CMA Exam Quiz 18

Which of the following risk(s) is(are) important for portfolio managers that must mark to market positions periodically?
I. Asset risk
II. Periodic risk
III. Liquidity risk
IV. Credit risk

The cash flows in the investor’s domestic currency are dependent on which of the following?
I. The exchange rate at the time the payments are received from the asset.
II. The asset whose payments are not in the domestic currency.
III. The credit ratings assigned to issues by rating companies.
IV. The true value indicated by a recent transaction.

Suppose an investor’s domestic currency is the U.S. dollar and that the investor purchases an asset whose payments are in euros. Which of the following things would happen if the euro depreciates relative to the U.S. dollar at the time a euro payment is received?
I. Fewer U.S. dollars will be received.
II. More U.S. dollars will be received.
III. Less Euro dollars will be lost.
IV. More Euro dollar will be gained

When should the manager of a mutual fund report the market value of each holding?
I. At the beginning of each business day.
II. At the end of each business day.
III. At the beginning of each day.
IV. At the end of each day.

There are systematic risks that affect bond returns; They include which of the following?
I. Interest rate risk
II. Call/prepayment risk
III. Reinvestment risk
IV Liquidity risk

The price of a bond changes as interest rates change. Specifically, price moves in the which of the following manner?
I. The price moves in the opposite direction but in a slower rate to the change in interest rates.
II. The price moves in the same direction but in a slower rate to the change in interest rates.
III. The price moves in the same direction to the change in interest rates.
IV. The price moves in the opposite direction to the change in interest rates.

The sensitivity of the price of a bond to changes in interest rates depends on which of the following factors?
I. The bond’s coupon rate
II. The bond’s maturity
III. The level of interest rates
IV. The bond’s liquidity rate

The price of a zero-coupon bond with a long maturity is highly sensitive to changes in which of the following?
I. The interest rates
II. The coupon rate
III. The asset rate
IV. The currency rate

For money market instruments, their maturity is less than one year which means that the price is considered to be which of the following?
I. Irrelevant
II. Important to asset risks
III. Very sensitive to changes in the interest currency risk rates
IV. Not very sensitive to changes in interest rates

The price sensitivity of a bond to changes in interest rates can be estimated. This measure is called?
I. The maturity of the bond
II. The rates of the bond
III. The length of the bond
IV. The duration of a bond