QBANK QUESTIONS
Which of the following is not included in the calculation of a mutual fund's NAV per share?
Accrued sales charges
The Conference Board, a nongovernmental nonprofit organization, regularly publishes a list of economic indicators. Which of the following would be included in their list of leading indicators?
Average weekly initial claims for unemployment insurance
While reviewing nationwide industrial production figures, an analyst notices that inventories have been rising. From that information, one would gather that the economy is most likely in which phase of the business cycle?
Contraction
Regarding open-end investment companies, which of the following sales charges is based on the NAV per share?
Redemption fee (CDSC)
Which of the following is not included in fundamental analysis of a company?
The study of a company's historical stock prices and trading volume.
Among the effects of a country devaluating its currency is that there will probably be
a credit to that nation's trade account balance and an increase in that nation's exports
When a U.S. resident investor purchases foreign bonds,
appreciation of both the bonds and the foreign currency benefits the domestic investor
A REIT and a direct participation program are similar because they both
are operated by a centralized management
closed end companies
can be priced at a discount from NAV
Straddle
consists of a put and a call on the same stock with the same strike price and expiration date
If a country's current account shows a trade deficit, it is most likely that
imports are greater than exports.
Pricing of closed end investment company
priced by supply and demand
Investment companies must send financial reports to shareholders
semiannually
Partners with the United States in the creation of Brady bonds were
the International Monetary Fund (IMF) and the world bank
A money market mutual fund would be least likely to invest in
those with a maturity date not exceeding 397 days. Treasury notes are issued with maturity dates of 2-10 years.
A securities analyst's approach is to look at the overall economy and try to forecast which industry will outperform. Then, the analyst searches for those individual companies within that industry that appear to have the best expected return and add those to their recommended list. In so doing, this analyst is using the
top-down approach
If a client wishes to purchase a life insurance policy that doesn't invest in the market, but allows the holder to pay additional premium if desired, the recommendation is
universal life
Which of the following bonds would appreciate the most if interest rates fell?
30-year maturity, selling at a discount
The term "eurodollars" refers to
American dollars held by banks in other countries, especially in Europe
If the dollar weakens, which of the following statements is TRUE?
An increase in U.S. interest rates might strengthen the dollar.
Calvin has the following securities in his portfolio: ABC common stock, XYZ common stock, PQR mutual fund (domestic small cap), DEZ mutual fund (foreign small cap), 30-year Treasury bond, and 5-year Treasury note. Which of the following risks should not concern Calvin?
Default risk
Interest rates are rising. An analyst would be most likely to state that the business cycle is in which stage?
Expansion
Which of the following statements regarding a mutual fund that offers class A, B, and C shares are TRUE? I. Class A shares have a front-end sales charge and a low 12b-1 fee. II. Class B shares have a declining contingent-deferred sales charge and a high 12b-1 fee. III. Class C shares have a high 12b-1 fee and a level contingent-deferred sales charge. IV. Class B and C shares allow investors to put the shares back to the fund for their original purchase price for up to 1 year after purchase.
I, II, III
A client has purchased a nonqualified variable annuity from a commercial insurance company. Before the contract is annuitized, your client, currently age 60, withdraws some funds for personal purposes. What is the taxable consequence of this withdrawal to your client?
Ordinary income taxation on the earnings withdrawn until reaching the owner's cost basis
KPT, Inc., is preparing to report its net income for the past year. An increase in which of the following causes a decrease in the reported net income?
Tax rate and interest charged on bank loans
Which of the following best describes net present value?
The difference between the sum of the discounted cash flows that are expected from an investment and its initial cost
total assets
Total Liabilities + Stockholders Equity
Collateral securing a Brady bond
US treasury zero coupon bonds with a maturity corresponding to the maturity of the individual Brady bond
XYZ Aircraft Manufacturing Corporation, based in the United States, announces a multibillion dollar order for its new jumbo jet from Fly Airlines, a Japanese-based carrier. When the sale is completed, there will be
a credit to the current account of the United States
A securities analyst reviewing the financial statements of the XYZ Corporation observes that the company's total liabilities are in excess of its total assets. From this information, the analyst could conclude that XYZ has
a negative book value per share.
Under the Investment Company Act of 1940
a vote of the majority of outstanding shares may approve changing from an open-end to a closed-end company, changing the investment objectives of the fund, and deciding to cease to be an investment company.
In order to qualify as a REIT,
at least 75% of the assets must be invested in real-estate related assets, cash, and U.S. government securities
What investment offers the best long-term protection against inflation?
common stock
Which of the following might be used by an analyst to approximate a reasonable price for a common stock?
dividend discount model
Disadvantages to owning preferred stock
fixed return may not keep up with inflation regardless or corporate earnings, the dividend will not change, so there is no hope for increased income
A measurement of investment return that takes the time value of money into consideration is
internal rate of return (IRR)
Unit Investment Trust
issues redeemable securities like a mutual fund. they will buy back an investors units
The business cycle has expanded, peaked, and contracted. The current economic activity could best be described as a trough. Which of the following would most likely be found in the trough?
low rate of inflation and high rate of unemployment
profit margin equation
net sales / sales
An investor would write a call option to
obtain income
Which of the following would appear as assets on a corporation's balance sheet? A. Prepaid expenses B. Deferred tax credits C. Notes payable D. Notes receivable
prepaid expenses and notes payable
The Investment Company Act of 1940 permits a reduction in sales charge when reaching a breakpoint for
purchasers meeting the definition of any person
The price-to-earnings ratio
shows how much investors value the stock as a function of earnings to the company's market price
The price to purchase an ETF is determined by
supply and demand
The economic theory that says economic growth results from lower tax rates and lower government spending is
supply-side theory
Under the Investment Company Act of 1940, an investment company may initially retain the services of an investment adviser only with approval of
the majority vote of the outstanding shares and a majority of that portion of the board of directors that is considered noninterested members
The financial ratio that shows the relationship between the price of a company's stock and the company's net worth (stockholders' equity) is
the price-to-book-value ratio
An investor would exercise a put option when the
market price of the stock is below the strike price
Duration is
measures a bond's volatility with respect to a change in interest rates. The higher the duration, the greater the change in a bond's price with respect to interest rate changes.
How often must an investment company file reports with the SEC as required by the Investment Company Act of 1940?
Annually
