Bond Mutual Funds: Test Your Investment Knowledge! Trivia Quiz
Bond Mutual Funds: Test Your Investment Knowledge! If you are a beginning investor, it is important to understand the different types of investments work, and one of the most common ones is the bond mutual. By taking this quiz, you will also learn more about bond mutual funds and how to optimize your income through them. Give it a try!
- 1.All subscribers to a new issue of securities must:
- A.
Receive a confirmation before the issue date
- B.
Receive a prospectus no later than the confirmation of their purchase
- C.
Receive red herring prior to purchase
- D.
Pay a commission even if the securities are not purchased
- 2.An individual is seeking an investment that offers high liquidity. Which of the following would best suit this need?
- A.
Municipal bonds
- B.
Variable annuities
- C.
Money market funds
- D.
Whole life insurance
- 3.A registered representative received a written complaint from a customer. The RR immediately gave a complaint to the branch manager. Which of the following statements is TRUE?
- A.
The RR did not have to give the complaint to the branch manager unless it contained an allegation that the customer lost money as a result of the reccomendation by the RR
- B.
The branch manager must immediately send a copy of the complaint to the NASD Arbitration Department, which will decide if an arbitration hearing is necessary
- C.
The branch manager must keep a copy of the complaint in a seperate complaint file, along with a record of action taken on the complaint, if any.
- D.
The RR should not have given the complaint to the manager until the client waas contacted and an attempt was made to rectify the complaint.
- 4.If inflation were rising at an above average rate, the type of mutual fund that would typically increase in value is a:
- A.
Ginnie Mae Fund
- B.
Municipal bond fund
- C.
Leisure stock fund
- D.
Precious metals fund
- 5.If a registered representative terminates employment with a member firm, the jurisdiction of the NASD:
- A.
Terminates upon the representative's resignation
- B.
Remains effective for five days following termination
- C.
Remains effective for 30 days following termination
- D.
Remains effective for two years following termination
- 6.The Winthrop Group, an NASD member, receives an order from a customer to buy 200 shares of Baxter Growth Fund, an open-end investment company. Winthrop currently holds 500 shares of Baxter in its investment account. A direct sale of these shares to the customer out of its inventory would be allowed:
- A.
If the order was unsolicited
- B.
If winthrop is not a dealer for the fund
- C.
As long as winthrop does not assess a sales charge for the transaction
- D.
Under no circumstances
- 7.An investor buys 200 shares of TDX at $20 per share. TDX declares a 10% stock dividend. The investor's cost basis per share for tax purposes would be:
- A.
18.00
- B.
18.18
- C.
22.00
- D.
40.00
- 8.<p>A broker dealer has filed for bankruptcy. One customer's account at the firm contains securities valued at $650,000 as of the date of the bankruptcy filing. Which of the following statements is TRUE regarding the coverage of this account by SIPC?</p> A broker dealer has filed for bankruptcy. One customer's account at the firm contains securities valued at $650,000 as of the date of the bankruptcy filing. Which of the following statements is TRUE regarding the coverage of this account by SIPC?
- A.
The account is covered in full as long as the customer is not a partner of the broker dealer
- B.
SIPC will cover $500,000 of the accounts value; the customer has no legal recourse on the remaining value of the account
- C.
SIPC will over $500,000 of the accounts value; the customer has a claim for the rest as a general creditor of the firm
- D.
SIPC will cover $500,000 of the account's value; FDIC will cover the rest of the claim
- 9.Sales literature for mutual funds:
- A.
May not contain performance data
- B.
Could be misleading if portrayed in a manner that implied past gains or income produced would be repeated in the future
- C.
Must be filed with the SEC within 10 days of use
- D.
Filed with the NASD is considered to have been filed with the SEC
- 10.A variable annuity has an AIR of 4%. This past year, the separate account grew at a rate of 12%. The appreciation in the separate account.
- A.
Will be taxed to the investor during the accumulation period as ordinary income
- B.
Is taxable only to the seperate account
- C.
Will increase an annuitant's monthly payment from the annuity
- D.
Will have no effect on the investor because the investor is guaranteed only a 4% payment increase during the year
- 11.When a mutual fund or its distributor advertises total return data, information must be provided covering at least:
- A.
The lesser of 10 years or the life of the company or account
- B.
The lesser of 5 years or the life of the company or account
- C.
The lesser of 1 year or the life of the company or account
- D.
The period since the fund last published performance data
- 12.In an account opened under the Uniform Gifts/Transfers to Minors Act, the primary social security number is the:
- A.
Custodian's
- B.
Parent's
- C.
Minor's
- D.
RR's
- 13.Which of the following would not be found in a mutual fund prospectus?
- A.
The method used to compute a CDSC
- B.
The annual payment to the custodian bank
- C.
Per-share income and capital changes
- D.
Exchange privelages within a family of funds
- 14.The life insurance policy that allows for the greatest flexibility regarding the payment of premiums is:
- A.
Decreasing term
- B.
Universal
- C.
Variable
- D.
Split dollar
- 15.Which of the following have a fixed rate of interest on their face?
- A.
Treasury bonds
- B.
Treasury notes
- C.
Treasury bills
- 16.The board of directors of a fund must review expenditures paid pursuant to a 12b 1 plan:
- A.
Monthly
- B.
Quarterly
- C.
Annually
- D.
At each meeting of the board of directors
- 17.All of the following are guaranteed EXCEPT the:
- A.
Return on a fixed annuity contract
- B.
Payment of principal and interest on a US government obligation
- C.
Cash value on a variable life insurance policy
- D.
Death benefit on a whole life insurance policy
- 18.Marjorie has been a registered representative for twenty years. She has amassed a large and valuable client base, from which she continues to earn a significant amount of trailing commissions. Marjorie would like to retire and, with her firm's permission, sell her book of business to Penny. Under the terms of the contract, Marjorie would continue to receive half the trailing commissions generated by the accounts for the next year following her retirement. Under what conditions is this permissible?
- A.
Under no conditions
- B.
Only as long as Marjorie remains and employee of the firm
- C.
As long as Marjorie is not paid form accounts opened after she retires
- D.
There are no conditions placed on this arrangement as long as the contract is legally binding
- 19.When the discount rate increases, the prices of high-grade bonds would tend to:
- A.
Rise
- B.
Fall
- C.
Remain the same
- D.
Parallel the prime interest rate
- 20.The management fee of a mutual fund pays to its investment adviser is considered:
- A.
An operating cost of the fund
- B.
Part of the acquisition cost (sales charge) the purchaser must pay
- C.
A cost to the sponsor (distributor) of the fund
- D.
A nonrecurring expense of the sponsor
- 21.All of the following are typical characteristics of a 401k plan EXCEPT:
- A.
Employee contributions are fully and immediately vested
- B.
Employees must match employee contributions
- C.
An employee's taxable income is reduced by employee contributions
- D.
Employee contributions grow on a tax deferred basis
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