Question 1

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

Accepted Answer

Yield curves show the relationship between market yield and time to maturity. Smart curves and filling curves are not related to yield and Bezier curves are a type of mathematical curve used in computer graphics.

Question 2

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

Accepted Answer

Market measures, such as indexes like the S&P 500 or Dow Jones Industrial Average, provide a quick and easy way for investors to judge the overall performance of their portfolio. They also offer a benchmark for comparison to other investment strategies and can help investors make informed decisions about buying or selling securities in their portfolio. Option A refers to the methodology of population measurement, which is not relevant to market measures, while option B refers to units of measurement and option C refers to trade regulations, both of which are not advantages to the investor in the context of market measures.

Question 3

Which of the following make use of divisor to adjust for stock splits?

Accepted Answer

Price weighting uses divisor to adjust for stock splits. Divisor is a number used to maintain continuity in the index value after a stock split. Capitalization weighting, equal weighting, and base weighting do not use divisor to adjust for stock splits.

Question 4

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

Accepted Answer

The answer of Which of the following does not pay...

Question 5

Which of the following take place at the expansion stage of the industry life cycle?

Accepted Answer

During the expansion stage, firm operations become more stable and dependable as the industry matures and companies establish themselves, leading to more predictable operations.

Question 6

Which of the following give payback period of investment made?

Accepted Answer

Future cash flows are used to calculate the payback period of an investment.

Question 7

Which of the following programs propagate the ethics?

Accepted Answer

The program that best aligns with the propagation of ethics is the Licensed International Financial Analyst program. This program requires its members to adhere to a strict code of ethics, including honesty, integrity, and professional competence.

Question 8

Which of the following is the basic exchange rate in the economy?

Accepted Answer

The basic exchange rate in the economy is the real rate of return. This is the return on investment adjusted for inflation. It is the rate at which goods and services can be exchanged in the economy. The other options are all related to rate of return, but not specifically the basic exchange rate.

Question 9

Bonds and preferred stocks do not ensure:

Accepted Answer

Bonds and preferred stocks do not provide ownership in the company. They are debt or hybrid securities that provide a fixed income or dividend, but do not give the holder any ownership stake or voting rights in the company.

Question 10

Which of the following bond will have the longest duration?

Accepted Answer

The longer the maturity of a bond, the greater its duration. Zero coupon bonds have the longest duration because they have no cash flows during the life of the bond, resulting in a greater sensitivity to changes in interest rates. Therefore, the 10 year, zero percent coupon bond will have the longest duration among the given choices.

Question 11

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

Accepted Answer

A broadening formation occurs during high volatility when a security shows great movement with no clear direction. It is characterized by higher highs and lower lows that alternate, creating a widening pattern on a chart. Bollinger bands can also be used to track volatility, but they indicate the upper and lower limits of a security's price range rather than the direction of movement. Relative strength index (RSI) and on balance volume (OBV) are technical analysis tools, but they do not specifically relate to high volatility with directional movement.

Question 12

The higher the coupon on the bond:

Accepted Answer

The answer of The higher the coupon on the bond:
...

Question 13

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?

Accepted Answer

Since the investor wants to borrow 70% of the total share price, a margin account is suitable for this situation as it allows investors to borrow funds from their brokerage firm. A cash account requires the investor to have the full amount of funds available to make the purchase. Real account and CFA account are not relevant to this situation.

Question 14

Which of the following measures variation of the bond's price yield curve from a straight line?

Accepted Answer

Bond convexity measures the degree to which the price yield curve of a bond deviates from a straight line. Bond duration measures the sensitivity of the bond's price to changes in interest rates, while bond valuation is the process of determining the fair value of a bond.

Question 15

Dow Jones industrial average is composed of how many blue chip stocks?

Accepted Answer

The Dow Jones industrial average is composed of 30 blue chip stocks.

Question 16

Current yield is defined as:

Accepted Answer

The answer of Current yield is defined as:
...

Question 17

The trend lines can have following trends, Except:

Accepted Answer

Trend lines cannot have a round phase. The other options - upward trend, downward trend, and trend range - are all valid trends that can be observed in trend lines.

Question 18

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

Accepted Answer

The multistage dividend discount model includes two-stage models, H models, and three-stage models. There is no such thing as Y models.

Question 19

Which of the following depicts a bullish trend in the stock market?

Accepted Answer

The answer of Which of the following depicts a bullish...

Question 20

In which of the following condition an investment is considered desirable?

Accepted Answer

The answer of In which of the following condition an...

Exam 2: Certified Trust and Financial Advisor