Question 1

How many asset classes are there in financial planning?

Accepted Answer

A) 1 
B) 2 
C) 3 
D) 4 
A) 1 
B) 2 
C) 3 
D) 4

Question 2

What type of bonds are often issued to finance a takeover and merger or to help a start-up firm raise capital?

Accepted Answer

A) Debentures 
B) Zero Coupon Bonds 
C) High-Yield Bonds 
D) Convertible 
A) Debentures 
B) Zero Coupon Bonds 
C) High-Yield Bonds 
D) Convertible

Question 3

What type of investment vehicle has low-default-risk and specializes in short-term securities?

Accepted Answer

A) U)S. Series EE and HH Bonds 
B) High-grade Common Stock 
C) High-grade Corporate Bonds 
D) Money Market Accounts 
A) U)S. Series EE and HH Bonds 
B) High-grade Common Stock 
C) High-grade Corporate Bonds 
D) Money Market Accounts

Question 4

Which statement is not true of Markowitz portfolio theory?

Accepted Answer

A) Investors maximize their one-period expected utility 
B) Investors base all decisions on expected return and risk. 
C) Investors estimate risk of a portfolio on the basis of variability of expected returns. 
D) The above statements are Capital market theory. 
A) Investors maximize their one-period expected utility 
B) Investors base all decisions on expected return and risk. 
C) Investors estimate risk of a portfolio on the basis of variability of expected returns. 
D) The above statements are Capital market theory.

Question 5

What theory recognizes three movements in security markets: major trends, intermediate trends, and short-term trends?

Accepted Answer

A) Efficient Frontier Hypothesis 
B) Market Indicators Analysis 
C) Technical Analysis 
D) Dow Theory 
A) Efficient Frontier Hypothesis 
B) Market Indicators Analysis 
C) Technical Analysis 
D) Dow Theory

Question 6

Assume you have a client that is willing to take a moderate level of risk when investing. They are interested in government coupons and want to take advantage the highs and lows of inflation, what should be recommended?

Accepted Answer

A) U)S. Series EE and HH Bonds 
B) Banker's Acceptances 
C) Treasury Inflation Protected Securities 
D) Money Market Accounts 
A) U)S. Series EE and HH Bonds 
B) Banker's Acceptances 
C) Treasury Inflation Protected Securities 
D) Money Market Accounts

Question 7

The setting of specific percentages for each asset class demonstrates what type of investment strategy?

Accepted Answer

A) Passive Investing 
B) Active Investing 
C) Market Timing 
D) Buy and hold 
A) Passive Investing 
B) Active Investing 
C) Market Timing 
D) Buy and hold

Question 8

What type of financial investment is guaranteed by a commercial bank?

Accepted Answer

A) U)S. Series EE and HH Bonds 
B) Banker's Acceptances 
C) Commercial Paper 
D) Money Market Accounts 
A) U)S. Series EE and HH Bonds 
B) Banker's Acceptances 
C) Commercial Paper 
D) Money Market Accounts

Question 9

A firm takes out a loan for investments; this introduces the firm to what type of risk?

Accepted Answer

A) Business Risk 
B) Financial Risk 
C) Exchange Rate Risk 
D) Nonmarket Risk 
A) Business Risk 
B) Financial Risk 
C) Exchange Rate Risk 
D) Nonmarket Risk

Question 10

Which statement is not an assumption to capital market theory?

Accepted Answer

A) There are not taxes or transaction costs. 
B) Capital markets are in equilibrium. 
C) All investors have the same one-period time horizon. 
D) Investors behavior impacts investment decisions. 
A) There are not taxes or transaction costs. 
B) Capital markets are in equilibrium. 
C) All investors have the same one-period time horizon. 
D) Investors behavior impacts investment decisions.

Question 11

What is the process of selecting broad investment categories for a client's portfolio?

Accepted Answer

A) Asset allocation 
B) Diversification 
C) Financial planning 
D) Brokerage 
A) Asset allocation 
B) Diversification 
C) Financial planning 
D) Brokerage

Question 12

What allows a corporation to have a debt instrument in its capital structure and are subordinate to other debt issued by the corporation?

Accepted Answer

A) Debentures 
B) Zero Coupon Bonds 
C) High-Yield Bonds 
D) Convertible 
A) Debentures 
B) Zero Coupon Bonds 
C) High-Yield Bonds 
D) Convertible

Question 13

What concept is used to evaluate, rank, and select among various investment projects?

Accepted Answer

A) Annuity Due 
B) Future Annuities 
C) Net Present Value 
D) Stream Annuities 
A) Annuity Due 
B) Future Annuities 
C) Net Present Value 
D) Stream Annuities

Question 14

What are the two methods for computing the basis of mutual funds?

Accepted Answer

A) Cost Basis and First-in, first-out 
B) Specific Identification and First-in, first-out 
C) First-in, first-out and Average Basis 
D) Average Basis and Cost Basis 
A) Cost Basis and First-in, first-out 
B) Specific Identification and First-in, first-out 
C) First-in, first-out and Average Basis 
D) Average Basis and Cost Basis

Question 15

Your client wants to invest in some stocks. She wants to invest in companies with highly regarded companies but want to avoid issues involved with up or down economy cycles. What product should be recommended and what should be avoided?

Accepted Answer

A) Recommend blue chip stocks and avoid cyclical stocks 
B) Recommend cyclical stocks and avoid blue chip stocks 
C) Recommend noncumulative stocks and avoid cumulative stocks 
D) None of the above 
A) Recommend blue chip stocks and avoid cyclical stocks 
B) Recommend cyclical stocks and avoid blue chip stocks 
C) Recommend noncumulative stocks and avoid cumulative stocks 
D) None of the above

Question 16

Naomi owns closely held stock and is considering selling a few shares. What makes this a difficult transaction?

Accepted Answer

A) Annuities affect stock prices. 
B) Bonds affect stock prices. 
C) The lack of an organized market makes it difficult to determine the value of stock 
D) All of the above. 
A) Annuities affect stock prices. 
B) Bonds affect stock prices. 
C) The lack of an organized market makes it difficult to determine the value of stock 
D) All of the above.

Question 17

Some bonds are issued to purchase specific fixed assets, some are promissory notes, still others are sold with no coupon at a discount; what type of bonds are debt obligations issued by state and local government?

Accepted Answer

A) Series EE Bonds 
B) Municipal Bonds 
C) Asset-backed Securities 
D) Mortgage pass-through Securities 
A) Series EE Bonds 
B) Municipal Bonds 
C) Asset-backed Securities 
D) Mortgage pass-through Securities

Question 18

What is not a phase of life cycle associated with a client's risk tolerance?

Accepted Answer

A) Accumulation 
B) Control 
C) Consolidation 
D) Spending 
A) Accumulation 
B) Control 
C) Consolidation 
D) Spending

Question 19

A callable bond__________

Accepted Answer

A) Has specific names. 
B) Allows the issuer to retire the bond before it matures. 
C) Is designed for specific investors. 
D) Has zero interest rates. 
A) Has specific names. 
B) Allows the issuer to retire the bond before it matures. 
C) Is designed for specific investors. 
D) Has zero interest rates.

Question 20

A shareholder owns 100 shares and there are three positions on the board of directors. How many votes does this shareholder have and what is the proper term for this voting right?

Accepted Answer

A) 99 shares, cumulative 
B) 99 shares, noncumulative 
C) 300 shares, cumulative 
D) 300 shares, noncumulative 
A) 99 shares, cumulative 
B) 99 shares, noncumulative 
C) 300 shares, cumulative 
D) 300 shares, noncumulative

How many asset classes are there in financial planning?

What type of bonds are often issued to finance a takeover and merger or to help a start-up firm raise capital?

What type of investment vehicle has low-default-risk and specializes in short-term securities?

Which statement is not true of Markowitz portfolio theory?

What theory recognizes three movements in security markets: major trends, intermediate trends, and short-term trends?

Assume you have a client that is willing to take a moderate level of risk when investing. They are interested in government coupons and want to take advantage the highs and lows of inflation, what should be recommended?

The setting of specific percentages for each asset class demonstrates what type of investment strategy?

What type of financial investment is guaranteed by a commercial bank?

A firm takes out a loan for investments; this introduces the firm to what type of risk?

Which statement is not an assumption to capital market theory?

What is the process of selecting broad investment categories for a client's portfolio?

What allows a corporation to have a debt instrument in its capital structure and are subordinate to other debt issued by the corporation?

What concept is used to evaluate, rank, and select among various investment projects?

What are the two methods for computing the basis of mutual funds?

Your client wants to invest in some stocks. She wants to invest in companies with highly regarded companies but want to avoid issues involved with up or down economy cycles. What product should be recommended and what should be avoided?

Naomi owns closely held stock and is considering selling a few shares. What makes this a difficult transaction?

Some bonds are issued to purchase specific fixed assets, some are promissory notes, still others are sold with no coupon at a discount; what type of bonds are debt obligations issued by state and local government?

What is not a phase of life cycle associated with a client's risk tolerance?

A callable bond__________

A shareholder owns 100 shares and there are three positions on the board of directors. How many votes does this shareholder have and what is the proper term for this voting right?

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Education Planning

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Exam 4: Investment Planning

How many asset classes are there in financial planning?

What type of bonds are often issued to finance a takeover and merger or to help a start-up firm raise capital?

What type of investment vehicle has low-default-risk and specializes in short-term securities?

Which statement is not true of Markowitz portfolio theory?

What theory recognizes three movements in security markets: major trends, intermediate trends, and short-term trends?

Assume you have a client that is willing to take a moderate level of risk when investing. They are interested in government coupons and want to take advantage the highs and lows of inflation, what should be recommended?

The setting of specific percentages for each asset class demonstrates what type of investment strategy?

What type of financial investment is guaranteed by a commercial bank?

A firm takes out a loan for investments; this introduces the firm to what type of risk?

Which statement is not an assumption to capital market theory?

What is the process of selecting broad investment categories for a client's portfolio?

What allows a corporation to have a debt instrument in its capital structure and are subordinate to other debt issued by the corporation?

What concept is used to evaluate, rank, and select among various investment projects?

What are the two methods for computing the basis of mutual funds?

Your client wants to invest in some stocks. She wants to invest in companies with highly regarded companies but want to avoid issues involved with up or down economy cycles. What product should be recommended and what should be avoided?

Naomi owns closely held stock and is considering selling a few shares. What makes this a difficult transaction?

Some bonds are issued to purchase specific fixed assets, some are promissory notes, still others are sold with no coupon at a discount; what type of bonds are debt obligations issued by state and local government?

What is not a phase of life cycle associated with a client's risk tolerance?

A callable bond__________

A shareholder owns 100 shares and there are three positions on the board of directors. How many votes does this shareholder have and what is the proper term for this voting right?

Education Planning

Education Planning

Estate Planning

Estate Planning

General Principles of Financial Planning

General Principles of Financial Planning

Investment Planning

Professional Conduct and Regulation

Professional Conduct and Regulation

Retirement Savings and Income Planning

Retirement Savings and Income Planning

Risk Management and Insurance Planning

Risk Management and Insurance Planning

Tax Planning

Tax Planning

Filters