If an investor expects a large decrease in the stock market sixty days from today, she can take advantage of the change by doing which of the following?
(1) Buying S&P 500 index calls
(2) Buying S&P 500 index puts
(3) Selling S&P 500 index calls
(4) Selli
C.
When a bond is selling at a premium to par, the YTM will always be __________ the bond's coupon rate. If a bond is selling at a discount to par, the YTM will always be __________ the bond's coupon rate.
A. greater than, less than
B. less than, greater tha
C.
Which of the following is/are correct regarding beta?
(1) Beta is used to measure the amount of unsystematic risk in an investor's portfolio.
(2) A portfolio's beta can be positive or equal to zero, but cannot be negative.
A. (1) only
B. (2) only
C. None
B.
Which of the following is not a characteristic of tangible assets, such as collectibles?
A. Collectibles do not have a strong secondary market.
B. Collectibles are not subject to significant government regulation.
C. Collectibles are marketable.
D. Collec
C.
Which of the following are qualified expenses to be paid from a 529 plan?
(1) Books
(2) Tuition
(3) Supplies
(4) Room and board
A. (1) and (3) only
B. (1), (2), and (3) only
C. (2), (3), and (4) only
D. All of the above
D.
Jim, John, and Jerry would each like to contribute money to their nephew's Coverdell Education Savings Account (ESA).
Which of the following is correct regarding the maximum contribution that can be made on behalf of the nephew?
A. Jim, John, and Jerry ar
A.
Which of the following are characteristics of Pell Grants?
(1) Only full-time students are eligible
(2) Distributed on the basis of financial need and availability of federal funds
(3) Receipt of other grants and loans is contingent upon applying for or r
B.
All but which of the following are correct regarding Federal Supplemental Educational Opportunity Grants (SEOGs)?
A. Funded by the federal government, but administered by individual schools
B. Available to undergraduate students only
C. Available to full-
C.
Stafford Loans are administered by the:
A. Private Loan Administration (PLA).
B. Federal Family Education Loan Program (FFELP).
C. Parent Loans to Undergraduate Students (PLUS).
D. Federal Assistance Loan Program (FALP).
B.
Which of the following are characteristics of Perkins loans?
(1) Repayment may be extended to 10 years
(2) Available to undergraduate students only
(3) Both full-time and part-time students are eligible
(4) Distributed on the basis of financial need
A. (1
B.
All but which of the following are correct regarding Parent Loans to Undergraduate Students (PLUS)?
A. Both full-time and part-time students are eligible
B. Loans are not based on financial need
C. Available to parents of undergraduate students up to the
A.
Money in a Coverdell Education Savings Account (ESA) must be used by the time the beneficiary is __________ years of age.
A. 18
B. 21
C. 24
D. 30
D.
What is the maximum contribution a donor can make in a single year to a 529 plan if the gift tax annual exclusion is $15,000? Assume the donor has not made previous contributions to a 529 plan.
A. $15,000
B. $30,000
C. $75,000
D. $105,000
C.
To establish a Coverdell Education Savings Account (ESA), the beneficiary must be under age __________ unless the individual is designated as a special needs beneficiary.
A. 14
B. 18
C. 21
D. 30
B.
Pete would like to save $80,000 for his son's college education. His son will begin college in 13 years. Assume Pete can invest $10,000 now, and $600 at the end of each 3-month period.
What annual rate of return is required for Pete to achieve his goal?
A
D.
Which of the following will result if money distributed from a 529 Plan is not used to pay for qualifying education expenses?
A. Gains are taxed at capital gains rates, and a 10% penalty is applied.
B. Gains are taxed as ordinary income, and a 10% penalty
B.
Which of the following are qualified expenses to be paid from a Coverdell Education Savings Account (ESA)?
(1) Computers and laptops
(2) Transportation
(3) Books and supplies
(4) Tuition, room, and board
A. (3) and (4) only
B. (1), (2), and (4) only
C. (2
D.
For divorces executed before December 31, 2018, and not modified after that date, which of the following are required to deduct alimony payments?
(1) Payments must be made in cash.
