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Question 1 of 10
1. Question
Which of the following best defines current yield?
Correct
Current yield is a measurement of the interest or dividends a given security pays compared to the price at which that security is sold.
Incorrect
Current yield is a measurement of the interest or dividends a given security pays compared to the price at which that security is sold.
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Question 2 of 10
2. Question
An investor in the 25% federal tax bracket has a portfolio that had the following returns in for 2015:
$800 stock dividends
$500 corporate bond interest
Calculate his after-tax return.Correct
After tax return = pretax return × (1- marginal tax rate)
= (800 + 500) × (1 – 0.25)
After tax return = $975
Incorrect
After tax return = pretax return × (1- marginal tax rate)
= (800 + 500) × (1 – 0.25)
After tax return = $975
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Question 3 of 10
3. Question
What is the current bond yield for a bond with a par value of $1,500, a market value of $1400 and an annual coupon of 5%?
Correct
Current yield is calculated by dividing the annual cash flows, or coupon rates in the case of bonds, by the market price of the security.
Current yield = Annual cash flow ÷ Market price
= (1500 × 5%) ÷ 1400
=5.35%
Incorrect
Current yield is calculated by dividing the annual cash flows, or coupon rates in the case of bonds, by the market price of the security.
Current yield = Annual cash flow ÷ Market price
= (1500 × 5%) ÷ 1400
=5.35%
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Question 4 of 10
4. Question
A portfolio returned 25% during a given year. The inflation adjusted return calculated for the portfolio was 20%. Calculate the inflation rate for this time period.
Correct
Simple inflation-adjusted returns are calculated by subtracting the rate of inflation from the rate of return of a security.
(1+return)
Inflation adjusted return =_____________- 1
(1+ inflation rate)
(1 + 25%)
20% = ———— – 1
(1 + x)Inflation rate = x = 4.17%
Incorrect
Simple inflation-adjusted returns are calculated by subtracting the rate of inflation from the rate of return of a security.
(1+return)
Inflation adjusted return =_____________- 1
(1+ inflation rate)
(1 + 25%)
20% = ———— – 1
(1 + x)Inflation rate = x = 4.17%
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Question 5 of 10
5. Question
An investor in the 50% federal tax bracket has a portfolio that had the following returns in for 2015:
$700 stock dividends
$300 corporate bond interest
$250 municipal bond interest
Calculate his after tax return.Correct
After tax return = pretax return × (1 – marginal tax rate)
= (700+300) × (1 – 0.50) + 250
= $750The municipal bond income is tax-free, so only the dividend and corporate bond income is subjected to the 50% tax rate.
Incorrect
After tax return = pretax return × (1 – marginal tax rate)
= (700+300) × (1 – 0.50) + 250
= $750The municipal bond income is tax-free, so only the dividend and corporate bond income is subjected to the 50% tax rate.
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Question 6 of 10
6. Question
Securities can be registered in the USA through the following ways, except:
Correct
The registration of securities in compliance with the USA may be accomplished in a number of ways. The three ways securities may be registered under the USA are by notice filing, qualification, and coordination.
Incorrect
The registration of securities in compliance with the USA may be accomplished in a number of ways. The three ways securities may be registered under the USA are by notice filing, qualification, and coordination.
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Question 7 of 10
7. Question
Notice filing requires which of the following?
Correct
Notice filing occurs when the issuer provides documents from the Securities Exchange Commission (SEC) filing to the administrator. It requires documents filed with their SEC registration statements, amendments thereto, a relevant valuation of the securities, and consent to service of process.
Incorrect
Notice filing occurs when the issuer provides documents from the Securities Exchange Commission (SEC) filing to the administrator. It requires documents filed with their SEC registration statements, amendments thereto, a relevant valuation of the securities, and consent to service of process.
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Question 8 of 10
8. Question
Registration by qualification occurs when the issuer submits to an application process that includes information regarding the following, except:
Correct
Registration by qualification occurs when the issuer submits to an application process that includes information regarding the business and the nature thereof, detailed financial statements of the issuer, type of security offered and how the proceeds will be used, submission of prospectus, and a copy of the security with an opinion of legality according to legal counsel.
Incorrect
Registration by qualification occurs when the issuer submits to an application process that includes information regarding the business and the nature thereof, detailed financial statements of the issuer, type of security offered and how the proceeds will be used, submission of prospectus, and a copy of the security with an opinion of legality according to legal counsel.
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Question 9 of 10
9. Question
The Uniform Securities Act defines security as:
Correct
The definition of security as outlined by the Uniform Securities Act is an investment of capital assets in a common enterprise with the anticipation of growing returns resulting mostly from the energies of a person separate from the investor.
Incorrect
The definition of security as outlined by the Uniform Securities Act is an investment of capital assets in a common enterprise with the anticipation of growing returns resulting mostly from the energies of a person separate from the investor.
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Question 10 of 10
10. Question
Which of the following best defines an issuer according to the Uniform Securities Act?
Correct
An issuer, as defined under the USA, is a person who issues or proposes the issue of a given security.
Incorrect
An issuer, as defined under the USA, is a person who issues or proposes the issue of a given security.