Dale Doust
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Quiz on Chaper 1 - 8 , created by Dale Doust on 03/09/2021.

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Chaper 1 - 8

Question 1 of 96

1

The 'Delivery versus Payment' system means that:

Select one of the following:

  • the trade date will be the same as the settlement date

  • the stock will be exchanged simultaneously with the cash

  • the transfer of ownership will take place on the trade date

  • the cash will be paid as soon as receipt of the stock is confirmed
    International Certificate in Wealth & Investment Management

Explanation

Question 2 of 96

1

Which of the following gives the right, but not the obligation, to sell individual equity at a
specified date for a given price?

Select one of the following:

  • Future

  • Forward contract

  • Put option

  • Call option

Explanation

Question 3 of 96

1

Which of the following types of investment incurs a liability for capital gains tax once sold?

Select one of the following:

  • Classic car

  • Government bonds

  • Units in unit trusts

  • Primary residence

Explanation

Question 4 of 96

1

A company's Market Value Added equates to the market assessment of the present value of
the company's future:

Select one of the following:

  • dividend distributions

  • economic value added

  • capital costs

  • gross profits

Explanation

Question 5 of 96

1

If a client wanted to make additional contributions to an occupational pension scheme, which of
the following options would give him the greatest choice of provider and a say in how the
funds are invested?

Select one of the following:

  • Non-contributory occupational scheme

  • Contributory occupational scheme

  • Freestanding Additional Voluntary Contributions

  • Additional Voluntary Contributions

Explanation

Question 6 of 96

1

Portfolio performance is:

Select one of the following:

  • rarely measured in absolute terms, mostly measured in relative terms

  • rarely measured in relative terms, mostly measured in absolute terms

  • only ever measured in relative terms

  • only ever measured in absolute terms

Explanation

Question 7 of 96

1

A client arranged for a wealth management firm to look after his investments on a non
discretionary basis. This means that the firm:

Select one of the following:

  • receives commission on the investment instead of fees

  • leaves the investment decisions to the client

  • subcontracts custodianship of the investment assets to a third party

  • bears some financial responsibility for any investment losses

Explanation

Question 8 of 96

1

Which of the following Fitch ratings denotes the LOWEST level of risk for a bond?

Select one of the following:

  • D

  • BBB

  • C

  • AAA

Explanation

Question 9 of 96

1

Which of the following implications will help to ensure financial advisers act in their clients'
best interest?

Select one of the following:

  • Firms that give investment advice must address the potential for adviser remuneration to
    distort consumer outcomes

  • Investment firms will need to switch clients into products that have no trailing
    commissions

  • Firms that give investment advice must charge fees within a guidance range set by the FCA

  • Investment firms will need to change their price lists to remove all percentage based fees

Explanation

Question 10 of 96

1

If the real annual returns of a UK equity investment are normally distributed around the mean
return of 8% with a standard deviation of 4.5% approximately two-thirds of the returns
recorded will be within what range?

Select one of the following:

  • -5.5% and 21.5%

  • -1% and 17%

  • 3.5% and 12.5%

  • 5.75% and 10.25%

Explanation

Question 11 of 96

1

Which of the following is likely to be the MOST important consideration when selecting the
most appropriate protection product for a client?

Select one of the following:

  • The level of the premium and charges

  • The financial strength of the provider

  • The quality of the service provided

  • Investment choice and performance

Explanation

Question 12 of 96

1

Which of the following is a limitation rather than an assumption of the Capital Asset Pricing
Model?

Select one of the following:

  • Investors are rational and risk averse

  • Investors hold a well-diversified portfolio

  • Investors make investment decisions based on mean variance analysis

  • Investors are rewarded for more than just their exposure to systemic risk

Explanation

Question 13 of 96

1

One of the core functions of the financial services sector is to facilitate the bringing together
of:

Select one of the following:

  • tax revenues and investment opportunities

  • short-term wealth and long-term wealth

  • liquidity and volatility

  • borrowers and investors

Explanation

Question 14 of 96

1

Which of the following statements is TRUE about preference shares?

Select one of the following:

  • The most common type is the deferred share

  • They offer a lower dividend rate than the comparative coupon rate on a debenture

  • Dividends are guaranteed each year

  • In most cases they do not carry voting rights
    International Certificate in Wealth & Investment Management

Explanation

Question 15 of 96

1

What are the possible implications for investment performance of investing in an ethical fund?