(2) Payments may extend beyond the death of the payee.
(3) The payor and p
B.
For estimated tax payments, what is the penalty imposed on a self-employed taxpayer who did not have any income tax liability for the preceding year, but failed to withhold $10,000 in tax payments in the current year?
A. $0 penalty
B. $1,000 penalty
C. $2
A.
Which of the following is correct regarding a taxpayer's ability to deduct moving expenses in 2019?
A. To deduct moving expenses, the taxpayer must be working full-time at his or her new job for at least 39 weeks within the first year of moving.
B. To ded
D.
Which of the following is correct regarding the amount of taxes withheld from an employee's paycheck based on the number of exemptions exemptions he or she claimed on IRS Form W-4?
A. The more exemptions that are claimed, the less tax is withheld from an
A.
Which of the following are considered secondary sources of tax information?
(1) Periodicals
(2) Newsletters
(3) Books
(4) Articles
A. (1) and (2) only
B. (1), (3), and (4) only
C. None of the above
D. All of the above
D.
Which of the following are above-the-line deductions that may be claimed without a taxpayer itemizing deductions?
(1) Capital losses
(2) Deductible traditional IRA contributions
(3) Ordinary and necessary business (Schedule C) expenses (4) Health savings
D.
Which of the following is/are correct regarding tax credits?
(1) A refundable tax credit cannot reduce a taxpayer's income tax liability below zero.
(2) A non-refundable tax credit can reduce a taxpayer's income tax liability below zero.
A. (1) only
B. (2
C.
To claim a dependency tax exemption, all but which of the following tests must be met?
A. Support test
B. Age test
C. Member of household test
D. Gross income test
B.
Which of the following professionals is not permitted to represent a taxpayer when audited by the IRS?
A. CPA
B. Enrolled actuary
C. CFP�
D. Enrolled agent
C.
Which of the following is/are correct regarding the taxable wage base applied to social security and Medicare taxes paid by self-employed individuals?
(1) There is a taxable wage base applied to the social security portion of a self-employed individual's
D.
According to the kiddie tax rules, if a child under the age of __________, or under the age of __________ if a full time student, has unearned income exceeding the annual threshold, the excess is taxed at the __________.
A. 18, 21, rates for trusts and es
D.
If a taxpayer would like to change accounting methods, such as switching from the cash to accrual method of reporting income and expenses, which of the following must occur?
A. The taxpayer must receive approval from a CPA.
B. The taxpayer must receive ap
B.
Which of the following is correct regarding long-term contracts?
A. The duties performed under the contract must be completed within ten years after the year in which construction begins.
B. The duties performed under the contract must be completed within
C.
When gifts of property are claimed as income tax deductions in excess of __________, the donor must obtain a qualified appraisal for each item donated and must include a copy of the appraisal with the tax return.
A. $50
B. $500
C. $1,000
D. $5,000
D.
Non-business bad debts are deductible as __________ on IRS Form 8949. The amount deductible is limited to the taxpayer's basis in the debt.
A. long-term capital losses
B. short-term capital losses
C. passive losses
D. portfolio losses
B.
All but which of the following are characteristics of a sole proprietorship?
A. Simplest form of business entity B. No formal legal requirements
C. Lack of continuity of business life
D. Limited liability for the owner
D.
The amount of Section 1244 stock that can be deducted as an ordinary loss is limited to how much per year?
(1) $50,000 if single
(2) $50,000 if filing a joint return (3) $100,000 if single
(4) $100,000 if filing a joint return
A. (1) and (3) only
B. (1) a
B.
Which IRS tax form serves as an informational return used to report income, gains, losses, deductions, and credits from the operation of a partnership?
A. IRS Form 1065
B. IRS Form 1060
C. IRS Form 1040
D. IRS Form 706
A.
Which of the following are among the requirements for a valid S Corp election?
(1) Only one class of stock permitted.
(2) There may be no more than 75 shareholders.
(3) It must be a domestic corporation.
(4) Shareholders must be US citizens or residents.
C.
