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Investment Companies & Packaged Products: 308 free SIE practice questions

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A market maker is best described as a dealer that:medium
Under the Investment Company Act of 1940, which of the following is a type of registered investment company?medium
Which type of investment vehicle is regulated by the Investment Company Act of 1940?easy
A pension fund making large trades in the market is best described as which type of market participant?easy
Which statement correctly describes U.S. Treasury bills (T-bills)?easy
A registered representative is helping a client build a portfolio. What principle requires the rep to make only recommendations that are…medium
Which is a characteristic of a unit investment trust (UIT) under the Investment Company Act of 1940?medium
What function does a market maker perform on a securities exchange?medium
Before selling shares, what must a mutual fund provide to investors under the Investment Company Act of 1940?medium
Which is true about both U.S. Treasury notes (T-notes) and Treasury bonds (T-bonds)?medium
A closed-end fund differs from a mutual fund in which key way?hard
MSRB Rule G-37 restricts municipal bond dealers from engaging in business with issuers following what action?hard
What is the minimum percentage of disinterested directors required by the Investment Company Act of 1940 for an investment company’s board?hard
A registered representative taking orders and providing investment advice to customers is acting as which of the following?easy
A mutual fund is most directly regulated by which of the following laws?easy
A registered representative recommends a high-risk product to a conservative investor. Which rule is most likely violated?medium
A unit investment trust (UIT) differs from a mutual fund because a UIT:medium
Which of these is true regarding shares of a closed-end investment company?medium
Which investment product is regulated by the Investment Company Act of 1940?easy
A broker recommends high-yield bonds to a conservative investor. Which rule does this potentially violate?medium
Which investment company type issues redeemable shares and has a fixed portfolio?medium
Which feature is unique to Unit Investment Trusts (UITs) compared to mutual funds and closed-end funds?hard
A customer wants to invest in a professionally managed, diversified portfolio with no sales charges on purchases or redemptions. Which…medium
A registered representative recommends a speculative small-cap stock to a risk-averse retiree. Which principle is most likely violated?medium
Which feature distinguishes a Unit Investment Trust (UIT) from mutual funds and closed-end funds?hard
A mutual fund is regulated primarily by which federal law?easy
A registered representative must always consider which factor when recommending investments?easy
Closed-end funds differ from mutual funds in that closed-end funds:medium
Which feature is unique to unit investment trusts (UITs)?medium
An investment company is formed to invest in stocks and is offering its own shares to the public. What must it do under the Investment…hard
A registered representative recommends a high-risk leveraged ETF to a retired client with low risk tolerance. This recommendation is most…medium
Which of the following investment products is regulated under the Investment Company Act of 1940?medium
How does an open-end mutual fund differ from a closed-end fund?easy
A mutual fund has total assets of $500 million, total liabilities of $20 million, and 20 million shares outstanding. What is the NAV per…medium
An investor making a large lump-sum investment in a mutual fund would MOST likely benefit from purchasing:medium
A mutual fund has breakpoints at $25,000, $50,000, $100,000, and $250,000. An investor wants to invest $48,000. Their registered…medium
Rights of accumulation (ROA) allow a mutual fund investor to:medium
12b-1 fees are charges that a mutual fund uses to cover:easy
Which of the following is a characteristic of a Unit Investment Trust (UIT)?medium
The separate account of a variable annuity is:medium
An investor who withdraws funds from a variable annuity during the surrender period will typically face:easy
How are withdrawals from a non-qualified variable annuity taxed?medium
When must a mutual fund prospectus be delivered to an investor?easy
An investor signs a letter of intent (LOI) to invest $100,000 over 13 months to receive a breakpoint discount. After 13 months, only…hard
If a variable annuity owner dies during the accumulation phase, the beneficiary typically receives:medium
A mutual fund's expense ratio includes all of the following EXCEPT:easy
A closed-end fund has a NAV of $25 per share but is trading at $22 on the exchange. The fund is trading at:hard
When a variable annuity is annuitized, the payout amount depends on:hard
An investor redeems shares of an open-end mutual fund. The redemption price is based on:easy
Variable annuities are generally NOT suitable for which type of account?medium
A money market mutual fund invests primarily in:easy
A mutual fund exchange privilege allows an investor to:medium
When a UIT reaches its termination date, what happens to unitholders?hard
Mortality and expense (M&E) risk charges in a variable annuity compensate the insurance company for:hard
When a mutual fund investor elects automatic reinvestment of dividends and capital gains distributions:easy
Under FINRA rules, the maximum sales charge for a mutual fund is:medium
A Section 1035 exchange allows an annuity owner to:hard
A Section 529 plan is a tax-advantaged savings plan designed to:easy
Contributions to a 529 plan are made with:medium
A grandparent wants to contribute to a grandchild's 529 plan. Under the special gift tax provision, the grandparent can contribute up to…hard
Who maintains control over a 529 plan account?medium
An ABLE (Achieving a Better Life Experience) account is designed for individuals who:medium
What is the difference between a 529 prepaid tuition plan and a 529 savings plan?medium
Which statement about ABLE account contributions is TRUE?hard
If funds are withdrawn from a 529 plan for non-qualified expenses, what is the tax consequence?easy
In a limited partnership, the limited partners' liability is:easy
Direct Participation Programs (DPPs) offer the primary tax advantage of:medium
A major disadvantage of investing in a Direct Participation Program (DPP) is:medium
The general partner in a limited partnership is responsible for:easy
Which of the following is a common type of Direct Participation Program?medium
Under IRS passive activity loss rules, losses from a limited partnership can generally only be used to offset:hard
A Tenant-in-Common (TIC) 1031 exchange allows an investor to:hard
Before investing in a DPP, an investor must complete a subscription agreement that includes:medium
A Real Estate Investment Trust (REIT) allows investors to:easy
What is the primary difference between an equity REIT and a mortgage REIT?medium
To qualify for special tax treatment, a REIT must distribute at least what percentage of its taxable income to shareholders?easy
Which statement about non-traded REITs is TRUE?medium
REIT dividends are typically taxed as:hard
To qualify as a REIT, a company must meet all of the following requirements EXCEPT:hard
Rising interest rates generally have what effect on REIT prices?medium
One advantage of investing in a publicly traded REIT compared to direct real estate ownership is:easy
Hedge funds are typically available only to:easy
A hedge fund lock-up period refers to:medium
The traditional hedge fund fee structure known as '2 and 20' refers to:medium
Which of the following strategies is commonly used by hedge funds but NOT typically available to mutual funds?hard
Compared to mutual funds, hedge funds are:medium
Hedge fund minimum investments are typically:easy
Which of the following is NOT a typical risk associated with hedge fund investing?hard
An Exchange-Traded Fund (ETF) shares characteristics of both mutual funds and stocks because it:easy
The creation and redemption mechanism of ETFs involves:hard
Tracking error in an ETF refers to:medium
ETFs are generally more tax-efficient than mutual funds because:medium
Which of the following is an advantage ETFs have over traditional open-end mutual funds?easy
A 2x leveraged ETF seeks to provide:hard
If an ETF's market price exceeds its intraday NAV (iNAV), the ETF is trading at:medium
Which of the following is an example of systematic (market) risk?easy
Unsystematic risk can be reduced by:easy
Political risk is BEST described as:medium
All of the following are types of systematic risk EXCEPT:hard
Which portfolio is MOST effectively diversified to reduce unsystematic risk?hard
Which of the following best describes the net asset value (NAV) of an open-end mutual fund?easy
A mutual fund's 12b-1 fee is primarily used to cover:easy
An investor making a large purchase in a mutual fund receives a reduced sales charge. This benefit is known as:easy
A client signs a Letter of Intent (LOI) with a mutual fund family. What is the primary benefit of an LOI?easy
How are closed-end fund shares typically bought and sold by investors?easy
Which of the following is a feature of most Exchange-Traded Funds (ETFs)?easy
A key characteristic of a Unit Investment Trust (UIT) is that it:easy
To maintain its special tax status, a Real Estate Investment Trust (REIT) must distribute at least what percentage of its taxable income to…easy
Class B mutual fund shares generally have which of the following features?easy
An investor wishes to trade a basket of securities in real time with low expenses. Which product is most suitable?easy
A primary benefit of investing in a 529 plan is:easy
At the end of a Unit Investment Trust's (UIT) life, investors typically:easy
A variable annuity differs from a fixed annuity because its value is primarily based on:easy
Which of the following is NOT a type of REIT?easy
A major difference between a hedge fund and a mutual fund is that hedge funds:easy
Which statement is true of private equity funds?easy
An investor notices that an ETF is trading at a price slightly higher than its net asset value (NAV). What does this indicate?medium
Which statement best describes how open-end mutual funds are priced for purchases and redemptions?medium
A client is eligible for a breakpoint but is not informed by their representative. This is considered:medium
An investor has previously purchased $30,000 in a mutual fund family and wants to invest $20,000 more to reach a $50,000 breakpoint. Which…medium
What happens if a closed-end investment company wants to raise more capital after its initial public offering (IPO)?medium
A distinguishing feature of ETFs, compared to mutual funds, is that ETFs:medium
