Exam 4: Investment Planning

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?

What investments types rely on demand for pricing?

Which statement is not true of Markowitz portfolio theory?

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?

If a corporation issues a 10-year $100,000 8% bond. What is the total that the issuing corporation pays to the bondholder over the next 10 years?

Mary has $100,000 that she would like to invest in jumbo certificates of deposit (CD). She doesn't want her money tied-up to long, but she doesn't want to pay any penalties. How long must she wait for the CD to mature and to withdrawal without penalty?

A diversified portfolio, market risk, and use of beta coefficient are associated with what type of performance measure?

In 1985, the Treasury introduced a zero coupon bond called STRIPS; they are direct obligations of the federal government. Your client is interested in investing a sum of funds that can grow tax-free and is concerned about bond volatility, what should you inform your client about STRIPS?

Higher rates of return do not alone indicate superior performance. For a complete picture of a fund's performance risk and return must be calculated; what are the composite measures?

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

Your 68 year old client wishes to make an investment, but doesn't want any risk or have their money tied-up for too long; what investment vehicle would be best for the given situation?

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

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?

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?

What statement is about tax-efficient investing is false?

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

Which statement is not an assumption to capital market theory?

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

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