Question 1

Which of the following is NOT true about technical analysis?

Accepted Answer

The answer of Which of the following is NOT true...

Question 2

A company that might not have historical perspective in background but it will find a place in the future depending on the product or industry is a ___________.

Accepted Answer

A growth company indicates a company that is expected to grow at a higher rate than the average market growth rate due to its innovative product or service. Such a company may not have a long history but has the potential to make an impact in the industry and establish a position in the future.

Question 3

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

Accepted Answer

Yield to maturity is the rate of return expected on a bond if it is held until its maturity date, taking into account its purchase price, coupon, and face value.

Question 4

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

Accepted Answer

Duration is a measure of the sensitivity of an asset's price to changes in interest rates. It is expressed in years and takes into account the timing and size of cash flows. Longer-duration assets are more sensitive to interest rate changes than shorter-duration assets.

Question 5

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

Accepted Answer

The answer of Which of the following lines depict the...

Question 6

Changes in Government rules and regulation will adversely affect which of the following industry?

Accepted Answer

The answer of Changes in Government rules and regulation will...

Question 7

All of the following steps are involved in estimating the earnings stream, EXCEPT:

Accepted Answer

Estimating corporate liabilities and assets is not directly involved in estimating the earnings stream. However, an understanding of a company's assets and liabilities can inform the estimation process. The other choices (A, B, and D) are all directly involved in estimating the earnings stream.

Question 8

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

Accepted Answer

Procter & Gamble is a defensive industry, meaning that its products (consumer staples such as household cleaning products, personal care items, etc.) are considered to be necessities rather than luxuries. This makes the demand for Procter & Gamble's products more stable during economic downturns, making it less affected by recessions in the economy.

Question 9

The trend lines can have the following trends, EXCEPT:

Accepted Answer

Trend lines can have an upward trend, a downward trend, or a trend range, but they cannot have a round phase.

Question 10

Which of the following is also called the Gordon's Growth Model?

Accepted Answer

The dividend discount model is also known as Gordon's Growth Model, named after Myron J. Gordon who first proposed the model in 1959.

Question 11

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

Accepted Answer

Individual investors' profiles can change over time due to various factors such as changes in financial goals, risk tolerance, and life circumstances.

Question 12

Standard & Poor's Composite Index is composed of how many "large" firm stocks?

Accepted Answer

The Standard & Poor's Composite Index is composed of 500 large firm stocks across various sectors of the economy.

Question 13

Which of the following charts give the economic information on weekly or yearly basis?

Accepted Answer

The answer of Which of the following charts give the...

Question 14

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?

Accepted Answer

The business cycle refers to the recurring and fluctuating levels of economic activity that an economy experiences over a long period of time. The claims cycle refers to the pattern of changes in insurance claims, the reaction cycle is not a commonly used term in economics, and the capital cycle refers to the process of investing and disinvesting in long-term assets.

Question 15

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

Accepted Answer

All three factors - maturity, coupon, and yield to maturity - play a significant role in determining the price volatility of a bond. For instance, longer maturity bonds are more volatile than shorter maturity bonds, high-coupon bonds are less volatile than low-coupon bonds, and the higher the yield to maturity, the greater the volatility.

Question 16

Which of the following is a current market in which all buying and selling is done on cash or margin basis?

Accepted Answer

Of the options given, "Regular market" is the only one that could potentially fit the description of a market where all buying and selling is done on a cash or margin basis. While the other options (Target market, Historic market, Borough market) may refer to specific types of markets or locations, they do not necessarily imply a cash or margin-based trading system.

Question 17

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

Accepted Answer

Market measures quickly judge the overall portfolio performance, which is an advantage for investors as they can quickly assess their investments and make necessary adjustments. Options A and B refer to measurement methods and conversions, respectively, which are not directly related to investor advantages. Option C refers to trade regulations, which may impact market measures but do not provide direct benefits to investors.

Question 18

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

Accepted Answer

A cash account is known as a "Type 1" account, which is a basic brokerage account where securities are bought and sold using only the cash available in the account. This type of account does not allow for borrowing or trading on margin. The other options listed are not referred to as "Type 1" accounts.

Question 19

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

Accepted Answer

A derivative security derives its value from the underlying asset or instrument, such as a stock, bond, or commodity. The return on a derivative security is dependent on the performance of the underlying asset or instrument. Examples of derivative securities include futures contracts, options, and swaps. Fixed income securities, equity securities, and money market securities do not derive their value from another instrument or asset.

Question 20

Which of the following orders are placed prior to the execution of trade?

Accepted Answer

The answer of Which of the following orders are placed...

Exam 2: Certified Trust and Financial Advisor