Which statement best describes the management of a Unit Investment Trust (UIT)?medium
Which of the following best describes a hybrid REIT?medium
Compared to mutual funds, hedge funds are generally:medium
Which of the following is a unique risk of variable annuities compared to fixed annuities?medium
Which is NOT a feature of 529 college savings plans?medium
An open-end mutual fund must stand ready to:medium
Which one is a unique risk associated with exchange-traded funds (ETFs) compared to mutual funds?medium
A typical characteristic of private equity funds is that they:medium
A client is considering a variable annuity mainly to control investment options. Which feature aligns with this goal?medium
Compared to mutual funds, UITs differ in that they:medium
Which statement about REITs is correct?medium
A client wants to minimize ongoing expenses and is planning a large investment in a mutual fund to use the available breakpoint. Which…medium
Shares of a closed-end fund may trade at a discount to NAV for which primary reason?medium
Which practice is common for hedge funds but not for mutual funds?medium
What is an advantage of ETFs over traditional mutual funds?medium
An investor in a UIT can expect which of the following at termination?medium
A mortgage REIT primarily earns income from:medium
Class C mutual fund shares are typically most appropriate for:medium
The price that an investor pays for a closed-end fund share is usually:medium
Which investor is generally eligible to purchase hedge funds?medium
A unique tax advantage of ETFs over open-end mutual funds is that ETFs:medium
A disadvantage of UITs compared to mutual funds is that UITs:medium
If a REIT distributes less than 90% of its taxable income to shareholders, the REIT:medium
A client plans to invest $25,000 in a mutual fund and wants to maximize long-term returns while minimizing ongoing expenses and sales…hard
An authorized participant in the ETF creation/redemption process primarily helps:hard
Which of the following best describes the liquidity risk of hedge funds?hard
Upon purchasing units of a UIT, an investor should expect that:hard
A key difference between private equity funds and public mutual funds is that private equity funds:hard
After a closed-end fund’s IPO, what is the primary source of liquidity for investors?hard
Which factor most limits significant price deviations between an ETF's market price and its net asset value?hard
A key risk associated with variable annuities, but not with fixed annuities, is:hard
If a 529 plan's funds are used for non-qualified expenses, the account owner may be subject to:hard
Which of the following is true of an equity REIT?hard
Why are hedge funds subject to less disclosure and fewer regulations than mutual funds?hard
Which of the following most accurately describes the pricing of shares in an open-end mutual fund?easy
A mutual fund charges a front-end sales load. What does this mean for investors?easy
An investor wants to invest $55,000 in a mutual fund with breakpoints. What is the purpose of breakpoints?easy
Which fee is specifically designated for the marketing and distribution of mutual fund shares?easy
An investor wants to qualify for a mutual fund breakpoint by signing a Letter of Intent (LOI). Which is TRUE?easy
Rights of Accumulation (ROA) in mutual funds allow investors to:easy
Unlike open-end funds, closed-end fund shares are:easy
A unique feature of exchange-traded funds (ETFs) compared to mutual funds is that ETFs:easy
All of the following are characteristics of unit investment trusts (UITs) EXCEPT:easy
A requirement for a company to qualify as a REIT is that it must:easy
Investors in variable annuities bear which of the following risks?easy
Which of the following statements about 529 college savings plans is TRUE?easy
Which is a typical characteristic of hedge funds?easy
Private equity funds generally:easy
A mutual fund has $150 million in assets, $10 million in liabilities, and 7 million shares outstanding. What is the NAV per share?medium
If an investor purchases $48,000 of a mutual fund, and the breakpoint for a lower sales charge is $50,000, which action can help qualify…medium
A mutual fund charges a 0.40% 12b-1 fee. Which of the following best describes this charge?medium
A client redeems shares in an open-end mutual fund. When is the price set for the redemption?medium
Which of the following is a true statement about ETF share creation and redemption?medium
An investor trades ETF shares during market hours. How does this compare to open-end mutual funds?medium
Why might an investor choose an index ETF over an actively managed mutual fund?medium
A distinguishing characteristic of a unit investment trust (UIT) compared to a mutual fund is that a UIT:medium
Upon maturity, a unit investment trust (UIT) typically:medium
Which of the following best describes an equity REIT?medium
A hybrid REIT combines the features of which two types of REITs?medium
Which is NOT a feature of most publicly traded REITs?medium
Which investor benefit is provided by mutual fund automatic reinvestment of dividends?medium
A key risk of variable annuities compared to fixed annuities is:medium
Which is a qualified expense for a 529 savings plan distribution?medium
A typical hedge fund fee structure is:medium
Private equity funds are best suited for which type of investor?medium
Closed-end funds may trade at a premium or discount to NAV because:medium
