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Question 1 of 10
1. Question
For how long should records be kept following the registration of an investment advisor?
Correct
Following the registration of an investment advisor, the Securities Exchange Commission requires that detailed records be kept. These records must be maintained in a secure location for five years.
Incorrect
Following the registration of an investment advisor, the Securities Exchange Commission requires that detailed records be kept. These records must be maintained in a secure location for five years.
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Question 2 of 10
2. Question
The time value of money concept can be described as:
Correct
The time value of money concept is the assumption that money held today is worth more than money received tomorrow. There are several reasons why this is a valid assumption. The rate of inflation makes future dollars worth less due to the loss in purchasing power.
Incorrect
The time value of money concept is the assumption that money held today is worth more than money received tomorrow. There are several reasons why this is a valid assumption. The rate of inflation makes future dollars worth less due to the loss in purchasing power.
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Question 3 of 10
3. Question
Which of the following happens in inflation?
Correct
The rate of inflation makes future dollars worth less due to the loss in purchasing power.
Incorrect
The rate of inflation makes future dollars worth less due to the loss in purchasing power.
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Question 4 of 10
4. Question
Which of the following is true about descriptive statistics?
Correct
Descriptive statistics are a set of calculated numbers that are used to generalize a set of data. In relation to the securities industry, descriptive statistics tend to measure risk, reward (returns), and the ranges pertaining thereto. The most useful descriptive statistics pertaining to the securities industries are the measures of central tendency (mean, median, and mode), range, standard deviation, and beta (and its derivatives).
Incorrect
Descriptive statistics are a set of calculated numbers that are used to generalize a set of data. In relation to the securities industry, descriptive statistics tend to measure risk, reward (returns), and the ranges pertaining thereto. The most useful descriptive statistics pertaining to the securities industries are the measures of central tendency (mean, median, and mode), range, standard deviation, and beta (and its derivatives).
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Question 5 of 10
5. Question
Which of the following is not a measure of central tendency?
Correct
The measures of central tendency are: mean, median and mode.
Incorrect
The measures of central tendency are: mean, median and mode.
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Question 6 of 10
6. Question
Calculate the share price given the following: P/E $40; outstanding shares $16,000; book value $800,000;12month earnings $20,000.
Correct
P/E = price per share / earnings per share
Price per share = P/E * earnings per share= 40*(20,000/16,000)
= $50
Incorrect
P/E = price per share / earnings per share
Price per share = P/E * earnings per share= 40*(20,000/16,000)
= $50
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Question 7 of 10
7. Question
An investor wants to estimate the risk of a given security, which of the following measures will be found useful?
Correct
Beta is a measure of volatility used to judge the risk of a given security or portfolio.
Incorrect
Beta is a measure of volatility used to judge the risk of a given security or portfolio.
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Question 8 of 10
8. Question
Which measure of central tendency assists the investor in finding trends?
Correct
Mode is the most recurrent return in a portfolio. This measure of central tendency assists the investor in finding trends, positive or negative, and dealing with them appropriately.
Incorrect
Mode is the most recurrent return in a portfolio. This measure of central tendency assists the investor in finding trends, positive or negative, and dealing with them appropriately.
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Question 9 of 10
9. Question
If an investment purchased has greater returns than the forfeited investment, the opportunity cost is said to be:
Correct
If the investment purchased has greater returns than the forfeited investment, the opportunity cost is negative and not real.
Incorrect
If the investment purchased has greater returns than the forfeited investment, the opportunity cost is negative and not real.
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Question 10 of 10
10. Question
Which of the following is the correct order of liquidation?
Correct
The order of liquidation, or the order in which the security holders are reimbursed, is as follows:
1. secured debtors (secured bonds)
2. unsecured debtors (unsecured bonds)
3. preferred stockholders
4. common stockholdersIncorrect
The order of liquidation, or the order in which the security holders are reimbursed, is as follows:
1. secured debtors (secured bonds)
2. unsecured debtors (unsecured bonds)
3. preferred stockholders
4. common stockholders