Exam 4: Investment Planning

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

Coupons are fixed periodic interest payments. They are paid from the bond's issue date to the bond's maturity date. What is the relationship between a bond's yield and its coupons?

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

What concept states that the larger a sample population the more accurate the prediction acquired by the testing of the sample?

Your client wants to know the systematic risk of his diversified portfolio. What would you first determine before answering the client's question?

Prices are determined by supply and demand. Supply and demand are driven by rational and irrational behavior. Security prices move in trends that persist for long periods of time. The actual shift in supply and demand can be observed in market price behavior. Each of the above statements is assumptions of what type of analysis?

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

A client has $100,000 to invest. They are considering a short-term investment that is unsecured but think it may be a good idea to have the issuer to be a large corporation. What investment vehicle should a financial planner suggest?

If you are looking to add a new mutual fund for the purpose of diversification, the fund you would select would have what?

The tangent line is strongly related to duration; both estimate the rate of change in price. After the first percentage change in price, what is used to approximate the second and added to the duration?

Which of the following is true regarding asset allocation and portfolio diversification?

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

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

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?

What is a bond? Select all that apply:

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

You have a new client, it is time to make investment decisions and you want to reduce professional liability exposure; what should be created for each client?

What type of bonds helps provide for diversification?

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

Your client as 20 years old and has several thousand dollars' worth of EE bonds that he was gifted on his first birthday. The client's EE bonds are hitting maturity and taxes will be due. The client is also starting college and funds to pay for school. What would you suggest the client do to address their financial dilemma?