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When was the first money market fund offered to the public?
If your definition for the different types of available real estate investment trusts were limited, what two terms would you use to describe the world of REITs?
equity and mortgage
If you were looking for the highest returns, what would be the type of hedge fund you would probably be looking at?
When are bank-loan fund yields adjusted (so existing shareholders are protected)?
What is the frequency of crediting interest on TIPS?
every six months (a fixed rate is applied to adjusted principal)
Emerging market bond funds include "bank quality" (also referred to as "investment grade" debt.
For the typical emerging markets bond fund, what percentage of its assets are in bank quality bonds?
How do REIT investors measure profitability?
Give a brief description of the typical CEF.
What is the phrase “breaking the buck” most closely associated with?
Money market funds
What is the maximum amount a money market fund can cumulatively invest in what is considered “riskier second-tier paper?”
Describe the pricing of the typical CEF.
4% discount to NAV
Ben and Diane are engaged and want to open up a mutual fund account.
Ben wants to make sure that the account reflects the fact that he is a 75% contributor and owner of the account.
What account titling should the couple use?
tenants in common.
From the individual investor's perspective, who or what should be looked at to back the assets within an ETN?
What type of mutual fund category is somewhat similar to market neutral funds?
What do market neutral funds usually invest an equal portion of their assets in what two assets?
long-short / going long and going short
What are the hallmarks of a money market fund?
Safety, liquidity, yield, & simplicity.
A municipality has hired you for advice as to how it can reduce interest costs on a single A-rated bond it is about to issue.
What would be your advice?
seek bond insurance in the hope of getting a AAA rating
From 1934 through 2004, how did commercial real estate returns (rents + appreciation) compare to total returns for U.S. stocks?
annualized returns were similar (both in the 9% range)
A favored closed-end fund has the following characteristics: pays one dollar a year in dividends, has an NAV of $20 and trades at $18 a share.
What is the current dividend yield of this asset?
How many basic category(s) of REITs are there (excluding hybrids)?
A married couple (who lives in California) wants to open up a mutual fund account with you.
The couple wants to ensure that if either spouse dies, the entire account receives a 100% step-up in basis.
What should you recommend?
Looking only at calendar years, when was the last time the U.S. experienced deflation?
What do you associate with a triple net lease?
taxes, repairs, maintenance and insurance
A REIT you are considering has a very attractive cash flow.
How is this cash flow calculated?
rental income minus all property operating expenses.
What is the original-issue maturity of a municipal note?
2 years or less.
Describe the volatility of a municipal bond’s price compared to a corporate bond with the same rating and maturity.
about 1/3 to 1/2 less.
How frequently are there distributions of capital gains or losses from a money market fund?
David wants to set up a systematic withdrawal plan so he will receive monthly income for the next 15-20 years.
If his only consideration is tax efficiency, what kind of fund should David select?
small cap stock fund
CEFs are an investment vehicle often overlooked by advisors.
When did CEFs first start trading in this country?
Based on SEC requirements, what is the maximum allowable average weighted maturity for a money market fund?
What is the individual ownership percentage of ETFs?
How would you compare or contrast short-term interest rates vs. long-term interest rates?
short-term rates are more volatile
What does the typical target retirement fund do once its date is reached?
merge into a retirement income fund
If a bond is trading at 103.16, what dollar figure does this translate into?
Describe a tenancy in common account.
not widely used (no rights of survivorship)
What REIT makes the most sense for the vast majority of investors?
near market weighting
Your client is interested in a foreign bond fund.
How would you verbalize this kind of portfolio?
Combination of government bonds and quality corporate bonds
When would you come across the SEC 30-day yield?
bond funds--a way to measure real value when bonds are selling at a premium
What do mortgage REITs do?
They both make and hold loans.
A revocable living trust can reduce or eliminate income taxes.
A revocable living trust can reduce or eliminate estate taxes.
Which statements are true?
only the second sentence is true
To meet the SEC definition of federally tax-exempt, what is the minimum amount of a fund’s assets that must be invested in tax-exempt securities?
Your favorite New York City client has almost 100% of her portfolio in an international small cap fund.
What would help increase the NAV of this fund?
dollar drops in value
Your client has been reading about SRI funds.
What should the client know about this mutual fund category?
For the typical money market fund, what is its likely annual turnover rate?
(note: if the defn. of turnover included short-term instruments)
greater than 1,000%
You were just looking at the summary holdings of a mutual fund; the holdings included a fair weighting in Eurodollar CDs.
What kind of fund were you looking at?
taxable money market fund
Are equity REIT dividends classified as "preferential dividend treatment."
Are mortgage REIT dividends classified as "preferential dividend treatment"
Compared to a similar-rated non-insured tax-free bond fund, what does an insured municipal bond funds generally yield?
10-40 basis points less
The ABC Target Maturity Fund is largely comprised of corporate bonds the fund bought for an average price of $1,080.
What will be the value of these bonds when the fund matures in 2020?
Over any given 1- or 3-year period, describe what the likely top-performing funds are going to be.
Are CEFs pass through tax entities, similar to mutual funds?
Money market deposit accounts offered by banks typically pay what kind of rate?
Whatever rate they desire.
What credit rating range is considered the “sweet spot” for bonds?
BBB to BB
Are closed-end funds (CEFs) professionally managed?
Can an ETN be bought on margin?
Can an ETN be shorted?
yes / yes