Any charitable contribution that is disallowed because of the limitation with respect to AGI can be carried forward for the lesser of __________ or death, and may be deducted on the donor's future income tax returns.
A. 3 years
B. 5 years
C. 10 years
D. 2
B.
If payments to an ex-spouse terminate when a child turns age 18, rather than when the spouse remarries, which of the following will result?
A. The payments will be non-deductible to the payor and non-taxable to the payee. The payments will be considered c
A.
How is the original basis of a newly acquired asset calculated? Assume the asset was acquired at an arm's length transaction from a non-related party.
A. Cost minus expenses of sale, such as sales tax paid, installation costs, freight charges, and commiss
B.
What are the tax consequences if an installment sale occurs and the buyer is a family member who then sells the purchased property within two years after acquiring it?
A. The family member who bought the property must recognize all gain deferred by the in
B.
In a like-kind exchange, a taxpayer has __________ days after the date the relinquished property is transferred to identify potential replacement properties. The exchange must be completed within __________ days after the transfer of the relinquished prop
C.
To satisfy the ownership test for the Section 121 exclusion, the home must have been owned and used as a principal residence for at least __________ of the __________ years preceding the date of sale.
A. 1, 3
B. 1, 5
C. 2, 3
D. 2, 5
D.
All but which of the following are characteristics of a C Corp?
A. Subject to double taxation
B. Perpetual life
C. Must have stock available for purchase on a stock exchange
D. Potential for classification as a personal service corporation (PSC)
C.
A loss on the sale of property between related parties is disallowed for income tax purposes." In this statement, "related parties" includes which of the following?
(1) Lineal descendants
(2) An individual and corporation if the individual owns more than
D.
Which of the following are preference items or adjustments for AMT?
(1) The bargain element of nonqualified stock options
(2) General obligation municipal bonds
(3) Oil and gas percentage depletion
(4) Depreciation (ACRS and MACRS)
A. (1) and (2) only
B.
B.
The holding period of property inherited from a decedent is considered to be __________ in nature.
A. sometimes short-term
B. always short-term
C. sometimes long-term
D. always long-term
D.
Long-term capital gains tax rates apply if an asset is held for:
A. at least 12 months.
B. longer than 12 months.
C. at least 6 months using the half-year convention.
D. longer than 6 months using the half-year convention.
B.
A closely held C Corp will be classified as a personal service corporation (PSC) if it falls under which of the following categories?
(1) Health (doctors and dentists) (2) Engineering
(3) Accounting and architectural (4) Law
A. (1) and (4) only
B. (1), (2
D.
Which of the following describes an itemized deduction?
A. A trade or business expense deductible from AGI
B. A personal expense deductible from AGI
C. A trade or business expense deductible in arriving at gross income
D. A personal expense deductible in
B.
A doctor starting a new medical practice is concerned about limiting her personal liability. She would like to have flow-through taxation and the ability to easily sell interests in her practice in the future. Which of the following entities is most suita
A.
Which of the following entities are subject to graduated corporate income tax rates?
(1) LLC
(2) S Corp
(3) Sole proprietorship
(4) Personal service corporation (PSC)
A. (3) only
B. (2) and (3) only
C. (1), (2), and (4) only
D. None of the above.
D.
Which of the following entities will protect owners from liability beyond the amount they personally invested?
(1) C Corp
(2) Limited partnership
(3) LLC
(4) S Corp
A. (1) and (4) only
B. (2) and (3) only
C. (1), (3), and (4) only
D. All of the above
C.
Which of the following qualify as alimony?
A. Paying child support
B. Paying the payor spouse's mortgage (The payee lives in the house alone.)
C. Paying $5,000 to an ex-spouse's IRA
D. None of these qualify as alimony.
C.
Zack reports the following transactions for the current year:
1. Earned a salary of $80,000 through his full-time job.
2. Schedule C loss of $6,000 (assume material participation)
3. Received a $30,000 inheritance due to his uncle's death.
What is Zack's
B.
Which of the following is/are correct regarding tax credits and deductions?
(1) A deduction is more beneficial to a higher-bracket taxpayer.
(2) A credit is more beneficial to a lower-bracket taxpayer.
