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| Section | Weight | Objectives |
|---|---|---|
| Opens Accounts After Obtaining and Evaluating Customers’ Financial Profile and Investment Objectives | 16% | - Financial profile and investment objectives assessment - Customer identification and verification - Account types and registration - Anti-money laundering (AML) and compliance |
| Provides Customers with Information About Investments, Makes Recommendations, Transfers Assets and Maintains Appropriate Records | 50% | - Product features, risks, costs, and tax considerations - Suitability rules and recommendations - Retirement plans and 529 savings plans - Investment company products: mutual funds, UITs, closed-end funds - Recordkeeping and disclosure requirements - Variable contracts: variable annuities, variable life insurance |
| Obtains and Verifies Customers’ Purchase and Sales Instructions; Processes, Completes and Confirms Transactions | 10% | - Error resolution and correction procedures - Trade confirmations and account statements - Payment and settlement processes - Order entry and processing procedures |
| Seeks Business for the Broker-dealer from Customers and Potential Customers | 24% | - Prospecting and identifying customer needs - Telemarketing and solicitation rules - Advertising and sales literature regulations - Communications with the public and regulatory rules |
1. On which of the following items do mutual fund shareholders get to vote?
I. any change in the investment objective of the fund
II. the election of a new investment adviser
III. the renewal of the fund's 12b-1 fee
IV. the purchase or sale of real estate by the fund
A) I, II, III, and IV
B) I, II, and III only
C) I, III, and IV only
D) I, II, and IV only
2. Which of the following investor characteristics is inconsistent with an aggressive investment strategy?
I. short investment horizon
II. high risk tolerance
III. young
A) III only
B) I, II, and III
C) I and II
D) I only
3. The investment banker bears the risk if the securities do not sell in a(n):
A) best efforts agreement.
B) firm commitment underwriting agreement.
C) None of the above selections are correct. The investment banking firm is never exposed to risk if the
securities don't sell.
D) all-or-nothing commitment.
4. Asset allocation involves:
A) selecting the investments that are expected to offer the highest return over your client's investment
horizon.
B) determining the percentages that your client should be investing in various types of investments (e.g.,
stocks, bonds) based on his investment objectives.
C) selecting the investments that will expose your client to the least amount of risk.
D) determining the specific stocks and bonds in which your client should invest his funds.
5. The totalreturn reported by a mutual fund:
A) is equal to the return it earned on the dividend and interest income it received from its investments.
B) includes both the dividend and interest income earned by the fund and any increase in the fund's net
asset value.
C) is calculated as the percentage change in the net asset value of the fund.
D) is equal to the annual percentage increase in the dollars invested in the fund by investors.
Solutions:
| Question # 1 Answer: C | Question # 2 Answer: D | Question # 3 Answer: B | Question # 4 Answer: B | Question # 5 Answer: B |
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