Exam 4: Investment Planning

Your client wants to know the risk involved with their small portfolio. What type of performance measure should you use?

What improves when more participants are engaged in trading a security?

What ratio focuses on growth in cash flows versus earnings and used in conjunction with P/E ratio?

What do normal distribution and "skewness" have in common?

Systematic risk includes risks that affect the entire market; the risk cannot be eliminated through diversification because it affects the entire market. For an investor to determine total financial risk, what must also be determined?

What model should you have a working knowledge of in order to best measure the risk and return of a portfolio allocation?

What is used to show yields for bond maturities to determine the best value in bonds as an economic indicator?

The market has been suffering from extremely high interest rates; a company wants to avoid the maturity of their bonds, what provision would allow the company to do that?

The U.S. Government's Series E bond was replaced by what bond?

What type of bonds helps provide for diversification?

Your client wants to invest in bonds and they don't mind high levels of risk if the payoff is worth it in the end. He has been watching a company that is looking to complete a major project in the city and is offering debentures, but there are rumors that the company may go bankrupt trying to complete the project. What should the client be told about debentures as it pertains to the current scenario?

You have invested $10,000 of your client's money in the exchange market of Spain. You have introduced your client's money to what?

What type of investment vehicle is issued by federal agencies, are not debt of the federal government, provide higher yields than the U.S. Treasury debt, and are extremely safe for investors?

Your client wants to purchase stock that appears to have a higher price than it should. What information should you seek to determine if indeed the price is too high?

Your client has an investment bond paying a coupon rate of 5 percent, but inflation increased to 5.5 percent. What type of risk does the scenario represent?

Futures contracts are settled daily and traders are required to realize losses in cash on a daily basis, but to purchase futures contract requires what type of account?

What statement is about tax-efficient investing is false?

Investors that do not believe that active management adds any additional returns to their portfolios practice what type of investment strategy?

What are the top four bond rating categories in Moody's and Standard and Poor's industrial bond ratings classifications referred to?

By what means can current stockholders use to maintain their proportionate ownership in a firm?