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NEW QUESTION: 1
A. Option A
B. Option C
C. Option B
D. Option E
E. Option D
Answer: A,C,E
NEW QUESTION: 2
Section A (1 Mark)
Unabsorbed depreciation can be carried forward for ____________.
A. None
B. Indefinite
C. 8 Years
D. 4 Years
Answer: B
NEW QUESTION: 3
In an arrangement between MoeMoney Investment Advisers and one of the firm's clients, the YourMoney mutual fund, part of MoeMoney's compensation is based how the fund performs compared to the S&P 500 Index. If the return on the fund exceeds the return on the index, MoeMoney gets a bonus. The S&P 500 had a return of negative 8% this year, and the fund returned a negative 2%, so MoeMoney invoiced the client for the bonus.
Has MoeMoney violated any securities laws?
A. Yes. An investment adviser's compensation cannot be based on the capital appreciation of the portfolio.
B. Yes. It is a violation of the Uniform Securities Act for an investment adviser to earn a bonus if a portfolio it manages loses money.
C. Yes. Under no circumstances can a bonus be part of an investment adviser's compensation package according to the Uniform Securities Act.
D. No. The fund beat the return on the S&P 500 Index, so MoeMoney is entitled to the bonus, based on its agreement with YourMoney.
Answer: D
Explanation:
Explanation/Reference:
Explanation: No. MoeMoney has not violated any securities laws. Even though the fund's return was negative, it still beat the return on the S&P 500 Index, and MoeMoney is entitled to the bonus. The Uniform Securities Act does not prohibit compensation agreements like this one as long as the client is a sophisticated investor, such as a mutual fund. This would not be permitted if the client were your average individual investor.
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