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Question 1 of 10
1. Question
Which of the following statements is most accurate?
Correct
Governmentally backed bonds are bonds that are secured by a specific government’s ability to tax its constituency. If, however, the government or the region is unstable, there is greater risk of default by the government.
Corporately backed bonds are secured by a company’s ability to perform well in its sector of the market and show that it is profitable. When small, unproven companies issue debt, it is usually considered highly speculative and risky.Incorrect
Governmentally backed bonds are bonds that are secured by a specific government’s ability to tax its constituency. If, however, the government or the region is unstable, there is greater risk of default by the government.
Corporately backed bonds are secured by a company’s ability to perform well in its sector of the market and show that it is profitable. When small, unproven companies issue debt, it is usually considered highly speculative and risky. -
Question 2 of 10
2. Question
Which of the following is not a type of bond?
Correct
Coupon bonds are debt instruments that are issued at par and pay a fixed rate of interest to the investor. Treasury bonds, or T-bonds, bear the longest maturity of any of the Treasury securities. T-bonds are issued at par with fixed interest and maturities of greater than ten years. Government agency bonds are not the same as U.S. Treasury or municipal bonds, but pertain to agencies of the federal government.
Incorrect
Coupon bonds are debt instruments that are issued at par and pay a fixed rate of interest to the investor. Treasury bonds, or T-bonds, bear the longest maturity of any of the Treasury securities. T-bonds are issued at par with fixed interest and maturities of greater than ten years. Government agency bonds are not the same as U.S. Treasury or municipal bonds, but pertain to agencies of the federal government.
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Question 3 of 10
3. 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 4 of 10
4. 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 5 of 10
5. 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 6 of 10
6. Question
Concerning Qualified domestic relations orders (QDROs), the following statements are true except:
I. A QDRO ensures that the account holder would be liable for the taxes, while passing on the portion of his retirement account.
II. If an accountholder were simply to distribute a portion of his retirement account to his ex-spouse, the accountholder would still be liable for the taxes.
III. The most ordinary QDRO allotment is 50% of the total increase in the retirement plan’s assets from the retirement plan’s assets inception to the point of divorce.
IV. The most ordinary QDRO allotment is 50% of the total increase in the retirement plan’s assets from the marriage’s inception to the point of divorce.Correct
The most ordinary QDRO allotment is 50% of the total increase in the retirement plan’s assets from the marriage’s inception to the point of divorce. QDROs are important because they also shift tax liability. If an accountholder were simply to distribute a portion of his retirement account to his ex-spouse, the accountholder would still be liable for the taxes, but a QDRO ensures that the ex-spouse would be liable.
Incorrect
The most ordinary QDRO allotment is 50% of the total increase in the retirement plan’s assets from the marriage’s inception to the point of divorce. QDROs are important because they also shift tax liability. If an accountholder were simply to distribute a portion of his retirement account to his ex-spouse, the accountholder would still be liable for the taxes, but a QDRO ensures that the ex-spouse would be liable.
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Question 7 of 10
7. Question
Which of the following is true about the difference between current bid and current offer?
I. It effectively imposes a substantial premium on all transaction.
II. It does not affect the final trading price
III. It is called the spread, or markup.
IV. It exists so that the dealer may make money for services provided.Correct
The difference between the two is called the spread, or markup. The spread exists so that the dealer may make money for services provided. This affects the final trading price by effectively imposing a small premium on each transaction.
Incorrect
The difference between the two is called the spread, or markup. The spread exists so that the dealer may make money for services provided. This affects the final trading price by effectively imposing a small premium on each transaction.
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Question 8 of 10
8. Question
Regarding Trade as a principal and as a trade, which of the following statements is / are true?
I. A trader acting on behalf of himself / herself is known as a principal.
II. A principal or dealer’s profit motive is satisfied by the commission he or she earns as a result of the sale and through fees charged.
III. Principals act on their own behalf; agents act on the behalf of others.
IV. A broker’s profit motive is satisfied by the commission he or she earns as a result of the sale and through fees charged.Correct
*A principal or dealer’s profit motive is satisfied by the capital gains and trading fees he or she may acquire due to the transactions between the principal and the principal’s clients.
*A broker’s profit motive is satisfied by the commission he or she earns as a result of the sale and through fees charged.Incorrect
*A principal or dealer’s profit motive is satisfied by the capital gains and trading fees he or she may acquire due to the transactions between the principal and the principal’s clients.
*A broker’s profit motive is satisfied by the commission he or she earns as a result of the sale and through fees charged. -
Question 9 of 10
9. Question
The following are advantages of High-frequency trading (HFT), except:
I. It processes high quantities of orders and transactions at extremely fast speeds.
II. It removes the human element of practical judgment from stock trading.
III. It replaces smaller traders, given the economic advantages such trading confers on the larger companies who can afford to implement HFT.
IV. It utilizes algorithms to compile and apply data from several different markets and to assess market conditions.Correct
Such trading utilizes algorithms to compile and apply data from several different markets and to assess market conditions. Although HFT systems have been acknowledged to improve market liquidity, such systems have received criticism for removing the human element of practical judgment from stock trading and for crowding out smaller traders given the economic advantages such trading confers on the larger companies who can afford to implement HFT.
Incorrect
Such trading utilizes algorithms to compile and apply data from several different markets and to assess market conditions. Although HFT systems have been acknowledged to improve market liquidity, such systems have received criticism for removing the human element of practical judgment from stock trading and for crowding out smaller traders given the economic advantages such trading confers on the larger companies who can afford to implement HFT.
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Question 10 of 10
10. Question
Listed below, are functions carried out by a specialist in securities trading, except?
I. He/shecompletes transactions for other persons and transacts business for him/herself.
II. He/she also facilitates trading by determining prices of the stock for which they make the market.
III. He/she executes orders placed with limits and trades in general.
IV. He/she possesses inventories of that stock to sell in the absence of a selling investor or orders that are too large to fill based on the amount currently for sell by individual investors.Correct
*They also execute orders placed with limits and trades in general. Generally, it is the role of specialists to wait in reserve to fill or receive orders of their given securities to guarantee a stable and fair market.
*Specialists possess inventories of that stock to sell in the absence of a selling investor or orders that are too large to fill based on the amount currently for sell by individual investors.
*Specialists also facilitate trading by posting the bid and ask prices of the stock for which they make the market.Incorrect
*They also execute orders placed with limits and trades in general. Generally, it is the role of specialists to wait in reserve to fill or receive orders of their given securities to guarantee a stable and fair market.
*Specialists possess inventories of that stock to sell in the absence of a selling investor or orders that are too large to fill based on the amount currently for sell by individual investors.
*Specialists also facilitate trading by posting the bid and ask prices of the stock for which they make the market.