As a high-yield bond fund, Slippery invests a substantial amount of its money in junk bonds. High

yield = high risk. Junk bonds have a rating below BBB.

The risk that the nation will enter a recession is an example of market risk. A recession will affect the

prices of all securities to one degree or another. The other choices are examples of business risk-a

risk that is tied to a specific firm. In finance, risk means uncertainty, so even the possibility that a

drug company will produce a pill that will cure cancer is referred to as a risk.

Selections I and II correctly describe differences between a profit -sharing plan and a money purchase plan. Under a profit-sharing plan, an employer can elect to make no contribution in a bad year, but an employer must make contributions to a money purchase plan, regardless. Only employers make contributions to profit-sharing plans, but both employers and employees can contribute to a money purchase plan. Both profit-sharing plans and money purchase plans are defined contribution plans, so the statement made in Selection III is false.

Both A and C are eligible to establish a Keogh Plan. Any individual who is self -employed, even in a

second job, is eligible to set up a Keogh Plan as long as they have established themselves as sole

proprietors and not as any form of corporation.

If you sell Hasbro stock for $55 and it was selling for $44 on the day that your uncle died, the sale will

result in $3,300 of taxable income, taxed to you as long-term capital gain income. Your cost basis is

the price at which the stock was selling on the day your uncle died, $44, so your gain on the sale is

($55 - $44) x 300 shares = $3,300. Although you owned the stock for only a month, the IRS stipulates

that capital gain (or loss) earned on the disposition of inherited investment property will be

considered to be long-term capital gain, regardless of how long it is held by the beneficiary prior to

its sale.

Invesco Utilities Fund profile suggests that the fund is a sector fund, which is a specialized fund that

invests mainly in stocks within a specific industry. This does not mean that it is non -diversified. As

long as it is invested in a portfolio of securities with a value exceeding 75% of its assets such that no

more than 5% is invested in any one firm and no more than 10% of any firm’s voting stock is owned,

it is considered to be a diversified management company.

Yes, there have been violations of FINRA/NASD rules in this instance. It is a violation of Rule 2110 for

an exam-past or present-to be reproduced and distributed for study purposes. Whether there has

been compensation paid or not is irrelevant.

Because Joel’s client is adamant about being risk-averse, but also desires growth, Joel should invest

his client’s monies in a growth fund to target her desired objective. He should avoid the riskier

aggressive growth and foreign stock funds. Although her long-term investment horizon indicates that

she is able to tolerate more risk, her desires trump that. Investing in stocks of her home country

doesn’t make sense at this point since no one knows what the future exchange rate will be. Investing

in a U.S. government bond fund has less risk, but does not target her growth objective.

A table providing detailed information on the various fees and expenses charged by a mutual fund

can be found in the fund’s prospectus. The other choices provide a wealth of information regarding

such items as investment strategies, fund holdings, and financial statements, however.

Since MoeMoney is a diversified management company, it may invest no more than 5% of its

investment monies in one issuer. It may be either a closed-end or an open-end company (mutual

fund), and it need not necessarily be invested in a variety of industries and geographic regions.