CH 8 Packaged products Flashcards
(81 cards)
The trading of REITs is most similar to what type of investment company?
Closed-end management companies, since both trade in the secondary market (exchange or OTC)
True or False: Regulated Investment Companies (under Subchapter M) may relieve their burden of paying tax on income.
True. Regulated Investment Companies will only be taxed on the income retained.
What inquiry is made of a client who is exchanging one variable annuity for another?
Whether other exchanges occurred in the previous 36 months (record of the firm inquiry and client response is retained)
Which annuity is funded with after-tax dollars - Qualified or Non-Qualified?
Non-Qualified
Are expenses related to an RR’s attendance at an issuer-sponsored seminar on variable contracts able to be reimbursed?
Yes, provided the reimbursement is not tied to achieving a sales target.
Typically, investment companies are allowed no more than ____ days from request to complete a redemption.
Typically, investment companies are allowed no more than 7 days from request to complete a redemption.
When and to whom are completed variable contract applications forwarded?
Promptly to an OSJ
Mutual funds are required to provide a ___________ report to their shareholders.
Mutual funds are required to provide a semiannual report to their shareholders.
An ADR issued in cooperation with the issuing foreign company is a __________ ADR.
An ADR issued in cooperation with the issuing foreign company is a sponsored ADR.
When recommending a variable contract, a firm must consider the client’s suitability for what different factors?
The initial purchase, the subaccounts to which funds are allocated, the exchange of one contract for another
A REIT must have a minimum of ____ shareholders, with no more than ____% of the trust owned by _____ or fewer persons.
A REIT must have a minimum of 100 shareholders, with no more than 50% of the trust owned by five or fewer persons.
With what should a firm be concerned if an RR recommends certain funds because they are hot?
The RR may be implying that past performance is indicative of future results.
For tax purposes, S Corporations and limited liability companies (LLCs) are ______________ investments.
For tax purposes, S Corporations and limited liability companies (LLCs) are pass through investments.
Letters of Intent may be back-dated for _____ days.
Letters of Intent may be back-dated for 90 days.
May fund sponsors hold educational seminars and pay hotel and meal expenses for BD salespeople and their guests?
No. Fund sponsors may pay hotel and meal expenses for BD salespeople, but NOT for their guests.
What investment benefit do REITs provide to investors?
Stable dividend payments
A REIT will not be taxed on its income if it distributes ____% of it to shareholders.
a REIT will not be taxed on its income if it distributes 90% of it to shareholders.
Who usually manages a wrap account?
An investment adviser
Wrap accounts benefit clients who trade ___________.
Wrap accounts benefit clients who trade frequently.
If a firm induces purchases by selling dividends, how does it result in a disadvantage for investors?
The dividend is already included in the price that investors must pay for the shares.
What is an ownership characteristic of a REIT?
Limited liability
True or False: To lower sales charges, investors add mutual fund purchases in all accounts using Rights of Accumulation.
True. However, the purchases must all be from the same fund family.
The annuity with growth dependent on the performance of securities in a separate account is called a __________ annuity.
The annuity with growth dependent on the performance of securities in a separate account is called a variable annuity.
According to the Anti-Reciprocal Rule, what practice is prohibited when selling mutual fund shares?
Paying more compensation for selling a fund or creating a preferred list of funds to sell based on commissions received
