Audio Script Series 66 | Number 3
Modern portfolio theory suggests that an efficient portfolio can be constructed
that yields the highest return for the level of risk assumed.
Hypothecation Agreement must be signed by the customer in order to open a
margin account.
An agent of a broker-dealer is required to renew his or her registration with the
State by December 31st of each year.
The efficient market theory states that securities selection based on technical or
fundamental factors is irrelevant since prices reflect all available information.
An IA prepares an advertisement that will be used in newspapers in a large city.
Under NASAA rules, the advertisement would be permitted to contain a toll-free
number to call for more information.
A fixed annuity contract is regulated by each state as an insurance product.
Investment risk is borne by the insurance company that issues the contract.
Securities that are non-exempt include the OTC securities of corporations. This
would include the common and preferred stock of companies quoted in the OTC
Pink Open Market, as well as corporate bonds of these companies.
When sold, inherited securities will always be taxed as long-term gains, while
gifted securities could be taxed as either short or long-term gains.
Variable annuities are a non-qualified retirement plan. There is no deduction for
amounts contributed. Earnings build tax-deferred. Contributions are invested in a
separate account that buys shares of a designated mutual fund. There is no limit
on contribution amounts.
If the holder of a put on a listed stock exercises, the holder must deliver the stock
and take delivery of cash.
Modern Portfolio Theory (MPT) states that risk-tolerant investors should construct
diversified portfolios that maximize their returns without unacceptable levels of
risk.
Standard deviation measures the variability of an investment’s return.
The measure that is closest to IRR is the YTM.
An IA that solely follows and recommends listed securities is subject to either
State or Federal registration.
Filing of advertising with the Administrator is required for Options Clearing
Corporation securities.
The seller of a futures contract has the obligation to sell a specific commodity at a
certain price and grade at a specific date and location through an organized
futures exchange.
A customer buys a variable annuity and elects a payout option of Life Income with
a 20 year period certain. This means that payments will continue for the
annuitant’s life, but if he dies before 20 years elapse, payments continue to his
heir(s).