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| Section | Weight | Objectives |
|---|---|---|
| Seeks Business for the Broker-dealer from Customers and Potential Customers | 24% | - Communications with the public and regulatory rules - Advertising and sales literature regulations - Telemarketing and solicitation rules - Prospecting and identifying customer needs |
| Obtains and Verifies Customers’ Purchase and Sales Instructions; Processes, Completes and Confirms Transactions | 10% | - Payment and settlement processes - Error resolution and correction procedures - Trade confirmations and account statements - Order entry and processing procedures |
| Provides Customers with Information About Investments, Makes Recommendations, Transfers Assets and Maintains Appropriate Records | 50% | - Retirement plans and 529 savings plans - Recordkeeping and disclosure requirements - Product features, risks, costs, and tax considerations - Variable contracts: variable annuities, variable life insurance - Investment company products: mutual funds, UITs, closed-end funds - Suitability rules and recommendations |
| Opens Accounts After Obtaining and Evaluating Customers’ Financial Profile and Investment Objectives | 16% | - Financial profile and investment objectives assessment - Account types and registration - Anti-money laundering (AML) and compliance - Customer identification and verification |
1. Which of the following plans does not have the requirement that its participants must begin withdrawing
funds from the plan by April 1st of the year after they turn 70 1/2 ?
I. SIMPLE IRA
II. 401(k)
III. Roth IRA
IV. profit-sharing plan
A) All of the above have a mandatory distribution requirement.
B) I, III and IV only
C) I and III only
D) III only
2. Glamourless Fund is a value fund. As such, it invests primarily in stocks with:
A) low cash dividend yields.
B) low earnings growth rates.
C) high betas.
D) high price-earnings ratios.
3. Which of the following is not a potential advantage associated with investing through a mutual fund?
A) simplified recordkeeping
B) lower cost associated with portfolio management
C) diversification
D) price discovery
4. In 2008, Mr. Conservative bought a 1-year Treasury bill that was yielding 1.63%.The average annual rate
of inflation in 2008 was 3.85%.In this case:
A) Mr. Conservative earned a real return of +1.63% on his investment.
B) Mr. Conservative earned a nominal return of +2.22% on his investment.
C) Mr. Conservative earned a real return of -2.22% on his investment.
D) Mr. Conservative earned a nominal return of +3.85% on his T-bill investment.
5. Which of the following is not included in calculating the expense ratio of a mutual fund?
A) management fees
B) recordkeeping fees
C) redemption fees
D) 12b-1 fees
Solutions:
| Question # 1 Answer: D | Question # 2 Answer: B | Question # 3 Answer: D | Question # 4 Answer: C | Question # 5 Answer: C |
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