Final Exam 3

Question 1

What is a measure of non systematic risk?

Answer 1

Alpha

Question 2

An adviser could recommend the purchase of a bond to a client if it’s:

Answer 2

Present value is more than its current market value

Question 3

The USA authorizes the administrator to waive the surety bond requirement for a BD if the firm:

Answer 3

Maintains a sufficient level of net capital

Question 4

According to the USA, if an IA wants to charge a fee based on the average value of a clients portfolio, the fee:

Answer 4

Is permitted unless prohibited by the administrator

Question 5

According to the IA Act of 1940, an IARs personal securities transactions involving which security are subject to the reporting requirement?

Answer 5

Corporate stocks and bonds

Question 6

Are section 457 plans required to follow ERISA guidelines?

Answer 6

No, because they’re non-qualified plans.

Question 7

When is the IRR used?

Answer 7

When determining the rates that makes the NPV of an investment zero

Question 8

Which investment company shares are transacted at the current bid or asking price on an SEC-registered securities market?

Answer 8

A closed end management company

Question 9

When is a BD required to deliver a prospectus?

Answer 9

By settlement date