RIA Investment Vehicle 2

Question 1

A closed-end fund differs from an open-end mutual fund in that:

Accepted Answer

It issues a fixed number of shares traded on exchanges

Answer

Closed-end funds issue a fixed number of shares that trade on stock exchanges, unlike open-end funds that continuously issue/redeem shares at NAV.

Question 2

Which type of annuity contract guarantees a fixed payout regardless of market performance?

Accepted Answer

Fixed annuity

Answer

Fixed annuities guarantee a specified interest rate and payout, providing predictable income regardless of market conditions.

Question 3

A Real Estate Investment Trust (REIT) must distribute at least what percentage of taxable income as dividends?

Accepted Answer

90%

Answer

REITs must distribute at least 90% of taxable income to shareholders to maintain their tax-advantaged status.

Question 4

Which investment vehicle allows investors to gain exposure to commodities without directly holding physical assets?

Accepted Answer

Commodity ETFs

Answer

Commodity ETFs provide exposure to commodities (like gold, oil, or agricultural products) without requiring physical ownership.

Question 5

Preferred stock typically has which characteristic compared to common stock?

Accepted Answer

Priority dividend claims but limited upside

Answer

Preferred stock has priority over common stock for dividends and in liquidation, but typically lacks voting rights and significant price appreciation.

(RIA) Registered Investment Advisor Practice Test

(RIA) Registered Investment Advisor Practice Test

RIA Investment Vehicle 2