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Question 1 of 30
1. Question
Information collected from what is considered as ‘intelligence vendors’ play a part in the economy as they offer answers to identity theft issue. Which is it they don’t allow?
Correct
Information obtained by what is known as ‘knowledge brokers’ play a role in the economy as they enable: financial firms to provide loans, employers to test future workers, and landlords to determine prospective renters ‘financial records.
Incorrect
Information obtained by what is known as ‘knowledge brokers’ play a role in the economy as they enable: financial firms to provide loans, employers to test future workers, and landlords to determine prospective renters ‘financial records.
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Question 2 of 30
2. Question
Rather of using analogy to describe derivatives, FASB went for a new, more general solution. Derivatives are classified in FAS 133 as financial instruments which have the following characteristics. Place the omission aside.
Correct
They have one or two underlying and a notional sum or two, as well as payment clauses. They typically do not need any initial net expenditure, and it is smaller than that characterizing other instruments when this is required. We neither provide for, nor require net settlements, nor arrange for the distribution of an commodity that places the buyer at a net settlement location in action.
Incorrect
They have one or two underlying and a notional sum or two, as well as payment clauses. They typically do not need any initial net expenditure, and it is smaller than that characterizing other instruments when this is required. We neither provide for, nor require net settlements, nor arrange for the distribution of an commodity that places the buyer at a net settlement location in action.
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Question 3 of 30
3. Question
Trading and trading in securities intensified in the late 1990s bubble years in the financial sector at large. This contributed to a quickly accelerated systemic transition in the finance sector, taking on major dimensions and even contributing to accumulation of risks expected of derivatives. Part of the explanation for this concentration is the practice of merger piling one trading book into another, and also:
Correct
Part of the explanation for this concentration is the combining operation that piled up one trading book on another, and also reduced the number of major players among financial firms, but increased the number of hedge funds that are most involved in derivatives.
The most prominent hedge fund loss to date has been attributed to an disproportionate level of exposure to derivatives.Incorrect
Part of the explanation for this concentration is the combining operation that piled up one trading book on another, and also reduced the number of major players among financial firms, but increased the number of hedge funds that are most involved in derivatives.
The most prominent hedge fund loss to date has been attributed to an disproportionate level of exposure to derivatives. -
Question 4 of 30
4. Question
Organizations partly hedged planned third-party revenue over a specified preparation period, usually no more than three years in the future. Through time, this technique contributes to layers of hedges, through the portion of hedged revenue as one reaches the expected date on which the hedged trade will take effect. This part of the hedged revenue will not be focused on cost / be estimates:
Correct
This portion of hedged revenues will be focused on cost / benefit profile calculations that take into account: forms of exposure offsetting, fluctuations and differences in income and exchange rates, and the expense of hedging instruments, which can be important since all hedges entail risk.
Incorrect
This portion of hedged revenues will be focused on cost / benefit profile calculations that take into account: forms of exposure offsetting, fluctuations and differences in income and exchange rates, and the expense of hedging instruments, which can be important since all hedges entail risk.
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Question 5 of 30
5. Question
Companies continue to enter into forward contracts on a more restricted basis for exposures in developed world currencies, and only when it is deemed economical to do so, on the basis of cost / benefit analysis which considers:
Correct
Companies prefer to enter into forward contracts on a more restricted basis for investments in developed world currencies, and only where it is considered feasible to do so, focused on cost / benefit analysis that measures the extent of exposure, exchange rate fluctuations, and hedging product costs and threats.
Incorrect
Companies prefer to enter into forward contracts on a more restricted basis for investments in developed world currencies, and only where it is considered feasible to do so, focused on cost / benefit analysis that measures the extent of exposure, exchange rate fluctuations, and hedging product costs and threats.
