying selection of independent auditors |
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1. What is the role of the investment advisor? 2. The investment advisor is typically paid on a fee that is based on ________ of the _______ under management over a specified period of time. This fee is classified as a _______ of the fund. 3. Who has to approve investment advisory contracts? 4. The investment advisor has 4 duties, which are: |
1. employed to manage the fund's portfolio 2. a percentage of the NAV, an operating expense 3. majority of shareholders, members of the board, or both 4. supervising the fund's portfolio by obtaining the appropriate diversification of securities held by the fund and making decisions regarding the appropriate timing of investments -providing investment advice in conformity with federal securities regulations and tax laws -researching and analyzing financial and economic trends -conforming to investment objectives and policy decisions established by the BOD. Most funds policies forbid such practices as short selling or margin buying |
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1. Who is required to perform as a custodian for a mutual fund? 2. What is the role of the custodian? 3. Does the custodian perform any management, supervision, or investment functions? What about selling of shares? 4. Can the custodian perform as the fund's transfer agent? |
1. a national bank, trust company or other qualified institution 2. safeguard the physical assets of the mutual fund, perform payable and receivable functions of the securities transactions, and register the receipt of interest and dividends for the fund 3. no and no 4. yes |
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The transfer agent is contracted by the fund to perform what basic functions? (3) |
1. issuance of physical shares or book entry cancellation of redeemed shares disbursement of dividend and capital gain distributions to shareholders
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The shareholders and the BOD must approve all of the _______ for the operation of the mutual fund. Detailed information concerning these are covered in the _________. |
expenses
prospectus |
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What is typically considered the largest expenses of operating a fund, and who is it paid to? |
management fee, to the investment advisor |
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1. Expenses for a mutual fund also include the cost of services such as (3): 2. Other _______ or _______ expenses may be charged by the fund. 3. _________ funds sell directly to the investor at NAV. Since they do not outsource their sales effort, their sales related costs are charged against the fund as an _________ |
1. custodian, transfer agent, BOD, etc. 2. administrative, distribution 3. No-load, expense |
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1. Section 12b-1 of the Investment Company Act of _______ allows the imposition of a distribution fee to cover expenses associated with the _________ and _______ of fund shares, also known as the 12b-1 fee. 2. The 12b-1 fee covers such costs as printing of _______ and _______ as well as certain _____________. |
1. 1940, promotion and distribution 2. prospectuses and sales materials, sales commissions
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1. The sales commissions are based on an annual ________ of the _______ under management and they are charged how often? 2. Does this fee have any effect on the investor's total return? 3. The sales commission fee is subject to an annual limit of ____% of assets. 4. All 12b-1 fees are reviewed _______. 5. Funds that market themselves as ______ are limited to a maximum fee of ______% of net assets under management. |
1. percentage, net assets charged quarterly 2. yes, it reduces the investor's total return, just like any other expense 3. 0.75% 4. quarterly 5. no-load, 0.25% |
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1. What kinds of securities will you typically find within a growth fund? 2. What kind of income is typically a lower priority in growth funds and why? 3. What risks are growth funds exposed to? |
1. Common stocks of blue-chip companies with solid earning history, also may include smaller, younger companies with growth potential 2. Dividend income - because these companies will often retain their earnings to find further expansion 3. market risk |
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1. Explain income funds. 2. Income funds typically hold securities with ______ 3. What kinds of companies stocks would be found in an income fund? 4. What kinds of growth potential do income funds have? 5. What risks are income funds exposed to? |
1. have an objective of current income 2. dividend yield potential 3. blue-chip companies with solid earning history, companies which pay regular dividends 4. below average 5. credit and interest rate risk
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Funds are differentiated by the ______ of their portfolio. However, funds with the same objectives may employ ______ that are very different. |
investment objective
investment policies |
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The management fees charged by a mutual fund company are _______ than those an individual investor would have to pay a portfolio manager. |
less |
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If the investor would like additional information, they may request a _____ which must be made available within _____ days of the request |
statement of additional information
3 days |
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1. What is a continuous primary offering and what must accompany each sale? 2. How often should a prospectus be updated? Financial information in a prospectus cannot be older than ______. 3. If a summary prospectus is provided, the fund's long term prospectus must be available ______ and a paper copy must be available upon request for $____ |
1. each share sold is a brand new share created for that investor, prospectus 2. every 12 months 16 months 3. online, $0 |
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1. In regards to mutual funds, do shareholders have voting rights? 2. How are the voting matters handled? |
1. yes 2. almost exclusively through proxies |
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1. Explain DREP (in regards to dividend dates for mutual funds) 2. For mutual funds, when does the ex-dividend date occur in regards to the record date? |
1. Declaration --> Record --> Ex-Dividend --> Payable 2. ex-dividend date is the first business day after the record date |
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"Selling Dividends" is a prohibited practice. This occurs when investors are encouraged to purchase shares just prior to a dividend distribution for the sole purpose of receiving a dividend. Why is this prohibited? |
Because the current value of the fund share drops by the dividend distribution on the ex-dividend. If the investor were to purchase the share just prior to the ex-dividend day, taxes would be owed on the dividend and there would be no economic benefit since the market value of the share drops by the amount of the dividend when it is paid
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In a mutual fund, investors purchase fund shares at _______, which is composed of ______ per share and any applicable _______. If the amount of the purchase doesn't compute into an even amount of shares, the mutual funds issue _______, computed to 1/_ of a share. |
Public Offering Price (POP) NAV any applicable sales charge fractional shares 1/1000 |
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Regarding closed-end management companies: 1. How are they usually capitalized? 2. Do they trade in the primary market or secondary market after the initial IPO? 3. How is the share price in the secondary market determined? 4. Where can the trading of shares take place? 5. Does the closed-end company redeem shares held by investors? |
1. through a one-time public offering of a fixed number of shares 2. secondary 3. investor demand 4. on an exchange or in the OTC market 5. no |
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4 ways that an investment portfolio may be diversified: |
1. industries 2. types of investment securities (pref stock, t-bonds, MMF) 3. a variety of securities issuers (small to large companies) 4. geographic areas |
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In order for a company to market itself as diversified, it has to follow the ____-____-_____ rule. Explain this rule.
