Question 1

All government bonds and the majority of corporate bonds are traded:

Options :

A : on the floor of the NYSE.

B : via electronic communication networks (ECNs).

C : on regional exchanges.

D : in the over-the-counter market.

Answer: D

Question 2

By investing in a diversified portfolio, an investor will:

Options :

A : lower both his risk and his expected return.

B : lower his risk without affecting his expected return.

C : lower his risk and increase his expected return.

D : eliminate all the market risk associated with his investment portfolio.

Answer: B

Question 3

Giant Investments filed a registration statement with the SEC for a new fund it wanted to introduce and has received word that the registration statement is now effective. Based on this, Jack, a registered representative with Giant Investments, can tell a client that:

Options :

A :

because the SEC has recently announced the fund’s registration statement effective, the client can rest assured that it is a sound long-term investment.

B :

the SEC pronouncement on the effectiveness of the registration statement means only that the SEC has deemed that enough information has been provided in the registration statement for the client to judge the quality of the investment for himself.

C : the SEC warrants that there have been no misstatements of fact in the registration statement.

D :

because the SEC has recently approved the fund, it is likely to be a much safer investment than other, older funds in the same fund category.

Answer: B

Question 4

A retirement plan under which the benefit to be paid upon retirement is specified when an employee is signed up for the plan is known as a:

Options :

A : 401(k) plan.

B : SIMPLE-IRA.

C : defined benefit plan.

D : defined contribution plan.

Answer: C

Question 5

Joel has a 28-year-old client who has been promoted to the elevated position of senior software engineer with a large, well-known, software company at her relatively young age. She has come to Joel for investment advice, explaining to him that she is risk-averse, having been influenced by parents who grew up in a foreign country and had little, prior to immigrating to America and working hard to achieve their dreams for themselves and their children. She has $50,000 that she wants him to invest for her, and her primary goal is to be able to have enough money, beyond what she expects to have in her employer’s retirement program, to return to her home country and help others achieve their dreams. Joel explains to her that she may have to invest in riskier securities in order to achieve her goal, but his client is adamant that she wants her portfolio to be invested to target growth with the least risk exposure possible. Given the facts:

Options :

A :

Joel should divide his client’s monies among growth, aggressive growth, and foreign stock funds. Regardless of what she says, she has a long investment horizon and can afford to take on more risk.

B : Joel should invest his client’s monies in a fund that specializes in stocks of his client’s home country to avoid the

C :

Joel should invest his client’s monies in a fund that specializes in stocks of his client’s home country to avoid the exchange rate risk that she will be exposed to when she returns.

D : Joel should invest his client’s monies in a growth fund to target her growth objective.

Answer: D

Higher Test Marks with Free Online Series-6 Exam Practice

Buying Options: