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Question 1 of 10
1. Question
Which of the following statements is true regarding No approval clause?
I. No approval clause is referred in Section 23
II. It is meant to indicate to investors that while the SEC is responsible for approving the registration of a security
III. They are in no way responsible for the truth and accuracy of the registration statement
IV. They do warrant the security as being a good investmentCorrect
No approval clause
Section 23 of the Securities Act of 1933, often referred to as the “no approval clause,” is meant to indicate to investors that while the SEC is responsible for approving the registration of a security, they are in no way responsible for the truth and accuracy of the registration statement and do not warrant the security as being a good investment.Incorrect
No approval clause
Section 23 of the Securities Act of 1933, often referred to as the “no approval clause,” is meant to indicate to investors that while the SEC is responsible for approving the registration of a security, they are in no way responsible for the truth and accuracy of the registration statement and do not warrant the security as being a good investment. -
Question 2 of 10
2. Question
Which of the following statements is true regarding Prospectus?
I. Ensuring investors access is the purpose of the prospectus
II. Investors don’t have access to a minimal level of information
III. A minimal level of information is necessary for the investment decision-making process
IV. A mutual fund’s objectives, strategy, risks, fees are some the informationCorrect
Prospectus
The purpose of the prospectus is to ensure that investors have access and are provided with, prior to the purchase of a security, a minimal level of information that is necessary for the investment decision-making process. Such information within the prospectus includes a mutual fund’s objectives, strategy, risks, fees and expenses, and past performance. The format of each prospectus is the same to enable investors to easily compare different investments.Incorrect
Prospectus
The purpose of the prospectus is to ensure that investors have access and are provided with, prior to the purchase of a security, a minimal level of information that is necessary for the investment decision-making process. Such information within the prospectus includes a mutual fund’s objectives, strategy, risks, fees and expenses, and past performance. The format of each prospectus is the same to enable investors to easily compare different investments. -
Question 3 of 10
3. Question
Which of the following statements is true regarding statement of additional information?
I. It is meant to provide additional information to assist in the investment-making decision
II. It is typically available, or required to be contained, within the prospectus
III. Detailed information about the fund’s investment advisers never be such information
IV. Information relating to the purchasing and redemption of shares is not of such informationCorrect
Statement of additional information
The Statement of Additional Information is meant to provide additional information to assist in the investment-making decision that is not typically available, or required to be contained, within the prospectus. Such information may include detailed information about the fund’s investment advisers and information relating to the purchasing and redemption of shares.Incorrect
Statement of additional information
The Statement of Additional Information is meant to provide additional information to assist in the investment-making decision that is not typically available, or required to be contained, within the prospectus. Such information may include detailed information about the fund’s investment advisers and information relating to the purchasing and redemption of shares. -
Question 4 of 10
4. Question
Which of the following statements is true regarding Offer to sell and prospectus?
I. Every attempt or offer to dispose of, or solicitation of an offer to buy is included
II. An offer to sell does not include preliminary negotiations or agreements between an issuer and an underwriter
III. The act defines prospectus as “any prospectus, notice, circular, advertisement, letter, or communication, written or by radio or television
IV. It offers any security for sale or confirms the sale of any securityCorrect
Offer to sell and prospectus
The Securities Act of 1933 defines offer to sell as including “every attempt or offer to dispose of, or solicitation of an offer to buy, a security or interest in a security, for value.” However, the act does further clarify that an offer to sell does not include preliminary negotiations or agreements between an issuer and an underwriter who are in contract with an issuer. The act defines prospectus as “any prospectus, notice, circular, advertisement, letter, or communication, written or by radio or television, which offers any security for sale or confirms the sale of any security.”Incorrect
Offer to sell and prospectus
The Securities Act of 1933 defines offer to sell as including “every attempt or offer to dispose of, or solicitation of an offer to buy, a security or interest in a security, for value.” However, the act does further clarify that an offer to sell does not include preliminary negotiations or agreements between an issuer and an underwriter who are in contract with an issuer. The act defines prospectus as “any prospectus, notice, circular, advertisement, letter, or communication, written or by radio or television, which offers any security for sale or confirms the sale of any security.” -
Question 5 of 10
5. Question
Which of the following statements is true regarding Investment objectives, policies, and restrictions?
I. Certain relevant information must be included in security’s prospectus
II. The investment is related to the fund’s investment objectives, policies and asset allocation, or risk management restrictions
III. The prospectus contains a brief sentence or paragraph explaining the overarching objective of the fund
IV. The prospectus excludes a brief sentence or paragraph explaining the overarching objective of the fundCorrect
Investment objectives, policies, and restrictions
A security’s prospectus must include certain relevant information related to the fund’s investment objectives, policies and asset allocation, or risk management restrictions. Typically, the prospectus contains a brief sentence or paragraph explaining the overarching objective of the fund. For instance, one objective might be “to achieve maximum total long-term return by investing in investment grade debt securities of varying maturities.”Incorrect
Investment objectives, policies, and restrictions
A security’s prospectus must include certain relevant information related to the fund’s investment objectives, policies and asset allocation, or risk management restrictions. Typically, the prospectus contains a brief sentence or paragraph explaining the overarching objective of the fund. For instance, one objective might be “to achieve maximum total long-term return by investing in investment grade debt securities of varying maturities.” -
Question 6 of 10
6. Question
Which of the following statements is true regarding Offer to sell?
