Question 1

If an investor was looking for an investment with a risk equal to that of the market, which factor would shewant in an investment?

Options :

A : a beta of 0

B : a standard deviation of 1

C : a standard deviation of 0

D : a beta of 1

Answer: D

Question 2

You are concerned about upcoming weakness in the Canadian dollar. Which type of fund should you invest in?

Options :

A : A specialty fund that uses derivatives to hedge the value of its portfolio

B : An international fund that hedges its foreign currency risk

C : A global fund that hedges its foreign currency risk

D : A global fund that does not hedge its foreign currency risk

Answer: D

Question 3

Which newspaper article would be likely to result in foreign capital moving out of a country?

Options :

A : Corporate Taxes Reduced

B : New Taxes on Foreign Direct Investment

C : Government Re-elected for a Fourth Consecutive Term

D : International Ranking of Domestic Level of Education Rises Significantly

Answer: B

Question 4

Your client has very limited investment knowledge and is confused about what is meant by "marginal taxrate". What do you tell him?

Options :

A : It is the tax rate applied to the next dollar earned.

B : It is the tax rate used in calculating taxable capital gains.

C : It is an amount resulting from dividing your total tax liability by your taxable income for the year.

D : It is the number used to gross-up Canadian dividend income.

Answer: A

Question 5

What risk type is prevalent regardless of the level of portfolio diversification or hedging?

Options :

A : Market

B : Default

C : Unique

D : Inflation

Answer: A

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