Do nondiversified companies have to follow this rule? |
75-5-10
For a portion totaling at least 75% of the total assets, the portfolio must be structured so that no more than 5% of total assets are invested in any one company. Additionally, the company cannot own more than 10% of the voting stock, of any target company. There's no restrictions on the remaining 25% |
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Regarding management investment companies: 1. Who manages the portfolio? 2. Each fund has its own _____ or ____ that outlines the types of securities and the investment strategies the fund employs. 3. Management companies are either _____ or ______. A mutual fund is considered _____. The difference between these two lie in their _______ methods. 4. Which behaves like shares of common stock issued by a publicly traded company? Open or closed? 5. Which one maintains a calculated NAV per share? |
1. Investment advisor/fund manager 2. Specific investment policy or objective 3. open-end or closed-end, capitalization 4. closed 5. closed |
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Regarding Face Amount Certificate Companies: 1. FAC companies issue debt certificates at ________. 2. What 2 ways can they be purchased? 3. What is their maturity? 4. Holders of these certificates are entitled to redeem for a _______ at ________. 5. Can these be redeemed prior to maturity? At what value? |
1. predetermined interest rates 2. periodic installments or lump-sum payment 3. at least 24 months 4. fixed amount, specified date 5. yes, stated surrender value |
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Regarding UIT's: 1. Who supervises the company's operation? 2. All units are redeemable - what does this mean? 3. UIT's usually feature a ______, which is held for the life of the trust. 4. Is the portfolio actively managed or supervised? 5. What has to happen before a substitution of securities, and how long in advance do unit holders need to be notified? 6. Explain what happens at maturity and can units be redeemed before then? |
1. A designated trustee 2. there's no secondary trading and units must be redeemable back to the issuer. Units must be sold back to the UIT. 3. fixed portfolio 4. supervised 5. written notice to SEC - 5 days prior 6. at maturity, proceeds distributed to investors on a per unit bases. Can redeem prior to maturity at current market value |
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1. What did the Investment Company Act of 1940 establish?
2. Name the 3 categories if established. |
1. guidelines for the operation of investment companies 2. Unit Investment Trusts (UIT's) Face Amount Certificate Companies Management Investment Companies |
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1. Define undivided interest
2. The investment company concept offers an investor access to ________ & ___________ |
1. no single shareholder has any right or claim that exceeds the right or claims of other shareholders
2. professional portfolio management, diversification |
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1. Define an investment company
2. Name the 3 classifications of investment companies
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1. corporations or trusts in which investors are able to pool their funds for increased diversification and professional management
2. management companies, unit investment trusts, face-amount certificate companies |
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How do you calculate the yield to maturity? |
YTM =
Annual interest + annualized gain OR - annualized loss ---------------------------------------------------------------- (Purchase price + redemption price) / 2 |
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Calculate the POP. |
POP =
NAV ------------------------------- (100% - sales charge) |
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Compute the offering price (or asked price) |
Offering price = Bid Price (NAV) + $ sales charge |
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Calculate the NAV per share |
NAV per share =
Total Net Assets ----------------------------------------- Total of Outstanding Shares |
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Calculate the expense ratio. |
Expense Ratio =
Total Expenses -------------------------------- Average Net Assets |
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How would you find out an investor's specific tax benefit from a municipal bond investment compared to a taxable corporate bond? |
Municipal Bond Yield ------------------------------------------ 100% - Marginal Tax Bracket % |
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T-Bonds are quoted in what fractional increment?
Are they typically expressed as fractions or decimals? |
1/32
Decimals |
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How do you calculate a bond's current yield? |
Current yield =
Annual Dollar Interest Paid ---------------------------------------- Current Market Price x 100% |
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Bonds typically have a par value of ______ and is quoted in what fraction of a point? |
$1000
1/8 of a point or $1.25 as corporate bond points each represent $10 |
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What is the typical par value of preferred stock? |
$100 |
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Dividend Yield Formula (calculate it) |
Dividend Yield =
Annual Dividend --------------------------------- Share Price |
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Formula to determine cumulative voting rights |
Total # of votes = # of shares x # of vacancies |
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2 Formulas to find a company's net worth |
1. Assets = Liabilities + Net Worth
2. Assets - Liabilities = Net Worth |
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Formula to find the # of outstanding shares |
Issued - Treasury = Outstanding |
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To initially approve the 12b-1 fee and to annually re-approve it requires ___ major votes from:
Termination of the 12b-1 fee requires only the majority votes of the _______ and the ________.
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1. The fund's BOD 2. the "non interested" board members 3. the outstanding shares
outstanding shares and "non interested" board members |
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1. The expenses of a mutual fund are expressed as the fund's expense ratio. The expense ratio is determined by: 2. Total expenses include (4): 3. Is the sales charge or load included in the expense ratio? |
1. Expense ratio =
Total Expenses ----------------------------------------------------------------- Average Net Assets (assets minus expenses)
2. investment advisor's management fee, fees to the custodian, transfer agent and board of directors 3. No |
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A mutual fund's sponsor, or distributor, is known as the fund's principal ____________. Sometimes the underwriter is called the _________. The underwriter has an exclusive agreement with the fund that allows it to purchase fund shares at the ________. The shares are then sold to the public, through either ______ or ________, at the ______ price. |
underwriter wholesaler NAV outside dealers or the underwriter's sales force POP |
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1. The fund's underwriter markets the fund's shares to _____ that sell the shares to the ______. 2. Only dealers that have a ____________ with the fund may sell shares. 3. The underwriters create and pay for retail communication material to better market the shares to ______, and __________ the dealers for the shares that are sold. |
1. dealers, public 2. selling agreement 3. dealers, compensate |
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1. In some cases, dealers make direct sales to the public by _______ shares from the underwriter at a discount from the _____ and then reselling them to investors. 2. Can dealers purchase mutual funds from their own personal inventory? |
1. purchasing, POP 2. No, not for their inventory, shares must be purchased to fill customer orders only |
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1. Define Net Asset Value. 2. The asked price, or offering, represents _______ + ___________ |
1. The current market price, or bid price. This is the price paid than an investor would receive if the funds were to be sold. 2. NAV + Sales charge |
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1. The sales charge of a mutual fund is expressed as a _____ of the POP. 2. The FINRA Conduct Rules limit the sales charge to a maximum of ___ of the POP. 3. If the fund does not offer three privileges, then the sales charge is limited to a maximum of _______. 4. List these 3 privileges. |
1. percentage 2. 8.5% 3. 6.25% 4. Dividend Reinvestment at NAV Breakpoints Rights of Accumulation |
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1. All fund expenses have the effect of ____________ the NAV. 2. Sales charges are not included in the expense ratio calculation because... |
1. reducing 2. they are added to the net asset value per share to form the sales price (NAV + SC = POP) |
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1. No-load funds do not charge front or back end sales loads, but may include a _______. 2. If a fund has a sales charge or a 12b-1 fee in excess of _____, it may not describe itself as a no-load fund. This is a violation of the FINRA Conduct Rules. 3. The Investment Company Act of 1940 requires that redeemable mutual fund shares are sold to customers at the _______, however the act allows for exemptions from the rule for scheduled sales load variations such as ______, or the elimination of sales loads altogether. |
1. 12b-1 fee 2. 0.25% 3. breakpoints |
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The investment company, its dealers, and the underwriters are exempted from the rule for scheduled sales load variations, and may offer discounts from the POP only when: (4) |
1. the discounts are applied uniformly to all investors in a particular class 2. existing shareholders and new investors are provided with adequate information about the sales price variations 3. the investment company prospectus is revised to show new sales load variations before making them available to new investors 4. the investment company informs existing shareholders of the new sales price variations within one year of the date when they are available to new investors |
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The type of mutual fund that invests in short-term debt instruments is a 1. Income Fund 2. Money Market Fund 3. Bond Fund 4. Growth Fund |
2. Money Market Fund |
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An inexperienced conservative investor is selecting his first equity fund. He wants to limit his risk while acquiring equity exposure. Which fund is most suitable for this investor? A. Allocation Fund B. Growth Fund C. Value Fund D. Balanced Fund |
C. Value Fund
Value investing is a conservative long-term strategy of investing in undervalued equities. Growth investing is an aggressive strategy of choosing young, unproven companies. Asset Allocation funds and balanced funds hold bonds along with stocks, and the investor has not expressed interest in bonds. |
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Susan's mutual fund is currently worth $48,000. The sales charge was 8.5%. If she withdraws 6% per year, Susan's final payment will be: A. $219.60 B. $240 C. Indeterminate; payment will fluctuate with the market D. None of the above; withdrawal penalties may apply |
B. $240
The 8.5% sales charge has no effect on the amount Susan receives in monthly payment. $48,000 x 6% = $2,880 annual amount ($2,880/12=$240 first month payment) |
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Which of the following are true concerning physical safety of mutual fund holdings? I. Physical safety of a fund's assets is the responsibility of the custodian. II. The shareholder need not maintain share certificates since funds use "book entry" accounting. III. If certificates are held, they must be surrendered in good order before shares can be redeemed. A. I and II B. I and III C. II and III D. I, II, and III |
D. I, II and III |
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The statistic that measures fund performance and includes reinvested distributions and share appreciation, net of sales charges and expenses for the period is: A. Investment Objective B. Standardized Yield C. Current Distribution Rate D. Total Return |
D. Total Return |
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An investment company can perform certain activities only by approval of a majority of shareholders. Which of the following is a board of directors activity that is allowable without a shareholder vote? A. Borrow Money B. Appointment of Officers of the Investment Company C. Change the fund's investment objectives D. Change the fund's investment concentration |
B. Appointment of the officers of the investment company
The board is elected by the shareholders but the board has the authority to appoint officers to perform the company's activities.
