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ABA CTFA Practice Test - Questions Answers, Page 63

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Which of the following is known as ''Type 1' account?

A.
CFA account
A.
CFA account
Answers
B.
Cash account
B.
Cash account
Answers
C.
Real account
C.
Real account
Answers
D.
Margin A/c
D.
Margin A/c
Answers
Suggested answer: B

Procter & Gamble is not affected by the recession in the economy; we will consider Procter & Gamble as:

A.
Cyclic industry
A.
Cyclic industry
Answers
B.
Defensive industry
B.
Defensive industry
Answers
C.
Interest sensitive industry
C.
Interest sensitive industry
Answers
D.
None
D.
None
Answers
Suggested answer: B

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?

A.
Claims cycle
A.
Claims cycle
Answers
B.
Reaction cycle
B.
Reaction cycle
Answers
C.
Capital cycle
C.
Capital cycle
Answers
D.
Business Cycle
D.
Business Cycle
Answers
Suggested answer: D

Which of the following factor contributes to the price volatility of a bond?

A.
Maturity
A.
Maturity
Answers
B.
Coupon
B.
Coupon
Answers
C.
Yield to maturity
C.
Yield to maturity
Answers
D.
All of the given options
D.
All of the given options
Answers
Suggested answer: D

Which of the following measures the sensitivity of an asset's price to interest rate movements, expressed as a number of years?

A.
Duration
A.
Duration
Answers
B.
Yield to maturity
B.
Yield to maturity
Answers
C.
Convexity
C.
Convexity
Answers
D.
Immunization
D.
Immunization
Answers
Suggested answer: A

Which of the following is defined as the rate of return anticipated on a bond if it is held until the maturity date?

A.
Discount rate
A.
Discount rate
Answers
B.
Interest free rate
B.
Interest free rate
Answers
C.
Return on equity
C.
Return on equity
Answers
D.
Yield to maturity
D.
Yield to maturity
Answers
Suggested answer: D

All of the following are the characteristics of the individual investor, EXCEPT:

A.
They are characterized by their personalities
A.
They are characterized by their personalities
Answers
B.
They maintain relatively constant profile overtime
B.
They maintain relatively constant profile overtime
Answers
C.
They have great freedom in what they can do with regard to investing.
C.
They have great freedom in what they can do with regard to investing.
Answers
D.
They define risk as losing money.
D.
They define risk as losing money.
Answers
Suggested answer: B

Which of the following lines depict the tradeoff between risk and expected return for individual securities?

A.
Value Market Line
A.
Value Market Line
Answers
B.
Capital Market Line
B.
Capital Market Line
Answers
C.
Security Market Line
C.
Security Market Line
Answers
D.
Money Market Line
D.
Money Market Line
Answers
Suggested answer: B

Financial instrument whose return is derived from the return on another instrument is known as a (n):

A.
Derivative security
A.
Derivative security
Answers
B.
Fixed income security
B.
Fixed income security
Answers
C.
Equity security
C.
Equity security
Answers
D.
Money market security
D.
Money market security
Answers
Suggested answer: A

Of the following statements identify the advantage of the market measures to the investor.

A.
These measures identify the population to be measured and its method
A.
These measures identify the population to be measured and its method
Answers
B.
These measures offer equivalents for common sizes and metric units
B.
These measures offer equivalents for common sizes and metric units
Answers
C.
These measures regulate the access to and cost of imports and exports
C.
These measures regulate the access to and cost of imports and exports
Answers
D.
These measure quickly judge the overall portfolio performance
D.
These measure quickly judge the overall portfolio performance
Answers
Suggested answer: D
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