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Question 1 of 10
1. Question
Edward, who is a client had stated that he only follows a disciplined approach to investing. For example, whenever his stock increases by 20%, he sells it as well as if the stock’s price has declined from its initial price. Which theory is Edward behaving consistently in?
Correct
Edward expresses a portfolio objective that considers the estimated return and the standard deviation. This is associated with traditional finances and the investor is most likely to choose an effective portfolio with mean-variances
Incorrect
Edward expresses a portfolio objective that considers the estimated return and the standard deviation. This is associated with traditional finances and the investor is most likely to choose an effective portfolio with mean-variances
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Question 2 of 10
2. Question
Cognitive Dissonance is a mental discomfort that happens if new knowledge is in contrast with previously held beliefs/cognitions. Which of the following does not apply as a solution for this dissonance?
Correct
To overcome the dissonance:
(1) Only details of concern can be notified to individuals (selective exposure)
(2) Ignore or change knowledge that is incompatible with current cognitions (selective perception)
(3) Remember and consider only information that confirms existing cognitions (selective retention)Incorrect
To overcome the dissonance:
(1) Only details of concern can be notified to individuals (selective exposure)
(2) Ignore or change knowledge that is incompatible with current cognitions (selective perception)
(3) Remember and consider only information that confirms existing cognitions (selective retention) -
Question 3 of 10
3. Question
Nicki is a fund manager who has 10 years of outstanding experience in the industry. As a result, she always takes credit for her achievements and successful decisions but assigns poor decisions to her teammates. What is Nicki most likely to be demonstrating?
Correct
Self-attribution is a bias in which individuals take credit for successes and delegate the loss responsibilities that Nicki portrays. However, as it’s put in another context, she’s only deciding how to assign the cause of the result to what makes her look best. Certainly, most of us can think of things we’ve done and decide that when everything goes according to expectations, it’s simply because of our abilities. And, when things don’t go according to plans, the blame and the mistake of everyone else will arise
Incorrect
Self-attribution is a bias in which individuals take credit for successes and delegate the loss responsibilities that Nicki portrays. However, as it’s put in another context, she’s only deciding how to assign the cause of the result to what makes her look best. Certainly, most of us can think of things we’ve done and decide that when everything goes according to expectations, it’s simply because of our abilities. And, when things don’t go according to plans, the blame and the mistake of everyone else will arise
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Question 4 of 10
4. Question
An Inventory cycle is a cycle measured in terms of the fluctuations in inventories, how many years does it typically last?
Correct
The inventory cycle is usually characterized by four stages, which are repeated over time as a cycle. Any market researchers use this asset cycle concept and vocabulary to research and describe variations of business inventory and other aspects of corporate operations. But, above all, this is often linked to broader industry patterns
Incorrect
The inventory cycle is usually characterized by four stages, which are repeated over time as a cycle. Any market researchers use this asset cycle concept and vocabulary to research and describe variations of business inventory and other aspects of corporate operations. But, above all, this is often linked to broader industry patterns
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Question 5 of 10
5. Question
Jim seeks to make choices analytically, He acknowledges that the markets can be influenced by the feelings of others. But he’s always used to buy/sell signals while he’s trading. In addition, his 20 years of experience with managers who deliberately exchange such knowledge makes him believe they are worth the fees they charge. What would be the most consistent for Jim?
Correct
It suggests that economies may be affected by other people’s feelings. This is consistent with the behavioral approach to asset pricing which involves concepts such as from a behavioral stochastic discount factor-based asset pricing model
Incorrect
It suggests that economies may be affected by other people’s feelings. This is consistent with the behavioral approach to asset pricing which involves concepts such as from a behavioral stochastic discount factor-based asset pricing model
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Question 6 of 10
6. Question
Which of the following statements about Electronic communication networks and crossing networks are true?
Correct
Electronic transfer networks as well as cross-border networks have flourished alongside the official stock exchanges. The exchange takes place only at mid-point between all the offer and requests for the rates of the primary sector, but there is a very little market effect and perhaps even the spread of its bid-ask except for big orders and thus no trading immediacy
Incorrect
Electronic transfer networks as well as cross-border networks have flourished alongside the official stock exchanges. The exchange takes place only at mid-point between all the offer and requests for the rates of the primary sector, but there is a very little market effect and perhaps even the spread of its bid-ask except for big orders and thus no trading immediacy
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Question 7 of 10
7. Question
US stock market capitalization is greater compared to US GDP in comparison to other European countries for all of the following reasons, except:
Correct
The world stock market is growing every year, and the US stock market is by far the largest. In reality, as of 2018, the U.S. stock market constitutes 40% of the world stock market
Incorrect
The world stock market is growing every year, and the US stock market is by far the largest. In reality, as of 2018, the U.S. stock market constitutes 40% of the world stock market
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Question 8 of 10
8. Question
Which of the following best characterizes the taxation of returns on international investments in both the country of the investor and where it was made?
Correct
Every nation has its own tax rules, and they differ significantly from one government to another. While certain countries do not have any capital gains tax at all or just waive it for foreign buyers, several countries also do
Incorrect
Every nation has its own tax rules, and they differ significantly from one government to another. While certain countries do not have any capital gains tax at all or just waive it for foreign buyers, several countries also do
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Question 9 of 10
9. Question
An analyst needs to account for financial distress and market capitalization, together with market risk, in the capital expense calculation of that certain trading firm. Which of the following models is best suited to accomplish this objective?
Correct
The Fama-French model consists of three attributes: the size of the firms, book-to-market prices, and the surplus return upon its market. This model underlines the need for investors to be capable of overcoming the extra short-term uncertainty and occasionally bad results that might arise over a short span of time
Incorrect
The Fama-French model consists of three attributes: the size of the firms, book-to-market prices, and the surplus return upon its market. This model underlines the need for investors to be capable of overcoming the extra short-term uncertainty and occasionally bad results that might arise over a short span of time
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Question 10 of 10
10. Question
Which of the following statements is not a reason why a corporation can have a stock market price well above its accounting book value?
Correct
Book value is exactly the value of a company as per its books of accounts, thus expressed throughout the financial statements. Here is what buyers could get if they sell all of the company’s properties and paid off every one of its loans and commitments. This may then be an approximate approximation of the value which the shareholders would have obtained if they wanted to liquidate their company
Incorrect
Book value is exactly the value of a company as per its books of accounts, thus expressed throughout the financial statements. Here is what buyers could get if they sell all of the company’s properties and paid off every one of its loans and commitments. This may then be an approximate approximation of the value which the shareholders would have obtained if they wanted to liquidate their company