D Question 19 1 pts As authorized by _ ., many security firms in recent years have joined with other financial institutions, such as depository institutions and insurance companies. O The Financial Services Modernization Act O The Glass-Steagall Act O SEC Rule 144A O The Federal Reserve Act O SEC Rule 415 Question 20 1 pts Northeastern Investments (NED) is selling some XYZ bonds from its own holdings. It bought these bonds 14 months ago, anticipating to profit from an increase in the XYZ bond price. Here, NEI is clearly involved in a(n): O best efforts transaction O agency transaction O private placement O program trade O principal transaction Question 21 1 pts A professionally managed fund of money investing in newer, higher-risk firms in which these investors take active equity positions rather than being passive debt investors is called _ O Discount brokerage O Arbitrage O Market making O Program trading O Venture capital D Question 22 1 pts of common stock, the shares issued may be held by a small number of institutional investors. O ETF o shelf placement O market placement O private placement O capital placement D Question 23 1 pts Investors should be paying . - for newly issued stock as the open market price of the firm's outstanding stock. O much less than O either about the same or much less than O cannot be determined, either much more than or much less than O about the same O much more than Question 24 1 pts An open-end mutual fund that invests in stocks will usually promise _ _ _ O to redeem investors' shares upon de o to earn at least the rate of return shown in the prospectus for the 1 year O to earn at least the rate of return shown in the prospectus for the last 5 years o to limit the NAV for investors O to have a m imum NAV for investorsQuestion 25 1 pts Money market mutual funds invest mostly in . O Treasury bonds O preferred stocks O short-term marketable securities O common stocks corporate bonds Question 26 1 pts When the redemptions of money market mutual fund shares exce d accommodates the dollar amount of excessive redemptions by _. O selling some of the assets contained in the portfolio O issuing stock borrowing from the SEC borrowing from Investment Banks issuing additional bonds Question 27 1 pts A mutual fund's expense ratio represents __ divided by the fund's _. initial sales charge (load); net asset value O annual fees charged to investors; 12b-1 fees initial sales charge (load); purchase commission O initial sales charge (load); 12b-1 fees annual fees charged to investors; net asset value Question 28 1 pts Hedge funds are not permitted to invest in or engage in_ O distressed firms O none of the other choices are correct O only two of the other specific choices O convertible bonds O currency speculation Question 29 1 pts The risk profile of hedge funds _ -.... making performance evaluation _ o can shift rapidly but never substantially; straightforward O can shift rapidly and substantially; challenging O is stable; challenging O none of the other choices o is stable; unnecessary Question 30 1 pts An insurance company's net profit to policyholders' surplus ratio is the _ O net rate of return gross rate of return O net underwriting margin o liquidity ratio profitability ratioD Question 31 1 pts For an Insurance Company, the -. include policy reserves. o balance sheet liabilities balance sheet assets o off-balance sheet liabilities O separate account items o off-balance sheet assets Question 32 1 pts When those who are most likely to have a claim against an insurance company are the quickest to apply for insurance, the company has a(n)_ - problem. O reinsurance o adverse selection o default risk o capital adequacy moral hazard D Question 33 1 pts The description of _ insurance includes having its pre rested in stock, bond, mutual funds, and/or money market funds, with the policy value changing with those investments' performance. o variable life O term life D group life O credit life commercial multiple peril Question 34 1 pts Over the life insurance industry, the largest source of life insurance company net premiums results from O investment income. o annuity plan premiums. O health insurance premiums. o life insurance premiums. O liability insurance premiums. D Question 35 1 pts Because life insurance companies carry a large amount of __ securities, the market value of their asset portfolio can be ___ to interest rate fluctuations. o long-term; very sensitive O short-term: very sensitive o long-term; insensitive short-term; insensitive Question 36 1 pts Ideally, insurance should only cover an event that is a _ O low severity with high frequency. O low severity with low frequency. O high severity with high frequency. O high severity with low frequency.D Question 37 1 pts The key Federal legislation passed in 1974 concerning the administration of pension plans is the O PBGC Ac O Roth Act O Pension Protection Act (PPA) O Keogh Act ERISA D Question 38 1 pts Pension Funds that are defined contribution plans O are typically underfunded o are used solely by government-sponsored pension plans O were banned by ERISA o are increasingly dominating the private pension fund market O have fallen well behind defined benefit plans, in terms of asset size DI Question 39 1 pts is an employer-offered supplemental retirement plan, in which contributions are from after-tax income in that year, therefore not taxed when withdrawn at retirement. o traditional IRA O public pension plan O Social Security plan O defined benefit plan o Roth 401(k) D Question 40 1 pts Those Federal government employee retirement funds that are invested (as opposed to being lent to the U.S. Treasury) are invested in_ O Treasury Bills O repurchase agreements O Fed funds o bonds and mortgage instruments common stocks and mutual funds