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Question 6 of 30
6. Question
A notional principal sum, which is a currency metric, number of shares or number of other units defined in the contract shall be called:
Correct
A notional principal sum is a metric of money, number of shares or number of other units stated in the deal, often called face value. Within a derivatives contract, neither the writer nor the recipient is forced to spend, compensate or collect the notional sum, but they are liable for market risk effects determined by an negotiated algorithm
Incorrect
A notional principal sum is a metric of money, number of shares or number of other units stated in the deal, often called face value. Within a derivatives contract, neither the writer nor the recipient is forced to spend, compensate or collect the notional sum, but they are liable for market risk effects determined by an negotiated algorithm
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Question 7 of 30
7. Question
Blocks or floors of interest rates and fixed-rate debt contracts have equivalent ideas to alternatives because:
Correct
Interest-rate limits or floors and fixed-rate debt contracts have identical conceptions of options because: they provide the lender with the advantages of advantageous fluctuations in the price of the underlying commodity or index and, in exchange, they allow the borrower to offer the writer (issuer) a premium at the outset.
Incorrect
Interest-rate limits or floors and fixed-rate debt contracts have identical conceptions of options because: they provide the lender with the advantages of advantageous fluctuations in the price of the underlying commodity or index and, in exchange, they allow the borrower to offer the writer (issuer) a premium at the outset.
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Question 8 of 30
8. Question
The majority of banks, treasurers, managers and accountants remain mystified and confused about the impact of derivatives on their balance sheets and, by implication, on their firms, as derivative instruments do nothing than encourage them to accept risks or mitigate risks. We require the holder to pretty much simulate any financial operation except:
Correct
Through that assets and liabilities, splitting and recombining risks, and bypassing what regulators may prevent, they enable the holder to mimic nearly any financial operation. A little known truth regarding derivatives is that they obscure the differences between instruments that are governed by different market discipline authorities.
Incorrect
Through that assets and liabilities, splitting and recombining risks, and bypassing what regulators may prevent, they enable the holder to mimic nearly any financial operation. A little known truth regarding derivatives is that they obscure the differences between instruments that are governed by different market discipline authorities.
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Question 9 of 30
9. Question
Since the 1990s, major financial institutions ‘private banking operations have been supporting the more established form of derivative financial instruments among their affluent customers, in the USA and beyond. After the stock market collapse of 2000, the drive intensified. The goods sold are organized mainly by which of the following?
Correct
After the stock market collapse of 2000, the drive intensified. The goods being offered are primarily priced And are deemed a way to retain money, so they provide the opportunity for returns if the economy progresses the way the buyer wishes.
Incorrect
After the stock market collapse of 2000, the drive intensified. The goods being offered are primarily priced And are deemed a way to retain money, so they provide the opportunity for returns if the economy progresses the way the buyer wishes.
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Question 10 of 30
10. Question
John Law was born in Edinburgh in 1671, and at an early age, Law worked for a company for three years, studying the banking values and defining itself with mathematical genius. Then he left in London, where he worked, learned banking, and exercised gallantry, to pursue his wealth. As early as 1705, Law advocated in a pamphlet for the development of banks which would offer land-backed paper money or other collateral. He differentiated capital as:
Correct
As early as 1705, Law called for the creation of banks in a pamphlet which would offer land-backed paper money or other collateral. He defined money as a practical tool to be embraced by the public, without any inherent interest, supported by anything of enduring meaning.
Incorrect
As early as 1705, Law called for the creation of banks in a pamphlet which would offer land-backed paper money or other collateral. He defined money as a practical tool to be embraced by the public, without any inherent interest, supported by anything of enduring meaning.
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Question 11 of 30
11. Question
The Securities and Exchange Commission (SEC) is holding a ‘really watchful eye’ on hedge funds, according to Stephen Cutler, the director of compliance at SEC. There are 2 explanations in the context. What are the two reasons?
Correct
The SEC is holding a ‘very watchful eye’ on hedge funds, confirms Stephen Cutler, director of compliance at SEC. The abundance of hedge funds and the reality that competition has risen on them to maintain high returns.
Incorrect
The SEC is holding a ‘very watchful eye’ on hedge funds, confirms Stephen Cutler, director of compliance at SEC. The abundance of hedge funds and the reality that competition has risen on them to maintain high returns.
