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ABA CTFA Practice Test - Questions Answers, Page 72

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Which of the following suggests that people express a different degree of emotion towards gains than towards losses?

A.
Loss aversion
A.
Loss aversion
Answers
B.
Prospect theory
B.
Prospect theory
Answers
C.
Illusion of control
C.
Illusion of control
Answers
D.
Anchoring
D.
Anchoring
Answers
Suggested answer: B

Bonds and preferred stocks do not ensure:

A.
Fixed income
A.
Fixed income
Answers
B.
Security
B.
Security
Answers
C.
Ownership
C.
Ownership
Answers
D.
None of the above
D.
None of the above
Answers
Suggested answer: C

Which of the following give payback period of investment made?

A.
Future cash flows
A.
Future cash flows
Answers
B.
Present cash flows
B.
Present cash flows
Answers
C.
Operating cash flows
C.
Operating cash flows
Answers
D.
Free cash flows
D.
Free cash flows
Answers
Suggested answer: A

Which of the following is pattern that occurs during high volatility, when a security shows great movement with the direction?

A.
Broadening formation
A.
Broadening formation
Answers
B.
Relative strength index
B.
Relative strength index
Answers
C.
On balance volume
C.
On balance volume
Answers
D.
Bollinger bands
D.
Bollinger bands
Answers
Suggested answer: A

Which of the following is payment to owners in stock?

A.
Penny stock
A.
Penny stock
Answers
B.
Stock dividend
B.
Stock dividend
Answers
C.
Stock flicker
C.
Stock flicker
Answers
D.
Stock ticker
D.
Stock ticker
Answers
Suggested answer: B

Which of the following bonds may be exchanged for another asset at the owner's discretion?

A.
Municipal bonds
A.
Municipal bonds
Answers
B.
Callable bonds
B.
Callable bonds
Answers
C.
Convertible bonds
C.
Convertible bonds
Answers
D.
Zero coupon bond
D.
Zero coupon bond
Answers
Suggested answer: C

All of the following are the levels of market efficiency, Except:

A.
Low PE effect
A.
Low PE effect
Answers
B.
The neglecting firm effect
B.
The neglecting firm effect
Answers
C.
Common size effect
C.
Common size effect
Answers
D.
The small firm effect
D.
The small firm effect
Answers
Suggested answer: C

High yield bonds:

A.
Pay lower coupon rate than investment-grade bonds
A.
Pay lower coupon rate than investment-grade bonds
Answers
B.
Have a lower probability of default than junk bonds
B.
Have a lower probability of default than junk bonds
Answers
C.
Are avoided by institutional investors
C.
Are avoided by institutional investors
Answers
D.
None of these
D.
None of these
Answers
Suggested answer: D

Which of the following compares the magnitude of recent gains to recent losses in an attempt to determine overbought and oversold conditions of an asset?

A.
Moving average convergence/Divergence
A.
Moving average convergence/Divergence
Answers
B.
Relative strength index
B.
Relative strength index
Answers
C.
On balance volume
C.
On balance volume
Answers
D.
Bollinger bands
D.
Bollinger bands
Answers
Suggested answer: B

Which of the following are required inputs of the present value approach?

A.
Discount rate and the expected cash flows
A.
Discount rate and the expected cash flows
Answers
B.
Expenses paid in cash and dividends disbursed
B.
Expenses paid in cash and dividends disbursed
Answers
C.
Earnings in valuing stocks and stock-in-trade
C.
Earnings in valuing stocks and stock-in-trade
Answers
D.
Retained earnings and dividend payout ratio
D.
Retained earnings and dividend payout ratio
Answers
Suggested answer: A
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