Exam 1: Investment and Bond Market

Which of the following are included in the expense ratio of a fund? I. 12b-1 fees II. brokerage costs incurred by the fund when it buys and sells securities III. redemption fees IV. management fees

Under current tax law, in order for the profits from the sale of any investment to be considered long-term capital gain income, the investment must have been held for:

Which of the following is a characteristic of a mutual fund?

Which of the following established the requirement that insiders report their trading activities to the SEC?

Given the same maturity, which of the following debt instruments would you expect to offer the highest yield-to-maturity?

A bond has a face value of $1,000, matures in 10 years, and pays an 8% coupon, with interest paid semiannually. If the bond is priced to yield 8.8%, it is selling:

Sarah Bean is a registered representative with NewWave Investments, a family of mutual funds. She has recommended one of NewWave's funds to a client and given him a prospectus. The prospectus provides information about the fund's breakpoints and indicates that an investment of $25,000 or more will lead to a reduced front-end load. The prospectus also clearly explains the details of a letter of intent. Sarah's client invests $23,000 in the fund then and there without even opening the prospectus. Has Sarah violated any of FINRA's rules of conduct?

The difference between a "redemption fee" and a "rear-end load" is that:

A new issue of common stock can be classified in which of the following categories? I. primary market II. money market III. secondary market IV. capital market

Which of the following is an example of market risk?

Pye has quit her job to become a full-time mother and wants to roll over the funds from her 401(k) plan into an IRA. As her financial adviser, you should tell her that:

A FINRA member who is a principal underwriter under the definition provided in the Investment Company Act of 1940 is permitted to sell variable contracts through another broker-dealer only if: I. the broker-dealer is also a FINRA member. II. there is a sales agreement in effect between the underwriter and the broker-dealer. III. the broker-dealer is also a principal underwriter as defined by the Investment Company Act of 1940.

Which of the following is a true statement about FINRA rules regarding material that Giant Investments submits to its institutional investors? I. FINRA requires that each member firm establish procedures for each institutional investor separately. II. Procedures to be followed in distributing material to institutional investors must be in writing. III. All institutional sales material must be submitted to a principal for approval prior to being used. IV. Institutional sales material must be maintained by the member firm for at least three years from the date of last use.

Upon receiving a complaint about one of its member firms, FINRA may: I. require any person associated with the member firm to provide information to FINRA and to testify under oath. II. inspect and copy the books, records and accounts of the member firm. III. share information obtained from its investigation of a member firm with a foreign regulatory agency.

A broker-dealer is required to file a Currency Transaction Report with the Treasury Department for:

Which of the following statements about primary market transactions is true?

Which of the following would be the most suitable investment for a client who has retired and needs some current income to augment her social security check?

A brochure advertising the Stocks4U Mutual Fund contains an example illustrating how much an investor who had invested $10,000 with the fund ten years ago would have in his account today, using the fund's historical return data, to illustrate the principle of compound interest. An example of this nature:

Which of the following is exempt from registering as an investment company under the Investment Company Act of 1940?

MBIA, Inc., a municipal bond insuring company, has a bond issue that is selling for $80.05 to yield 9.5%. The bond has a coupon rate of 7%, with semiannual payments, and matures in 2025.If interest rates in the economy increase, which of the following statements will be true, all else equal? I. the nominal yield of the bond will increase. II. the yield-to-maturity of the bond will increase. III. the current yield of the bond will increase.