Mastery exam 1 questions with complete
solutions
Which risk is unique to investing internationally in less-developed countries?
A Political risk
B Market risk
C Marketability risk
D Default risk
A political risk
Interest earned on corporate bonds is:
triple taxed
When compared to plain vanilla CMO tranches, Planned Amortization Classes have:
lower prepayment risk
Plain vanilla CMO tranches are subject to both prepayment and extension risks. PACs protect
against prepayment risk, by shifting this risk to an associated Companion tranche. Thus, PACs
have lower prepayment risk than plain vanilla CMO tranches.
The regular hours of operation of the NASDAQ system are:
9:30-400pm ET
All of the following pay dividends EXCEPT:
A Preferred Stock
B ADRs
C Rights
D Real Estate Investment Trust Shares
C Rights
, Preferred stock pays a fixed dividend rate; American Depositary Receipt holders receive
dividends; and Real Estate Investment Trusts make dividend distributions to shareholders.
Holders of warrants and rights do not receive dividends on these instruments.
Which of the following actions must be taken if a municipality wishes to raise its debt limit?
A Public referendum
B Court order
C Judicial edict
D Tax assessment
A Public referendum
If a municipality wishes to raise its debt limit, the voters must approve via a public referendum.
In effect, the voters are approving an increase in their taxes when they approve such a measure.
Index ETFs are:
I passively managed
II actively managed
III negotiable
IV redeemable
passively managed and negotiable
An income fund would likely invest in all of the following securities EXCEPT:
A common stocks
B preferred stocks
C corporate bonds.
D government bonds
A common stocks
Income funds invest primarily in bonds and preferred stocks for a high level of current income.
Common stocks are not typically a choice for investment because the dividend yields are
comparatively low.
A municipality has a tax rate of 8 mills. A piece of real property in the municipality is assessed at
$100,000 and has a fair market value of $200,000. The annual tax liability on the property is:
solutions
Which risk is unique to investing internationally in less-developed countries?
A Political risk
B Market risk
C Marketability risk
D Default risk
A political risk
Interest earned on corporate bonds is:
triple taxed
When compared to plain vanilla CMO tranches, Planned Amortization Classes have:
lower prepayment risk
Plain vanilla CMO tranches are subject to both prepayment and extension risks. PACs protect
against prepayment risk, by shifting this risk to an associated Companion tranche. Thus, PACs
have lower prepayment risk than plain vanilla CMO tranches.
The regular hours of operation of the NASDAQ system are:
9:30-400pm ET
All of the following pay dividends EXCEPT:
A Preferred Stock
B ADRs
C Rights
D Real Estate Investment Trust Shares
C Rights
, Preferred stock pays a fixed dividend rate; American Depositary Receipt holders receive
dividends; and Real Estate Investment Trusts make dividend distributions to shareholders.
Holders of warrants and rights do not receive dividends on these instruments.
Which of the following actions must be taken if a municipality wishes to raise its debt limit?
A Public referendum
B Court order
C Judicial edict
D Tax assessment
A Public referendum
If a municipality wishes to raise its debt limit, the voters must approve via a public referendum.
In effect, the voters are approving an increase in their taxes when they approve such a measure.
Index ETFs are:
I passively managed
II actively managed
III negotiable
IV redeemable
passively managed and negotiable
An income fund would likely invest in all of the following securities EXCEPT:
A common stocks
B preferred stocks
C corporate bonds.
D government bonds
A common stocks
Income funds invest primarily in bonds and preferred stocks for a high level of current income.
Common stocks are not typically a choice for investment because the dividend yields are
comparatively low.
A municipality has a tax rate of 8 mills. A piece of real property in the municipality is assessed at
$100,000 and has a fair market value of $200,000. The annual tax liability on the property is:
