Series 65: Unit 3 Quiz 1 || All Answers Are Correct 100%.
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Series 65: Unit 3
Institution
Series 65: Unit 3
Which of the following are characteristics of a money market mutual fund?
1. Shares are offered without a sales charge.
2. There is a redemption fee.
3. All purchasers must receive a copy of the prospectus.
4. The letter of intent must be signed within 16 months. correct answers Shares are of...
which of the following are characteristics of a mo
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Series 65: Unit 3 Quiz 1 || All Answers Are Correct 100%.
Which of the following are characteristics of a money market mutual fund?
1. Shares are offered without a sales charge.
2. There is a redemption fee.
3. All purchasers must receive a copy of the prospectus.
4. The letter of intent must be signed within 16 months. correct answers Shares are offered w/o a
sales charge and all purchasers must receive a copy of the prospectus
In order to qualify as a REIT,
A. a mortgage REIT must have at least 75% of the assets in government-insured mortgages.
B. at least 75% of the assets must be invested in real estate-related assets, cash, and U.S.
government securities.
C. at least 75% of the taxable income must be paid out as dividends to investors.
D. at least 90% of the assets must be invested in real estate-related assets. correct answers At
least 75% of the assets must be invested in real estate - related assets, cash, and U.S. government
securities
A REIT must be invested in real estate. By law, at least 75% of a REIT's assets must consist of
real estate assets such as real property or loans secured by real property. That 75% can also
include cash and U.S. government securities. If it is a mortgage REIT, there is no specific
requirement regarding government-insured mortgages. A REIT must distribute at least 90% of its
taxable income to investors, not 75%.
All of the following statements regarding exchange-traded funds (ETFs) are correct except
A. ETFs may be passively managed.
B. ETFs trade based on supply and demand for the shares rather than their NAV.
C. ETFs can be bought on margin.
D. ETFs may not be sold short. correct answers ETFs may not be sold short
An investor is looking for a pooled investment product that can provide rental income as well as
potential capital gains. You would most likely recommend
A. a mortgage REIT.
B. an equity REIT.
C. a growth mutual fund.
D. a GNMA pass-though. correct answers An equity REIT
When you see "rental," you immediately think of renting real estate. Of the two basic types of
REITs, an equity REIT is the one that owns property. Rental income is received from the users
of those properties. As an owner of real estate, there is always potential to sell the property for a
gain. Think of the difference between an equity REIT and a mortgage REIT as the difference
between a stock and a bond. A stock offers the possibility of income through dividends and a
,bond through interest. But, it is only the stock (equity) where there is a real potential for capital
gain.
A 45-year-old client has just received an inheritance and would like to invest $100,000 into a
growth mutual fund offered by your firm. The client intends to use the money to supplement
retirement. You should probably recommend the purchase of
A. Class C shares
B. Class A shares
C. Class B shares
D. a fixed annuity correct answers Class A shares
Which of the following individuals would be considered a noninterested person in a mutual
fund?
A. A person who holds a position with the fund's underwriter
B. A shareholder who owns 10% of the fund's shares
C. A member of the board of directors who is also employed as the investment adviser
D. A member of the board of directors who does not hold another position within the investment
company correct answers A member of the board of directors who does not hold another position
within the investment company
Which of the following is the least suitable mutual fund transaction?
A. Encouraging a mutual fund shareholder to switch from one fund family to another while a
deferred load is in existence
B. Encouraging an investor in his early 30s to invest in an emerging markets mutual fund
C. Encouraging a retired 65-year-old investor to invest a small percentage of his savings in a
large-cap growth fund
D. Encouraging an investor in a high tax bracket with an income objective to invest in a
municipal bond fund correct answers Encouraging a mutual fund shareholder to switch from one
fund family to another while a deferred load is in existence
Encouraging a mutual fund shareholder to switch from one fund family to another while a
deferred load is in existence is not in the client's best interest, because the client might be subject
to substantial additional sales charges.
There are certain requirements for an investment to qualify as a REIT. Which of the following is
not one of them?
A. At least 75% of the REIT's annual gross income must be from real estate-related income such
as rents from real property and interest on obligations secured by mortgages on real property.
B. At least 90% of the REIT's taxable income must be paid out as dividends to investors.
C. At least 75% of the REIT's taxable income must be paid out as dividends to investors.
, D. At least 75% of the assets must be invested in real estate-related assets, cash, and U.S.
government securities. correct answers At least 75% of the REIT's taxable income must be paid
out as dividends to investors
In order to qualify as a REIT, the REIT must distribute at least 90% of its taxable income, not
75%. At least 75% of the assets must be invested in real estate-related assets such as real
property or mortgages. The same is true of the REIT's annual gross income.
Jasper is considered an affiliated person of the Tahor Clean Energy Mutual Fund. Under the
Investment Company Act of 1940, Jasper is prohibited from all of the following except
A. buying securities from the fund's portfolio.
B. selling stock to the fund for its portfolio.
C. being elected to the fund's board of directors.
D. borrowing from the fund (money or property). correct answers Being elected to the fund's
board of directors
There is no problem with an affiliated person being elected to the fund's board of directors.
Under the act, as many as 60% of the board members may be affiliated persons (the law states
that at least 40% must be noninterested parties). Affiliated persons may not have any dealings
with the investment company (outside of contractual obligations and the purchase or redemption
of shares of the investment company), such as buying securities, furniture, real estate, or other
property from the company or selling such property to the company.
Which of the following are the most common characteristics of a REIT?
1. It is traded on an exchange or over the counter.
2. It is professionally managed.
3. It passes through both gains and losses to investors.
4. It is a type of limited partnership. correct answers It is traded on an exchange or over the
counter and it is professionally managed
A REIT shares some features with a limited partnership, but it is a different type of business
entity. REITs are traded on exchanges and OTC and are professionally managed. Both REITs
and limited partnerships provide pass-through of gains to investors, but REITs do not provide
pass-through of losses. Please note: NASAA has recognized that, over the past few years, there
has been an enormous growth in non-traded REITs. Non-traded REITs don't trade, so there is
little or no liquidity. Unless something in the question refers to a non-traded REIT, assume that
all REITs are publicly traded either on the stock exchanges or OTC.
Which of the following would be least likely to be organized as a limited partnership?
A. Index ETF
B. Venture capital fund
C. Hedge fund
D. Private equity fund correct answers Index ETF
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