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All of the following would be considered an advantage of owning mutual fund shares EXCEPT: A. The reinvestment of dividends and capital gains at NAV B. Simplification of tax filing C. Easily accessible information about the fund D. Tax-free capital gain distributions |
D. Tax-free capital gain distribution
The investor may reinvest capital gains with no additional sales charge, however, the investor would still be required to pay taxes on the capital gain distribution whether they receive the money or reinvest it. All the other statements are benefits of mutual fund ownership. |
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Alice wants a convenient way to choose an investment strategy that offers a mix of investments that is appropriate to her stage in life. Which fund should Alice choose? A. Asset allocation fund B. Balanced fund C. Growth and Income Fund D. Life Index Fund |
A. Asset Allocation Fund |
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One of the significant advantages of investing in mutual funds is: A. Automatic reinvestment of dividends and capital gains at POP B. Automatic reinvestment of dividends at NAV C. Reinvestment of dividends and capital gain with no tax liability D. Reinvestment of dividends at a reduced sales charge and no capital gains tax |
B. Automatic Reinvestment of Dividends and Capital Gains at NAV |
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Money Market Funds will fluctuate in relation to the yields of: A. Series EE savings bonds B. U.S. Government Bonds C. Passbook savings rates D. Treasury Bills |
D. Treasury Bills |
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If a fund is going to assess a 12b-1 fee, the fee must be first approved by the: A. SEC B. BOD C. Investment Company D. FINRA |
B. BOD, including a majority of the "noninterested" or unaffiliated board members |
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Which of the following should NOT be used during a comparison of mutual funds? A. Risk Factors B. The fund's investment policies C. Comparison of funds of a dissimilar nature D. Quality of Management |
C. Comparison of funds of a dissimilar nature |
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Whose approval is required for an investment company to change its investment objective? A. Approval must be granted by the SEC, FINRA, and the BOD of the investment company B. The SEC and the majority of shareholders C. The majority of shareholders of the investment company D. The board of directors may make such a change, but must report the change in the annual report to shareholders |
C. The majority of shareholders of the investment company |
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Which of the following is the largest expense item of the fund? A. Transfer agent services B. Board of Directors fees C. Custodial Fees D. Management Fee |
D. Management Fee |
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Which legislative act requires that mutual funds pay redemption proceeds within 7 calendar days? A. The Securities Act of 1933 B. The Securities Exchange Act of 1934 C. The Trust Indenture Act of 1939 D. The Investment Company Act of 1940 |
D. The Investment Company Act of 1940 |
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Dollar cost averaging plans have which of the following features? I. They are voluntary plans. II. They generally have a minimum periodic investment. III. Investors are penalized for missing subsequent investment periods. IV. Over time, the investor's person profit exceeds the average cost per share. A. I and II B. I and IV C. II and III D. II and IV |
A. I and II
Dollar Cost Averaging is a voluntary investment plan with systemic investments at fixed intervals, usually monthly or quarterly. There is a minimum investment required with each deposit. There is no penalty for failure to make additional investments. The investor's person cost is lower than the average public price per share over time. |
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Which of the following is an investment company with the objective of achieving the same return as a particular market index? A. Industrial Revenue Board B. Exchange Traded Fund C. Hedge Fund D. Revenue Bond |
B. Exchange Traded Fund |
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With regard to sales breakpoints, any schedule changes must be communicated to existing shareholders within what period of time? A. Within 1 year B. Immediately C. Within 7 days D. Within 30 days |
A. Within 1 year |
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Which of the following is NOT true regarding DCA? A. A minimum investment is required with each deposit. B. It results in a lower average cost per share. C. It is not available to large investors. D. More shares are purchased when prices are lower. |
C. It is not available to large investors. |
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Which entity within a mutual fund's structure is responsible for customer name and address changes? A. Wholesaler B. Investment Advisor C. Transfer Agent D. Custodian |
C. Transfer Agent is responsible for all "back office" services |
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Dollar cost averaging I. Will allow an investor to purchase a fixed number of shares periodically II. Is not as effective as market timing III. Does not protect the investor against loss in steadily declining markets IV. Does not guarantee a profit A. I and II B. I and IV C. II and III D. III and IV |
D. III and IV |
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A fund's expense ratio has been declining over the past 3 quarters. The may be the result of all the following reasons EXCEPT: A. Assets in the fund are rising faster than the operating expenses B. Investment Advisor Fee has reduced C. Sales charges are falling because a large percentage of investors have taken advantage of breakpoint levels D. All of the above are correct |
C. Sales charges are falling because a large percentage of investors have taken advantage of breakpoint levels
Sales charges have no effect on the operating expenses of a fund |
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What is the maximum front-end sales charge for a mutual fund? A. 9% of the NAV B. 8.5% of the POP C. 8.5% of the NAV D. 9% of the POP |
B. 8.5% of the POP |
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Which of the following is a risk associated with a mutual fund withdrawal plan? A. Investors have no control over the liquidation process B. The investor may outlive his or her income C. The sales charge for the service is high D. There are no dividends or capital gains |
B. The investor may outlive his or her income |
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Registered investment companies are required to have directors on their board that are independent of the management company. What is the required minimum percentage of disinterested directors? |