A. (1) only
B. (2) only
C. None of the above
D. All o
D.
Each year Chris rents out his beachfront home in Miami for 14 days. Because of his home's prime location, Chris is able to charge $5,000 per week. Which of the following is true?
A. Any repairs necessary would be deductible, but Chris is not permitted to
D.
Stephanie teaches piano lessons at the local community center as an independent contractor. Which of the following taxes is Stephanie required to pay?
A. Income tax
B. Medicare payroll tax
C. Social security payroll tax
D. All of the above are correct.
D.
Due to civil fraud, Jeremy underpaid his taxes last year by $8,000. He will incur a penalty of __________.
A. $1,600
B. $2,000
C. $4,000
D. $6,000
D.
Which of the following are considered taxable income?
(1) Workers compensation
(2) Child support
(3) Jury duty pay
(4) Premiums paid by an employer on $75,000 of group term life insurance
A. (1) and (3) only
B. (3) and (4) only
C. (1), (3), and (4) only
D
B.
The Tax Cuts and Jobs Act of 2017 provides eligible taxpayers with a deduction of up to __________ of qualified business income (QBI) from a domestic business operated directly or through a pass-through entity.
A. 10%
B. 15%
C. 20%
D. 25%
C.
When property is transferred for less than full consideration of money or money's worth, the value of the gift is equal to which of the following?
A. The value of the property transferred less the consideration received
B. The value of the property transf
A.
The majority of individual tax returns filed in the US use the __________ method of accounting.
A. cash
B. accrual
C. hybrid
D. long-term contract
A.
Mike has taxable income of $200,000 and a tax liability of $55,000. Mary has taxable income of $150,000 and a tax liability of $35,000. The tax rate structure being used to tax Mike and Mary is __________.
A. proportional
B. value added
C. progressive
D.
C.
A taxpayer may petition for redetermination of an assessed income tax penalty and receive a jury trial in which of the following courts?
A. US Tax Court
B. US District Court
C. US Court of Appeals
D. US Appellate Court
B.
Jim and Kate were married when Jim died unexpectedly on February 15 of the current year. They had no dependents. Which of the following is Kate's tax filing status for the current year?
A. Single
B. Married filing separately
C. Married filing jointly
D. H
C.
Which of the following is/are correct regarding capital losses?
(1) Capital losses have a two-year carry back period.
(2) Capital losses have a five-year carry forward period.
A. (1) only
B. (2) only
C. None of the above
D. All of the above
B.
Which of the following represents the maximum amount of capital loss that a single taxpayer can deduct in a single year?
A. Up to the amount of capital gain
B. Up to the amount of capital gain plus $3,000
C. Up to the amount of capital gain plus $6,000
D.
B.
A wash sale occurs when an investor acquires substantially identical stock during the __________ days prior to, or __________ days after the date of sale.
A. 30, 30
B. 45, 45
C. 30, 45
D. 45, 30
A.
All but which of the following are considered casualty losses?
A. Sudden hail damage
B. Termite infestation
C. Damage to an automobile due to negligent driving
D. All of the above are casualty losses.
B.
All but which of the following are characteristics of an LLC?
A. Limited liability to all members B. Dissolution upon the death, retirement, or resignation of a member unless the remaining members elect by majority to continue
C. Majority approval require
D.
All but which of the following are requirements for a valid prenuptial agreement?
A. Both parties must provide full and complete disclosure of their net worth.
B. The agreement must be in writing and signed by both parties.
C. The agreement must be execut
D.
As a result of the Tax Cuts and Jobs Act of 2017, which of the following is/are correct regarding debt accumulated on a primary residence?
(1) For a loan originating after December 15, 2017, a taxpayer may deduct interest up to $750,000 in qualifying debt
D.
The maximum exclusion of gain on the sale of a principal residence is __________ for married couples filing jointly, and __________ for single taxpayers.
A. $1,000,000, $500,000
B. $500,000, $1,000,000
C. $500,000, $250,000
D. $250,000, $500,000
C.
Child support payments are __________ to the payor and __________ to the recipient.
