Random 65

Question 1

STRIPS - interest rate

Answer 1

zero coupon bonds

Question 2

Government National Mortgage Association (GNMA) Bonds

Answer 2

-Direct backing of the US Treasury. the only security without the word Treasury in its name that is backed by the U.S. government is a GNMA.
-payments are received monthly, because underlying the security is a pool of home mortgages, which are paid for monthly. Second, each monthly payment the investor receives consists partly of interest and partly of principal.
-Subject to state taxes

Question 3

Tenants in the Entirety

Answer 3

can be used by married couples only

Question 4

of days mutual fund has to redeem an investors shares

Answer 4

7

Question 5

Do Treasury bills pay interest?

Answer 5

They are zero coupon

Question 6

Cost basis of a gift received

Answer 6

carryover basis and holding period

Question 7

holding period of inheritence

Answer 7

always LT even if actually ST

Question 8

convertible securities generally sell at a slight ____over their parity pric

Answer 8

premium

Question 9

parity price of a convertible

Answer 9

common stock trading price * # shares bond can convert into

Question 10

order of returns for a discount bond

Answer 10

D
N
C
YM
YC

Question 11

No registered investment company can make IPO unless it has net worth of at least ___

Answer 11

$100k

Question 12

Treasury notes are issued with maturity dates of

Answer 12

2–10 years.

Question 13

Roth 401k vs IRA

Answer 13

Roth 401k:
Same 5 year rule as IRA
Employer contribution cannot be roth
HAVE RMDS
NO INCOME LIMIT

Question 14

Excess Contribution penalty - IRA

Answer 14

6%
Any contribution in excess of the indexed maximum (and the earnings associated with the excess) is subject to a penalty of 6%.

Question 15

ERISA Section 404(c) relieves the employer of ____ _____ for investment decisions made by employees.

Answer 15

fiduciary responsibility

Question 16

Section 404(c) The safe harbor requirements relieve the trustee of a 401(k) plan of liability if the plan participants have the ability to select from at least _ different investments and are allowed to make selection changes no less frequently than ____.

Answer 16

3 different investments
no less than quarterly

Question 17

funds in a Coverdell ESA must be used by the time the beneficiary is __

Answer 17

30

Question 18

QDRO - is it applicable to IRAs?

Answer 18

No. Only Qualified Employer Plans

Question 19

The fiduciary standards of ERISA

Answer 19

-require that plan participants be offered a broad range of investment options in order to obtain the benefit of broad diversification.
-Under no circumstance, even when benefiting plan participants, are fiduciaries permitted to engage in prohibited transactions such as lending money to the plan.
-The standards of prudence apply to the administration of the plan, as well as to the investment decisions, and the investment policy, although a good thing to have, is not required under ERISA.

Question 20

Coverdell vs 529

Answer 20

-The Coverdell may only be used by persons who fall within certain income limits—no such limits apply to the 529 plan.
-The Coverdell has contribution limits set by federal law; each state sets its own 529 limit.
-If the money is not used for qualified education expenses, it is the donor in a 529 plan who is responsible for any taxes and penalties, but to the beneficiary in a Coverdell ESA.

Question 21

It is the ____ _ shares that have no front-end load, but they do have a 1% CDSC for a period of one year.

Answer 21

Class C

Question 22

Mutual fund pricing is based on the ____ _____ _____ The price is based on the next calculated NAV per share after the order is received.

Answer 22

forward pricing rule.

Question 23

SEC Rule 144 covers

Answer 23

sale of restricted stock (e.g. sold via private placcement) and control stock

Rule 144 applies to the sale of unregistered securities owned by affiliates or nonaffiliates (private placements) AND the sale of control stock. It does NOT apply to the sale of REGISTERED securities by nonaffiliated persons.

Question 24

Preemptive rights

Answer 24

give a shareholder the right to buy additional shares of a new issue in order to maintain the size of an ownership stake

Question 25

___ _____bear no stated interest rate. They are sold at a discount through weekly auctions and are actively traded in the money market. Treasury ___ and Treasury _____ both carry stated interest rates.

Answer 25

Treasury bills: No interest rate Notes and bonds: have an interest rate

Question 26

A specialized or sector fund invests __ or more of its assets in a particular region or industry.

Answer 26

25%

Question 27

The Investment Company Act of 1940 requires that an open-end investment company have a minimum of $____in net assets prior to commencing a public offering. Reports must be sent to shareholders on a ______ basis. No fund is permitted to own more than __ of the outstanding shares of another registered investment company.