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Question 12 of 30
12. Question
Such edicts prohibited the sale of underlying coinage and gold, silver or other precious metals possession or acquisition. This was also announced that they would withdraw both gold and silver coins from circulation. The final hit arrived on 21 May 1720, when Law had to officially accept the following:
Correct
The big hit came on May 21, 1720, when Law had to acknowledge officially that the valuation of Mississippi stock would be lowered by half to 5,000 pounds, and the face value of banknotes would also be decreased by 50%.
Incorrect
The big hit came on May 21, 1720, when Law had to acknowledge officially that the valuation of Mississippi stock would be lowered by half to 5,000 pounds, and the face value of banknotes would also be decreased by 50%.
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Question 13 of 30
13. Question
The SEC charged that the members of KL Group earned capital from rich investors by promising above-market gains, during a period when the mutual funds of that company incurred massive investment losses. In fact, one of the key worries of authorities is that the hedge funds are:
Correct
Some of the key worries of the regulators is that hedge funds are aimed at institutional investors and aimed at unsophisticated investors who do not realize the dangers of organized products.
Incorrect
Some of the key worries of the regulators is that hedge funds are aimed at institutional investors and aimed at unsophisticated investors who do not realize the dangers of organized products.
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Question 14 of 30
14. Question
Hedge funds have been a perfect way to buy whatever’s on the table. Nevertheless, recent reports demonstrate the rising relevance of hedge funds and other skilled non-bank traders to:
Correct
Latest data show the increasing significance of hedge funds and other skilled non-bank traders to increasingly rising quantities of trading and possibly disruptive market trends.According to the Bank for International Settlements, trade between banks and other financial firms, including hedge funds, soared 78 per cent between 2001 and 2004 as stated in its triennial study on the forex sector.
Incorrect
Latest data show the increasing significance of hedge funds and other skilled non-bank traders to increasingly rising quantities of trading and possibly disruptive market trends.According to the Bank for International Settlements, trade between banks and other financial firms, including hedge funds, soared 78 per cent between 2001 and 2004 as stated in its triennial study on the forex sector.
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Question 15 of 30
15. Question
The Bank for International Settlements credits this rise in foreign exchange trade to three major reasons: growing Forex recognition as a distinct tradable asset class; substantial increase in hedge fund operation; and financial investment tracking price movement such as dollar weakening. This trend-following prompted:
Correct
Such trend-following has allowed Momentum traders to ride a trade as long as it goes, and traders to go on selling, raise a low-cost currency, and spend elsewhere in higher returning securities.
Incorrect
Such trend-following has allowed Momentum traders to ride a trade as long as it goes, and traders to go on selling, raise a low-cost currency, and spend elsewhere in higher returning securities.
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Question 16 of 30
16. Question
In turn, banks have applied a surge of derivatives risks, including liquidity, price and operating risk, to the collateral danger they typically bear with loans. Because the issuers or co-sponsors of certain financial securities are commercial and investment firms, the regulatory authorities would feel obliged to step in and protect the system’s reputation in the case of systemic danger. Hence:
Correct
Therefore, the risk of utilizing taxpayers ‘resources to rescue overexposed financial firms, as occurred in Japan, and the expanded responsibility to control and monitor all participants of derivative securities, including hedge funds, until a crisis happens.
Incorrect
Therefore, the risk of utilizing taxpayers ‘resources to rescue overexposed financial firms, as occurred in Japan, and the expanded responsibility to control and monitor all participants of derivative securities, including hedge funds, until a crisis happens.
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Question 17 of 30
17. Question
Which are the key factors for attracting a new financial product?
Correct
The key explanations that a new financial idea is appealing are because consumers and companies like to think there is something better for them, that this new innovation they dreamed of will make them wealthy in a short time.
Incorrect
The key explanations that a new financial idea is appealing are because consumers and companies like to think there is something better for them, that this new innovation they dreamed of will make them wealthy in a short time.
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Question 18 of 30
18. Question
Since they are primarily derivatives-based, and derivatives offer an variety of opportunities in the creation of financial securities, structured products marketed by commercial and investment firms, hedge funds and other organizations are joining a growing range of frameworks. The diversity helps experienced customers to meet their financial ambitions and risk appetite. However, not all participants have the expertise about:
Correct
Nevertheless, not all consumers are aware of: what is a regulated commodity, and the amount of risk it gives to the assets of a individual or an organization.
