Characteristics, Uses and Taxation of Investments - Sample Questions 1 - 7

  1. Joseph and Mary McCracken have the following bank accounts. In his own name, Joseph has $373,546.52; in her own name, Mary has $87,986.03 and jointly, they have an account with $987,901. Under current law, to what extent are they covered under SIPC rules?
    1. $0
    2. Joseph's account up to $100,000; Mary's entire account and the joint account up to $100,000.
    3. The entire joint account, up to the lesser of the account total or $100,000.
    4. Not more than $100,000 in the aggregate.
  2. With respect to futures and forwards
    1. Forwards are marked to market on a daily basis.
    2. Futures carry greater default risk than forward contracts.
    3. Futures trades are private transactions.
    4. A requirement of forwards is a high degree of creditworthiness on the part of both parties to the transaction.
  3. An investor in a hedge fund has as her primary objective
    1. Risk management.
    2. Long term capital appreciation.
    3. The ability to hedge.
    4. None of the above.
  4. The SEC was allowed to create SROs pursuant to
    1. The 1933 Act
    2. The 1934 Act
    3. SIPC
    4. The Maloney Act
  5. Real Estate investors seek the following objective
    1. Liquidity
    2. Marketability
    3. Long-term growth
    4. Tax-deferred growth
    5. Both c. and d.
  6. Warrants and options share all of the following features, EXCEPT
    1. Tradable in the secondary market.
    2. Are subject to the volatility of the underlying.
    3. Are issued by the company upon whose underlying stock they are based.
    4. May serve as a less expensive means to gain exposure to an equity security than the actual purchase of that security.
  7. REITs and Direct Participation Programs in real estate are different in the following respects, except for
    1. Liquidity.
    2. Marketability.
    3. Tax benefits.
    4. A less expensive manner in which to gain exposure to real estate than direct investment.
Sample Questions 8 - 13


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