D. 40% |
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Selling dividends is considered: A. An excellent tax advantage for investors in a high tax bracket B. A good investment practice for investors seeking income C. A poor business practice because the representative is not compensated for selling dividend D. A prohibited practice because it creates a taxable event without providing the investor with any economic benefit |
D. A prohibited practice because it creates a taxable event without providing the investor with any economic benefit |
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Mutual fund investment income and capital gains distributions I. May be taken in cash II. Can be reinvested into the fund at POP III. Are taxable whether taken in cash or reinvested A. I and II B. I and III C. II and III D. I, II, and III |
B. I and III |
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Which statement is true concerning dollar cost averaging? A. DCA protects the investor from a loss in a steadily declining market B. DCA is a way to reduce risk C. DCA allows the investor to buy the same number of shares per installment D. All of the above |
B. DCA is a way to reduce risk
More shares will be purchased in a down market, and fewer shares are purchased with the same amount of money in a rising market, therefore reducing risk. This practice will level out the cost basis of the shares over time, which minimized overall investor risk. |
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Kenny is interested in an income fund. The fund he selects is likely to have a portfolio that consists of A. growth company securities that consistently earn above-average income B. growth C. A+ rated securities D. high-yield corporate securities |
D. High-yield corporate securities |
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Mutual funds offer systematic withdrawal plans. Allowable types of withdrawal plan payouts include: I. Fixed dollar periodic payments II. Dollar cost averaging III. Fixed shares periodic payments A. I, II and III B. I and II only C. I and III only D. II and III only |
C. I and III only |
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Which of the following is NOT subject to the Investment Company Act of 1940? A. Money Market Fund B. Hedge Fund C. Equity Fund D. Government Bond Fund |
B. Hedge Fund
A hedge fund is actually a limited partnership |
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All of the following reduce gross assets to net assets EXCEPT: A. Investment Advisory Fees B. Transfer Agent Fees C. Custodian Charges D. Underwriting Assessments |
D. Underwriting Assessments
All fund "expenses" have the effect of reducing the gross asset value. Underwriting and sales charges are added to the POP and are not reductions in gross assets |
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Which of the following is contracted by a mutual fund to issue new shares and cancel redeemed shares for the fund? A. Transfer agent B. Custodian C. Investment advisor D. BOD |
A. Transfer Agent |
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Which of the following statements regarding hedge funds is FALSE? A. Short selling and buying on margin are hedge fund strategies B. they are appropriate only for the experienced investor C. They are mutual funds D. They use aggressive strategies to generate income and minimize losses in a down market |
C. They are mutual funds |
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Which of the following statements is/are correct concerning the basis of a mutual fund's redemption price? I. The price is based on the next calculated price II. The redemption price is the NAV (bid price) at the time the request is made. III. If the fund charges a redemption fee, the fee will be based on a percentage of the NAV. A. III only B. I and II only C. II and III only D. I, II and III |
A. III only
A fund's redemption fee is based on the next calculated bid price or NAV at the end of the trading day. Redemption fees are based on a percentage of the NAV |
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When making mutual fund recommendations a registered representative should I. Concentrate on short-term trends to highlight investment opportunities. II. Compare standardized yields of similar funds III. Explain the fund's expense ratio IV. Consider the total return of the fund after sales charges and expenses A. III only B. I and IV only C. II, III and IV only D. I, II, III and IV |
C. II, III and IV only |
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Jennifer is a busy young manager with a retail chain and doesn't have time or the desire to try to figure out which investments are right for her investment portfolio. Which of these mutual fund features is most important to Jennifer? A. The 12b-1 fee exclusion for certain accounts B. The ability to invest on a consistent basis regardless of the amount invested C. The stated investment objective of the fund D. The financial and economic research done by the fund |
D. The financial and economic research done by the fund
Mutual fund management uses extensive research on a company's financial condition, company earnings report, trends, and analysis which individuals often do not have time to do |
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Which of the following would be considered a qualifying group for rights of accumulation? I. Entities such as participants in a company retirement plan II. A trust account III. A company's 401k plan IV. An investment club A. I, II and III B. II, III and IV C. I and III D. II and IV |
A. I, II and III |
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Face amount certificates issue debt certificates that offer predetermined interest rates. The certificates may be purchased by either periodic installments or with a lump-sum payment. These certificates have a maturity of at least A. 6 months B. 12 months C. 18 months D. 24 months |
D. 24 months |
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A sample of how a mutual fund quote would appear in the newspaper is: The Smith Barney fund has a sales charge of $4.10, computer by subtracting the bid price from the asked price ($81.99 - $77.89 = $4.10) 1. The percentage of the sales charge is found by dividing the ______ by the ________ 2. Newspaper quotes may also contain information concerning mutual funds costs by placing a "P" which indicates _______, or an "R" which indicates, or a letter "T" which indicates _______ after the name of the fund. |
1. sales charge by the offering price per share 2. P = 12b-1 fees apply R = redemption fee T = both a 12b-1 fee and redemption fee apply |