Select one of the following:

  • The fund may be more volatile because of the increased exposure to smaller company
    holdings

  • Ethical funds invest primarily in large companies producing lower total returns

  • There are no suitable benchmarks for the client to measure performance against

  • Total returns are likely to be higher due to the increased level of diversification in ethical
    funds

Explanation

Question 16 of 96

1

When considering the money supply, money is accurately described as anything that is
generally:

Select one of the following:

  • convertible to sterling currency

  • acceptable as a means of settling a debt

  • sustainable in value over a defined period

  • tradable and held outside of a bank or building society deposit

Explanation

Question 17 of 96

1

What type of information is contained in a Key Features Document?

Select one of the following:

  • A clear description of the financial product being recommended to the client

  • Cancellation rights if a client changes their mind about investing in a product

  • All product recommendations listed in the financial plan and the reasoning behind them

  • Taxation implications for all the products listed in the financial plan

Explanation

Question 18 of 96

1

An investor allowed the principle of 'regret aversion' to influence his actions. This resulted in
him:

Select one of the following:

  • declining to buy a stock based purely on a previous bad experience

  • B buying a badly performing stock from a friend as recompense for recommending it in the
    first place

  • holding a poorly performing stock for an irrationally long period

  • only selling stock once a specified loss threshold had been reached

Explanation

Question 19 of 96

1

Firms that specialise in looking after the assets of pension funds and fund managers are
normally known as:

Select one of the following:

  • trustees

  • registrars

  • underwriters

  • custodians

Explanation

Question 20 of 96

1

Global Depositary Receipts traded on the London Stock Exchange are settled in which
currency?

Select one of the following:

  • Euros

  • US Dollars

  • Japanese Yen

  • UK Sterling

Explanation

Question 21 of 96

1

Jackie is a private client investor and you ascertain that her investment objective and risk
tolerance are capital growth and cautious. During the meeting she asks you for your thoughts
on the use of derivatives. You respond that, in your opinion, derivatives:

Select one of the following:

  • are normally appropriate only where there is a high risk tolerance

  • only generate an income stream and so are not compatible with her objective

  • can generate capital growth and are suitable where there is a low risk tolerance

  • can be traded only on an execution only basis as firms cannot offer any advice or opinion

Explanation

Question 22 of 96

1

Which of the following is a fiscal policy used to stimulate the economy?

Select one of the following:

  • Raising interest rates

  • Cutting interest rates

  • Raising personal taxes

  • Cutting personal taxes

Explanation

Question 23 of 96

1

Where the proposer and the life assured are different people under a life policy, the policy:

Select one of the following:

  • provides cover on a joint life basis

  • was taken out on someone else's life

  • owner holds power of attorney status

  • was arranged by a financial adviser acting independently

Explanation

Question 24 of 96

1

Why is a time weighted return (TWR) preferred to a money weighted return (MWR) when
evaluating performance?

Select one of the following:

  • TWR only requires portfolio values at the start and end of the investment period along
    with dates and size of each cash flow

  • TWR eliminates the timing effect of cash flows into and out of the fund

  • TWR measures the fund growth resulting from both the underlying performance of the
    portfolio and the size and timing of cash flows into and out of the fund

  • TWR calculates the risk adjusted return per unit of risk

Explanation

Question 25 of 96

1

Where a trade operates on a T+2 basis, this normally means that:

Select one of the following:

  • the cash is paid two calendar days after the stock is delivered

  • the cash is paid two business days after the stock is delivered

  • settlement takes place two calendar days after the trade date

  • settlement takes place two business days after the trade date

Explanation

Question 26 of 96

1

Which MAIN class of financial asset is normally considered to be the LEAST liquid?

Select one of the following:

  • Equities

  • Corporate bonds

  • Government bonds

  • Property

Explanation

Question 27 of 96

1

Which of the following rules applying to financial intermediaries is directly underpinned by the
principle of fiduciary responsibility?

Select one of the following:

  • Commission disclosure

  • Money laundering

  • Professional indemnity

  • Best execution

Explanation

Question 28 of 96

1

Two sets of data are positively correlated. If one set of data rises in value, what will happen to
the other set?

Select one of the following:

  • Rises

  • Falls

  • No change

  • Rises to begin with then falls

Explanation

Question 29 of 96

1

What is the MAIN purpose of a power of attorney document?

