Regulators often seek public consultation prior to the implementation of new regulations in
order to:
A ensure the new rules are favorable to those likely to be affected
B educate consumers and service providers on the new rules
C improve the final rules by undertaking a cost-benefit analysis
ANSWER
C
According to fundamental ethical and professional principles applicable to the investment
industry, which group should have its interests ranked first?
A Clients
B Employers
C Co-workers
ANSWER
A
The feature of a well-functioning investment industry that gives investors the ability to
quickly buy and sell a significant amount of an investment without having a material impact
on the price is described as:
A liquidity
B competitive markets
C risk transfer
ANSWER
A
1
,A financial advisory firm that implements internal policies regarding information barriers,
suitability standards, and restrictions on self-dealing is addressing issues related to which of
the following types of regulation?
A Sales practices rules
B Trading rules
C Disclosure rules
ANSWER
A
The best financial statement to use to find information about what a company owns and
owes others is called the:
A income statement
B balance sheet
C cash flow statement
ANSWER
B
If two variables do not have a strong (linear) relationship, the correlation coefficient be-
tween the two variables will be closest to:
A0
B -1
C +1
ANSWER
A
In contrast to forward contracts, futures contracts:
A trade on organized exchanges
B have contract sizes tailored to investor needs
C have negotiable expiration dates
2
,ANSWER
A
Which type of private equity strategy is most likely used to finance a start-up company?
A Growth equity
B Buyout
C Venture capital
ANSWER
C
In commercial real estate investment, the amount derived from discounting future cash
flows of lease and rental payments plus capital appreciation represents the value of the:
A asset
B equity
C liability
ANSWER
A
A form of pension plan in which the participant has some ability to determine how pension
contributions are invested is described as a(n):
A defined contribution plan
B endowment plan
C defined benefit plan
ANSWER
A
The type of bank that is exclusively owned by its members is a:
A savings and loan bank
3
, B commercial bank
C mutual bank
ANSWER
C
An investor attempting to replicate a price-weighted index would hold an equal:
A percentage of outstanding shares of each security in the index
B amount invested in each security in the index
C number of units (shares) of each security in the index
ANSWER
C
From the standpoint of taxes, investors will benefit from:
A deferring taxes to the future if tax rates will be higher in the future
B realizing gains via stock repurchases as opposed to receiving the same gains as dividends
C selling appreciated shares to meet cash needs instead of borrowing against them
ANSWER
B
If a decrease in the selling price of a company's only product results in an increase in the
company's total revenue, the demand for the company's product is:
A elastic
B unit-elastic
C inelastic
ANSWER
A
Which of the following actions taken by a central bank is expansionary?
4
order to:
A ensure the new rules are favorable to those likely to be affected
B educate consumers and service providers on the new rules
C improve the final rules by undertaking a cost-benefit analysis
ANSWER
C
According to fundamental ethical and professional principles applicable to the investment
industry, which group should have its interests ranked first?
A Clients
B Employers
C Co-workers
ANSWER
A
The feature of a well-functioning investment industry that gives investors the ability to
quickly buy and sell a significant amount of an investment without having a material impact
on the price is described as:
A liquidity
B competitive markets
C risk transfer
ANSWER
A
1
,A financial advisory firm that implements internal policies regarding information barriers,
suitability standards, and restrictions on self-dealing is addressing issues related to which of
the following types of regulation?
A Sales practices rules
B Trading rules
C Disclosure rules
ANSWER
A
The best financial statement to use to find information about what a company owns and
owes others is called the:
A income statement
B balance sheet
C cash flow statement
ANSWER
B
If two variables do not have a strong (linear) relationship, the correlation coefficient be-
tween the two variables will be closest to:
A0
B -1
C +1
ANSWER
A
In contrast to forward contracts, futures contracts:
A trade on organized exchanges
B have contract sizes tailored to investor needs
C have negotiable expiration dates
2
,ANSWER
A
Which type of private equity strategy is most likely used to finance a start-up company?
A Growth equity
B Buyout
C Venture capital
ANSWER
C
In commercial real estate investment, the amount derived from discounting future cash
flows of lease and rental payments plus capital appreciation represents the value of the:
A asset
B equity
C liability
ANSWER
A
A form of pension plan in which the participant has some ability to determine how pension
contributions are invested is described as a(n):
A defined contribution plan
B endowment plan
C defined benefit plan
ANSWER
A
The type of bank that is exclusively owned by its members is a:
A savings and loan bank
3
, B commercial bank
C mutual bank
ANSWER
C
An investor attempting to replicate a price-weighted index would hold an equal:
A percentage of outstanding shares of each security in the index
B amount invested in each security in the index
C number of units (shares) of each security in the index
ANSWER
C
From the standpoint of taxes, investors will benefit from:
A deferring taxes to the future if tax rates will be higher in the future
B realizing gains via stock repurchases as opposed to receiving the same gains as dividends
C selling appreciated shares to meet cash needs instead of borrowing against them
ANSWER
B
If a decrease in the selling price of a company's only product results in an increase in the
company's total revenue, the demand for the company's product is:
A elastic
B unit-elastic
C inelastic
ANSWER
A
Which of the following actions taken by a central bank is expansionary?
4
