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LET’S PRACTICE!
#1. Which of the following is considered a derivative security?
#2. A company’s balance sheet shows assets of $5 million and liabilities of $3 million. What is its equity?
#3. Which of the following is NOT a characteristic of a closed-end fund?
#4. The primary function of the Federal Reserve’s open market operations is to:
#5. What is the primary advantage of a Roth IRA over a traditional IRA?
#6. Which of the following is true about general obligation bonds?
#7. The Sharpe ratio measures:
#8. An investment adviser must register with the SEC if:
#9. The “prudent investor rule” requires fiduciaries to:
#10. Which of the following securities is most affected by interest rate risk?
#11. What type of order will be executed only at a specific price or better?
#12. Which act primarily governs investment advisers?
#13. A bond selling below par is trading at:
#14. A mutual fund’s expense ratio includes:
#15. What type of account allows a minor to own securities?
#16. Which of the following is a lagging economic indicator?
#17. A “no-load” mutual fund:
#18. Which of the following has the highest claim in a corporate liquidation?
#19. What is the tax treatment of municipal bond interest for most U.S. investors?
#20. Which of the following is not considered an investment strategy?
#21. A stop-loss order is used to:
#22. The “efficient market hypothesis” suggests:
#23. Which tax form reports capital gains and losses?
#24. When does a mutual fund’s NAV change?
#25. Which of the following is most likely to hedge against inflation?
#26. The term “beta” refers to:
#27. A client who wants income and preservation of capital should invest in:
#28. Which account type has the highest contribution limits?
#29. What kind of risk cannot be eliminated through diversification?
#30. Who regulates broker-dealers?
#31. An adviser must update its Form ADV:
#32. A revocable trust is:
#33. Which of the following is a characteristic of zero-coupon bonds?
#34. A client’s investment objective is growth. Which is most appropriate?
#35. A person who provides investment advice solely to insurance companies is:
#36. An investor purchases a bond with a 6% coupon and current yield of 5%. The bond is selling at:
#37. Which of the following is true about ETFs?
#38. Who is responsible for enforcing securities laws in individual U.S. states?
#39. Which statement about futures contracts is correct?
#40. Which of the following is considered an alternative investment?
#41. Which measure best reflects the volatility of a security?
#42. An unsolicited trade by a client:
#43. Under ERISA, plan fiduciaries must:
#44. What is the maximum civil penalty for insider trading?
#45. The time-weighted return is most useful for:
#46. What is the primary purpose of diversification?
#48. A margin call occurs when:
#49. A hedge fund is typically structured as:
#50. A “fiduciary” under the Investment Advisers Act of 1940 is required to:
#51. Which of the following is a feature of preferred stock?
#52. A bond’s yield to maturity is best described as:
#53. Which of the following would be most suitable for a conservative investor?
#54. The CAPM model uses which of the following to estimate expected return?
#55. A variable annuity is most appropriate for:
#56. A TIPS bond protects investors from:
#57. Which of the following is not a type of order?
#58. An investor worried about currency risk should avoid:
#59. Which of the following would increase the duration of a bond?
#60. A 529 plan is used primarily for:
#61. Which of these is subject to AMT (Alternative Minimum Tax)?
#62. Which of the following is not included in the calculation of GDP?
#63. A covered call strategy is considered:
#64. Who must register under the Investment Company Act of 1940?
#65. An investment adviser representative must register with:
#66. Which of the following is a feature of ETFs?
#67. Which security has the highest potential for long-term capital appreciation?
#68. An income statement shows:
#69. A qualified dividend is taxed at:
#70. Which of the following is a leading indicator?
#71. If interest rates rise, what happens to existing bond prices?
#72. Who sets monetary policy in the U.S.?
#73. Which plan has mandatory withdrawals starting at age 73?
#74. Which of the following is NOT a type of business structure?
#75. What is the maximum loss for a covered call writer?
#76. Which form discloses conflicts of interest for advisers?
#77. Which of the following is most sensitive to changes in interest rates?
#78. An IA’s client requests access to their records. The adviser must:
#79. Which of these bonds would be most affected by call risk?
#80. An unsolicited order placed by a client must be:
#81. Who can issue municipal bonds?
#82. Which investment offers the most liquidity?
#83. An HSA is best suited for:
#84. A mutual fund’s NAV is calculated:
#85. Which investment is typically subject to double taxation?
#86. What is the benefit of a SEP IRA?
#87. Which type of risk is diversification unable to reduce?
#88. If a client has a low risk tolerance, which investment is most appropriate?
#89. A Treasury note matures in:
#90. Which of these is a non-qualified retirement plan?
#91. A stop order becomes a market order when:
#92. Which of the following is true about capital gains on stocks held over one year?
#94. What is the max capital loss deduction against ordinary income?
#95. A diversified portfolio reduces:
#96. The purpose of Form U4 is to:
#97. What does alpha measure?
#98. Which of these assets is most illiquid?
#99. Which of the following is a characteristic of a limited partnership?
#100. In a rising interest rate environment, which investment is most negatively affected?
#101. The bid price of a stock is:
#102. A wrap fee program typically includes:
#103. Which of the following provides the best protection against credit risk?
#104. An investor using dollar-cost averaging would:
#105. Which of the following securities is least liquid?
#106. What is the primary purpose of a mutual fund prospectus?
#107. Which of these is a tax-advantaged retirement plan for self-employed individuals?
#108. An investor with a high risk tolerance and long time horizon would likely invest in:
#109. Which regulatory body oversees the securities industry at the federal level?
#110. Which of the following is not an example of a fixed-income security?
#111. A client’s objective is income. Which is most suitable?
#112. The efficient frontier represents:
#113. The ex-dividend date is the date:
#114. A client wants estate planning with control over asset distribution. Which tool is most appropriate?
#115. A wash sale occurs when:
#116. Which of the following is used to measure inflation?
#117. A zero-coupon bond investor receives:
#118. Which of the following types of income is not taxable?
#119. A client who wants tax-free income should invest in:
#120. Which of the following investment vehicles is pass-through for tax purposes?
#121. If an adviser takes custody of client funds, they must:
#122. Which of the following describes a callable bond?
#123. The quick ratio measures a firm’s:
#124. Which of these investments is most suitable for a client seeking principal protection?
#125. Which of these is considered passive investing?
#126. The main benefit of a 1031 exchange is to:
#127. Which of the following are subject to market risk?
#128. A client with liquidity needs should avoid:
