Quiz_________________?
"four Cs" of credit analysis -
Answer✅
capacity, collateral, covenants, and character
Quiz_________________?
6 Components of Code of Ethics -
Answer✅
APUMPP
- Act with integrity, competence, diligence, respect and in an ethical manner
- Place the integrity of the investment profession and interest of clients above their own
- Use reasonable care and exercise independent professional judgement
- Practice and encourage others to practice in a professional manner
- Promote the integrity and viability of capital markets
- Maintain and improve professional competence
1
, Quiz_________________?
7 Standards of Professional Conduct -
Answer✅
PIDDCR
- Professionalism
- Integrity of Capital Markets
- Duties to Clients
- Duties to Employers
- Conflicts of Interest
- Responsibilities of a CFA Institute Member or CFA Candidate
Quiz_________________?
A firm is likely to have more pricing power if... -
Answer✅
CBUS (Charlie's Unique Butt Songs)
- Concentration
- Undercapacity
- Barriers to entry
- Stable market shares
Quiz_________________?
According to capital market theory, any portfolio that plots on the CML... -
Answer✅
Will also plot on the SML
2
, Quiz_________________?
Accounting for fixed-coupon bond liabilities -
Answer✅
IFRS: Proceeds - Issuance Costs
US GAAP: Proceeds (issuance costs amortized on B/S as asset)
YTM when issued will determine interest expense for each period
Quiz_________________?
Accounting for Investment in Securities -
Answer✅
Trading Securities:
- Intended to sell in short term; marked to market each period; unrealized gains/losses
reported on I/S
Available for Sale:
- May sell prior to maturity; marked to market each period; unrealized gains/losses reported
on S/E (OCI)
Held to Maturity:
- Not to be sold; B/S value is amortized cost (unless impaired, then market value)
Quiz_________________?
Accrued bond interest types -
Answer✅
Gov't: actual/actual
3
, Corporate: 30/360
Quiz_________________?
Addition Rule of Probability -
Answer✅
ADDITION: P(A or B) = P(A) + P(B) - P(AB)
Quiz_________________?
Additional Compensation Agreements - Std. IV: Duties to Employers -
Answer✅
Offers that are contingent on member or candidate's future action or performance MAY
CREATE a conflict with employer's interests. Require employer's WRITTEN consent in
advance of accepting (may create conflict with other client's interests)
Compensation that doesn't conflict with employer's interests is OK (if outside employment
takes a lot of time, should discuss with employer)
Quiz_________________?
Agency Residential Mortgage Backed Securities (RMBS) -
Answer✅
Issued by government agencies (GNMA) or government sponsored enterprises (FNMA,
FHLMC)
Mortgages must be conforming such as max loan-to-value, insurance, documentation, etc.
Agency RMBS are pass-through
4
"four Cs" of credit analysis -
Answer✅
capacity, collateral, covenants, and character
Quiz_________________?
6 Components of Code of Ethics -
Answer✅
APUMPP
- Act with integrity, competence, diligence, respect and in an ethical manner
- Place the integrity of the investment profession and interest of clients above their own
- Use reasonable care and exercise independent professional judgement
- Practice and encourage others to practice in a professional manner
- Promote the integrity and viability of capital markets
- Maintain and improve professional competence
1
, Quiz_________________?
7 Standards of Professional Conduct -
Answer✅
PIDDCR
- Professionalism
- Integrity of Capital Markets
- Duties to Clients
- Duties to Employers
- Conflicts of Interest
- Responsibilities of a CFA Institute Member or CFA Candidate
Quiz_________________?
A firm is likely to have more pricing power if... -
Answer✅
CBUS (Charlie's Unique Butt Songs)
- Concentration
- Undercapacity
- Barriers to entry
- Stable market shares
Quiz_________________?
According to capital market theory, any portfolio that plots on the CML... -
Answer✅
Will also plot on the SML
2
, Quiz_________________?
Accounting for fixed-coupon bond liabilities -
Answer✅
IFRS: Proceeds - Issuance Costs
US GAAP: Proceeds (issuance costs amortized on B/S as asset)
YTM when issued will determine interest expense for each period
Quiz_________________?
Accounting for Investment in Securities -
Answer✅
Trading Securities:
- Intended to sell in short term; marked to market each period; unrealized gains/losses
reported on I/S
Available for Sale:
- May sell prior to maturity; marked to market each period; unrealized gains/losses reported
on S/E (OCI)
Held to Maturity:
- Not to be sold; B/S value is amortized cost (unless impaired, then market value)
Quiz_________________?
Accrued bond interest types -
Answer✅
Gov't: actual/actual
3
, Corporate: 30/360
Quiz_________________?
Addition Rule of Probability -
Answer✅
ADDITION: P(A or B) = P(A) + P(B) - P(AB)
Quiz_________________?
Additional Compensation Agreements - Std. IV: Duties to Employers -
Answer✅
Offers that are contingent on member or candidate's future action or performance MAY
CREATE a conflict with employer's interests. Require employer's WRITTEN consent in
advance of accepting (may create conflict with other client's interests)
Compensation that doesn't conflict with employer's interests is OK (if outside employment
takes a lot of time, should discuss with employer)
Quiz_________________?
Agency Residential Mortgage Backed Securities (RMBS) -
Answer✅
Issued by government agencies (GNMA) or government sponsored enterprises (FNMA,
FHLMC)
Mortgages must be conforming such as max loan-to-value, insurance, documentation, etc.
Agency RMBS are pass-through
4
