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| Section | Weight | Objectives |
|---|---|---|
| Provides Customers with Information About Investments | 50% | - Investment company securities and variable contracts
|
| Obtains and Verifies Customers' Purchase and Sales Instructions | 10% | - Order processing and transaction procedures
|
| Opens Accounts After Obtaining and Evaluating Customer Financial Profile | 16% | - Customer account types and documentation
|
| Seeks Business for the Broker-Dealer from Customers and Potential Customers | 24% | - Prospecting and communication with clients
|
Question 1
Which of the following correctly describes a difference between closed-end and open-end investment
companies?
A. Open-end investment company shares will never be offered at a price below the net asset value per
share of the fund; this is not true of closed-end companies.
B. Open-end companies may invest in non-diversified portfolios; closed-end companies are required to
invest only in diversified portfolios.
C. Shares of open-end companies sell on exchange floors; shares of closed-end companies are bought
and sold through the company itself.
D. Open-end investment companies have a fixed number of shares; closed-end companies can create
new shares if there are more buyers than sellers.
Question 2
Which of the following share classes do not have front-end loads?
A. Neither Class B nor Class C shares have front-end loads.
B. Class A
C. Class C
D. Class B
Question 3
Which of the following is not included in calculating the expense ratio of a mutual fund?
A. redemption fees
B. 12b-1 fees
C. recordkeeping fees
D. management fees
Question 4
Which of the following is exempt from registering as an investment company under the Investment
Company Act of 1940?
A. a company that has no sales charges or management fees
B. a non-diversified mutual fund
C. a unit investment trust
D. a company that sells its securities only to accredited investors
Question 5
Rank the following entities with regard to the priority of their claims on a firm-from the highest priority to
the lowest priority-in the event of bankruptcy.
I. common shareholders
II. preferred shareholders
III. secured bondholders
IV. debenture holders
A. III, II, IV, I
B. IV, III, II, I
C. II, III, I, IV
D. III, IV, II, I
Solutions:
| Question 1 Answer: A | Question 2 Answer: A | Question 3 Answer: A | Question 4 Answer: D | Question 5 Answer: D |
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