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1. Mutual funds are quoted by their _____ (bid price) and the _______ (asked price) 2. The sales charge is computed by subtracting the ______ from the _____. 3. For open-end shares, the _____ will be the bigger number and the _____ is the smaller number, (unless the fund is a no load). 4. Investors redeem at the _____ and purchase at the _____. |
1. net asset value, public offering price 2. bid price from the asked price 3. asked (POP), bid (NAV) 4. NAV, POP |
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1. The NAV must be calculated at least ______ and is usually computed at the _____ of the NYSE. 2. Buy and sell orders are based on the next price to be computed, referred to as ________. |
1. once a day, close 2. forward pricing
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1. The NAV of a mutual fund is determined by dividing the _____ of the fund by the ________. 2. The fund's total net assets consist of the current ______ of the fund's securities excluding the _____, _______, minus _______. |
1. total net assets, number of shares outstanding 2. market value, fixed assets, plus cash, minus total liabilities |
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Mutual funds are purchased at the _____ (asked price). They are redeemed at the ______ (bid price). The offering price is the ______ + ______. |
POP, NAV, bid price plus a sales charge |
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What is the formula for computing the offering price (or asked price)? |
Offering Price = Bid Price (NAV) + $ Sales Charge |
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How do you compute the percentage of the sales charge? |
Sales Charge --------------------- Offering Price |
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1. How do you calculate the POP? 2. Example: NAV : $10.50 - Sales Charge 5%. What is the POP? |
1. POP = NAV ------------ (100% - SC)
2. $10.50 / (100% - 5%) $10.50 / 95% $11.05 = POP $0.55 = SC |
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1. How long do Class C shares have a CDSC? 2. Even though Class C shares have a _______ expense ratio than Class B shares, they may be costly over a longer term. Why? 3. Class B shares CDSC _____ each year the investment is held, until eventually reaching ____, and then converting into _______ |
1. One year 2. lower, because they can never be converted to Class A shares 3. decreases, 0%, Class A shares |
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To ensure potential investors are fully aware of mutual fund sales charges, they must be quoted a the ______ of the particular fund. |
maximum sales charge percentage |
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1. In order to encourage increased investment, most mutual funds have _______, which are dollar levels at which the sales charge is ________. 2. Will these be stated in the fund's prospectus? 3. Who is able to take advantage of these? 4. Who is unable to take advantage of these? 5. These are allowable if the following conditions are met: (4) |
1. sales breakpoints, discounted 2. yes, it must be 3. any "person", which is married couples, parents and their minor children, and certain other entities such as trusts, pension plans, etc. 4. investment clubs or investment co-ops, and minors who are not legal "persons" because of their age 5. breakpoints uniformly apply to all recipients -information concerning scheduled breakpoints is given to shareholders and prospective investors -the prospectus is revised if the breakpoint schedules change -the investment company advises existing shareholders of any breakpoint schedule changes within 1 year |
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1. Selling just shy of a breakpoint is considered _____ and is a violation. 2. Example: if a registered representative encourages the purchase of $24,000 of the above fund with informing the customer of the available discount upon investing an additional $1,000, has the representative engaged in breakpoint selling? 3. If a representative accepts an order of $24,000 without informing the customer of the available discount, is this a breakpoint sale? |
1. breakpoint selling 2. yes 3. yes |
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T/F It is considered breakpoint selling if a representative divides a customer's purchase between several different mutual fund families to increase the sales charges upon which the rep is paid? |
True |
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A _______ allows an investor to qualify for the sales discount without initially investing the entire amount required. The letter states the investor's intent to invest the required amount over the next ____ months. |
letter of intent, 13 months |
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1. Letters of intent can be backdated _____ days. If the LOI is backdated, note that there will be less than ______ months remaining to complete the investment, because the window begins at the date of _______. 2. Are letters of intent binding to the investor? What happens if the customer doesn't pay the required amount by the time the letter expires? 3. How does the fund ensure that it will be able to recover these charges? 4. Only ______ contributions are considered part of additional deposits. 5. Can appreciation of shares owned credit toward completion of the letter? |
1. 90 days, 13 months, original purchase 2. No, the fund will charge the investor an amount that equals the higher sales charge that applied to the original investment 3. it holds a sufficient number of shares in escrow to cover the expenses 4. investor 5. no |
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1. __________ allow investors the right to receive cumulative quantity discounts when purchasing additional shares. 2. Investors are permitted to ______ from their accounts and this of immediate family members to qualify for the discounts. 3. Unlike breakpoints, ________ of shares is considered, but the sales charge reductions are not ________ to previous purchases. These rights are also made available to certain qualifying ______. As with breakpoints, _______ and ________ are not considered qualifying groups. 4. Accumulation rights must be made available for at least _____ years, calculated from the original ______. 5. Funds that do not offer rights of accumulation are subject to a maximum sales charge that is less than ________%. |
1. Rights of accumulation 2. combine assets 3. appreciation, retroactive, groups investment clubs and co-ops 4. 10 years, purchase date 5. 7.75% |
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1. Mutual fund companies typically permit the combining of accounts for rights of accumulation for members of the _______ and children under the age of _____ living at the same residence. _______ could also be considered relatives if they are _______ of the family. 2. Fund companies typically permit rights of accumulation for groups such as _______, ______, ________, etc. and these groups usually invest through some type of __________.
