QFA Investments - Sample Paper 4 Exam
Questions And Answers
Maturity transformation in relation to financial services is:
A. a method of diversifying investment risk.
B. turning short term deposits and savings into longer term loans.
C. a form of regulatory intervention.
D. a facility to allow the easy payment of bills - ANS B
turning short term deposits and savings into longer term loans.
The financial services market in Ireland enables providers to collect surplus funds as savings
and lend them at a margin to:
A. individuals only.
B. businesses only.
C. individuals and businesses only.
D. individuals, businesses, and the Government. - ANS D
individuals, businesses, and the Government.
Which one of the following is always structured as a financial co-operative?
A. A retail bank.
B. A credit union.
C. A MIFID investment firm.
D. A life assurance company. - ANS B
A credit union
Overdrafts are charged interest:
A. only when the overdraft limit has been exceeded.
B. when used.
C. if not used.
D. only when fully drawn - ANS B
when used.
Which one of the following markets is a regulated market for MiFID purposes?
,A. Irish Stock Exchange Global Exchange.
B. Irish Stock Exchange Enterprise Securities.
C. Irish Stock Exchange Main Securities.
D. Irish Stock Exchange Bond Swap. - ANS C
Irish Stock Exchange Main Securities.
The control of interest rates is which type of economic policy?
A. Fiscal.
B. Capital.
C. National.
D. Monetary - ANS D
Monetary
Which measurement of the Irish economy includes the value of goods and services produced by
Irish firms operating in foreign countries?
A. Foreign National Product (FNP).
B. Gross Domestic Product (GDP).
C. Gross National Product (GNP).
D. Net National Growth (NNG) - ANS C
Gross National Product (GNP).
Deflation can be caused by:
(i) an increase in sales tax.
(ii) a reduction in producers mark up %.
(iii) a decrease in the level of demand for goods and services
A. (i) only.
B. (iii) only.
C. (i) and (ii) only.
D. (ii) and (iii) only - ANS D
(ii) and (iii) only
Joan works in the tourist sector of the economy. She is laid off each October until the following
March. When Joan becomes unemployed in October, this is an example of WHICH type of
unemployment?
A. Discretionary.
B. Frictional.
C. Seasonal.
D. Structural. - ANS C
Seasonal.
, When compared to equities, property as an investment is expected to:
A. offer a lower return.
B. offer a higher return.
C. offer lower protection against inflation.
D. have a significantly lower level of liquidity. - ANS D
have a significantly lower level of liquidity.
Which one of the following investment types has shown the HIGHEST level of volatility of
returns over the longer term?
A. Deposits.
B. Corporate bonds.
C. Equities.
D. Government bonds - ANS C
Equities.
The standard deviation of investment returns is a way to measure:
A. correlation of returns.
B. investment risk.
C. diversification
D. investor confidence - ANS B
investment risk.
Another term used to describe investment risk is:
A. volatility.
B. correlation.
C. concentration.
D. maximisation - ANS A
volatility.
Which of the following funds provides diversification between the main asset classes?
A. A managed fund investing in a mix of shares, bonds and property.
B. An equity fund investing in a mix of European and international equities.
C. A bond fund investing in a mix of bonds issued by large international companies.
D. A deposit fund, which invests in deposits with a wide range of banks - ANS A
A managed fund investing in a mix of shares, bonds and property.
If the average gross dividend yield offered by equities is currently 3% per annum and the gross
guaranteed annual yield offered by long term Government bonds (assumed to be risk free) is
2% per annum, the yield gap at this time is:
Questions And Answers
Maturity transformation in relation to financial services is:
A. a method of diversifying investment risk.
B. turning short term deposits and savings into longer term loans.
C. a form of regulatory intervention.
D. a facility to allow the easy payment of bills - ANS B
turning short term deposits and savings into longer term loans.
The financial services market in Ireland enables providers to collect surplus funds as savings
and lend them at a margin to:
A. individuals only.
B. businesses only.
C. individuals and businesses only.
D. individuals, businesses, and the Government. - ANS D
individuals, businesses, and the Government.
Which one of the following is always structured as a financial co-operative?
A. A retail bank.
B. A credit union.
C. A MIFID investment firm.
D. A life assurance company. - ANS B
A credit union
Overdrafts are charged interest:
A. only when the overdraft limit has been exceeded.
B. when used.
C. if not used.
D. only when fully drawn - ANS B
when used.
Which one of the following markets is a regulated market for MiFID purposes?
,A. Irish Stock Exchange Global Exchange.
B. Irish Stock Exchange Enterprise Securities.
C. Irish Stock Exchange Main Securities.
D. Irish Stock Exchange Bond Swap. - ANS C
Irish Stock Exchange Main Securities.
The control of interest rates is which type of economic policy?
A. Fiscal.
B. Capital.
C. National.
D. Monetary - ANS D
Monetary
Which measurement of the Irish economy includes the value of goods and services produced by
Irish firms operating in foreign countries?
A. Foreign National Product (FNP).
B. Gross Domestic Product (GDP).
C. Gross National Product (GNP).
D. Net National Growth (NNG) - ANS C
Gross National Product (GNP).
Deflation can be caused by:
(i) an increase in sales tax.
(ii) a reduction in producers mark up %.
(iii) a decrease in the level of demand for goods and services
A. (i) only.
B. (iii) only.
C. (i) and (ii) only.
D. (ii) and (iii) only - ANS D
(ii) and (iii) only
Joan works in the tourist sector of the economy. She is laid off each October until the following
March. When Joan becomes unemployed in October, this is an example of WHICH type of
unemployment?
A. Discretionary.
B. Frictional.
C. Seasonal.
D. Structural. - ANS C
Seasonal.
, When compared to equities, property as an investment is expected to:
A. offer a lower return.
B. offer a higher return.
C. offer lower protection against inflation.
D. have a significantly lower level of liquidity. - ANS D
have a significantly lower level of liquidity.
Which one of the following investment types has shown the HIGHEST level of volatility of
returns over the longer term?
A. Deposits.
B. Corporate bonds.
C. Equities.
D. Government bonds - ANS C
Equities.
The standard deviation of investment returns is a way to measure:
A. correlation of returns.
B. investment risk.
C. diversification
D. investor confidence - ANS B
investment risk.
Another term used to describe investment risk is:
A. volatility.
B. correlation.
C. concentration.
D. maximisation - ANS A
volatility.
Which of the following funds provides diversification between the main asset classes?
A. A managed fund investing in a mix of shares, bonds and property.
B. An equity fund investing in a mix of European and international equities.
C. A bond fund investing in a mix of bonds issued by large international companies.
D. A deposit fund, which invests in deposits with a wide range of banks - ANS A
A managed fund investing in a mix of shares, bonds and property.
If the average gross dividend yield offered by equities is currently 3% per annum and the gross
guaranteed annual yield offered by long term Government bonds (assumed to be risk free) is
2% per annum, the yield gap at this time is:
