CEBS 2 PRACTICE EXAM QUESTIONS WITH CORREC
ANSWERS | RATED A+
1. A plan that has benefits based on final average pay and credits a percentage
to the participant to receive each year is a: pension equity plan
2. The calculation that plots the portfolios with the greatest and lowest return
is called the: eflcient frontier
3. an investment company that has a set amount of shares is called a: closed-end
fund
4. Under the PPA, a benefit statement must be provided: annually to a participant in a
defined contribution where the employer directs the investments
5. A 10% penalty tax is applied to early distributions prior to age 59 1/2. This is
applicable to which of the following situations?: A distribution of $50,000 for the purchase of
a first home
6. When there has been a plan amendment, which of the following commu-
nication pieces are required to be provided to participants?: Summary of Material
Modification(SMM)
7. A core part of the selection process for a vendor in a retirement plan is the
development of teh: Request for Proposal (RFP)
8. The calculation that shows the impact of the changing purchase power of the
investment is called: inflation-adjusted return
9. Over a 90-year period, the highest annual return was from investments
in:: small company stocks.
10. The amount of premium costs that a participant must include as taxable
income is called: PS-58 Costs
11. An example of a fee-sharing arrangement is a: soft-dollar arrangement
12. A fund that seeks to find stocks that are expected to have a higher-than-av-
erage increase in value due to strong earnings and revenue potential is called
a: growth fund
13. Market risk refers to: the overall direction of stocks in general that will impact a particular stock
1/5
, 14. The concept that the market price reflects all information regarding a stock
is called: eflcient market hypothesis
15. The increase in expected return on a stock over a treasury bill is known as: the
risk premium
2/5
ANSWERS | RATED A+
1. A plan that has benefits based on final average pay and credits a percentage
to the participant to receive each year is a: pension equity plan
2. The calculation that plots the portfolios with the greatest and lowest return
is called the: eflcient frontier
3. an investment company that has a set amount of shares is called a: closed-end
fund
4. Under the PPA, a benefit statement must be provided: annually to a participant in a
defined contribution where the employer directs the investments
5. A 10% penalty tax is applied to early distributions prior to age 59 1/2. This is
applicable to which of the following situations?: A distribution of $50,000 for the purchase of
a first home
6. When there has been a plan amendment, which of the following commu-
nication pieces are required to be provided to participants?: Summary of Material
Modification(SMM)
7. A core part of the selection process for a vendor in a retirement plan is the
development of teh: Request for Proposal (RFP)
8. The calculation that shows the impact of the changing purchase power of the
investment is called: inflation-adjusted return
9. Over a 90-year period, the highest annual return was from investments
in:: small company stocks.
10. The amount of premium costs that a participant must include as taxable
income is called: PS-58 Costs
11. An example of a fee-sharing arrangement is a: soft-dollar arrangement
12. A fund that seeks to find stocks that are expected to have a higher-than-av-
erage increase in value due to strong earnings and revenue potential is called
a: growth fund
13. Market risk refers to: the overall direction of stocks in general that will impact a particular stock
1/5
, 14. The concept that the market price reflects all information regarding a stock
is called: eflcient market hypothesis
15. The increase in expected return on a stock over a treasury bill is known as: the
risk premium
2/5