Select one of the following:

  • It appoints someone to distribute the assets of a deceased person

  • It enables ownership of property to transfer from one person to another person

  • It allows one person to conduct specific transactions on behalf of another person

  • It entitles one trustee to override the demands of another trustee

Explanation

Question 30 of 96

1

Four bond portfolios each hold a variety of stock. Which one of them is BEST described as
operating a barbell strategy?

Select one of the following:

  • Portfolio A, which consists solely of bills maturing in one year plus bonds maturing in 25
    and 30 years

  • Portfolio B, which consists solely of bills maturing in six months plus bonds maturing in 5,
    10, 15 and 20 years

  • Portfolio C, which consists solely of bonds maturing in 1, 3 and 5 years

  • Portfolio D, which consists solely of bonds maturing in 20, 25 and 30 years

Explanation

Question 31 of 96

1

Which of the following is a characteristic of a quote driven market?

Select one of the following:

  • Orders from buyers and sellers are automatically matched and executed

  • Market makers prioritise orders according to transaction size

  • Trading hours are longer than for order driven markets

  • Market makers are obliged to provide two way prices

Explanation

Question 32 of 96

1

Which measurement in relation to a fixed interest investment is given by the following
formula?

Select one of the following:

  • Grossed up redemption yield

  • Gross redemption yield

  • Net redemption yield

  • Running yield

Explanation

Question 33 of 96

1

Corporation tax is a factor when considering investment as it can:

Select one of the following:

  • block investment opportunities

  • differ between countries

  • be deferred indefinitely

  • be subject to a different accounting period

Explanation

Question 34 of 96

1

What differentiates Gross Domestic Product (GDP) and Gross National Product (GNP)?

Select one of the following:

  • A Indirect taxes, depreciation and net exports

  • Indirect taxes and depreciation

  • Depreciation and property income

  • Net property income

Explanation

Question 35 of 96

1

Which of the following would MOST likely be found in a formal written report presenting
recommendations to a client?

Select one of the following:

  • Details of family and dependants

  • The tax implications on the client's position

  • Details of the client's occupation, earnings and other income sources

  • A summary of the client's assets and liabilities

Explanation

Question 36 of 96

1

Why do portfolios need a regular annual or periodic review?

Select one of the following:

  • To ensure that all assets are priced on a regular basis

  • To ensure that all assets are reconciled against the market

  • To ensure that all cash balances are reconciled against the actual bank

  • To ensure the portfolio still meets the client's objectives and is positioned correctly given
    the market conditions

Explanation

Question 37 of 96

1

A characteristic of the foreign exchange market is that:

Select one of the following:

  • it has no centralised market place

  • B it is highly illiquid

  • it is unregulated

  • D spot market transactions settle on a T + 3 basis

Explanation

Question 38 of 96

1

The running yield of a corporate bond is determined by calculating the coupon as a percentage
of the:

Select one of the following:

  • market price

  • issue price

  • gross dividend

  • nominal value

Explanation

Question 39 of 96

1

When recommending an investment product to a client, what material information MUST the
adviser disclose in order to satisfy the fiduciary relationship that exists between the two
parties?

Select one of the following:

  • Only details which have been specifically requested by the client

  • Whatever is needed to produce a guaranteed return

  • Only details which are considered to affect the investment risk

  • Whatever is needed in order for the client to make an informed decision

Explanation

Question 40 of 96

1

A function of the Monetary Policy Committee is to:

Select one of the following:

  • attempt to control inflation by setting the base rate

  • intervene in the financial markets to control money supply

  • maintain confidence in the UK financial system

  • promote public understanding of inflation

Explanation

Question 41 of 96

1

Where funds are to be set aside to provide for the future financial maintenance of a disabled
child, this can normally be achieved through the establishment of a legal document called a:

Select one of the following:

  • codicil

  • trust

  • grant of representation

  • power of attorney

Explanation

Question 42 of 96

1

The excess return of a portfolio or security above that of the risk adjusted benchmark is known
as:

Select one of the following:

  • alpha

  • beta

  • duration

  • premium

Explanation

Question 43 of 96

1

Which of the following types of organisation is MOST likely to arrange finance for a company
wanting to float on the stock market?

Select one of the following:

  • Insurance companies

  • Investment banks

  • Custodians

  • Bancassurers

Explanation

Question 44 of 96

1

Where the mining costs of a particular metal increase to 105% of that metal's current price,
this indicates that:

Select one of the following:

  • demand is significantly rising

  • supply has become unreliable

  • there is likely to be a shortage of raw materials

  • production activities are likely to stop

Explanation

Question 45 of 96

1

An independent financial adviser would make recommendations on which type of product?