A. non-deductible, non-taxable
B. deductible, taxable
C. taxable, deductible
D. non-taxable, non-deductible
A.
Which of the following is not a type of audit conducted by the IRS?
A. Field audit
B. Correspondence audit
C. Office audit
D. Court audit
D.
Which of the following entities is subject to double taxation?
A. S Corp
B. C Corp
C. LLC
D. Partnership
B.
An improvement to a tangible asset has which of the following effects on the asset's basis?
A. The cost of the improvement is added to the asset's basis.
B. The cost of the improvement is subtracted from the asset's basis.
C. The cost of the improvement d
A.
In a like-kind exchange, when property received by a related party is disposed of less than two years after the date of the exchange, what is the result?
A. The like-kind exchange treatment is disallowed and the deferred gain is recognized over a two-year
B.
How is a loss on the sale of a personal residence treated for tax purposes?
A. Losses are unrecognized and non-deductible.
B. Losses are unrecognized and non-deductible unless the ownership and use tests have been satisfied.
C. Losses may be recognized up
A.
Charitable donations are __________ to the extent the donor received consideration in return for the donation.
A. fully deductible
B. non-deductible
C. partially deductible
D. taxable
B.
Which of the following is correct regarding certificates of deposit (CDs)?
A. CDs are short-term securities that may be bought or sold in the open market at a market-determined price.
B. CDs typically invest in high-quality, short-term investments, such a
C.
All but which of the following are correct regarding Treasury bills?
A. Have maturities of one year or less
B. Sold in minimum denominations of $500
C. Considered to be default risk free
D. Sold at a discount to par
B.
Which of the following describes the relationship between total risk, systematic risk, and unsystematic risk?
A. Total risk = systematic risk - unsystematic risk
B. Total risk - systematic risk = unsystematic risk
C. Unsystematic risk - total risk = syste
B.
Common stock is referred to as __________ because the owner of the stock is also an owner of the corporation and may participate in its capital and income growth.
A. debt
B. equity
C. cumulative stock
D. preferred stock
B.
Which of the following are correct regarding a bond's yield to maturity (YTM)?
(1) The YTM assumes that coupon payments are reinvested at the YTM rate of return for the life of the bond.
(2) When the market rate of interest for the same term and risk is h
C.
An investment grade bond is one that is rated __________ or higher by the Standard & Poor's bond rating service. A high-yield bond is rated __________ or lower by Standard & Poor's.
A. BBB, BB
B. BBB+, BB-
C. BBB-, BB+
D. BB, BBB
C.
Which of the following describes bonds that have a legal claim to specific assets in the event of default, insolvency, or liquidation?
A. Debenture bonds
B. Secured bonds
C. Unsecured bonds
D. Indenture bonds
B.
Which of the following are characteristics of EE bonds?
(1) May be purchased for an amount that is equal to one-half of face value
(2) May be purchased for a minimum price of $25 for a $50 bond
(3) US Treasury guarantees an EE bond's value will double aft
B.
Which of the following are characteristics of zero-coupon bonds?
(1) A zero-coupon bond does not make periodic interest payments throughout the term of the bond. (2) Zero-coupon bonds have significant reinvestment risk because no payments are made until t
A.
All but which of the following are characteristics of exchange-traded funds (ETFs)?
A. Traded on an exchange like individual securities
B. Trades settle at the end of the trading day, similar to mutual funds
C. Lower expenses than mutual funds
D. Income t
B.
If a corporation is required to pay unpaid dividends from prior years before paying a dividend to common stockholders, the stock is considered to be which of the following?
A. Accumulated preferred stock
B. Preferred stock
C. Convertible stock
D. Cumulati
D.
Which of the following is/are correct regarding the capital structure of open-end mutual funds?
(1) Open-end mutual funds issue new shares and redeem existing shares from shareholders.
(2) The price an investor pays when buying shares of an open-end mutua
A.
How is the net asset value (NAV) of a mutual fund calculated?
A. NAV = (total value of investment + liabilities) / shares outstanding
B. NAV = (total value of investment / shares outstanding) - liabilities
C. NAV = (total value of investment - liabilities
C.
A hedge fund is a __________ offered fund of securities for wealthy investors. The investment manager is generally paid a __________ fee.
A. publicly, performance
B. privately, performance
C. publicly, flat
D. privately, flat
B.
Which of the following are characteristics of guaranteed investment contracts (GICs)?
(1) GICs are sold by insurance companies primarily to mutual fund companies.
(2) GICs provide higher returns than savings accounts and US Treasury securities.
(3) The ra
C.
All but which of the following are characteristics of a REIT?
A. A REIT is a publicly traded open-end investment company.
B. A mortgage REIT is a specific type of REIT.
C. A REIT can sell at a premium or discount to its NAV.
D. All of the above are correc
A.
Which of the following is/are correct regarding cyclical stocks?
(1) When the economy is growing, demand usually strengthens and cyclical companies are able to make large profits.
(2) When the economy is declining, cyclical companies are hurt by decreases
D.
Puts are an option to __________ a specified number of shares of stock during a specified period at a specified price. A buyer of a put option expects the price of the underlying stock to __________.
A. buy, fall
B. sell, rise
C. buy, rise
D. sell, fall
D.
Which of the following accurately describes the difference between rights and warrants?
(1) A warrant may be attached to new debt or preferred issues to make the issues more attractive to buyers.
(2) A difference between rights and warrants is their lifes
B.
Which of the following measures how far the actual outcomes of a probability distribution deviate from the arithmetic mean?
A. Skewness
B. Correlation coefficient
C. Coefficient of determination
D. Poisson distribution
A.
The Jensen and Treynor ratios assume a __________ portfolio. The Sharpe ratio assumes a __________portfolio.
A. non-diversified, diversified
B. non-diversified, riskless
C. diversified, non-diversified
D. riskless, diversified
C.
Which of the following describes a strategy used to minimize the interest rate risk of bond investments by adjusting the portfolio duration to match the investment time horizon?
A. Bond laddering
B. Bond immunization
C. Bond hedging
D. Bond spread
B.
According to Modern Portfolio Theory, an investor's optimal portfolio is located at the point of tangency of the investor's __________ and the __________ of available investment assets.
A. marginal utility curve, efficient frontier
B. optimal portfolio, e
C.
According to the anomaly known as the small-firm effect, __________ companies have been shown to outperform __________ companies on a risk-adjusted basis over a period of many years.
A. large cap, small cap
B. mid cap, small cap
C. small cap, large cap
D.
C.
According to the principles of behavioral finance, which theory suggests that investors typically fear losses more than they value gains? As a result, investors will often choose the smaller of two potential gains if it avoids highly probable loss.
A. Exp
B.
A large interest rate change has the most significant effect on a __________ bond.
A. low coupon
B. short duration
C. high coupon
D. short maturity
A.
All but which of the following are charting techniques used by technical analysts?
A. Moving average
B. Trendline
C. CAPM
D. Support and resistance levels
C.
The initial margin percentage is currently __________ as established by Regulation T of the Federal Reserve Board.
A. 25%
B. 30%
C. 50%
D. 75%
C.
Which of the following factors are included in the Arbitrage Pricing Theory (APT)?
(1) Unexpected inflation
(2) Unexpected changes in industrial production
(3) Unexpected shifts in risk premiums
(4) Unexpected changes in interest rates
A. (1) and (2) only
D.
The standard deviation of an investor's portfolio must be __________ the weighted average of the standard deviation of returns of the individual securities.
A. equal to
B. less than or equal to
C. less than
D. greater than
B.
All but which of the following are underlying assumptions of the capital asset pricing model (CAPM)?
A. All investors have the same one-period time horizon.
B. All investors have the same expectations about the risk-return relationship of assets.
C. Inves
C.
Which of the following is/are correct regarding a bond's coupon rate?
(1) The smaller a bond's coupon, the greater its relative price fluctuation.
(2) The smaller a bond's coupon, the greater its reinvestment risk.
A. (1) only
B. (2) only
C. None of the a
A.