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1. immediate family, 21 Immediate family, financially dependent 2. schools, hospitals, corporations retirement program |
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1. __________ (also referred to as contractual plans or systematic investment plans) allow investors to accumulate shares of a mutual fund indirectly by contributing a ________ on a regular basis. 2. Contractual plans normally require ______ investments over a period of ____ or _____ years, and allow an investor to start a plan with a ___________. 3. An investor does not directly own shares of a mutual fund, instead, a ________ invests the individual investor's payments minus applicable fees in the mutual fund's shares. 4. The plan company and the underlying fund must be ________. 5. The maximum sales charge allowed for contractual plans is ______% over the life of the plan. |
1. Periodic Payment Plans, fixed amount of money 2. monthly, 10 or 15 years, small monthly contribution 3. plan trust 4. registered with the SEC 5. 9% |
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Certain funds shares may also charge a redemption fee. This normally occurs when shares are held for less than ____ days or perhaps up to ______. Most often this is to discourage _______ of shares by the investor. This is not a ______ and is computed based on the value of the shares that are __________. |
90 days 1 year short-term trading sales charge redeemed |
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There are ____ different methods for redeeming mutual fund shares. Name and define them. |
4 Written Request: mutual funds may be redeemed through a written request Telephonic: may be redeemed over the phone if the fund has this privilege and the investor chooses it when the account is opened Check Writing: mutual funds may be redeemed through check writing if the fund has that privilege. It is usually limited to money market funds and some bond funds Through a dealer: can go through a dealer who sold the funds or directly with the transfer agent. No load funds are redeemed by direct contact with the issuing transfer agent or custodian bank because there's no dealer involved. |
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1. Under certain circumstances, funds may require a ________ before redeeming shares to ensure that the request is valid. This is usually required for _______, _________, or for _________. 2. If a physical certificate was issued for the share, it must be ________ for cancellation in order to ________ the shares. This is rare since most sales are recorded on a _______ basis. |
1. signature guarantee, wire transfers, redemptions to addresses other than the address on record on the account, or for dollar amounts above certain limits 2. presented, redeem, book-entry |
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1. Most fund companies will permit shareholders to request a ______ as evidence of their ownership, similar to a ________. 2. Because of the increased sensitivity of this request, a _____ of the owner is often required. 3. It is important to note that before those shares can be redeemed, they must be _______ and re-evaluated by the fund company. |
1. physical certificate, stock certificate 2. signature guarantee 3. deposited to the account |
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1. Once a fund company receives a redemption request in good order, meaning that all required items have been provided, the fund company will utilize _____ to determine the price per share that the shareholder will receive. |
forward pricing |
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The Investment Company Act of 1940 requires that mutual funds pay redemption proceeds to customers within _____ calendar days |
7 |
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1. Mutual funds typically offer reinvestment of _______ and ________ at NAV (meaning without a sales charge). If the customer chooses to reinvest distributions, these moneys are automatically used to purchase _______ in the customer's account. 2. The IRS taxes mutual fund distributions in the ________ distributed. The IRS calls this choice __________. 3. Whether the investor receives them or reinvests them back into the dividend, the distributions are _______. |
1. capital gains and dividends, additional mutual fund shares
2. year distributed, constructive receipt
3. taxable |
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1. Most funds allow investors to redeem shares in one fund and reinvest proceeds in another fund within their family at ______. 2. These exchanges do not incur additional sales charges, but some funds charge a ________. 3. Because redemption of shares normally results in a _________, the IRS defines these exchanges as a ______ for capital gain and taxation purposes. 4. Should investors be informed of the tax consequence of a switch before they execute the switch? |
1. NAV 2. small exchange fee 3. realized capital gain or loss, sale 4. yes, because the tax consequence is a consideration in the switch decision |
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1. _________ is a voluntary investment plan whereby the investor systematically invests a _____ at regular intervals, usually ______ or _______. 2. The mutual fund may require a _________ with each deposit. 3. Is there a penalty for failure to make additional investments? |
1. dollar cost averaging, fixed dollar amount, monthly or quarterly 2. minimum investment 3. no |
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1. DCA plans are considered a way to reduce ______ risk in mutual fund investing. Why? 2. The average cost basis means than an investor, with the same dollar amount per installment, will be able to _____ more shares when the market is ______ and ______ when it is _______. 3. By investing a fixed amount at fixed intervals, regardless of fluctuations in the share price, over time the investor will realize an ________ that is less than the ________ during that time. 4. When discussing DCA plans, the agent must let investors of the following: (2) |
1. because share prices are combined and averaged out over time 2. purchase, down, and fewer, up 3. average personal cost, average public cost 4. they still can sustain a loss if the current market value of the shares is below the average share cost -the plan does not protect them from a loss in a steadily declining market |
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1. In order to calculate a shareholder's average cost per share, you must find the _______ and divide it by the __________. 2. The average price per share is calculated by adding the _______ and dividing it by the _________. 3. DCA always produces the same result: the investor's ______ per share is less than the ______ per share over the investment period. |
1. total dollar amount invested during a given period, total number shares purchased during that time 2. price per share of each purchase, the number of purchases 3. average cost, average price |
