FINRA SIE Ch. 7 Practice Questions with Correct Answers

FINRA SIE Ch. 7 Practice Questions with Correct Answers Which investment company does NOT charge a management fee? - Answer️️ -A unit investment trust Shares of a closed-end fund are available on the NYSE at $21.50 per share. The customer will pay: - Answer️️ -$21.50 + a commission All of the following statements are TRUE about closed-end investment companies, EXCEPT that the: - Answer️️ -Shares may not sell below the current net asset value Which of the following stipulations is NOT included in a letter of intent? - Answer️️ - The fund may stop redemptions during the duration of the letter of intent. Which of the following is a characteristic of closed-end funds? - Answer️️ -Closed-end fund shares are bought and sold on an exchange The day-to-day business activities of a unit investment trust (UIT) are the responsibility of the: - Answer️️ -Trustee All of the following are likely to be found in the portfolio of a money-market fund, EXCEPT: - Answer️️ -Common stock Which of the following funds is the LEAST likely to provide income? - Answer️️ -A sector fund TITLE: EMILLYCHARLOTTE 2024/2025 ACADEMIC PERIOD OWNER: EMILLYCHARLOTTE COPYRIGHT STATEMENT: ©2024 EMILLYCHARLOTTE. ALL RIGHTS RESERVED FIRST PUBLISHED: SEPTEMBER 2024 2/6 Who keeps track of the shareholders of a mutual fund? - Answer️️ -The transfer agent An individual who is considering the purchase of closed-end fund shares would pay: - Answer️️ -A market price as determined by the supply and demand for the shares A "breakpoint sale" is best defined as: - Answer️️ -The sale of investment company shares in dollar amounts just below the point at which the sales charge is reduced on quantity transactions According to current regulations, if a client redeems his mutual fund shares, the fund company must send the payment within: - Answer️️ -7 days The purchase price of a no-load fund is determined by: - Answer️️ -The net asset value as computed at the end of the business day An investment company that diversifies its portfolio with stocks, bonds, and money market instruments, but will always hold some of each, is called: - Answer️️ -Balanced fund Which of the following is considered an investment company under the Investment Company Act of 1940 - Answer️️ -A Unit Investment Trust (UIT) company Which of the following is a benefit of investing in mutual funds? - Answer️️ - Professional management of investments An investor in a mutual fund: - Answer️️ -Owns shares which represent an interest in the portfolio TITLE: EMILLYCHARLOTTE 2024/2025 ACADEMIC PERIOD OWNER: EMILLYCHARLOTTE COPYRIGHT STATEMENT: ©2024 EMILLYCHARLOTTE. ALL RIGHTS RESERVED FIRST PUBLISHED: SEPTEMBER 2024 3/6 A specialized or specialty fund invests in stocks that are primarily: - Answer️️ -In a particular industry or geographical area Which of the following investments can be purchased on margin? - Answer️️ -Closed- end fund shares An increase in which of the following choices will cause an increase in the expense ratio for an investment company? - Answer️️ -Management fees The purchase price of a no-load fund is determined by the: - Answer️️ -Net asset value Which of the following entities is responsible for the safeguarding of the securities that are owned by a mutual fund? - Answer️️ -The custodian bank Jamie has inherited 500 shares of an investment company. She calls her broker to redeem the shares and is informed that the kind of investment company she owns makes no provision for future purchases or redemptions. What kind of investment company does she own - Answer️️ -A closed-end fund An investment company that is purchased in installments and that matures at a fixed- dollar amount is called a: - Answer️️ -Face-amount certificate company The sale of which of the following dollar amount of mutual fund shares is most likely considered a breakpoint sale? - Answer️️ -$99,000. The shares of a closed-end fund that trades on the NYSE has a current price of $21.70. A customer who purchases the shares will pay: - Answer️️ -$21.70 plus a commission TITLE: EMILLYCHARLOTTE 2024/2025 ACADEMIC PERIOD OWNER: EMILLYCHARLOTTE COPYRIGHT STATEMENT: ©2024 EMILLYCHARLOTTE. ALL RIGHTS RESERVED FIRST PUBLISHED: SEPTEMBER 2024 4/6 You are reading the prospectus for the Adventurers Aggressive Growth Fund. Which of the following statements are you LEAST likely to encounter? - Answer️️ -The primary objective of the fund is income, with preservation of capital as a secondary objective. Which one of the following statements concerning money-market funds is TRUE? - Answer️️ -These investments are liquid. The fund that would probably have the most price volatility is a(n): - Answer️️ - International equity fund In which of the following funds is the percentage that's invested in each of the various asset categories adjusted as financial markets change? - Answer️️ -An asset allocation fund Which of the following is an advantage of a unit investment trust as compared to a managed mutual fund? - Answer️️ -It usually has lower operating costs. Which of the following is TRUE if a mutual fund investor chooses to implement a systematic withdrawal plan from the fund? - Answer️️ -The withdrawals may result in a reduction of capital. When purchasing mutual fund shares, the ability to receive cum