SIE Investment Companies and Packaged Products 2

Question 1

A variable annuity differs from a fixed annuity in that:

Accepted Answer

Variable annuity returns depend on the performance of underlying investment subaccounts

Answer

Variable annuities are not regulated by the SEC

Answer

Variable annuities guarantee a fixed monthly payment

Answer

Variable annuities have no surrender charges

Question 2

What is a unit investment trust (UIT)?

Accepted Answer

An investment company with a fixed, unmanaged portfolio that terminates on a set date

Answer

A fund actively managed by a portfolio manager

Answer

A hedge fund open to retail investors

Answer

A government-sponsored bond fund

Question 3

Which of the following is a characteristic of a Real Estate Investment Trust (REIT)?

Accepted Answer

REITs must distribute at least 90% of taxable income to shareholders

Answer

REITs must invest at least 75% of assets in real estate

Answer

REITs are exempt from all federal taxes

Answer

REITs cannot be traded on stock exchanges

Question 4

Breakpoints in mutual fund investing refer to:

Accepted Answer

Investment thresholds that qualify investors for reduced sales loads on Class A shares

Answer

The point at which a fund closes to new investors

Answer

NAV levels that trigger automatic rebalancing

Answer

Fees charged when switching between funds in a family

Question 5

What distinguishes a hedge fund from a registered mutual fund?

Accepted Answer

Hedge funds are not registered with the SEC and are limited to accredited investors

Answer

Hedge funds are prohibited from using leverage

Answer

Hedge funds must publish daily NAV

Answer

Hedge funds are only allowed to invest in fixed income

Question 6

A letter of intent (LOI) in mutual fund investing allows a shareholder to:

Accepted Answer

Qualify for a breakpoint discount over a 13-month investment period

Answer

Redeem shares before the surrender period

Answer

Switch between fund families without sales loads

Answer

Defer capital gains taxes on fund distributions