Buying a __________ and selling a __________ are both bullish strategies.
A. put, call
B. put, put
C. call, call
D. call, put
D.
Which of the following describes the rate of return calculated by the capital asset pricing model (CAPM)?
A. The rate of return is not reliable because CAPM fails to take risk into account.
B. The rate of return can be used in the dividend growth model fo
B.
Which of the following are liquidity ratios?
(1) Current ratio
(2) Debt-to-equity ratio
(3) Quick ratio
(4) Fixed asset turnover ratio
A. (1) and (2) only
B. (1) and (3) only
C. (2), (3), and (4) only
D. All of the above
B.
Based on the Markowitz model, which of the following securities would a rational investor select?
A. Rate of return 4%, beta 1.3
B. Rate of return 7%, beta 1.1
C. Rate of return 6%, beta 1.2
D. Rate of return 7%, beta 1.2
B.
The duration of a bond is least affected by which of the following characteristics?
A. Coupon
B. Time to maturity
C. Interest rate
D. Quality
D.
Which of the following will shift the Markowitz efficient frontier upward and to the left?
A. Selecting investments with lower coefficients of correlation between them
B. Changing the proportion of securities already invested in the portfolio
C. Taking le
A.
A mutual fund that invests in securities both inside and outside the US is known as a/an __________ .
A. long-short fund
B. balanced fund
C. international fund
D. global fund
D.
Which of the following securities are backed by the full faith and credit of the US government?
A. Student Loan Marketing Association notes (Sallie Maes)
B. Federal Home Loan Mortgage Corporation debentures (Freddie Macs)
C. Federal National Mortgage Asso
D.
Which of the following investments will provide tax-exempt interest if the proceeds are used to pay for qualifying education expenses?
(1) FNMA funds
(2) EE bonds
(3) Treasury bonds
(4) Treasury bills
A. (2) only
B. (1) and (2) only
C. (2), (3), and (4) o
A.
Which of the following is correct regarding non-systematic risk?
A. It includes such risks as tax risk and financial risk.
B. An investor who owns five growth common stocks can reduce non-systematic risk by adding value common stocks to her portfolio.
C.
D.
When an investment company puts home mortgages or other loans into a pool and then sells securities representing shares of the pool, the securities sold are referred to as which of the following?
A. Donor advised funds
B. Pooled income funds
C. Derivative
D.
Eurodollars have which of the following characteristics?
(1) Eurodollars are foreign denominated deposits in banks located outside the US.
(2) Eurodollars involve deposits made at only European banks.
A. (1) only
B. (2) only
C. None of the above
D. All of
C.
Which of the following is/are correct regarding registered bonds and bearer bonds?
(1) A registered bond is registered with the corporation or organization that issued the bond, and coupon payments are made to the owner of record.
(2) A bearer bond can be
D.
Which of the following is/are correct regarding interest paid from municipal bonds?
(1) Interest paid from municipal bonds is not taxed by the federal government.
(2) Interest paid from municipal bonds is never taxable at the state level.
A. (1) only
B. (
A.
Which of the following is an unconditional promise to pay a sum of money to a payee, either at a fixed or determinable future time, under specific terms?
A. IOU
B. Promissory note
C. Bank draft
D. None of the above are correct.
B.
The purpose of the Black-Scholes valuation model is to determine the value of a __________ option of a __________ paying stock.
A. call, dividend
B. call, non-dividend
C. put, dividend
D. put, non-dividend
B.
The duration of a coupon bond is always __________ its term to maturity. A zero-coupon bond's duration is always __________ its term to maturity.
A. less than, greater than
B. greater than, less than
C. less than, equal to
D. equal to, less than
C.
In a short call, the maximum gain is __________ and the maximum loss is __________.
A. unlimited, the premium
B. the premium, unlimited
C. unlimited, unlimited
D. limited, limite
B.
Which of the following investment strategies is profitable in a declining stock market?
(1) Buying a call
(2) Buying a put
(3) Selling a put
(4) Selling a call
A. (1) and (3) only
B. (1) and (4) only
C. (2) and (3) only
D. (2) and (4) only
D.