I. Offer to sell refers to every attempt or offer to dispose of, or solicitation of an offer to buy
II. Offer to sell refers to a security or interest in a security, for value
III. It includes preliminary negotiations or agreements between an issuer and an underwriter
IV. It does not include preliminary negotiations or agreements between an issuer and an underwriterCorrect
Offer to sell and prospectus
The Securities Act of 1933 defines offer to sell as including “every attempt or offer to dispose of, or solicitation of an offer to buy, a security or interest in a security, for value.” However, the act does further clarify that an offer to sell does not include preliminary negotiations or agreements between an issuer and an underwriter who are in contract with an issuer.Incorrect
Offer to sell and prospectus
The Securities Act of 1933 defines offer to sell as including “every attempt or offer to dispose of, or solicitation of an offer to buy, a security or interest in a security, for value.” However, the act does further clarify that an offer to sell does not include preliminary negotiations or agreements between an issuer and an underwriter who are in contract with an issuer. -
Question 7 of 10
7. Question
Which of the following statements is true regarding Prospectus information?
I. The purpose of the prospectus is to ensure investors access
II. Investors access to a minimal level of information
III. The information may include a mutual fund’s objectives, strategy, risks, fees and expenses, and past performance
IV. The information excludes strategy, risks, fees and expenses, and past performanceCorrect
Prospectus information
The purpose of the prospectus is to ensure that investors have access and are provided with, prior to the purchase of a security, a minimal level of information that is necessary for the investment decision-making process. Such information within the prospectus includes a mutual fund’s objectives, strategy, risks, fees and expenses, and past performance.Incorrect
Prospectus information
The purpose of the prospectus is to ensure that investors have access and are provided with, prior to the purchase of a security, a minimal level of information that is necessary for the investment decision-making process. Such information within the prospectus includes a mutual fund’s objectives, strategy, risks, fees and expenses, and past performance. -
Question 8 of 10
8. Question
Which of the following statements is true regarding Investment objectives, policies, and restrictions?
I. A security’s prospectus must exclude certain relevant information related to the fund’s investment objectives, policies and asset allocation, or risk management restrictions
II. A security’s prospectus must ignore certain relevant information related to the fund’s investment objectives, policies and asset allocation, or risk management restrictions
III. A security’s prospectus must include certain relevant information related to the fund’s investment objectives, policies and asset allocation, or risk management restrictions
IV. The prospectus contains a brief sentence or paragraph explaining the overarching objective of the fundCorrect
Investment objectives, policies, and restrictions
A security’s prospectus must include certain relevant information related to the fund’s investment objectives, policies and asset allocation, or risk management restrictions. Typically, the prospectus contains a brief sentence or paragraph explaining the overarching objective of the fund. For instance, one objective might be “to achieve maximum total long-term return by investing in investment grade debt securities of varying maturities.”Incorrect
Investment objectives, policies, and restrictions
A security’s prospectus must include certain relevant information related to the fund’s investment objectives, policies and asset allocation, or risk management restrictions. Typically, the prospectus contains a brief sentence or paragraph explaining the overarching objective of the fund. For instance, one objective might be “to achieve maximum total long-term return by investing in investment grade debt securities of varying maturities.” -
Question 9 of 10
9. Question
Which of the following statements is false regarding Sales loads and fees and share classes?
I. A security’s prospectus must include certain relevant information related to the fund’s sales loads, fees, and share classes
II. The mutual fund prospectus will include a detailed table
III. The mutual fund prospectus will show the applicable fees, in percentages, for each available share class
IV. Fees may include minimum sales charge loadsCorrect
Sales loads and fees and share classes
A security’s prospectus must include certain relevant information related to the fund’s sales loads, fees, and share classes. The mutual fund prospectus will include a detailed table showing the applicable fees, in percentages, for each available share class. Fees may include maximum sales charge loads, management fees, distribution and service fees (12b-1), and other expenses that are part of the cost of operating the fund.Incorrect
Sales loads and fees and share classes
A security’s prospectus must include certain relevant information related to the fund’s sales loads, fees, and share classes. The mutual fund prospectus will include a detailed table showing the applicable fees, in percentages, for each available share class. Fees may include maximum sales charge loads, management fees, distribution and service fees (12b-1), and other expenses that are part of the cost of operating the fund. -
Question 10 of 10
10. Question
Which of the following statements is true regarding Sales loads and fees and share classes?
I. Fee waivers, expense reimbursements, or breakpoints for large purchases are potential credits
II. There will also be an example hiding the total expenses for each share class over a given period of time
III. The fee and share class information is not important for investors
IV. The fee and share class information has no impact on investor’s returnsCorrect
Sales loads and fees and share classes
There may also be potential credits to the investor such as fee waivers, expense reimbursements, or breakpoints for large purchases. Any such discounts or waivers will also be detailed in this section of the prospectus. Following the table of charges, there will also be an example showing the total expenses for each share class over a given period of time and assuming to have earned a hypothetical rate of return. The fee and share class information is very
important for investors to review carefully as it will directly impact an investor’s returns.Incorrect
Sales loads and fees and share classes
There may also be potential credits to the investor such as fee waivers, expense reimbursements, or breakpoints for large purchases. Any such discounts or waivers will also be detailed in this section of the prospectus. Following the table of charges, there will also be an example showing the total expenses for each share class over a given period of time and assuming to have earned a hypothetical rate of return. The fee and share class information is very
important for investors to review carefully as it will directly impact an investor’s returns.