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Question 1 of 10
1. Question
Many investors are not sure how much risk they should be taking, and it is the broker’s job to help them figure this out. Various nonfinancial factors in making this determination include:
I. Investor previous investment experience
II. Investor employment situation
III. Investor household income
IV. Investor net worthCorrect
Nonfinancial factors
1. the investor’s age
2. his marital status
3. his dependents
4. his educational needs
5. his employment situation
6. his previous investment experienceIncorrect
Nonfinancial factors
1. the investor’s age
2. his marital status
3. his dependents
4. his educational needs
5. his employment situation
6. his previous investment experience -
Question 2 of 10
2. Question
Which of the following are the customer-specific factors which affect the selection of his securities for investment purposes:
I. Risk tolerance
II. Investment time horizon
III. Investment objectives
IV. Expected Rate of ReturnCorrect
The customer-specific factors which affect the selection of his securities for investment purposes are his risk tolerance, his investment time horizon, and his investment objectives.
Incorrect
The customer-specific factors which affect the selection of his securities for investment purposes are his risk tolerance, his investment time horizon, and his investment objectives.
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Question 3 of 10
3. Question
The following term refers to possession of several varied types of securities, usually so that different parts of one’s portfolio offset risks in other parts:
I. Diversification
II. Concentration
III. Asset allocation
IV. VolatilityCorrect
Diversification for portfolios or accounts is the possession of several varied types of securities, usually so that different parts of one’s portfolio offset risks in other parts.
Incorrect
Diversification for portfolios or accounts is the possession of several varied types of securities, usually so that different parts of one’s portfolio offset risks in other parts.
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Question 4 of 10
4. Question
The following theory that seeks to maximize the return and/or minimize risk for a given portfolio is:
I. Portfolio theory
II. Diversification theory
III. Capital budgeting theory
IV. Asset Valuation theoryCorrect
Portfolio theory is a branch of finance theory which mathematically seeks to maximize the return and/or minimize risk for a given portfolio
Incorrect
Portfolio theory is a branch of finance theory which mathematically seeks to maximize the return and/or minimize risk for a given portfolio
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Question 5 of 10
5. Question
Following is (are) brokerage accounts where, instead of paying his own cash, the customer is lent cash from the broker, with various securities and cash being used as collateral.
I. Cash Accounts
II. Margin Accounts
III. Options Accounts
IV. Day trading AccountsCorrect
Margin accounts are brokerage accounts where, instead of paying his own cash, the customer is lent cash from the broker, with various securities and cash
being used as collateral.Incorrect
Margin accounts are brokerage accounts where, instead of paying his own cash, the customer is lent cash from the broker, with various securities and cash
being used as collateral. -
Question 6 of 10
6. Question
Which of the following can serve as a lesser substitute for power of attorney:
I. Corporate Resolution
II. Trading authorization
III. Discretionary accounts
IV. Estate accountsCorrect
Trading authorization can serve as a lesser substitute for power of attorney.
Incorrect
Trading authorization can serve as a lesser substitute for power of attorney.
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Question 7 of 10
7. Question
Which of the following statement is (are) true about the purpose of Know Your Customer (KYC) forms:
I. To assess client’s willingness to take risk
II. To assess client’s knowledge of investments and finance
III. To assess client’s actual assets
IV. To assess client’s qualification as bona fide foreign residentCorrect
Know Your Customer (KYC) forms are documents specifically designed assess the client’s willingness to assume risk, his knowledge of investments and finance, and his actual assets. Brokers should seek to gain this kind of information from their clients, such as whether they qualify as bona fide foreign residents.
Incorrect
Know Your Customer (KYC) forms are documents specifically designed assess the client’s willingness to assume risk, his knowledge of investments and finance, and his actual assets. Brokers should seek to gain this kind of information from their clients, such as whether they qualify as bona fide foreign residents.
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Question 8 of 10
8. Question
Which of the following appliers when concerning to corporate insiders:
I. Individuals who are privy to corporation’s inside information
II. Includes directors and officers
III. Those who have access to material but non-public knowledge
IV. Owning less than 10% of the voting sharesCorrect
Corporate insiders are individuals who are particularly privy to a corporation’s “inside” information; this definition includes directors and officers for the company in addition to anyone owning over 10% of the voting shares, and really anyone who has access to material but nonpublic
knowledge.Incorrect
Corporate insiders are individuals who are particularly privy to a corporation’s “inside” information; this definition includes directors and officers for the company in addition to anyone owning over 10% of the voting shares, and really anyone who has access to material but nonpublic
knowledge. -
Question 9 of 10
9. Question
Which of the following statement is true about money market funds:
I. Money market funds are not insured by FDIC
II. They can be invested in short term securities
III. They can be invested in both short term and long term securities
IV. The average maturity of the portfolio cannot exceed 120 daysCorrect
money market funds are not insured by the FDIC, Another restriction on money market funds is that they must stay mainly invested in short-term securities—the average maturity in their portfolio cannot exceed 90 days
Incorrect
money market funds are not insured by the FDIC, Another restriction on money market funds is that they must stay mainly invested in short-term securities—the average maturity in their portfolio cannot exceed 90 days
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Question 10 of 10
10. Question
Which of the following is false about transferring accounts between broker dealers
I. Account transfer form states whatever securities the customer had with old broker dealer
II. the old broker-dealer has three business days to confirm or else make an exception for some information in the request
III. The old-broker dealer has five business days to execute the account transfer
IV. Using ACATS requires membership in National Securities Clearing Corporation (NSCC)Correct
The old-broker dealer then has three more business days to execute the account transfer.
Incorrect
The old-broker dealer then has three more business days to execute the account transfer.