o65 - 4

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If an analyst wishes to determine the degree to which leverage was being employed by a subject company she would most likely examine that issuer's:

Debt to equity ratio

Credit risk is commonly defined as:

Default Risk

Which of the following is NOT a leading economic indicator?

Duration of unemployment

Sale of an issue of common stock

Public Offering

increased audit by the IRS when reporting a DPP

Risk of Audit

A client approaches the IAR handling the advisory account with a request to find a preferred stock that will offer 6% income return. The IAR suggests a stock paying a $.28 quarterly dividend. That stock will meet the income objective if it has a current market price of:

$18.67

An individual owns assets worth $500K and has debts of $300K, what is the individuals net worth?

$200K

an organization or individual w/ Net worth >$1M or >$200K annual income the previous 2 years

Accredited Investors

the Common Stock of the YXZ Pharmaceutical Corporation, listed on the NYSE, is likely to be subject to: - Business Risk - Credit Risk - Liquidity Risk - Regulatory Risk

Business risk & Regulatory Risk

Under what circumstances will a dilution of equity occur?

Conversion of convertible bonds into common stocks.

As current interest rates go up, the market price of existing corporate bonds bearing lower interest rates will

decrease

A customer purchases 100 shares of SNP at $38. At the time of the purchase, the PE ration was 12. Approx. what are the earnings per share of SNP?

$3.20

An investment of $1000 made 10 years ago is now worth $4000. Using the Rule of 72, the approximate compounded annual rate of return is

14.4 %

Which of the following must be considered in evaluating the suitability of a DPP investment for a customer? - Risk Tolerance - Other holdings - Financial Situation - Age

All of them

Lowering the tax basis of an asset & then selling the asset for more that the tax basis & the excess is then subject to tax

Depreciation Recapture

The prospectus for a fund states that the minimum initial investment is $500,000, This is most likely what time of fund?

Hedge fund

The potential for an investor to be adversely affected by changes in investment or tax laws.

Legislative Risk

Which of the Industry's performance is least likely to track the business cycle?

Pharmaceuticals

Uncertainty resulting from the possibility that the value of an investment will be affected by a change in the law is known as

Legislative risk

risk associated with the inability to liquidate a security quickly and at a fair market price

Liquidity risk

A portfolio manager with a growth style would probably diversify by:

Placing a portion of the portfolio into high-yield bonds

All of the following actions will increase the Deficit in the U.S. balance of payments EXCEPT: - Americans buying Japanese cars - investments by US firms abroad - US Foreign Aid - Purchase by foreigners of US securities

Purchase of US securities

Which two are most associated with a Treasury Bond? - Credit risk - Liquidity risk - Reinvestment risk - Interest Rate risk

Reinvestment Risk & Interest Rate Risk

Amount that can be subtracted from a tax liability, such as an energy conservation/research and development; dollar for dollar

Tax Credit

You recently took a trip to Warsaw, Poland and when you received your credit card statement, you noticed that your vodka purchase for 100 polish Zlotys resulted in a $30 charge on your statement. Based on this exchange rate, each dollar was worth approx.

3.33 Zlotys

Among the Effects of a country devaluation its currency is that there will probably be: - A Credit to that nation's trade account balance - A debit to that nation's trade account balance - An increase in that nation's exports - An increase in that nations imports

A Credit to trade account balance & An increase in exports

Which of the following securities are the most interest-rate sensitive? - Utility Stocks - Growth Stocks - Preferred Stocks - Common Stocks

Utility Stocks & Preferred Stocks


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