How does the number of outstanding shares in a closed-end fund generally change over time?medium
A mutual fund prospectus must disclose all of the following EXCEPT:medium
Which investor is most likely to benefit from an ETF’s intraday liquidity?medium
A mutual fund family offers exchange privileges. This means an investor can:medium
An investor interested in income wants to compare equity REITs and mortgage REITs. Which statement is most accurate?hard
A REIT is considering reducing its annual distribution to 80% of taxable income. What would be the potential consequence?hard
Which is a defining feature of a mutual fund with a back-end sales load (Class B share)?hard
A mutual fund may suspend redemptions under which circumstance?hard
When purchasing mutual fund Class C shares, what is the typical cost structure?hard
Which scenario best illustrates the risk associated with a UIT’s fixed portfolio?hard
Which of the following best explains why ETFs experience lower capital gains distributions than mutual funds?hard
A withdrawal from a 529 college savings plan used for non-qualified expenses will result in:hard
Which regulatory feature applies to most hedge funds?hard
A primary risk associated with private equity investing is:hard
Which of the following statements regarding tax treatment of variable annuity earnings is correct?hard
If an investor fails to fulfill an LOI, what happens to the previously reduced sales charges?hard
Which risk is unique to investors in closed-end funds, compared to open-end mutual funds?hard
Which tax characteristic is a major advantage of ETFs over mutual funds?hard
An investor buys shares of an open-end mutual fund at the public offering price (POP). What does the POP generally consist of?easy
Which type of fund typically charges a sales load at the time of purchase?easy
Which of the following can be traded throughout the day on an exchange at market prices?easy
A main characteristic of a Unit Investment Trust (UIT) is that it:easy
For a Real Estate Investment Trust (REIT) to avoid federal taxation on income, it must distribute at least:easy
A 529 plan is most commonly used to fund which of the following?easy
Which share class of mutual funds usually imposes a contingent deferred sales charge (CDSC)?easy
Closed-end funds differ from open-end funds because they:easy
Which characteristic is most associated with hedge funds?easy
Private equity funds primarily invest in:easy
What is a breakpoint in a mutual fund?easy
An investor who plans to invest $45,000 over 13 months in a mutual fund can receive a sales charge reduction immediately by signing a:easy
At the end of a Unit Investment Trust’s life, the investor typically:easy
12b-1 fees in mutual funds are used to cover:easy
Variable annuities differ from mutual funds in that:easy
Which of the following REITs invests primarily in mortgages and mortgage-backed securities?easy
Which party is primarily involved when ETFs are created or redeemed in large blocks known as 'creation units'?medium
The NAV of an open-end mutual fund changes primarily as a result of:medium
An accredited investor is required for investing in which of the following packaged products?medium
Which feature differentiates a variable annuity’s payout phase from its accumulation phase?medium
Unlike mutual funds, ETFs maintain price alignment with underlying assets primarily through:medium
If a closed-end fund is trading below its NAV, this means:medium
A client wants to minimize upfront sales charges and is willing to pay higher ongoing expenses. Which mutual fund class is most appropriate?medium
ETFs are often considered more tax-efficient than mutual funds due to:medium
When an investor places an order to buy mutual fund shares, the actual price paid is determined by:medium
A key difference between a UIT and a mutual fund is that a UIT:medium
Who maintains control over the assets in a 529 plan?medium
A mutual fund’s expense ratio measures:medium
Mutual fund shareholders typically have the right to:medium
After its initial public offering (IPO), a closed-end fund:medium
A mutual fund is MOST suitable for an investor seeking:medium
Which of the following is a key difference between ETFs and open-end mutual funds?medium
If an investor wishes to redeem units in a UIT prior to termination, they:medium
A typical equity REIT seeks to earn returns for investors by:medium
A major risk of private equity funds for investors is:medium
A primary benefit of ETF intraday trading is:medium
Variable annuities are most suitable for:medium
The main tax benefit of 529 plan distributions used for qualified education expenses is:medium
A closed-end fund trades at a discount to its NAV. Which factor is least likely to explain this discount?hard
Which strategy is most likely to be employed by a hedge fund but not by a mutual fund?hard
A private equity fund’s preferred exit strategy for a portfolio company is usually:hard
Variable annuities typically include which of the following cost structures?hard
A key disadvantage of Class B mutual fund shares compared to Class A shares is:hard
After formation, a UIT portfolio is generally:hard
In order to qualify as a REIT under IRS rules, a company must:hard
Which statement best distinguishes ETF share redemption from mutual fund share redemption?hard
An investor exchanges shares from one mutual fund to another within the same fund family. For tax purposes, this is considered:hard
A closed-end fund may trade at a premium if:hard
