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ABA CTFA Practice Test - Questions Answers, Page 70

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An investor wants to buy 100 shares of a company but due to shortage of funds investor can only 30% of the total share price and will borrow rest of 70% from brokerage firm. Which of the following type of account will be suitable for investor in this situation?

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

Which of the following does not pay fix income (interest/ dividend) to investors?

A.
Preferred stock
A.
Preferred stock
Answers
B.
Government bond
B.
Government bond
Answers
C.
Common stock
C.
Common stock
Answers
D.
Treasury bond
D.
Treasury bond
Answers
Suggested answer: B

Which of the following is the theories searching the patterns in randomness?

A.
Elliott wave theory
A.
Elliott wave theory
Answers
B.
Chaos theory
B.
Chaos theory
Answers
C.
Portfolio theory
C.
Portfolio theory
Answers
D.
Valuation theory
D.
Valuation theory
Answers
Suggested answer: B

Which of the following is not a type of the multistage dividend discount model?

A.
Two-stage models
A.
Two-stage models
Answers
B.
Y models
B.
Y models
Answers
C.
H models
C.
H models
Answers
D.
Three-stage models
D.
Three-stage models
Answers
Suggested answer: B

Which of the following is a characteristic of cyclical stock?

A.
Their value is tied with the overall state of the national economy.
A.
Their value is tied with the overall state of the national economy.
Answers
B.
They are low-priced, speculative and risky securities.
B.
They are low-priced, speculative and risky securities.
Answers
C.
They have stable earnings and no extensive liabilities
C.
They have stable earnings and no extensive liabilities
Answers
D.
None of the given options
D.
None of the given options
Answers
Suggested answer: A

Which of the following programs propagate the ethics?

A.
London Instruments Fiscal Attachment
A.
London Instruments Fiscal Attachment
Answers
B.
Laurel Immigration Fairness Analysis
B.
Laurel Immigration Fairness Analysis
Answers
C.
Low Income Financial Association
C.
Low Income Financial Association
Answers
D.
Licensed International Financial Analyst
D.
Licensed International Financial Analyst
Answers
Suggested answer: D

Which of the following shows relationship between market yield and time to maturity?

A.
Smart curves
A.
Smart curves
Answers
B.
Bezier curves
B.
Bezier curves
Answers
C.
Yield curves
C.
Yield curves
Answers
D.
Filling curves
D.
Filling curves
Answers
Suggested answer: C

What does the abbreviation SIC stands for?

A.
Standard industrial classification
A.
Standard industrial classification
Answers
B.
Symbolic Industry consortium
B.
Symbolic Industry consortium
Answers
C.
Southeastern Illinois compendium
C.
Southeastern Illinois compendium
Answers
D.
None of these
D.
None of these
Answers
Suggested answer: A

Of the following statement identify the advantages of market measures to the investor?

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

Current yield is defined as:

A.
Internal rate of return that equates the prevailing market price with future interest and principle payments
A.
Internal rate of return that equates the prevailing market price with future interest and principle payments
Answers
B.
Approximate yield to call for premium bonds
B.
Approximate yield to call for premium bonds
Answers
C.
Coupon interest divided by average of market and call prices
C.
Coupon interest divided by average of market and call prices
Answers
D.
Coupon rate expressed as a percent of the prevailing market price
D.
Coupon rate expressed as a percent of the prevailing market price
Answers
Suggested answer: A
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