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Question 1 of 10
1. Question
Certificates of deposit: securities issued by banks with fixed interest payments and maturities up to-
Correct
Certificates of deposit: securities issued by banks with fixed interest payments and maturities up to five years.
Incorrect
Certificates of deposit: securities issued by banks with fixed interest payments and maturities up to five years.
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Question 2 of 10
2. Question
Which of the following statement(s) is (are) true about commercial paper?
I. Commercial paper are fixed income securities issued by companies to finance long-term obligations.
II. Commercial paper is issued at a discount to par.
III. Commercial paper does not make interest payments.
IV. Durations of 270 days or less, commercial paper do not require registration with the SEC.Correct
Commercial paper: fixed income securities issued by companies to finance short-term obligations. Commercial paper is issued at a discount to par and does not make interest payments. Durations of 270 days or less do not require registration with the SEC.
Incorrect
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Question 3 of 10
3. Question
Which of the following statement(s) is (are) true about Bankers acceptances?
I. Bankers acceptances are fixed income securities issued by firms to finance short-term obligations.
II. Bankers acceptances are guaranteed by a commercial bank.
III. Bankers acceptances durations typically range up to two year.
IV. Bankers acceptances are issued at a discount to par and do not make interest payments.Correct
Bankers acceptances: fixed income securities issued by firms to finance short-term obligations and are guaranteed by a commercial bank. Durations typically range only up to one year. Bankers acceptances are issued at a discount to par and do not make interest payments.
Incorrect
Bankers acceptances: fixed income securities issued by firms to finance short-term obligations and are guaranteed by a commercial bank. Durations typically range only up to one year. Bankers acceptances are issued at a discount to par and do not make interest payments.
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Question 4 of 10
4. Question
A money market fund seeks to maintain a net asset value of –
Correct
A money market fund seeks to maintain a net asset value of $1 per share.
Incorrect
A money market fund seeks to maintain a net asset value of $1 per share.
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Question 5 of 10
5. Question
Which of the following statement(s) is (are) true about offering price?
I. The offering price of a mutual fund is the price at which the fund can be purchased by an investor.
II. The offering price may be identical to the net asset value.
III. The offering price may differ depending upon whether any sales loads are charged.
IV. The offering price is simply equal to the net asset value plus any applicable sales loads that the fund charges.Correct
The offering price, or public offering price, of a mutual fund is the price at which the fund can be purchased by an investor. The offering price may be identical to the net asset value (the total value of fund assets less expenses divided by the number of outstanding shares) or may differ depending upon whether any sales loads are charged. The offering price is simply equal to the net asset value plus any applicable sales loads that the fund charges.
Incorrect
The offering price, or public offering price, of a mutual fund is the price at which the fund can be purchased by an investor. The offering price may be identical to the net asset value (the total value of fund assets less expenses divided by the number of outstanding shares) or may differ depending upon whether any sales loads are charged. The offering price is simply equal to the net asset value plus any applicable sales loads that the fund charges.
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Question 6 of 10
6. Question
Fund A’s net asset value is $1,000 and Fund A charges a sales load of 5%. What will be the offering price?
Correct
The offering price is calculated by taking the net asset value and dividing it by one minus the sales load: $1,000 dividend by (1 – 0.05) = $1,052.63.
Incorrect
The offering price is calculated by taking the net asset value and dividing it by one minus the sales load: $1,000 dividend by (1 – 0.05) = $1,052.63.
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Question 7 of 10
7. Question
For most investors, the primary share classes available within mutual funds that provide for varying expense structures depending upon the investors expected holding period are:
I. Class A
II. Class B
III. Class C
IV. Class DCorrect
For most investors, there are three primary share classes available within mutual funds that provide for varying expense structures depending upon the investors expected holding period:
Class A
Class B
Class CIncorrect
For most investors, there are three primary share classes available within mutual funds that provide for varying expense structures depending upon the investors expected holding period:
Class A
Class B
Class C -
Question 8 of 10
8. Question
Which of the following statement(s) is (are) true about Class A shares?
I. Class A shares charge investors a front-end sales charge.
II. Class A shares charge lower annual 12b-1 fees than other share classes.
III. Class A shares charge higher annual 12b-1 fees than other share classes.
IV. Class A shares do not charge a front-end sales chargeCorrect
Class A shares charge investors a front-end sales charge but typically charge lower annual 12b-1 fees than other share classes.
Incorrect
Class A shares charge investors a front-end sales charge but typically charge lower annual 12b-1 fees than other share classes.
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Question 9 of 10
9. Question
Which of the following statement(s) is (are) true about Class B shares?
I. Class B shares do not charge a front-end sales charge
II. Class B shares impose a contingent deferred sales charge (CDSC).
III. The annual 12b-1 fees imposed are higher than Class A shares.
IV. Once the CDSC no longer applies, the Class B shares are converted into Class A shares.Correct
Class B shares do not charge a front-end sales charge and instead impose a contingent deferred sales charge (CDSC) according to a defined schedule over the first several years of holding the fund (often six years). However, the annual 12b-1 fees imposed are higher than Class A shares. Once the CDSC no longer applies, the shares are converted into Class A shares, thereby lowering 12b-1 fees.
Incorrect
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Question 10 of 10
10. Question
Which of the following statement(s) is (are) true about Class C shares?
I. Class C shares do not charge a front-end sales charge.
II. Class C shares impose some type of percentage-based fee if the shares are sold within a short time from the date of purchase.
III. The 12b-1 fees are higher.
IV. The shares never convert into B shares.Correct
Class C shares do not charge a front-end sales charge and usually impose some type of percentage-based fee if the shares are sold within a short time from the date of purchase (i.e., one year). Also, the 12b-1 fees are higher and the shares never convert into B shares or C shares.
Incorrect
Class C shares do not charge a front-end sales charge and usually impose some type of percentage-based fee if the shares are sold within a short time from the date of purchase (i.e., one year). Also, the 12b-1 fees are higher and the shares never convert into B shares or C shares.