QUESTION What type of securities make up a hybrid mutual fund? A) common stock and preferred stock B) secured bonds and debenture bonds C) stocks and bonds D) alternative energy company and utility stocks E) convertible bonds ANSWER Answer: C Explanation: C) Hybrid funds include both stocks and bonds to help balance risk.
QUESTION In recent years, the Dow Jones Industrial Average has replaced manufacturing companies listed in the index with pharmaceutical and technology companies. Why? A) to open the Dow to foreign companies B) to reflect change in the U.S. economy C) to add more companies selling preferred stock D) to enhance computation of the index E) […]
QUESTION Umeko works in Manhattan, but a little bit of her heart will always be home in Japan. For her retirement plan, she selected a mutual fund that focuses on stocks from the Nikkei 225. What type of fund did Umeko invest in? A) global B) sector C) growth D) index E) socially responsible […]
QUESTION Which of the following would NOT be included in the prospectus for a company’s stock? A) details about the company’s mission B) experience of the company’s top managers C) par value for shares D) past dividends E) call-in date for shares ANSWER Answer: E Explanation: E) Call-in dates are only established for callable […]
QUESTION Which of the following is NOT a correctly paired association? A) sector fund—green energy B) balanced fund—stocks and bonds C) money market fund—common stock D) index fund—Wilshire 5000 E) income fund—dividends ANSWER Answer: C Explanation: C) Money market funds follow a very conservative investment strategy. They invest in bank CDs, commercial paper, and […]
QUESTION What aspect of the brokerage firm operational model can benefit the broker at the expense of the client? A) Brokers can execute limit sell orders at higher than the stipulated order price and keep the difference. B) Brokers can utilize insider trading knowledge to manipulate client trades for their own benefit. C) Brokers can […]
QUESTION Which of the following mutual fund types offers investors the lowest risk? A) index B) sector C) money market D) balanced E) socially responsible ANSWER Answer: C Explanation: C) Money market funds invest in bank CDs, U.S. Treasury bills, and commercial paper. Money market instruments are very conservative and considered extremely safe compared […]
QUESTION Marta has an extensive securities portfolio and has been working with the same full-service broker for over ten years. Based on this relationship, what type of security orders would Marta place? A) discretionary order B) secured order C) limit order D) market order E) indexed order ANSWER Answer: A Explanation: A) Given Marta’s […]
QUESTION After 36 years with the same engineering firm, Leonard retired last month. After making sure his investments grew to a substantial nest egg, now he needs to shift strategies so his savings provide living expenses. What type of fund should Leonard shift his retirement money into? A) money market B) balanced C) index D) […]
QUESTION Alison has just opened an account with ClickVest, an online discount broker. What is ClickVest best suited to provide Alison? A) optimized returns on discretionary orders B) customized tax planning advice C) low fees on three-day limit orders D) fast execution of market orders E) reduced commission fees on common stock ANSWER Answer: […]
