Exam 1 Retake Questions Missed Flashcards
Under which of the following circumstances will an individual be required to register with the Administrator as an investment adviser representative?
She solicits brokerage services
She supervises the accounting department of a registered investment adviser
She holds herself out as an investment adviser representative
She serves on a committee that makes investment decisions for an investment adviser’s managed accounts
She serves on a committee that makes investment decisions for an investment adviser’s managed accounts
Typically employees of an investment adviser who solicit advisory services, make investment decisions, or supervise IARs
Investment Adviser rep
All the following are characteristics of passive asset allocation strategies, EXCEPT
Low transaction costs
Minimal annual tax liabilities
Rebalancing of a portfolio when risk levels exceed the investor’s preferences
Altering a portfolio in anticipation of an economic event
Altering a portfolio in anticipation of an economic event
Nominal Yield x (100% - Tax Rate % )
After-Tax Yield
Bond Yield - Inflation Rate
Inflation-Adjusted Return
A client contacts an investment adviser representative to discuss the advantages of incorporating. What are the disadvantages of forming a C Corporation?
Double taxation
Which of the following is TRUE if the price of a discount bond falls?
The spread between the yield-to-maturity and yield-to-call will increase and the yield-to-call will rise
If a bond’s basis declines, the yield-to-maturity will
Also decline, they move in the same direction
An individual currently has $100 to invest. She has calculated that the future value of her investment will be either $130 under favorable market conditions or $80 under unfavorable market conditions. Which of the following statements about the investor’s future value projections is TRUE?
If market conditions are unfavorable, the investor will have a $20 loss.
The discount rate must be the same for both the favorable and unfavorable market conditions.
The present value of the investment is $105.
If market conditions are favorable, the investor will have a $20 gain.
If market conditions are unfavorable, the investor will have a $20 loss
All of the following statements are TRUE of a 529 plan, EXCEPT:
Withdrawals that are used for educational purposes are not subject to federal taxation.
There are no income limits placed on contributors.
Contribution amounts are unlimited.
A married couple may make a lump-sum contribution of $170,000 without incurring federal gift taxes.
Contribution amounts are unlimited
What information is required in order to determine an investment’s internal rate of return (IRR)?
The positive and negative cash flows from an investment
A corporation’s shareholders must vote for
Stock splits
Par / Conversion price
Conversion ratio
If the net present value of an investment is greater than 0
The current market value is less than the discounted cash flows
Bonds that are issued by foreign companies pay interest and principal in
the issuer’s currency