Ms. Pye has quit her job to become a full-time mother and wants to roll over the funds from her 401(k) plan into an IRA. As her financial adviser, you should tell her that:
Answer(s): B
If Ms. Pye wants to rollover the funds from her 401(k) plan into an IRA, you should tell her that if she has the funds transferred directly from her 401(k) plan to the IRA, she will avoid having 20% withheld. She will not have to pay either taxes or a penalty on the funds that are rolled over if she follows specified guidelines, and if she opts to take possession of the funds herself prior to depositing them in the IRA account, she has 60 days in which to do so before a 10% penalty is assessed.
Mr. Big of HiGrow Corporation needs more money to support the exceptional growth rate that his firm is enjoying. He meets with BigFee Investment Banker, who agrees to handle the IPO for HiGrow. Subsequently, InTheLoop Brokerage is tapped to be part of the selling group that will handle the sale of the new stock to the public. In this example, the underwriter is:
Answer(s): C
BigFee Investment Banker is the underwriter in this example. The underwriter is the investment banking firm that helps a firm with the issue of new securities-which includes helping the firm file a registration statement with the SEC and establishing a selling group to facilitate the distribution of the securities to the public.
The URMoney Mutual fund, a no load fund, has 10 million shares outstanding. The market value of its assets is $620 million and its liabilities are $150. Based on this information, an investor who wants to buy shares of the fund will pay:
Based on the information provided, an investor who wants to buy shares of the URMoney Mutual Fund will pay $47 a share. Since the fund is a no load fund, the shares can be purchased at the net asset value per share of the fund. Net asset value per share (NAVPS) = (market value of fund's assets - fund liabilities) ÷ total number of share outstanding, so NAVPS = ($620 million - $150 million) ÷ 10 million shares = $47.
All government bonds and the majority of corporate bonds are traded:
Answer(s): D
All government bonds and the majority of corporate bonds are traded in the over-the- counter market.
Which of the following is exempt from registering as an investment company under the Investment Company Act of 1940?
A company that sells its securities only to accredited investors is exempt from registering as an investment company under the Investment Company Act of 1940. All the other choices describe investment companies that are required to file a registration statement with the SEC.
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