Class A and Class C shares of a mutual fund differ in which of the following ways?
Answer(s): A
Expense Ratio: Class A shares typically have lower ongoing expense ratios but higher front-end sales charges. Class C shares often have higher ongoing expense ratios but no front-end charges.Incorrect Options:B: NAV is determined daily and does not vary by share class.C: All share classes invest in the same underlying portfolio.D: Purchase timing is the same for all share classes.
SEC Guidance on Mutual Fund Share Classes: SEC Fund Classes.
Which of the following statements is true of the writer of a listed equity call option?
Answer(s): C
Call Option Writer: When writing (selling) a call option, the writer has the obligation to sell the underlying stock at the strike price if the buyer exercises the option.Incorrect Options:A & B: Only the option buyer has rights, not the writer.D: Obligations to buy stock apply to put option writers, not call option writers.
Options Clearing Corporation (OCC) Options Education: OCC Options Education.
A retail investor owns shares of Mutual Fund ABC that paid a $0.25 dividend on September 1 and closed at $10.00. What is the opening price once this fund trades on the ex-dividend date?
Answer(s): B
Ex-Dividend Date Pricing: On the ex-dividend date, the mutual fund's price is adjusted downward by the amount of the dividend.Closing Price: $10.00Dividend: $0.25Adjusted Opening Price: $10.00 - $0.25 = $9.75.Incorrect Options:A: $9.25 subtracts more than the dividend amount.C: $10.00 does not reflect the dividend adjustment.D: $10.25 adds to the price rather than subtracting the dividend.
SEC Guidance on Mutual Fund Pricing: SEC Mutual Funds.
For up to how many business days is a firm initially permitted to place a temporary hold on disbursements for a specified adult account in which the firm reasonably believes financial exploitation has occurred?
Temporary Hold Period: Under FINRA Rule 2165, a firm can initially place a hold on disbursements for up to 10 business days if financial exploitation is suspected.Additional Holds: The period may be extended by an additional 10 business days if warranted and allowed by state law.Incorrect Options:A & B: These are shorter than the permissible period.D: The initial hold period is capped at 10 business days.
FINRA Rule 2165 (Financial Exploitation of Specified Adults): F, I, N, R, A Rule 2165.
A registered representative (RR) intends to enter into an arrangement for compensation with an unaffiliated entity to participate in the sale of promissory notes to the general public. Which of the following statements is true?
Private Securities Transactions: Under FINRA Rule 3280, RRs must obtain written approval from their employing firm before participating in the sale of securities outside the firm.Promissory Notes: These are typically considered securities, requiring prior approval.Incorrect Options:A & C: Notification alone is insufficient; written approval is required.D: Promissory notes are generally treated as securities under federal law.
FINRA Rule 3280 (Private Securities Transactions): F, I, N, R, A Rule 3280.
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