If a REIT fails to distribute 90% of its taxable income as dividends, it will:hard
Compared to mutual funds, hedge funds are less likely to:hard
An RR recommends that a client divide investments among several mutual fund families to 'avoid breakpoints.' This practice is:hard
REITs are not considered investment companies under the Investment Company Act of 1940 because:hard
An investor is considering purchasing $100,000 of a Class A mutual fund that charges a front-end sales load, provides breakpoints, and…medium
A change in government policy results in new regulations that negatively impact a company’s industry. This is an example of:easy
Diversification is most effective at reducing which type of risk?easy
Which risk cannot be eliminated through diversification?easy
Which investor faces the highest political/legislative risk?medium
Systematic risk is also referred to as:medium
A new tax law significantly increases the tax rate on capital gains. Which risk does this illustrate?medium
Which of the following is an example of unsystematic risk?medium
A foreign government unexpectedly nationalizes its banks, causing local bond prices to fall. U.S. investors in those bonds face what type…hard
Which best distinguishes systematic from unsystematic risk?hard
A pharmaceutical company's stock price drops sharply after a new law restricts the sale of one of its leading drugs. What risk is this an…medium
Which of the following is considered an unsystematic risk?hard
Under FINRA's suitability rules, a registered representative must have a reasonable basis to believe a recommendation is suitable based on…medium
Under FINRA Rule 2165, a broker-dealer may place a temporary hold on disbursements from a senior investor's account if the firm reasonably…medium
Which of the following is governed by the Investment Company Act of 1940?easy
The Investment Company Act of 1940 defines which of the following as investment companies?hard
A mutual fund must register with the SEC under which law?medium
When does an investor in a mutual fund buy shares?medium
An investor wants intraday pricing and trading privileges not allowed by mutual funds. Which product suits this need?hard
A registered representative must ensure that a recommendation for a client is:easy
Under the Investment Company Act of 1940, which of the following is NOT classified as an investment company?medium
Which type of account is specifically designed to save for qualified educational expenses?medium
A mutual fund account is regulated primarily by which federal law?medium
A customer applies for an options account and reports very limited investment experience. The firm should:hard
The Investment Company Act of 1940 requires mutual funds to:hard
Under the Investment Company Act of 1940, which account type might hold mutual fund shares?medium
When opening a brokerage account, a registered representative's most important requirement is to:hard
A customer applies for an options account. What must the firm consider before approval?medium
An investor opens an account with a mutual fund company. Which law primarily governs the fund's structure?medium
A registered rep recommends only proprietary products to all new accounts without considering customer needs. What standard is the…medium
A customer purchases Class B shares in a mutual fund account. Which fee is MOST likely applied?hard
Which best describes a registered representative's obligation regarding investment recommendations?easy
Which investment vehicle is regulated under the Investment Company Act of 1940?medium
Front-running occurs when a broker-dealer:easy
Recommending frequent mutual fund exchanges solely to generate commissions is known as:medium
A mutual fund portfolio manager trades shares for personal benefit ahead of fund trades. This is a violation of which fiduciary obligation?medium
A registered rep tells a client that an investment is 'guaranteed' to increase in value. This statement is:medium
Which is an example of a prohibited practice relating to custodial accounts?medium
A closed-end fund manager manipulates the share price through coordinated trading with other parties. This is a violation of:medium
A UIT sponsor uses false advertising to promote a new trust series. This would be considered:medium
A broker solicits non-accredited investors for a Regulation D offering after exceeding the permitted number allowed. This is:hard
If a mutual fund advisor gives one group of investors favorable information not disclosed in the prospectus, this could be considered:medium
A mutual fund manager uses nonpublic information to trade for the fund’s benefit before that information is widely available. This practice…hard
A registered representative recommends complex options strategies to a client who has limited investment experience and a low risk…medium
MSRB Rule G-37 (pay-to-play) restricts municipal securities dealers from doing business with a government entity for how long after making…medium
Under MSRB Rule G-37, what is the de minimis exception for political contributions by municipal securities professionals?hard
FINRA Rule 2030 (pay-to-play) applies to which type of business?easy
If a retail communication uses hypothetical illustrations, what must be included?medium
MSRB Rule G-37 requires reporting of political contributions by firms that underwrite:medium
Broker-dealers must report gifts and gratuities over what value per person per year, under FINRA rules?medium