Incorrect
Nevertheless, not all consumers are aware of: what is a regulated commodity, and the amount of risk it gives to the assets of a individual or an organization.
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Question 19 of 30
19. Question
Ours is the era of equalization, according to an report in Sigma journal. Although the source of this word is ‘equity,’ equity and debt lie behind equalization. Financial creativity, declining securitization costs and rising market participants maturity have allowed the issuance of securities to:
Correct
Financial progress, declining securitization rates and growing awareness of market investors have allowed the issuance of securities to substitute bank loans as the primary source of funding for large companies, and Create a flood of innovative financial products that find their way through investor portfolios.
Incorrect
Financial progress, declining securitization rates and growing awareness of market investors have allowed the issuance of securities to substitute bank loans as the primary source of funding for large companies, and Create a flood of innovative financial products that find their way through investor portfolios.
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Question 20 of 30
20. Question
What did not lead to the creation and intensive promotion of organized devices, with private banks and fund managers trying to persuade their buyers that such items ‘build additional value by risk reduction?’
Correct
Rapid developments in computer and networking technologies, increasingly advanced tools for financial modeling, and Business consolidation coupled with computerization of trading practices has led to the introduction and intensive promotion of automated instruments, with private banks and fund managers seeking to persuade their clients that such devices ‘build additional value by risk management.’
Incorrect
Rapid developments in computer and networking technologies, increasingly advanced tools for financial modeling, and Business consolidation coupled with computerization of trading practices has led to the introduction and intensive promotion of automated instruments, with private banks and fund managers seeking to persuade their clients that such devices ‘build additional value by risk management.’
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Question 21 of 30
21. Question
A synthetic instrument is a financial device developed, obtained and retained to mimic the characteristics of another instrument according to the International Financial Reporting Standard (IFRS) by the International Accounting Standards Board (IASB). This is the case for long-term debt floating rate paired with an interest rate exchange along with:
Correct
That is the case of long-term debt variable rate coupled of interest rate exchange concerning obtaining free payments and making fixed payments. IFRS states that each of the financial products representing such a composite entity together constitutes a statutory right or duty of its own terms and conditions.
Incorrect
That is the case of long-term debt variable rate coupled of interest rate exchange concerning obtaining free payments and making fixed payments. IFRS states that each of the financial products representing such a composite entity together constitutes a statutory right or duty of its own terms and conditions.
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Question 22 of 30
22. Question
Bloomberg defines a structured note as hybrid security combining a fixed income instrument with one or more derivative components. As a result of this combination, the coupon’s life, and/or redemption value, can become exposed to market forces such as forward movement in:
Correct
The life and/or redemption interest of the coupon can be sensitive to market factors such as forward movement in: stock price indices, currency exchange rates, and mortgage-backed securities pre-payment levels.
Incorrect
The life and/or redemption interest of the coupon can be sensitive to market factors such as forward movement in: stock price indices, currency exchange rates, and mortgage-backed securities pre-payment levels.
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Question 23 of 30
23. Question
Which of the below is an asset swap, that is to say a mixture of a long-term fixed rate bond with an interest rate swap that turns it into a floating rate asset?
Correct
A synthetic bond is an asset swap, that is to say a mixture of a long-term fixed rate bond with an interest rate swap that turns it into a floating rate asset. The resulting synthetic commodity helps the borrower to bear the issuer’s default risk in the longer term, without the price risk associated with the fixed interest rate.
Incorrect
A synthetic bond is an asset swap, that is to say a mixture of a long-term fixed rate bond with an interest rate swap that turns it into a floating rate asset. The resulting synthetic commodity helps the borrower to bear the issuer’s default risk in the longer term, without the price risk associated with the fixed interest rate.
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Question 24 of 30
24. Question
Which of the statement best describes the synthetic covered options?
Correct
Synthetic choices protected are based on a method of duplicating conventional protected choices, in a purchase. Buying the underlying commodity and drafting the call contract was achieved using derivatives.
Incorrect
Synthetic choices protected are based on a method of duplicating conventional protected choices, in a purchase. Buying the underlying commodity and drafting the call contract was achieved using derivatives.
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Question 25 of 30
25. Question
Essentially, when publishing a conventional covered option (which is a call option) or by measuring the yield on the new covered option price on the selling of a call option, the potential market value risk is smaller than it would be if it were a pure purchase. The prime option reduces the potential market-value loss due to market error. Choose the correct path to proceed to the top.
Correct
If the underlying market value on maturity is greater than the purchase price, a defined cash sum is charged to the buyer as a payout.
He or she earns direct distribution of the underlying commodity because it is greater than the strike amount.Incorrect
If the underlying market value on maturity is greater than the purchase price, a defined cash sum is charged to the buyer as a payout.
He or she earns direct distribution of the underlying commodity because it is greater than the strike amount. -
Question 26 of 30
26. Question
As the attentive reader would have seen between the margins, this financial R&D endeavor requires three groups of people. Choose the right one.
Correct
Customers, engineers, structurers and brokers who have to negotiate with the customer(s) and ultimately market the device, strategists, basically quants who worry of the technological aspects of innovative product(s) and are primarily rocket scientists, and simulation controllers who have to check the concept on which the new method is centered and have to accept the software, including its risk profile.
Incorrect
Customers, engineers, structurers and brokers who have to negotiate with the customer(s) and ultimately market the device, strategists, basically quants who worry of the technological aspects of innovative product(s) and are primarily rocket scientists, and simulation controllers who have to check the concept on which the new method is centered and have to accept the software, including its risk profile.
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Question 27 of 30
27. Question
The widely-advertised security of capital provided by organized goods consists essentially of two elements:
Correct
Private banking and retail customers need to be well informed of the uncertainties associated when purchasing any new goods. The highly discussed security of capital provided by organized goods basically consists of two components An alternative and An expenditure in profits.
Incorrect
Private banking and retail customers need to be well informed of the uncertainties associated when purchasing any new goods. The highly discussed security of capital provided by organized goods basically consists of two components An alternative and An expenditure in profits.
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Question 28 of 30
28. Question
Which of the statements does not correctly define the job of modelling controllers?
Correct
Modeling controllers function to decide how much of the specified product’s selling price should be charged before it expires. It offers us an estimation of the expense of capital defense. We are now trying to determine the minimum return to be charged in the choice part, irrespective of market movements.
Incorrect
Modeling controllers function to decide how much of the specified product’s selling price should be charged before it expires. It offers us an estimation of the expense of capital defense. We are now trying to determine the minimum return to be charged in the choice part, irrespective of market movements.
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Question 29 of 30
29. Question
Remember that the sum of expenditure in packaged goods is closely related to the risk tolerance of the buyer. Holding that in mind, pick the wrong sentence.
Correct
Low-risk buyers do not buy any financial securities.
Investors at medium risk must devote no more than 1% of their assets to regulated goods.
High-risk investors could allocate up to 5 per cent, but under stress testing conditions and constant vigilance.Incorrect
Low-risk buyers do not buy any financial securities.
Investors at medium risk must devote no more than 1% of their assets to regulated goods.
High-risk investors could allocate up to 5 per cent, but under stress testing conditions and constant vigilance. -
Question 30 of 30
30. Question
Single credit notes correlated with, first, default buckets, credit notes (yogi) bearings and CPPI loan funds fell into one of the following types of standardized products. which one is the correct option.
Correct
The preference will be focused on instruments with characteristics desired by the consumer, as thousands of existing models come out every day and new ones come out. Structured credit items, such as connected single credit notes, first to default bins, bear on credit notes (yogi), and credit funds from the CPPI.
Incorrect
The preference will be focused on instruments with characteristics desired by the consumer, as thousands of existing models come out every day and new ones come out. Structured credit items, such as connected single credit notes, first to default bins, bear on credit notes (yogi), and credit funds from the CPPI.