Answer 27

$100,000 minimum reports on a semiannual basis 3%

Question 28

Most loans from a 401(k) plan are required to be repaid within __ years. This rule does not apply to loans taken for a home purchase.

Answer 28

5 must be repaid with interest must be secured and made in accordance with plan provisions

Question 29

For RMD purposes, each IRA is figured separately and the distribution can be made from one or all of them. That is/is not the case with a 401(k) plan. Each account has an RMD that can only be paid from that account.

Answer 29

IS NOT the case. RMDs from 401ks must be taken from the actual account

Question 30

qualified pension plans must

Answer 30

They must not discriminate. They must have a vesting schedule. They must be in writing. An employer must update the status of all employees at least annually

Question 31

A governmental Section 457 plan must be __—that is, it must hold plan assets in trusts or custodial accounts for the benefit of individual participants. Conversely, a tax-exempt (nongovernmental) Section 457 plan may ____

Answer 31

governmental: funded tax exempt/nongovernmental: may not be funded

Question 32

Defensive industries are least/most affected by normal business cycles. Companies in defensive industries generally produce nondurable consumer goods, such as food, pharmaceuticals, tobacco, and energy

Answer 32

least

Question 33

During recessions and bear markets, stocks in ____ industries generally decline less than stocks in other industries.

Answer 33

defensive Defensive industries are least/most affected by normal business cycles. Companies in defensive industries generally produce nondurable consumer goods, such as food, pharmaceuticals, tobacco, and energy

Question 34

To be considered a negotiable CD, a CD must have a face value of at least

Answer 34

$100k

Question 35

GNMAs are subject to what taxes (fed/state/local?)

Answer 35

federal, state, and local income tax note the difference from treasury which are just federal

Question 36

The maximum amount of bitcoin that will ever be in circulation is ___

Answer 36

21 million coins

Question 37

It is only in the case of ___contracts that the buyer (and seller) are both obligated to complete the contract.

Answer 37

forward

Question 38

Standardized equity options are issued and guaranteed by the ___. They are traded on the ___and other exchanges.

Answer 38

OCC: options clearing corporation CBOE: chicago board options exchange

Question 39

One question asked on a new ___ account form that is not required on a normal brokerage account opening is: investment experience and knowledge

Answer 39

options

Question 40

A ____ ____ is an informal trust that is set up as a bank account.

Answer 40

Totten trust The person who sets up the Totten account is the trustee of the account and can name any person as the beneficiary of the account. Upon the death of the trustee, the money will immediately be made available to the named beneficiary.

Question 41

can closed end funds have fractional shares?

Answer 41

No. full shares only Mutual funds (open end) may have fractional

Question 42

what is required for qual plans: SPD (summary plan description) and/or IPS (investment policy statement)?

Answer 42

The DOL requires a SPD to be given to a participant the IPS is not required under any rules. This is what the investment advisors of the plan will follow

Question 43

All prospective options customers must receive a copy of the ___ at or before the time the account is approved to trade options.

Answer 43

ODD (Options Disclosure Document) It is the options account agreement that must be signed and returned to the broker-dealer within 15 days of account approval.

Question 44

____ ____ _____ must be signed and returned to the broker-dealer within 15 days of account approval. (options accounts)

Answer 44

options account agreement

Question 45

ERISA Section 404 (c) describes a safe harbor for 401(k) plan fiduciaries. Among the requirements is to provide at least 3 different investment alternatives with a range of risk and provide account access no less frequently than ____.

Answer 45

quarterly

Question 46

Preferred stockholders do/do not have the right to subscribe to a rights offering.

Answer 46

preferred stockholders do not have preemptive rights

Question 47

the term no-load cannot be used if 12-b1 charge exceeds

Answer 47

0.25%.

Question 48

Dying intestate means that there is no valid will. In that case, the state will appoint someone as ______ of the estate with the responsibility of handling all of the affairs of the deceased. Only when there is a will is there an _______,

Answer 48

court will appoint an administrator only with will is there an executor

Question 49

JTWROS accounts - While either party may enter an order, any money or securities delivered out of the account must be in the names of ____

Answer 49

both owners.

Question 50

Money purchase pension plan - annual contributions are

Answer 50

mandatory

Question 51

The property that may be transferred into an UGMA account is generally limited to _____while in an UTMA account, almost any kind of property—real or personal, tangible or intangible—can be transferred to the custodian.

Answer 51

cash and securities

Question 52

The 4 primary requirements of the CIP are

Answer 52

name, physical address, DOB, and SSN. - "NABS" (name address birthday ssn)

Question 53

Estate taxes must be paid within ___months of death

Answer 53

nine