FINAL C2

A registered representative works for ABC broker-dealer and posts a message on an internet bulletin board reading "ABC broker-dealer leads the industry in making customers money! Be the next investor to retire in the lap of luxury, come see us at ABC!" Which of the following statements is true about this?
-This posting is considered advertising and is subject to FINRA communication rules
-This posting must be filed with FINRA at least 10 days before use
-This posting is not misleading or exaggerated

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This posting is considered advertising and is subject to FINRA communication rules

An investor wishes to redeem 1,000 shares of a mutual fund. The POP is $15 per share, the funds' sales charge is 6%, and the fund charges a 1% redemption fee. What amount would the investor receive when redeeming his 1,000 shares directly through the fund?

Public offering price minus percent sales charge equals net asset value (redemption price). $15 - 6% ($.90) = $14.10 x 1000 = $14,100 - 1% ($141) = $13,959.

How the general public perceives the market and where it will head in the future is known as:

Market sentiment

4 FACTS=Qualified Dividend/Ordinary Dividend distributions?

Taxable in the year they're paid, even if reinvested. Qualified dividends are taxed at long-term capital gains rates(PREFERENTIAL). Ordinary dividends are taxed as ordinary income. The fund reports dividends to the investors each year using IRS Form 1099, which also distinguishes the type of dividend.

Which of the following is a capital loss event?

A capital loss event for a mutual fund investor occurs when the investor redeems fund shares for less than the cost basis.

What is an optimal portfolio according to modern portfolio theory?
-One that achieves the highest return
-One that compensates an investor for any extra risk taken on, by investing in a specific security

One that compensates an investor for any extra risk taken on, by investing in a specific security

If an investor thinks the U.S. equity market is going to crash in the short-term and wants to make the most money, which one of the following should they consider investing in?

S&P 500 Inverse Leveraged ETF
-Leveraged funds are used for short-term investing.

An investor purchased 100 shares of 7% preferred stock last summer. Since then interest rates have fallen, what can be expected if the investor decides to sell these shares?

The share prices will have increased, DIVIDENDS HAVE INCREASED

Elizabeth has inherited a portfolio of "high yield" bonds. While she is happy with the returns, the additional interest income has pushed her into the top tax bracket. Which of the following investments would be the least effective in alleviating the tax problem?
-A growth fund
-A variable annuity
-A municipal bond fund
-An index fund

A growth fund- Any growth or income created in a variable annuity would be tax-deferred until withdrawn at a later time. An index fund would have lower turnover than an actively managed growth fund and would therefore be the more tax efficient of the two.

Index funds typically possess which of the following characteristics?
I Lower than average expense ratios
II Higher than average expense ratios
III Lower than average portfolio turnover
IV Higher than average portfolio turnover

I and III