Select one of the following:

  • The firm's own products

  • Products of one other provider

  • Products from across the market place

  • A range of products from a limited number of providers

Explanation

Question 46 of 96

1

The demand curve for a particular product will be horizontal where the supplying firm operates
in:

Select one of the following:

  • a perfect competitive market

  • a monopolistic market

  • a sector generating excessive profits

  • a sector generating minimal profits

Explanation

Question 47 of 96

1

What lump sum must someone aged 35 invest today given an assumed annual growth rate of
7% if they are to accrue a lump sum of £450,000 at the age of 65?

Select one of the following:

  • £14,018

  • £59,115

  • £64,285

  • £420,560

Explanation

Question 48 of 96

1

An investment manager believes that markets are inefficient and that he can obtain abnormal
returns after transaction charges. Which investment style is he most likely to adopt?

Select one of the following:

  • Passive

  • Indexation

  • Active

  • Satellite

Explanation

Question 49 of 96

1

What inter-governmental body develops and promotes national and international policies to
combat money laundering and terrorist financing?

Select one of the following:

  • Financial Stability Board

  • World Trade Organisation

  • Financial Action Task Force

  • International Monetary Fund

Explanation

Question 50 of 96

1

A call option is an option that generally confers

Select one of the following:

  • the right to buy

  • the right to sell

  • a contract to sell

  • a contract to buy

Explanation

Question 51 of 96

1

A consumer purchases a designated investment and the firm provides the consumer with
detailed cancellation rights over the telephone, immediately after the purchase. How has the
firm contravened the rules?

Select one of the following:

  • Designated investments require notice of cancellation rights to be signed by the customer

  • Cancellation rights must be given in writing

  • Consumers must be informed of cancellation rights before a purchase is confirmed in all
    cases

  • Consumers must receive cancellation rights in writing before identification checks are
    undertaken

Explanation

Question 52 of 96

1

The annual return of a portfolio in each of the last six years has been 8.2%, 3.6%, 5.1%, 2.1%,
9.4% and 4.7%. What is the arithmetic mean return?

Select one of the following:

  • 4.2%

  • 4.9%

  • 5.5%

  • 5.8%

Explanation

Question 53 of 96

1

Who controls the assets of a trust and looks after the property for the person or persons who
will ultimately benefit from it?

Select one of the following:

  • Benefactors

  • Beneficiaries

  • Creditors

  • Trustees

Explanation

Question 54 of 96

1

An individual has been advised to invest in some shares by a friend. He wants to make sure that
he invests in companies which do not have a volatile share price. To achieve this he should
select shares which have a beta factor of:

Select one of the following:

  • 1

  • 1.25

  • 1.5

  • 1.75

Explanation

Question 55 of 96

1

One of the key objectives of financial services regulation is to:

Select one of the following:

  • encourage market competition

  • reduce financial crime

  • ensure products and services represent value for money

  • liaise with financial services regulators from other countries

Explanation

Question 56 of 96

1

Exchange-traded funds normally operate by:

Select one of the following:

  • tracking indices

  • tracking an individual security

  • investing in fund of funds

  • investing in manager of managers funds

Explanation

Question 57 of 96

1

Which is the MOST important reason for an adviser to conduct regular reviews of a client's
circumstances and arrangements?

Select one of the following:

  • To help the client complete any tax documentation

  • To ensure that the adviser complies with any regulatory requirements

  • To ensure that any products continue to meet a client's needs

  • To ensure that the adviser retains any repeat business from the client

Explanation

Question 58 of 96

1

A company's p/e ratio recently changed from 12 to 15. This normally indicates that:

Select one of the following:

  • the share value has fallen

  • growth expectations have improved

  • dividend levels have become less stable

  • the relevant market sector is in decline

Explanation

Question 59 of 96

1

John is worried that he will be unable to work due to a heart attack. Which of the following
would enable him to claim if he had a severe heart attack?

Select one of the following:

  • Critical Illness cover

  • Permanent Health Insurance

  • Mortgage Protection

  • Accident, Sickness & Unemployment cover

Explanation

Question 60 of 96

1

Which of the following is a feature in Arbitrage Pricing Theory (APT)?

Select one of the following:

  • APT relies on identified factors being correlated

  • The variables of APT include real economic factors

  • The principal component of APT is the return on an index of all shares

  • APT is equivalent to a single factor Capital Asset Pricing Model

Explanation

Question 61 of 96

1

The members of the International Organisation of Securities Commissions (IOSCO) collectively
regulate how much of the world's securities markets?

