1. Surrender Changes2. Mortality and Expense risk change3. Administrative Fees4. Underlying funds expenses5. Fees charges for other featuresThese are the charges which investors pay when they invest in:

Both B & C depends upon situation

Guaranteed investment contracts are contracts between:

An insurance company and a corporate retirement plan

A retirement plan and a brokerage house

Which of the following statements about the over-the-counter market is false?

Security prices are determined through auction bidding

Mutual funds and other new issues are initially issued over the counter

Security prices are determined through auction bidding

Broker dealers must be resigned

Securities are traded at many locations throughout the country

General Market indices in the commodities market with which many people would be familiar include:

Goldman Sachs Commodities Index (GSCI)

The main objective/s of an audit of swaps is/are:

To determine the adequacy and effectiveness of controls relating to rate swap transactions

To ascertain that swap transaction are properly recorded in accordance with their term

To ensure that the company's financial statements and regulatory reports properly reflect in accordance with generally accepted accounting principles, the results of swap activity

Adequate procedures and controls associated with swap transactions should exist to help minimize the risks inherent in transaction process. Example/s of these controls may include:

A daily reconciliation of traders' positions should be performed

To minimize market risk in hedge transactions: There should be independent sign-off procedures for hedging models All hedge strategies should be clearly defined All software and products should be secure and temper resistant

All transactions should be authorized and affirmed

Customer accounts:Ensure that the firm is exercising due diligence in the opening and supervision of customer accounts. The procedures should be formalized in writing and in accordance with the rules and regulations of the appropriate regulatory authority. Ensure that daily customer positions and option exercises are in accordance with the limits established by the appropriate exchange. Verify that commissions generated by customer trades are properly calculated and posted to the general ledger.

This is one of the primary audit objectives of stock and options

This is one of the primary audit objectives of swaps

This is one of the primary audit objectives of bonds

Call provisions are often part of ______________, but usually not bonds issued by ______________.

Corporate and municipal bonds, bonds issued by Federal Government

Zero coupon bond, Federal Government bonds

Corporate bonds, Zero coupon bonds

Corporate and municipal bonds, bonds issued by Federal Government

Audit objectives that apply to one sales portion are all EXCEPT:

Ensure that inventory is being accurately market to market on a continuing basis

Ensure that daily activity of each salesman is reviewed by head salesman

Ensure that inventory is being accurately market to market on a continuing basis

Ensure customer markups are reasonable relative to NASD

Which of the following is not an audit objective of a commodity department?

Verify the accuracy and reporting (inventory reports, fail reports, again reports and profit and loss reports.)

All customer accounts are opened and maintained in accordance with the rules and regulations commodity futures trading commission (CFTC) and the various commodity Exchanges

Adequate control exist to ensure the accuracy and propriety of information contained in regulatory reports, such as the commodity futures trading commission form 1-FR, and the focus report

Verify the accuracy and reporting (inventory reports, fail reports, again reports and profit and loss reports.)

There are some investment companies, known as exchange-traded funds or ETFS, which are legally classified as open-end companies or UITs. EFTs differ from traditional open-end companies and UITs because:

Pursuant to SEC exemptive orders

Shares issued by ETFs Traded on a secondary market

Are lonely redeem able in very large blocks (Blocks of 50,000 shares for example)

The approximate per-share NAV plus any fees the fund imposes is the price:

That investors pay to purchase mutual fund

That investors receive on redemptions

A UIT typically issues redeemable securities (or ''units''), like a mutual fund, which means:

That the UIT will, buy back an investor's request at their approximate net asset value

That the UITs typically will make a one-time ''public offering''

A UIT does not activity trade its investment portfolio

That the UIT will, buy back an investor's request at their approximate net asset value

The investment portfolios generally are managed by separate entities

Are permitted to invest in a greater amount of ''illiquid'' securities than mutual funds.

End users need to hedge the prices at which they can purchase these commodities for instance:

A University might want to lock in the price at which it purchases electricity to supply its air conditioning units for upcoming summer months

An airline wants to lock in the price of the jet fuel it needs to purchase in order to satisfy the peak in seasonal demand for travel

A cotton producer wants to hedge his exposure to changes in the price of fertilizers or his end product (cotton)

Money market funds bond funds (also called ''fixed income'' funds) , and stock funds (also called equity funds) are the categories of:

Professionally managed portfolio

Can invest in only certain high-quality, short-term investments issued by Federal State and local government

Try to keep their NAV at a stable $1.00 per share

Pay dividends that generally reflect short-term interest rates

If interest rates fall, a bond issuer may decide to pay off (or ''retire'') its debt and issue new bonds that pay a lower rate. When this happens, the fund may not be able to reinvest the proceeds in an investment with a high return or yield. This is an example of:

Interest rate risk in bond funds

ABA CTFA Practice Test 15 - Free Online Exam Prep & Questions

The benefits of tax deferral will out weigh the costs of a variable annuity only if the investor holds it as:

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ABA CTFA Practice Test 15

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