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Question 1 of 10
1. Question
Which is (are) the correct statement(s) regarding Negotiable certificates of deposit?
I. Negotiable certificates of deposit are negotiable time deposits with a higher interest rate.
II. For negotiable time deposit the required minimum investment is $100,000.
III. These are very high-risk.
IV. They can be sold to other investors if the holder requires it.Correct
Negotiable certificates of deposit are defined as negotiable time deposits with a higher interest rate due to the investment required ($100,000 is the minimum). These are very low-risk, negotiable investments — meaning they can be sold to other investors if the holder requires it.
Incorrect
Negotiable certificates of deposit are defined as negotiable time deposits with a higher interest rate due to the investment required ($100,000 is the minimum). These are very low-risk, negotiable investments — meaning they can be sold to other investors if the holder requires it.
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Question 2 of 10
2. Question
Risks associated with bond investment are-
I. Market risk
II. Inflation risk
III. Investment risk
IV. Fluctuation riskCorrect
Risks associated with bond investment are market risk and inflation risk.
Incorrect
Risks associated with bond investment are market risk and inflation risk.
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Question 3 of 10
3. Question
Which statement(s) is (are) correct regarding Letter of Intent (LOI)?
I. The investor has to meet the share requirement stated in the LOI within 13 months
II. The agreement can be backdated up to 90 days.
III. Shares are kept in an escrow account until the LOI obligation is met.
IV. The investor limits price fluctuation risk by investing periodically, or using dollar cost averaging.Correct
Letter of Intent (LOI): The investor has to meet the share requirement stated in the LOI within 13 months, the agreement can be backdated up to 90 days, and shares are kept in an escrow account until the LOI obligation is met.
Incorrect
Letter of Intent (LOI): The investor has to meet the share requirement stated in the LOI within 13 months, the agreement can be backdated up to 90 days, and shares are kept in an escrow account until the LOI obligation is met.
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Question 4 of 10
4. Question
In voluntary accumulation plan, the investor limits price fluctuation risk by investing-
Correct
Voluntary accumulation plan: the investor limits price fluctuation risk by investing periodically, or using dollar cost averaging.
Incorrect
Voluntary accumulation plan: the investor limits price fluctuation risk by investing periodically, or using dollar cost averaging.
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Question 5 of 10
5. Question
Which one is the correct relationship to calculate average cost per share?
Correct
How to calculate average cost per share: Average cost per share = total dollars invested ÷ shares bought
Incorrect
How to calculate average cost per share: Average cost per share = total dollars invested ÷ shares bought
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Question 6 of 10
6. Question
Trish Williams deposits a total of $600 in ABC Fund over three months, making her monthly investment $200. The price of shares was: Month 1: $50 Month 2: $60 Month 3: $55 What will be the average cost per share?
Correct
You must first determine how many shares she owns. Month 1: $200/$50= 4 shares Month 2: $200/$60= 3.33 shares Month 3: $200/$55= 3.64 shares
Total shares held: 4 + 3.33 + 3.64 = 10.97 shares
To calculate average price per share, you must now divide total amount invested by the amount of shares: $600 ÷ 10.97 = $54.69Incorrect
You must first determine how many shares she owns. Month 1: $200/$50= 4 shares Month 2: $200/$60= 3.33 shares Month 3: $200/$55= 3.64 shares
Total shares held: 4 + 3.33 + 3.64 = 10.97 shares
To calculate average price per share, you must now divide total amount invested by the amount of shares: $600 ÷ 10.97 = $54.69 -
Question 7 of 10
7. Question
Which one is the correct relationship for calculation Net Asset Value?
Correct
Net Asset Value (NAV): value of fund’s assets ÷ outstanding shares
Incorrect
Net Asset Value (NAV): value of fund’s assets ÷ outstanding shares
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Question 8 of 10
8. Question
ABC mutual fund has a net asset value of $18 and a public offering price of $20. What will be the sales charge?
Correct
The sales charge is ($20 – $18)/$20 = 0.1, or 10 percent
Incorrect
The sales charge is ($20 – $18)/$20 = 0.1, or 10 percent
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Question 9 of 10
9. Question
Which is (are) the correct types of Unit Investment?
I. Fixed investment trust
II. Participating trust
III. Open-ended trust
IV. Close-ended trustCorrect
Unit investment trusts come in two types:
1.Fixed investment trust
2.Participating trustIncorrect
Unit investment trusts come in two types:
1.Fixed investment trust
2.Participating trust -
Question 10 of 10
10. Question
Which one is the correct relationship to calculate Public Offering Price (POP)?
Correct
Public Offering Price (POP): Net Asset Value (NAV) + broker’s commission
Incorrect
Public Offering Price (POP): Net Asset Value (NAV) + broker’s commission