Series 7: Exercise

Exercise

Answer the following questions.

1. 1. Members of the board of directors:
2. I. Can include employees of the custodian firm
3. II. Must include at least 40% non-interested persons
4. III. Assist with day-to-day portfolio management
5. IV. Vote on a change of investment adviser
6. A. II and IV
7. B. I and III
8. C. II and III
9. D. I and II
10. 2. Which of the following statements about the sale of mutual fund shares is inaccurate?
11. A. The underwriter prepares sales literature.
12. B. The mutual fund company sells shares to the transfer agent at the NAV.
13. C. The transfer agent receives the investor’s payment and issues new shares to buyers.
14. D. The custodian safeguards the proceeds of the sale.
15. 3. Regarding mutual funds, who are non-interested persons?
16. A. Non-interested persons are those who may receive dividends but receive no interest income from a particular mutual fund company.
17. B. Non-interested persons are those with dividends from a mutual fund company but do not face taxation on those dividends because of their non-interested status.
18. C. Non-interested persons must make up at least 40% of members of a board of directors of a mutual fund company.