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Question 1 of 30
1. Question
Inside the financial sector, liquidity fluctuations may be quickly spread via the interbank segment, rendering frequent monitoring of interbank relations necessary. Easy mapping of interbank ties is not, however, necessary to calculate the possibility of contagion in interbank markets. What is Correct Contagion Measurement?
Correct
Proper estimation of contagion Calls for comprehensive aggregate statistics on the interbank exposures of each bank, which includes consideration of the different risk reduction steps, such as collateralization, netting which hedging.
Incorrect
Proper estimation of contagion Calls for comprehensive aggregate statistics on the interbank exposures of each bank, which includes consideration of the different risk reduction steps, such as collateralization, netting which hedging.
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Question 2 of 30
2. Question
Algorithms from applied mathematics will help hold exposure under track, providing that banks, treasurers, traders and investors are alert to the signs these models give; but models are not adequate, if appropriate. What does a strict Damage Control Policy require?
Correct
A robust damage management strategy includes a comprehensive management and balance process, well specified protocols as well as solutions for device engineering. A rational approach to risk management is the redistribution of constraints of financial roles and lines of exchange.
Incorrect
A robust damage management strategy includes a comprehensive management and balance process, well specified protocols as well as solutions for device engineering. A rational approach to risk management is the redistribution of constraints of financial roles and lines of exchange.
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Question 3 of 30
3. Question
Which of the options below reflects cost of carrying? It gives the difference in the price of the right per 1 per cent interest rate increase. The exposure of the measured value of an option to interest rate adjustment is determined by through it.
Correct
Rho reflects cost-carrying options. It gives the change in the price of the option per 1 per cent interest rate change. The sensitivity of calculated value of an option to interest rate change is estimated by rho.
Incorrect
Rho reflects cost-carrying options. It gives the change in the price of the option per 1 per cent interest rate change. The sensitivity of calculated value of an option to interest rate change is estimated by rho.
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Question 4 of 30
4. Question
Some of the points frequently raised against classical debt instruments is that they do not give their owners the ability to benefit from a company’s performance, as do equities. Investment banks which have built FISPs (Fixed income structured products) as alternatives to conventional bond investments claim their offerings address this deficiency. Theoretically, but in principle only, what fits the best for the buyer to do?
Correct
Technically, but only technically, their customer receives a better return and may also share in company productivity based on the tool he or she buys. Practically, this statement is particularly subjective, so it’s just half accurate but at optimum times.
Incorrect
Technically, but only technically, their customer receives a better return and may also share in company productivity based on the tool he or she buys. Practically, this statement is particularly subjective, so it’s just half accurate but at optimum times.
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Question 5 of 30
5. Question
Due to which characteristics of most organized instruments is the Risk management most complicated?
Correct
Risk management is more complicated as most standardized instruments: Are modern, Come in various variants, and Keep changing all the time. Additionally, words used to define them can be inaccurate, as is the case for organized ‘bonds.’ Moreover, when compared with past terminology, their characteristics are not commonplace. Notes which are linked to inflation.
Incorrect
Risk management is more complicated as most standardized instruments: Are modern, Come in various variants, and Keep changing all the time. Additionally, words used to define them can be inaccurate, as is the case for organized ‘bonds.’ Moreover, when compared with past terminology, their characteristics are not commonplace. Notes which are linked to inflation.
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Question 6 of 30
6. Question
As for wealth allocation, how is the percentage of volatile investments in the fund over the duration of a CPPI affected?
Correct
In terms of wealth allocation, the percentage of volatile assets in the fund grows over the lifespan of a CPPI as the fund valuation falls away from the average, and declines as the portfolio value rises to the bottom. A good risk control strategy includes continuous analysis of the disclosure.
Incorrect
In terms of wealth allocation, the percentage of volatile assets in the fund grows over the lifespan of a CPPI as the fund valuation falls away from the average, and declines as the portfolio value rises to the bottom. A good risk control strategy includes continuous analysis of the disclosure.
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Question 7 of 30
7. Question
A crucial decision is to choose the degree of trust to ensure the security of wealth at each time. This is mostly taken at 99 per cent, but no definition remains. Unprotected investment can not be typified by which of the given options?
Correct
The option of trust level to ensure the security of capital in each time is a crucial decision. It is mostly measured at 99 per cent, but no law applies for it. Unprotected investment may be defined for one year by Projected returns, inherent uncertainty, and risk premium at 99%.
Incorrect
The option of trust level to ensure the security of capital in each time is a crucial decision. It is mostly measured at 99 per cent, but no law applies for it. Unprotected investment may be defined for one year by Projected returns, inherent uncertainty, and risk premium at 99%.
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Question 8 of 30
8. Question
A basic concept of fixed-rate debt instruments is that although risk rates are determined by projections of potential interest rate changes, the overriding aspect of the credit rating is uncertainty. What is Junk bonds, for simultaneous feature?
Correct
A substantial decline in interest rates, such as the one observed after the end of 2002, creates appetite for higher interest yet lower credit rating devices.Most buyers are no longer considering the low interest rate on risk-free assets appealing in their search for yield. The growing appetite for speculative bond assets leads to a significant reduction in price premium. Another basic theory of fixed-rate debt instruments is that although risk rates are determined by potential interest rate changes forecasts, the overriding aspect is the credit rating function. For eg, junk bonds carry high credit risk at the same time, and a higher interest rate.
Incorrect
A substantial decline in interest rates, such as the one observed after the end of 2002, creates appetite for higher interest yet lower credit rating devices.Most buyers are no longer considering the low interest rate on risk-free assets appealing in their search for yield. The growing appetite for speculative bond assets leads to a significant reduction in price premium. Another basic theory of fixed-rate debt instruments is that although risk rates are determined by potential interest rate changes forecasts, the overriding aspect is the credit rating function. For eg, junk bonds carry high credit risk at the same time, and a higher interest rate.
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Question 9 of 30
9. Question
Many contracts that by definition are not financial instruments can have financial instruments incorporated in them. An indication of this is a deal to purchase a product at a set shipping price on a certain date. This form of contract has incorporated in it a derivative linked to the product price. What does this illustration suggest?
Correct
This definition demonstrates that an embedded derivative is a contract function and its existence implies that cash flows correlated with that function are close to a standalone derivative.
Incorrect
This definition demonstrates that an embedded derivative is a contract function and its existence implies that cash flows correlated with that function are close to a standalone derivative.
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Question 10 of 30
10. Question
Both of the following choices are enhanced coupon notes when floating comparison trades inside a preset band? If outside the band the buyer loses the value for one day on each day the relation is outside the collar decided upon.
Correct
Range floaters, or notices that compensate an improved coupon when the floating connection is working inside a preset unit. If outside the band the creditor loses the value of one day on any day that the relation is beyond the collar decided upon.
Incorrect
Range floaters, or notices that compensate an improved coupon when the floating connection is working inside a preset unit. If outside the band the creditor loses the value of one day on any day that the relation is beyond the collar decided upon.
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Question 11 of 30
11. Question
Choose the right details that truly describe leverage floaters.
Correct
Leverage floaters: like the name suggests, these are optimized notes that compensate an improved leverage-based coupon, the floating comparison coupon being magnified by a multiplier mechanism that decides the payout or loss. The definition appears to be very complicated, and so is the method of figuring out from where the losses come.
Incorrect
Leverage floaters: like the name suggests, these are optimized notes that compensate an improved leverage-based coupon, the floating comparison coupon being magnified by a multiplier mechanism that decides the payout or loss. The definition appears to be very complicated, and so is the method of figuring out from where the losses come.
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Question 12 of 30
12. Question
The best way to react to these frivolous claims is through the joke sometimes heard in Las Vegas that you have a decent chance by gambling to make a small fortune, if you start with a big one. Gambling often needs skills and the above promotional campaigns are conveniently overlooking the reality that the typical investor does not have the required know-how for what?
Correct
The aforementioned advertising tactic forgets that the average investor does not have the requisite know-how to ‘determine’ forex revenue derivative transactions, and quantify the risks associated with such transactions, which is a must, by any count.
