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Practicing Financial Planning For Professionals and CFP Aspirants 12Th Edition Mittra Test Bank Full Chapter PDF
Practicing Financial Planning For Professionals and CFP Aspirants 12Th Edition Mittra Test Bank Full Chapter PDF
INTRODUCTION
Question 1. Which of the following investments are fixed with respect to the rate of return
they pay?
A. Treasury bills/bonds
B. Certificates of deposit
C. Savings accounts
D. Municipal bonds
Answer: E
A. Treasury bonds
B. Treasury notes
C. Treasury bills
D. A and B
E. B and C
1
Answer: D
A. Treasury bills
B. Certificates of deposit
C. Treasury notes
D. Certificates of indebtedness
E. Corporate bonds
Answer: A
Question 4. Which of the following is/are true with respect to Treasury notes and bonds?
D. A and B
E. A and C
Answer: B
Question 5. Which of the following are true with respect to federal agency securities?
B. They carry a small degree of default risk since their ability to pay is based on the
government’s power to tax
D. A and B
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E. B and C
Answer: D
Question 6. Which of the following bonds are dependent on the income specifically from the
A. Municipal
B. General obligation
C. Revenue
D. Corporate
E. A and C
Answer: C
A. A debenture is unsecured and backed only by the full faith and credit of the issuing
company
B. Debentures have junior claim to all aspects relative to all other forms of bonds
D. In the case of liquidation subordinated or junior debentures are paid after regular
debenture holders
Answer: E
Question 8. Which of the following are not true with respect to junk bonds?
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B. They offer yields higher than investment grade bonds
C. They have default rates higher than those of investment grade bonds
E. B and C
Answer: A
D. B and C
E. A and C
Answer: D
Question 10. Which of the following are not true with respect to preferred stocks?
B. In the case of liquidation, preferred stockholders have prior claim (on the companies
assets) over common stocks
Answer: A
4
Question 11. Which of the following factors are not taken into consideration by bond rating
C. Liquidity ratio
E. Bond rating companies take into consideration all of the above features
Answer: E
B. Have an equity interest in the corporation and thus are usually the only group to
participate in increased earnings of the corporation
E. A and B
Answer: E
Question 13. Which of the following company stocks typically do not pay dividends so they
can maintain or accelerate their growth by reinvesting the earnings in the company?
A. Blue-chip
B. Income
C. Secular
5
D. Growth
Answer: D
Question 14. Which of the following is not true with respect to mutual funds?
C. Net asset value is calculated by subtracting all liabilities from the market value of all
securities held in the portfolio and multiplying this figure by the outstanding shares
E. A and C
Answer: E
D. Would expect a higher return since no-loads generally pay better rates than load funds
E. C and D
Answer: C
Question 16. Which of the following are reasons for purchasing a mutual fund?
A. Professional management
B. Tax reduction
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C. Diversification
D. A and C
E. B and C
Answer: D
Question 17. Which of the mutual funds should an investor purchase if he or she cannot
B. Income
C. Index
D. Balanced
Answer: B
A. Commercial paper
B. Common stock
C. Short-term debentures
D. A and C
Answer: A
7
A. The proliferation of mutual funds in the marketplace
E. The way in which mutual funds are classified in the order of their quality
Answer: B
Question 20. An index fund is a mutual fund which has the following characteristics:
Answer: E
Question 21. All statements relating to index funds are true except:
Answer: D
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A. Declining market
B. Advancing market
C. Stable market
Answer: B
A. Stocks
Answer: B
Answer: C
Question 25. All of these are true for Spiders (SPDRs) except:
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C. They can be sold short
Answer: D
E. Answer: D
C. Is less tax-savvy
D. Is more risky
Answer: B
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Answer: A
Question 29. Which of the following method allows to get higher returns for EIA:
A. Annual ratchet
B. Point-to-point
Answer: C
I. Is a form of derivative
II. Gives the holder the right to sell the underlying asset by a certain date at a certain
price
B. Only IV is correct
C. Only IV is incorrect
Answer: C
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Question 31. You sold a stock short. To calculate your cost basis for the stock you need to
know:
Answer: A
I. Fund managers
A. I and II
B. II and IV
D. I and III
Answer: D
A. Is price-weighted, which means that weight is given only to the price of each stock
B. Allows the highest price stocks with the largest number of shares outstanding to carry
the greatest influence in the movement of the index
12
C. Covers 86 industry groups, 400 industrial, 22 transport, and 40 financial companies
D. A and B
E. B and C
13
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