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1. Many investment companies provide investors with an option for systematic ________, ________ or _______ withdrawals. 2. Payments can be received at specified intervals in either ______ or _______ amounts. 3. Much like systematic investment plans help an investor accumulate monies in an account, ______ helps an investor liquidate an account in a more predictable manner. |
1. monthly, quarterly, annual 2. fixed or flexible 3. a systematic withdrawal plan |
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1. There is usually a requirement for a __________ for the account from which the distribution is being made. 2. Payments are made first from ______ and then from _______. If these are not sufficient, fund shares are ________. 3. If the account value falls below the minimum required for _______, the mutual fund will generally ask that the account either be _______ or that future distributions are ________. |
1. minimum NAV 2. dividends, capital gains, liquidated 3. distributions, liquidated, discontinued |
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1. Investors need to be aware that systematic withdrawal plans have a potential to ________. 2. Are systematic withdrawal plans guaranteed to last for a certain length of time? 3. What is one reason an investor may set up a systematic withdrawal plan in regards to timelines and liquidation? |
1. exhaust their principal 2. no 3. by setting up the plan in such a way, the investor can know with great certainty the timeframe of the liquidation |
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Name the 3 types of withdrawal plans and define them. |
1. Fixed Dollar Periodic Payments - an investor requests that a specified dollar amount be received in each payment 2. Fixed Percentage Periodic Payments - an investor requests that a fixed percentage of shares be liquidated at fixed intervals 3. Fixed Shares Period Payments - an investor requests that a fixed number of shares be liquidated at specific intervals |
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1. Who is charged with the safekeeping of the fund's securities? 2. Who maintains the record of share ownership? 3. Shareholders own fund shares through _______ and do not have a ________. 4. What would a shareholder have to do if they possess share ownership certificates in order to redeem shares? |
1. the custodian 2. the custodian 3. book entry form, physical certificate 4. they would have to surrender share ownership certificates in order to redeem shares |
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1. The Form ______ documents to the IRS and to the investor all potentially taxable events such as _______, __________ and _________. 2. Registered investment companies are permitted to distribute long-term capital gains no more than once every ______. |
1. 1099, dividends, realized short-term and long-term capital gains, capital losses 2. 12 months |
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1. How many different funds are available to the public today? 2. To quantify a fund's price volatility relative to various market indices most publications use rating measures such as ______. 3. Publications such as ______ and _______ are generally good sources of unbiased information. 4. Which document will provide the most comprehensive information for evaluation and comparison? |
1. Over 10,000 2. beta 3. Morningstar and Lipper 4. a fund's prospectus |
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Funds should be compared and contrasted within the following realms: (5) |
1. Investment Objectives - it would not be appropriate to compare the performance results of a fund with a growth objective to a fund having an income objective for example. 2. Investment Policies - even funds with the same overall objective can utilize very different investment policies to pursue those objectives. 3. Quality of Management - quality of management can be compared by duration of current management and consistency of performance relative to like funds. 4. Risk Factors - risk factors can be compared by the fund's calculated risk coefficient, beta, Sharpe ratio, and risk/return factors 5. Portfolio Turnover - the frequency with which a fund buys and sells securities in its portfolio (turnover rate or turnover ratio) can effect its cost to the investor. For example, a turnover rate of 100% would indicate that a fund completely replaces its portfolio every year, whereas a rate of 50% means it typically changes half of its portfolio each year. A high turnover rate typically means higher expenses and probably higher short-term capital gains distributions |
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1. Mutual fund investing is most appropriate for _______ investment objectives. 2. Comparisons between funds should focus on ________ and consistency of performance over time, not on the current ______ of certain funds or industry sectors. 3. Two of the most helpful statistical analysis is based on the following: |
1. long-term 2. long-term, short-term trends 3. 1. Total Return - for a given holding period includes the effect of reinvested distributions and share price appreciation, net of sales charge and expenses for the period 2. Expense Ratio - higher expenses have the effect of reducing current yields and total returns. Remember that newer funds, especially those with fewer total assets under management than their peers, usually experience higher expense ratios in their earlier years |
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1. ______ are investment companies whose objective is to achieve the same return as a particular market index, and who primarily invest in _______ that are included in a selected market index. 2. Do these sell individual shares to investors? 3. These shares are only issued in large blocks (______ shares for example), that are known as __________. 4. After purchasing this, an investor may split it up and sell the individual shares on a _____ or they may also ______ to the ETF. |
1. exchange traded funds (ETFs), securities of companies 2. no 3. 50,000, creation units 4. secondary market, sell the creation unit back to the ETF |
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1. Unlike in mutual funds, investors do not purchase or redeem shares from the ______, but instead ______ on an _______. 2. Like stocks, ETF prices _____ continuously throughout the day according to changes in the underlying portfolio of securities. 3. ETFs also offer the same intraday _____ as other securities traded on exchanges, such as closed-end funds. |
1. ETF, buy and sell, exchange 2. fluctuate 3. liquidity |
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1. Hedge funds are actually ______ and not mutual funds as defined by the Act of 1940. They use aggressive strategies such as _____, ______ on margin to generate income and minimize, or "______" against losses in a down market. 2. What kind of investor are these investment vehicles appropriate for? 3. Can Series 6 qualified representatives sell hedge funds? Series 26? |
1. limited partnerships options, short selling and buying "hedge" 2. experienced, sophisticated, wealthy investors 3. no and no |