The only aspect that certainly the typical consumer can get from organized goods that he or she doesn’t appreciate is an unnecessary amount of advertising.Incorrect
The aforementioned advertising tactic forgets that the average investor does not have the requisite know-how to ‘determine’ forex revenue derivative transactions, and quantify the risks associated with such transactions, which is a must, by any count.
The only aspect that certainly the typical consumer can get from organized goods that he or she doesn’t appreciate is an unnecessary amount of advertising. -
Question 13 of 30
13. Question
Which of the given options describe money rates the best?
Correct
Money rates; that is, earnings the investor needs to lock in on his or her property. This provides a backdrop to which various standardized fixed rate instruments can be measured. A money rate is the expense of an specific portion of capital, and the incentive provided to draw capital by a money market.
Incorrect
Money rates; that is, earnings the investor needs to lock in on his or her property. This provides a backdrop to which various standardized fixed rate instruments can be measured. A money rate is the expense of an specific portion of capital, and the incentive provided to draw capital by a money market.
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Question 14 of 30
14. Question
The inflation-linked note would lose value if actual interest rates increase, which is possible. The same will be the case in case inflation will not increase, although the returns on regular bonds sold recently were. Therefore, in the event of negative inflation, the coupon repayment could fell to 0 per cent. Through fact which of the following is it?
Correct
It’s essentially Win – win for the lender, and Lose – lose for the buyers, who figured they were purchasing insurance against inflation.
Moreover, as in other goods, the money initially spent is covered only upon maturity.Incorrect
It’s essentially Win – win for the lender, and Lose – lose for the buyers, who figured they were purchasing insurance against inflation.
Moreover, as in other goods, the money initially spent is covered only upon maturity. -
Question 15 of 30
15. Question
Example of an instrument whose specified goal is to produce a stable, inflation-protected total return in euros and to ‘outperform’ the euro CPI+ benchmark return 140 basis points over the medium term. What does the issuer claim attractive to this organized product?
Correct
The issuer claims this regulated offering is appealing, as key investment to bond buyers looking to redeploy into a fixed income portfolio with decreased exposure to inflation, and to more prudent bond holders looking to retain a managed cap on their sensitivity to interest rates (whatever this ‘restricted ceiling’ means).
Incorrect
The issuer claims this regulated offering is appealing, as key investment to bond buyers looking to redeploy into a fixed income portfolio with decreased exposure to inflation, and to more prudent bond holders looking to retain a managed cap on their sensitivity to interest rates (whatever this ‘restricted ceiling’ means).
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Question 16 of 30
16. Question
As regards market discovery, it is not just the actual interest rates that are important, but the interest rate curve as a whole, since a note’s value is equivalent to which of the given options?
Correct
So far so market discovery is concerned, it is not just the actual interest rates that are important, but the interest rate curve as a whole, because the value of a bond is proportional to the sum of coupon payments required Plus the redemption of the initial cost, discounted to the date of ‘today.’
Incorrect
So far so market discovery is concerned, it is not just the actual interest rates that are important, but the interest rate curve as a whole, because the value of a bond is proportional to the sum of coupon payments required Plus the redemption of the initial cost, discounted to the date of ‘today.’
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Question 17 of 30
17. Question
Which of the derivative instruments listed potentially offer the investor the possibility of obtaining an attractive return relative to conventional bonds?
Correct
The callable reverse floater and its twin, the callable accrual notice of the series, are financial instruments that potentially offer the borrower the chance to earn an advantageous return relative to standard bonds.
Incorrect
The callable reverse floater and its twin, the callable accrual notice of the series, are financial instruments that potentially offer the borrower the chance to earn an advantageous return relative to standard bonds.
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Question 18 of 30
18. Question
The Orange County Trust also needed to spend $7.5bn in actual capital. This was leveraged to about $22 billion by an idiotic treasurer and his buddies. Subsequently these very individuals sought to pose as political innocents during the County’s bankruptcy. Orange County officials, in evidence to a joint California senate subcommittee, claimed they were ignorant of the threats. They understood ‘little’ about reverse floaters and other leveraged assets, but they acquired them in a major way and ultimately what did it lead to?
Correct
We knew ‘little’ about reverse floaters and other leveraged assets, but we purchased them in a major way, contributing to: collapse of the city, and almost $2 billion in damages.
