Random #12

Question 1

Customer made check out inadvertently to wrong co.

Answer 1

Sent back to customer 3 business days

Question 2

Can I borrow $ for a customer

Answer 2

No unless customer is my mortgage banker- no personal loans

Question 3

Blanket recommendations

Answer 3

No unless it’s your specialty

Question 4

Change in control of IA firm

Answer 4

Customer must consent

Question 5

Customer statements have to be provided how often (at a minimum)

Answer 5

Quarterly

Question 6

Form ADV part 2 is

Answer 6

The brochure

Question 7

Form ADV 2A vs 2B

Answer 7

ADV Part 1 is also the vehicle to upload your Firm’s Form ADV Part 2A (Firm Brochure) and Form ADV Part 2Bs (Brochure Supplements).

Question 8

ADV part 1A

Answer 8

Info about the firm- Part 1A is required whether you’re registering with the state or the SEC.

Question 9

ADV 1B

Answer 9

Part 1B is only required if you are registering with state authorities- Additional disclosures about your business

Question 10

ADV 2B

Answer 10

contains required information about the individuals providing financial advice at your firm

Question 11

ADV 2A

Answer 11

Part 2A requires you to write a narrative brochure where you’ll lay out information about your firm’s services, fees, conflicts, and personnel. The instructions require 18 disclosure items

Question 12

Cyber security and data protection for IA firms

Answer 12

Written supervisory procedures- must address; How are we protecting customers?

Question 13

Equity investments- ADRs are?

Answer 13

Foreign security with a domestic wrapper- can diversify a customer with a foreign security- subjects to currency risk

Question 14

Preferred stock preferential treatment in 2 areas:

Answer 14

1-Can’t pay dividend to common if in arrears

Question 15

Features of preferred stock

Answer 15

Income stream- stated as a max not a min- so we can use discounted cash flow

Question 16

2 versions of discounted cash flow

Answer 16

Common stock- Dividend growth model )can’t be used with preferred. This results in a higher growth model
Preferred stock- dividend discount model = dividend stays the same

Question 17

Current yield

Question 18

Yield to call

Question 19

Bonds most volatile

Answer 19

Long maturity, lowest coupon is most volatile

Question 20

Eurodollar bond

Answer 20

Issued outside US- but in $$ - no currency risk

Question 21

Eurobond

Answer 21

does have currency risk

Question 22

Commercial paper

Answer 22

Does not have to be registered

Question 23

Mutual funds- open end vs closed end

Answer 23

Open end continually offering new shares- federally secured and registeredclosed end trading

Question 24

Break point sale

Answer 24

BAD- trying to max commission by avoiding

Question 25

REIT vs open end