Question 1

The optimal balance of marketable securities held to take care of probable deficiencies in the firm's cash account is referred to as the __________ segment in the one's portfolio of short-term marketable securities.

Accepted Answer

A)  Ready cash 
B)  Controlled cash 
C)  Free cash 
D)  Cash and cash equivalent

Question 2

In processing __________, many entities keep a single file for each insured event, with separate identification of each claimant.

Accepted Answer

A)  Insurance claim 
B)  transaction cycle 
C)  Liability claim 
D)  Compensation period

Question 3

Securities products include: 1. Trusts 2. Annuities 3. Derivatives 4. Stocks 5. Bonds 6. Commodities 7. Mutual Funds 8. Pension Funds 9. Term Loans 10. Asset Management 11. Money Market Products

Accepted Answer

A)  Only 1, 2, 3,4,5,10,11 
B)  Only 1, 3, 5, 10 
C)  All except 8, 9 
D)  All except 8,9,10

Question 4

In which plan all activities writing automobile insurance in a state are allocated a share of the involuntary business on an equitable basis?

Accepted Answer

A)  Automobile equitability 
B)  Automobile insurance 
C)  Automobile assurance 
D)  None of the above

Question 5

Which of the following terms refer to the recurring and fluctuating levels of economic activity that an economy experiences over a long period of time?

Accepted Answer

A)  Claims cycle 
B)  Reaction cycle 
C)  Capital cycle 
D)  Business Cycle

Question 6

Performance as _____________ is normally the only true trust relationship administered by a corporate trust department.

Accepted Answer

A)  Trustee under a bond indenture 
B)  Bank under a bond indenture 
C)  Trust under a bond indenture 
D)  None of these

Question 7

Red color indicates market or share price is going down

Accepted Answer

A)  Leverage ratios are designed to 
B)  Measure a company's capital structure 
C)  Measure the quality of a company's operations 
D)  Measure a company's ability to cover its short-term obligations

Question 8

The main objective/s of an audit of swaps is/are:

Accepted Answer

A)  To determine the adequacy and effectiveness of controls relating to rate swap transactions 
B)  To ascertain that swap transaction are properly recorded in accordance with their term 
C)  To ensure that the company's financial statements and regulatory reports properly reflect in accordance with generally accepted accounting principles, the results of swap activity 
D)  All of these

Question 9

Which of the following index is known as value weighting?

Accepted Answer

A)  Price weighting 
B)  Equal weighting 
C)  Base weighting 
D)  Capitalization weighting

Question 10

Uninsured motorists insurance is fairly low in cost. Because, the cost of the coverage is low compared to the amount of protection it provides, drivers should purchase at least:

Accepted Answer

A)  The maximum available limit 
B)  The minimum available limit 
C)  The equality limit 
D)  None of these

Question 11

Which of the following depicts a bullish trend in stock market?

Accepted Answer

A)  Stock price drop below support level 
B)  Stock price rises above support level 
C)  Stock price drop below resistant level 
D)  None of given options

Question 12

Insurance that provides only death benefits, for a specified period, and does not provide accumulation of cash value is called:

Accepted Answer

A)  Straight term policy 
B)  Term life insurance 
C)  Decreasing term policy 
D)  Renewability

Question 13

Home office record-maintenance methods may include:

Accepted Answer

A)  duplication of branch records 
B)  maintenance of detailed entries for analytical purposes 
C)  use of planning procedures from main office for both premiums and cash 
D)  All of the above

Question 14

Maria worked her way through college earning $20,000 per year. After graduation, her first job pays $40,000. The total dollar amount Maria will have to pay in federal income taxes in her new job will:

Accepted Answer

A)  Stay the same as when she was in college 
B)  Be lower than when she was in college 
C)  Double, at least, from when she was in college 
D)  Go up a little from when she was in college

Question 15

Which of the following is NOT true about technical analysis?

Accepted Answer

A)  It requires some subjective decision-making 
B)  It requires much accounting information 
C)  Its success would mean markets are not efficient 
D)  Technical analysis is older than fundamental analysis

Question 16

A gold producer wants to hedge his loses attributable to a fall in the price of gold for his current gold currency. This is an example of:

Accepted Answer

A)  Currency Swaps 
B)  Commodity Swaps 
C)  Interests rate Swaps 
D)  All of these

Question 17

Which of the following tests is used to test the weak form of market efficiency?

Accepted Answer

A)  Stock splits 
B)  Insider transactions 
C)  Accounting changes 
D)  None of these

Question 18

Availability float is the __________.

Accepted Answer

A)  Total time between the mailing of the check by the customer and the availability of cash to the receiving firm 
B)  Time consumed in clearing the check through the banking system 
C)  Time the check is in the mail 
D)  Time during which the check received by the firm remains uncollected

Question 19

Assume our typical 65-year-old investor likewise has adequate insurance coverage and a cash reserve. Let's also assume she is retiring this year. This individual will want less risk exposure than the 25-year-old investor, because her earning power from employment will soon be ending; she will not be able to recover any investment losses by saving more out of her paycheck. Depending on her income from social security and a pension plan, she may need some current income from her retirement portfolio to meet living expenses. Given that she can be expected to live an average of another 20 years, she will need protection against inflation. A risk-averse investor will choose a combination of current income and capital preservation strategy; a more risk-tolerant investor will choose:

Accepted Answer

A)  A combination of current income and capital depreciation in an attempt to have principal growth outpace inflation 
B)  A combination of current income and capital preservation strategy 
C)  A combination of current income and capital appreciation in an attempt to have principal growth outpace inflation 
D)  A combination of current income and total return in an attempt to have principal growth outpace inflation

Question 20

Which of the following equations assume a linear relationship between price and yield?

Accepted Answer

A)  Yield to maturity equation 
B)  Duration equation 
C)  Convexity equation 
D)  Immunization equation

Exam 2: Certified Trust and Financial Advisor