Pooled investments

Question 1

Pooled investment

Answer 1

Multiple investors contribute assets to be held and invested as a single group

Question 2

Index securities actively or passively managed?

Answer 2

Passively

Question 3

Pooled investments are pass through for tax purposes meaning

Answer 3

interest, dividends, gains and losses are passed to the individual investor

Question 4

Pooled investment interest and dividends taxed how

Answer 4

ordinary income

Question 5

Pooled investment capital gains taxed how

Answer 5

as capital gains

Question 6

Open ended fund has what capital structure

Answer 6

variable

Question 7

closed end funds have what capital structure

Answer 7

Fixed

Question 8

How would shareholders of a closed end fund liquidate their shares?

Answer 8

Secondary market

Question 9

What happens when you add or withdraw money from an open end fund

Answer 9

creates or eliminates shares

Question 10

ETFS and open ended funds trade at what value?

Answer 10

NAV

Question 11

Closed end funds trade at what value?

Answer 11

discount or premium to NAV depending on supply/demand of secondary market

Question 12

ETFS open end or closed end

Answer 12

Closed end

Question 13

Do ETFs sell at a discount or premium?

Answer 13

No bc institutions are able to exchange etf shares for individual securities and vice versa which keeps an etf on track with the index its tracking

Question 14

ETFs are open to who and closed to who

Answer 14

Open to institutions but closed to individual investors

Question 15

Advantage of ETF over open end mutual funds

Answer 15

• trade during day
  -capital gains may be managed, not incurred by activity of other investors
  -low cost due to operating cost

Question 16

Disadvantages to etf over open end mutual fund

Answer 16

commission to buy or sell shares

Question 17

UITs publicly traded?

Answer 17

No

Question 18

UIT open or closed end

Answer 18

Closed but not publicly traded

Question 19

Bond UIT would liquidate when vs stock UIT

Answer 19

Bond liquidates as securities mature, stock would liquidate at predetermined date

Question 20

How does investor use UIT

Answer 20

hold basket of securities and collect income and principal through time until all principal has been returned

Question 21

UITS active or passive?

Answer 21

Passive

Question 22

Drawbacks to mutual funds

Answer 22

Charge fees
often have minimum investment

Question 23

Index securities cost is what vs actively managed fund?

Answer 23

Lower

Question 24

Hedge funds use what strategies

Answer 24

leverage, long, short, derivatives, domestic and international

Question 25

Hedge funds are set up as what structure?

Answer 25

private investment partnership

Question 26

Hedge funds open to what type of investor?

Answer 26

Accredited, high initial investment amount

Question 27

Hedge funds are unregulated why

Answer 27

Because they only cater to sophisticated investors

Question 28

Hedge fund liquid or illiquid?

Answer 28

Illiquid

Question 29

Hedge funds got their name how

Answer 29

because they could hedge against market downturn with ability to short the market, now they use many different strategies

Question 30

Limited partnership

Answer 30

two or more partners united to conduct business jointly to the extent of the amount of $ the partnership has invested

Question 31

Limited partners liability limited to what

Answer 31

Only what they invested

Question 32

General partner liability is what

Answer 32

NOT limited, can be sued personally

Question 33

Do limited partner receive dividends?

Answer 33

No they have direct access to to flow of income and expenses

Question 34

Managed account

Answer 34

held by private investor and managed by a professional specifically tailored to that investor

Question 35

Difference between mutual fund and managed account

Answer 35

managed acct is tailored for you vs mutual fund is managed on behalf of many investors

Question 36

Separately managed accounts

Answer 36

privately managed investment account opened thru brokerage or advisor that uses pooled money to buy individual assets. Investor directly owns the securities instead of shares of a mutual fund. Usually 100k or more