Incorrect
We knew ‘little’ about reverse floaters and other leveraged assets, but we purchased them in a major way, contributing to: collapse of the city, and almost $2 billion in damages.
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Question 19 of 30
19. Question
Pick out the incorrect statement put forward regarding the accrual notes.
Correct
Accrual notices are a further consequence of fixed interest rates. Their peculiarity is that as long as the comparison index stays inside the predefined set, coupons accrue regular. It generates daily cash balances at repayment, rather than one back-end bill.Callable accrual notes vendors claim such an method appeals to creditors taking the view that prices would either stable or grow at a steady speed. A common rate of comparison is the three to six month Libor
Incorrect
Accrual notices are a further consequence of fixed interest rates. Their peculiarity is that as long as the comparison index stays inside the predefined set, coupons accrue regular. It generates daily cash balances at repayment, rather than one back-end bill.Callable accrual notes vendors claim such an method appeals to creditors taking the view that prices would either stable or grow at a steady speed. A common rate of comparison is the three to six month Libor
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Question 20 of 30
20. Question
Issuers claim these products are primarily intended for buyers who want prices to increase or decline as they would therefore be willing to obtain a net gross coupon over a limited period of time. Select the most accurate subsequent option.
Correct
However, if interest rates increase quickly, then the danger is that the borrower may continue to keep the note before maturity until the maximum sum of coupon payments is issued.
Incorrect
However, if interest rates increase quickly, then the danger is that the borrower may continue to keep the note before maturity until the maximum sum of coupon payments is issued.
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Question 21 of 30
21. Question
Which of the following are hybrid solutions that are standardized goods that look exactly like a conventional fixed income fund, superficially?
Correct
Notes to bulls are combinations.These are organized goods that behave much like a conventional fixed income fund on a superficial basis. The borrower makes a fixed coupon payout over the product’s lifetime, and the lender promises a 100 per cent maturity repayment.
Incorrect
Notes to bulls are combinations.These are organized goods that behave much like a conventional fixed income fund on a superficial basis. The borrower makes a fixed coupon payout over the product’s lifetime, and the lender promises a 100 per cent maturity repayment.
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Question 22 of 30
22. Question
Risk premium calculations are very relevant since equities are, so to say, ‘living assets’ and are, as such, vulnerable to other threats other than the more traditional price risk and credit danger. Pick an odd case.
Correct
Examples are: Business risk, Event risk, such as a leveraged buyout (LBO), and Headline risk, resulting from bad publicity because of management risk2 or outright fraud. The aftermath of headline risk may be a sharp drop in equity price, as investors react negatively to headline news, and/or widening of credit spread on the entity’s bonds, from recent levels.
Incorrect
Examples are: Business risk, Event risk, such as a leveraged buyout (LBO), and Headline risk, resulting from bad publicity because of management risk2 or outright fraud. The aftermath of headline risk may be a sharp drop in equity price, as investors react negatively to headline news, and/or widening of credit spread on the entity’s bonds, from recent levels.
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Question 23 of 30
23. Question
An equity transaction was a contract giving ownership interest in an company. This portion of ownership usually entitles the holder to a pro-rate vote in any payments provided to the class of stock investors of whom it refers, however it entails the opportunity to earn cash or other financial assets only in which of the given conditions?
Correct
It includes the ability to obtain cash or other financial properties only on the grounds of: the payment of a payout or the liquidation of the issuing company.
Incorrect
It includes the ability to obtain cash or other financial properties only on the grounds of: the payment of a payout or the liquidation of the issuing company.
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Question 24 of 30
24. Question
Futures for equity indices are both strong and flexible tools for futures, enabling participants to share in wide price fluctuations without needing to pick particular securities, but also to gamble on short-term price gyrations. What is thought about those methods?
Correct
These instruments are assumed to help investors in bull markets by spending a lot of funds to purchase securities, and to maintain equity interest in bear markets, at least technically. It doesn’t require a strong intelligence quotient (IQ) to understand that these two weapons, founded on half-truths, convey very conflicting aims.
