FPQP Module 6 Questions with Complete
Solutions
Which one of these would be identified as a threat when developing a SWOT analysis for a
client? Inflation may be increasing in the coming years.
Which of the following is NOT one of the three main investment mutual fund objectives?
Asset allocation
Which of the following statements about bond pricing is CORRECT? If a bond is issued
when interest rates are at 8%, and interest rates decrease to 7%, the bond would then be selling
at a premium
Which of these is an advantage of investing in mutual funds? Diversification
Nefeli has earned 9% on her five-year investment to buy a car. She is in a 22% federal and a 3%
state marginal income tax bracket. The inflation rate has averaged 2.4% over the past five years.
What is her tax- and inflation-adjusted return? 4.25%
0.09 * (1-0.25) = 0.0675
, (0.0675 + 1) / 1.024) - 1 = 4.25%
Fund T has an average return of 7.5% and a beta of 1.1. Fund W has an average return of 6.8%
and a beta of 0.9. Which fund should you purchase and why? Fund W because it has a
higher risk-adjusted return.
Which of the following statements concerning standard deviation is CORRECT? Standard
deviation is a measure of the dispersion of returns around the mean.
Which of these statements about no-load mutual funds is CORRECT? There are numerous
no-load funds with various investment styles and objectives.
Which of the following statements concerning the buy-and-hold investment strategy is
CORRECT? This strategy of buying and holding investments minimizes transaction costs in
the buying and selling of securities.
For which of the following investors would U.S. Treasury bills be most appropriate? Jack
and Krissy, ages 65 and 63, conservative risk tolerance, need for liquidity and safety of principal
Solutions
Which one of these would be identified as a threat when developing a SWOT analysis for a
client? Inflation may be increasing in the coming years.
Which of the following is NOT one of the three main investment mutual fund objectives?
Asset allocation
Which of the following statements about bond pricing is CORRECT? If a bond is issued
when interest rates are at 8%, and interest rates decrease to 7%, the bond would then be selling
at a premium
Which of these is an advantage of investing in mutual funds? Diversification
Nefeli has earned 9% on her five-year investment to buy a car. She is in a 22% federal and a 3%
state marginal income tax bracket. The inflation rate has averaged 2.4% over the past five years.
What is her tax- and inflation-adjusted return? 4.25%
0.09 * (1-0.25) = 0.0675
, (0.0675 + 1) / 1.024) - 1 = 4.25%
Fund T has an average return of 7.5% and a beta of 1.1. Fund W has an average return of 6.8%
and a beta of 0.9. Which fund should you purchase and why? Fund W because it has a
higher risk-adjusted return.
Which of the following statements concerning standard deviation is CORRECT? Standard
deviation is a measure of the dispersion of returns around the mean.
Which of these statements about no-load mutual funds is CORRECT? There are numerous
no-load funds with various investment styles and objectives.
Which of the following statements concerning the buy-and-hold investment strategy is
CORRECT? This strategy of buying and holding investments minimizes transaction costs in
the buying and selling of securities.
For which of the following investors would U.S. Treasury bills be most appropriate? Jack
and Krissy, ages 65 and 63, conservative risk tolerance, need for liquidity and safety of principal
