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August 19, 2022

Exam - Types of Investments

1) What is the settlement period for stocks?

a) T+6
b) T+5
c) T+4
d) T+3

2) Which of the following acts like a blend between common stock and a bond?

a) Preferred stocks
b) Mutual funds
c) REITs
d) Closed-end funds

3) If interest rates rise, the price of a bond will:

a) Rise
b) Fall
c) Stay the same
d) May rise or fall

4) What is one of the biggest risks incurred by investing in investment grade bonds?

a) Downgrade risk
b) Default risk
c) Inflation risk
d) Call risk

5) Which of the following are benefits of mutual funds?

a) Diversification
b) Small initial investment
c) Professional money management
d) All of the above

6) Mutual funds that trade like stocks are called:

a) Preferred stocks
b) REITs
c) Money markets
d) Closed-end funds

7) A cost-effective way to invest in real estate is through:

a) REITs
b) Preferred stocks
c) Bonds
d) Cumulative preferred stocks

8) What is a drawback to closed-end funds?

a) High expense ratios
b) The NAV may fall below the true value of the stocks held
c) Contingent deferred sales charges
d) The NAV may rise above the true value of the stocks held

9) Which assets of a corporation back commercial paper?

a) The long-term assets
b) The short-term asset
c) Nothing other than the company's reputation
d) The working capital

10) What is perhaps the biggest drawback to options?

a) They expire
b) They have low returns
c) They are highly illiquid
d) They are not leveraged like other derivatives

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