CTFA Cannon Study Guide with Complete Solutions.
Diversification correct answers Most effective way to reduce risk in a portfolio
Common Stockholders correct answers Who benefits the most in a highly leveraged company
during periods of rising profits
Federal level ONLY. EXEMPT from State and Local level. correct answers What level are
Treasury Securities taxed at?
Municipal Bonds correct answers What can Pooled Income Funds NOT invest in
Bonds correct answers A widow, 75 years old, with no heirs wants stable income with little risk
should have a portfolio constructed mostly of what?
Common Stock correct answers What has provided the highest return over the past 50 years
Growth Stocks correct answers Exhibit high PE Ratios, Low Dividend Yields, high price
volatility
Food, beverage, toiletries correct answers Defensive stocks include
The companies Board of Directors correct answers Who determines and declares a companies
dividends
Corporate Bonds correct answers What pays a high yield compared to Treasury or Agency
Bonds?
appreciating; lower correct answers When exchange rates of foreign currencies increases it
means the foreign currency is _____________and the cost of US made goods in that country will
be _____________
Money-Market Funds correct answers Possesses HIGH liquidity and HIGH marketability VERY
low risk investment option?
Gold and Real Estate correct answers What is a good inflation hedge in a portfolio
preferred stock correct answers stock that entitles the holder to a fixed dividend, whose dividend
payment takes priority over that of common-stock dividends. No voting rights.
, systemic risk correct answers Type of Risk that CANNOT be diversified away
Debt Coverage correct answers A corporate bonds safety is best measured by its
Time correct answers What is the single most important variable in deciding on a risk level?
Sell; Raise correct answers When the Federal Reserve Board (FRB) CONTRACTS the money
supply it would _____________ securities and _____________ reserves.
Cumulative Preferred Stock correct answers What kind of stock is entitled to dividends in
arrears?
Coupon rate correct answers Yield to maturity for a bond selling at a DISCOUNT is higher than
its _____________
Government National Mortgage Association (GNMA) (Ginnie Mae Pass Through) correct
answers _____________________securities earn income from the interest and principal
payments made on mortgages by mortgage holders. This type of security is backed by the full
faith and credit of the United States government.
GNMA pass-through certificates correct answers Bonds pay interest semi-annually
except____________
Fixed Annuities correct answers _________________ provide a guaranteed income for life
500 correct answers If you own 250 share of a stock and then it has a 2:1 split how many share
do you now own?
automobiles, machine tools, steel producer correct answers Cyclical Stocks include...?
Cyclical Stocks correct answers A stock that's price is affected by macroeconomic changes,
where its returns follow the cycles of an economy. Usually have higher volatility and are
expected to produce higher returns during periods of economic strength.
Foreign Securities correct answers What presents HIGH liquidity risk, HIGH sovereign risk, and
HIGH diversification
Bid Price correct answers The lowest price on a stock acceptable to a prospective seller.
The income tax brackets of the remainderman correct answers When choosing FIXED INCOME
investments for a portfolio what is the least important factor?
Diversification correct answers Most effective way to reduce risk in a portfolio
Common Stockholders correct answers Who benefits the most in a highly leveraged company
during periods of rising profits
Federal level ONLY. EXEMPT from State and Local level. correct answers What level are
Treasury Securities taxed at?
Municipal Bonds correct answers What can Pooled Income Funds NOT invest in
Bonds correct answers A widow, 75 years old, with no heirs wants stable income with little risk
should have a portfolio constructed mostly of what?
Common Stock correct answers What has provided the highest return over the past 50 years
Growth Stocks correct answers Exhibit high PE Ratios, Low Dividend Yields, high price
volatility
Food, beverage, toiletries correct answers Defensive stocks include
The companies Board of Directors correct answers Who determines and declares a companies
dividends
Corporate Bonds correct answers What pays a high yield compared to Treasury or Agency
Bonds?
appreciating; lower correct answers When exchange rates of foreign currencies increases it
means the foreign currency is _____________and the cost of US made goods in that country will
be _____________
Money-Market Funds correct answers Possesses HIGH liquidity and HIGH marketability VERY
low risk investment option?
Gold and Real Estate correct answers What is a good inflation hedge in a portfolio
preferred stock correct answers stock that entitles the holder to a fixed dividend, whose dividend
payment takes priority over that of common-stock dividends. No voting rights.
, systemic risk correct answers Type of Risk that CANNOT be diversified away
Debt Coverage correct answers A corporate bonds safety is best measured by its
Time correct answers What is the single most important variable in deciding on a risk level?
Sell; Raise correct answers When the Federal Reserve Board (FRB) CONTRACTS the money
supply it would _____________ securities and _____________ reserves.
Cumulative Preferred Stock correct answers What kind of stock is entitled to dividends in
arrears?
Coupon rate correct answers Yield to maturity for a bond selling at a DISCOUNT is higher than
its _____________
Government National Mortgage Association (GNMA) (Ginnie Mae Pass Through) correct
answers _____________________securities earn income from the interest and principal
payments made on mortgages by mortgage holders. This type of security is backed by the full
faith and credit of the United States government.
GNMA pass-through certificates correct answers Bonds pay interest semi-annually
except____________
Fixed Annuities correct answers _________________ provide a guaranteed income for life
500 correct answers If you own 250 share of a stock and then it has a 2:1 split how many share
do you now own?
automobiles, machine tools, steel producer correct answers Cyclical Stocks include...?
Cyclical Stocks correct answers A stock that's price is affected by macroeconomic changes,
where its returns follow the cycles of an economy. Usually have higher volatility and are
expected to produce higher returns during periods of economic strength.
Foreign Securities correct answers What presents HIGH liquidity risk, HIGH sovereign risk, and
HIGH diversification
Bid Price correct answers The lowest price on a stock acceptable to a prospective seller.
The income tax brackets of the remainderman correct answers When choosing FIXED INCOME
investments for a portfolio what is the least important factor?
