CRPC MODULE 2 EXAM WITH QUESTIONS AND VERIFIED ANSWERS WITH
RATIONALE |ALREADY GRADED A+
Fund JKL has a mean return of 8% and a standard deviation of 12, and its returns are evenly
distributed.
This would mean that 68% of the time its returns would fall between
a. -4% and +20%
b. +4% and +20%
c. -8% and +8%
d. -16% and +32% - (ANSWER)a. -4% and +20%
#$
Assuming the market is currently returning 12% and the beta of your stock is .8.
%
What percentage return can you expect on your stock? ^
&*
a. 2.4% ()_
b. 8.0% +
c. 9.6%
d. 14.4% - (ANSWER)c. 9.6%
Jezebel owns four stocks in various industries. She has come to you to assess the risk she
is taking.
You inform her that her portfolio is subject to which one of the following types of risk, and
why?
a. purchasing power risk, because stocks fluctuate with inflation.
b. systematic risk, because the stocks she owns are in various industries.
c. political risk, since companies are subject to the laws of the countries in which they
operate
d. unsystematic risk, because she owns only four stocks. - (ANSWER)d. unsystematic risk,
because she owns only four stocks.
Which one of the following statements is correct?
a. Reinvestment, exchange rate, and liquidity risk are examples of systematic risk.
b. Default, purchasing power, and political risk are examples of nondiversifiable risk.
c. A company without debt will have no financial risk, but will have business risk, which is a
type of unsystematic risk.
d. Default, call, and liquidity risk are unique to bonds and not applicable to stocks. -
(ANSWER)c. A company without debt will have no financial risk, but will have business risk,
which is a type of unsystematic risk.
Beta is a measure of a stock's
, CRPC MODULE 2 EXAM WITH QUESTIONS AND VERIFIED ANSWERS WITH
RATIONALE |ALREADY GRADED A+
a. range of returns
b. total risk
c. variability
d. volatility - (ANSWER)d. volatility
Hector has been investing for years, and has approximately three quarters of his portfolio
invested in stock index and bond index funds, which he rebalances periodically. He has the
remainder of his portfolio invested in oil and health care stocks, which he believes provide
above-average price appreciation potential over the next few years.
#$
His style of asset allocation would be best described as
%
a. strategic ^
b. tactical &*
c. dynamic ()_
d. core/satellite - (ANSWER)d. core/satellite +
An investor has a 6%, $10,000 par value bond that matures in 15 years. The yield to
maturity on similar bonds currently is 5.5%.
What is the price of this bond?
a. $1,050.62
b. $5,779.16
c. $9,509.99
d. $10, 506.23 - (ANSWER)d. $10, 506.23
Rex owns a corporate bond that currently sells for $1,090. The coupon rate is 9%, and the
bond matures in 23 years. The bond is callable in eight years at $1,020.
What is the yield to call of this bond?
a. 6.84%
b. 7.66%
c. 7.93%
d. 8.13% - (ANSWER)b. 7.66%
What is the purpose of an investment policy? - (ANSWER)1. To provide a foundation of
goals, time horizons, and constraints on which the client portfolio is constructed.
2. Provide a basis for review, performance evaluation, and adaptation of changing
conditions.
What elements should an Investment Policy contain? - (ANSWER)1. Clear statement of
client's investment goals.
RATIONALE |ALREADY GRADED A+
Fund JKL has a mean return of 8% and a standard deviation of 12, and its returns are evenly
distributed.
This would mean that 68% of the time its returns would fall between
a. -4% and +20%
b. +4% and +20%
c. -8% and +8%
d. -16% and +32% - (ANSWER)a. -4% and +20%
#$
Assuming the market is currently returning 12% and the beta of your stock is .8.
%
What percentage return can you expect on your stock? ^
&*
a. 2.4% ()_
b. 8.0% +
c. 9.6%
d. 14.4% - (ANSWER)c. 9.6%
Jezebel owns four stocks in various industries. She has come to you to assess the risk she
is taking.
You inform her that her portfolio is subject to which one of the following types of risk, and
why?
a. purchasing power risk, because stocks fluctuate with inflation.
b. systematic risk, because the stocks she owns are in various industries.
c. political risk, since companies are subject to the laws of the countries in which they
operate
d. unsystematic risk, because she owns only four stocks. - (ANSWER)d. unsystematic risk,
because she owns only four stocks.
Which one of the following statements is correct?
a. Reinvestment, exchange rate, and liquidity risk are examples of systematic risk.
b. Default, purchasing power, and political risk are examples of nondiversifiable risk.
c. A company without debt will have no financial risk, but will have business risk, which is a
type of unsystematic risk.
d. Default, call, and liquidity risk are unique to bonds and not applicable to stocks. -
(ANSWER)c. A company without debt will have no financial risk, but will have business risk,
which is a type of unsystematic risk.
Beta is a measure of a stock's
, CRPC MODULE 2 EXAM WITH QUESTIONS AND VERIFIED ANSWERS WITH
RATIONALE |ALREADY GRADED A+
a. range of returns
b. total risk
c. variability
d. volatility - (ANSWER)d. volatility
Hector has been investing for years, and has approximately three quarters of his portfolio
invested in stock index and bond index funds, which he rebalances periodically. He has the
remainder of his portfolio invested in oil and health care stocks, which he believes provide
above-average price appreciation potential over the next few years.
#$
His style of asset allocation would be best described as
%
a. strategic ^
b. tactical &*
c. dynamic ()_
d. core/satellite - (ANSWER)d. core/satellite +
An investor has a 6%, $10,000 par value bond that matures in 15 years. The yield to
maturity on similar bonds currently is 5.5%.
What is the price of this bond?
a. $1,050.62
b. $5,779.16
c. $9,509.99
d. $10, 506.23 - (ANSWER)d. $10, 506.23
Rex owns a corporate bond that currently sells for $1,090. The coupon rate is 9%, and the
bond matures in 23 years. The bond is callable in eight years at $1,020.
What is the yield to call of this bond?
a. 6.84%
b. 7.66%
c. 7.93%
d. 8.13% - (ANSWER)b. 7.66%
What is the purpose of an investment policy? - (ANSWER)1. To provide a foundation of
goals, time horizons, and constraints on which the client portfolio is constructed.
2. Provide a basis for review, performance evaluation, and adaptation of changing
conditions.
What elements should an Investment Policy contain? - (ANSWER)1. Clear statement of
client's investment goals.
