Question 1
Which of these portfolio allocations below would you expect to show the least volatility
over the next year?
STOCK 50%/BOND 50%,
STOCK 30%/BOND 70%,
STOCK 10%/BOND 90%,
STOCK 0%/BOND 100%
CORRECT ANSWER
C. 10%/90%
Question 2
If the S&P goes up 5% what is the MOST LIKELY result for XYZ with a Beta of 1.5?
A. 3.33%
B. 3.5%
C. 6.5%
D. 7.5%
CORRECT ANSWER
D. 7.5%
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,Question 3
The method of computing long-term returns that takes into consideration time value of
money is
A. internal rate of return
B. after-tax return
C. real rate of return
D. risk-adjusted return
CORRECT ANSWER
A. internal rate of return
Question 4
An investor is looking at the past performance of a security over the past three years. In
year one, it returned 8%; year two 15%; year three 10%. The average return is 11%. This is
properly referred to as
A. arithmetic mean
B. geometric mean
C. IRR
D. median
CORRECT ANSWER
A. arithmetic mean
Question 5
Which of the following pairs offers the most diversification?
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,A. U.S. equity securities & foreign equity securities B. Municipal GO bonds & Treasuries
C. Large-cap & blue-chip
D. Corporate debentures & convertibles
CORRECT ANSWER
A. U.S. equity securities & foreign equity securities
Question 6
According to Efficient Market Hypothesis, information based on company financials and
economic factors is considered to be:
A. Weak
B. Semi-strong
C. Strong
D. Exceptional
CORRECT ANSWER
B. Semi-strong
Question 7
In modern portfolio theory, what is an efficient portfolio set?
A. efficient frontier
B. indifferent frontier
C. attainable set
D. feasible set
CORRECT ANSWER
A. efficient frontier
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, Question 8
Which two are most associated with a Treasury bond?
I Credit risk
II Liquidity risk
III Reinvestment risk
IV Interest rate risk
A. I & II
B. I & IV
C. II & III
D. III & IV
CORRECT ANSWER
D. III & IV
Question 9
When current interest rates are at 9%, you would expect a bond with a nominal yield of
8% to be:
A. at par
B. discount
C. premium
D. in danger of default
CORRECT ANSWER
B. discount
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Which of these portfolio allocations below would you expect to show the least volatility
over the next year?
STOCK 50%/BOND 50%,
STOCK 30%/BOND 70%,
STOCK 10%/BOND 90%,
STOCK 0%/BOND 100%
CORRECT ANSWER
C. 10%/90%
Question 2
If the S&P goes up 5% what is the MOST LIKELY result for XYZ with a Beta of 1.5?
A. 3.33%
B. 3.5%
C. 6.5%
D. 7.5%
CORRECT ANSWER
D. 7.5%
1
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,Question 3
The method of computing long-term returns that takes into consideration time value of
money is
A. internal rate of return
B. after-tax return
C. real rate of return
D. risk-adjusted return
CORRECT ANSWER
A. internal rate of return
Question 4
An investor is looking at the past performance of a security over the past three years. In
year one, it returned 8%; year two 15%; year three 10%. The average return is 11%. This is
properly referred to as
A. arithmetic mean
B. geometric mean
C. IRR
D. median
CORRECT ANSWER
A. arithmetic mean
Question 5
Which of the following pairs offers the most diversification?
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,A. U.S. equity securities & foreign equity securities B. Municipal GO bonds & Treasuries
C. Large-cap & blue-chip
D. Corporate debentures & convertibles
CORRECT ANSWER
A. U.S. equity securities & foreign equity securities
Question 6
According to Efficient Market Hypothesis, information based on company financials and
economic factors is considered to be:
A. Weak
B. Semi-strong
C. Strong
D. Exceptional
CORRECT ANSWER
B. Semi-strong
Question 7
In modern portfolio theory, what is an efficient portfolio set?
A. efficient frontier
B. indifferent frontier
C. attainable set
D. feasible set
CORRECT ANSWER
A. efficient frontier
3
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, Question 8
Which two are most associated with a Treasury bond?
I Credit risk
II Liquidity risk
III Reinvestment risk
IV Interest rate risk
A. I & II
B. I & IV
C. II & III
D. III & IV
CORRECT ANSWER
D. III & IV
Question 9
When current interest rates are at 9%, you would expect a bond with a nominal yield of
8% to be:
A. at par
B. discount
C. premium
D. in danger of default
CORRECT ANSWER
B. discount
4
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