Incorrect
These instruments are assumed to help investors in bull markets by spending a lot of funds to purchase securities, and to maintain equity interest in bear markets, at least technically. It doesn’t require a strong intelligence quotient (IQ) to understand that these two weapons, founded on half-truths, convey very conflicting aims.
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Question 25 of 30
25. Question
What segment of buyers who use stock options seeks to market financial securities and annuities to their retail customers?
Correct
Corporate treasurers finding strategies to control or offset various risks to their balance sheets, insurance firms and mutual managers looking to offer innovative goods and annuities to their retail clients, pension funds wanting access to a particular stock sector without needing to venture out and purchase securities in the business and Corporate treasurers finding strategies to control or offset various risks to their balance sheets, insurance firms and mutual managers looking to offer innovative goods and annuities to their retail clients, pension funds wanting access to a particular stock sector without needing to venture out and purchase securities in the business.
Incorrect
Corporate treasurers finding strategies to control or offset various risks to their balance sheets, insurance firms and mutual managers looking to offer innovative goods and annuities to their retail clients, pension funds wanting access to a particular stock sector without needing to venture out and purchase securities in the business and Corporate treasurers finding strategies to control or offset various risks to their balance sheets, insurance firms and mutual managers looking to offer innovative goods and annuities to their retail clients, pension funds wanting access to a particular stock sector without needing to venture out and purchase securities in the business.
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Question 26 of 30
26. Question
Contrary to custom-made stock derivative instruments tailored to satisfy customer requirements, exchange-traded securities appear to be more structured and appealing to customers who are not licensed to acquire financial instruments which of the given condition is also required?
Correct
Items exchanged on markets appear to be more structured and appealing for buyers who are not permitted to buy financial securities not advertised, can not be identified on the platform and may not provide a price-finding system to insure that liquidity is not gained by fire selling.
Incorrect
Items exchanged on markets appear to be more structured and appealing for buyers who are not permitted to buy financial securities not advertised, can not be identified on the platform and may not provide a price-finding system to insure that liquidity is not gained by fire selling.
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Question 27 of 30
27. Question
Analytics is a characteristic of the left-brain. Every individual has a pattern of decision style distributed in both the left and right brains. Choose the correct description of them.
Correct
Analytics is a characteristic of the left-brain. — individual has a decision style pattern expressed in the left and right brain, with left brain analytical and guidance capabilities, and right brain mental and behavioral capabilities. Decision type assessments are not an IQ test.
Incorrect
Analytics is a characteristic of the left-brain. — individual has a decision style pattern expressed in the left and right brain, with left brain analytical and guidance capabilities, and right brain mental and behavioral capabilities. Decision type assessments are not an IQ test.
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Question 28 of 30
28. Question
All shares in a stock portfolio must not be subject to constant oversight of which of the following?
Correct
We are slashing distributions as businesses face headwinds. Nonetheless, damage prevention needs even more than this. Any assets of an investment fund will be subject to continuous review in management efficiency, consistency in financial statements, cash flow and performance, and dividend policy.
Incorrect
We are slashing distributions as businesses face headwinds. Nonetheless, damage prevention needs even more than this. Any assets of an investment fund will be subject to continuous review in management efficiency, consistency in financial statements, cash flow and performance, and dividend policy.
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Question 29 of 30
29. Question
Assumed risk management is paramount. A risk equal variable may be made more reliable by changing the risk factor used to represent the corresponding settlement duration of the contract. It can even become more complex by differentiating between which of the given options?
Correct
Through discriminating between future consumer exposure and the danger arising from marking-to-market, which implies real disclosure, it may therefore become more complex.
Incorrect
Through discriminating between future consumer exposure and the danger arising from marking-to-market, which implies real disclosure, it may therefore become more complex.
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Question 30 of 30
30. Question
Institutional investors would be well prepared to carry out certain tasks of risk management. However, we can not give such a comment regarding private investors. A sound law, then, is described by one of the given statements. choose the right one.
Correct
A clear law is that if the system is complicated and damage management is outside the means characterizing the capability and know-how of the owner, then the product will not be reached except by a one-kilometer long pole.
Incorrect
A clear law is that if the system is complicated and damage management is outside the means characterizing the capability and know-how of the owner, then the product will not be reached except by a one-kilometer long pole.