Select one of the following:

  • 70%

  • 80%

  • 90%

  • 100%

Explanation

Question 62 of 96

1

Units in a unit trust fund are sold by which of the following?

Select one of the following:

  • The trustee

  • The registrar

  • The manager

  • The depositary

Explanation

Question 63 of 96

1

Paulo is a non-resident investor. How is he likely to benefit from a double taxation treaty?

Select one of the following:

  • By incurring tax at a reduced concessionary rate

  • By opting for the country with the lowest tax rate

  • By avoiding the need to register with the tax authorities

  • By obtaining a refund of withholding tax

Explanation

Question 64 of 96

1

Which of the following is MOST LIKELY to be a factor causing market movement?

Select one of the following:

  • Sentiment

  • Supply and demand

  • Economic and political strategy

  • Investor psychology

Explanation

Question 65 of 96

1

What are two advantages of investing in an offshore trust?

Select one of the following:

  • Less complex product and only local taxes apply

  • Privacy and flexibility for the client

  • Security and a less complex product

  • Privacy and only local taxes apply

Explanation

Question 66 of 96

1

Based on the principles of Modern Portfolio theory, an equity fund will operate on the
'efficient frontier' if:

Select one of the following:

  • the optimum level of systematic risk is obtained

  • the best level of diversification is achieved

  • the fund's alpha value is negative

  • the fund's beta value is one or more

Explanation

Question 67 of 96

1

Which of the following investments is covered by insider dealing legislation?

Select one of the following:

  • Commodity derivatives

  • Equity options

  • Gold

  • Residential property

Explanation

Question 68 of 96

1

What is a key feature of exchange-traded commodities?

Select one of the following:

  • They are an open-ended collective investment vehicle

  • They are available only to high net worth individuals

  • There is limited exposure to derivative contracts

  • No additional shares can be created by the fund

Explanation

Question 69 of 96

1

When conducting investment business for a private customer, what must a firm do?

Select one of the following:

  • Only invest in products that are classified as low risk

  • Make the customer aware of costs and commissions

  • Meet face to face with the client

  • Disclose the underlying investments in the investment products

Explanation

Question 70 of 96

1

The Liquidity (Acid Test) ratio measures a company's ability to:

Select one of the following:

  • increase its current assets

  • meet its current liabilities

  • increase its inventory turnover

  • pay its non-current liabilities

Explanation

Question 71 of 96

1

When giving financial advice on the subject of protection, it is important to quantify a client's
assets to:

Select one of the following:

  • determine whether the costs can be offset against tax liabilitie

  • establish what shortfall may arise if an insured event occu

  • ensure that the underwriters have sufficient information

  • identify the client's appropriate risk profile

Explanation

Question 72 of 96

1

Bond portfolio X exclusively contains relatively long-dated stock whereas Bond portfolio Y
operates a laddering strategy. This means that Bond X is likely to:

Select one of the following:

  • generate higher yields

  • present less of a credit risk

  • be more sensitive to interest rate changes

  • represent a more diversified approach

Explanation

Question 73 of 96

1

In order to determine how 'efficient' the market is, financial service regulators will normally
consider the extent to which:

Select one of the following:

  • products and services represent a reasonable return on capital employed

  • relevant information is reflected in the price formation basis

  • competition is clustered within each product sector

  • regulation is needed to address existing systemic weaknesses

Explanation

Question 74 of 96

1

Where an investment fund established in the UK satisfies the UCITS directive and is sold in
another EU country, what is the position regarding local taxes and local marketing laws?

Select one of the following:

  • It will not be subject to either

  • It will be subject to local taxes but not local marketing laws

  • It will be subject to local marketing laws but not local taxes

  • It will be subject to both local taxes and local marketing laws

Explanation

Question 75 of 96

1

Which of the following would provide the lowest level of risk for risk averse investors with
short term horizons?

Select one of the following:

  • Long term gilts

  • Cash deposits

  • Ordinary shares

  • Warrants

Explanation

Question 76 of 96

1

In a two-stock portfolio which of the following correlations would normally offer the greatest
level of diversification?

Select one of the following:

  • 0.8

  • 0.6

  • -0.4

  • -0.7

Explanation

Question 77 of 96

1

A client in the UK was granted lasting power of attorney in relation to his elderly mother. Why
did this facility fail to provide him with control over her financial affairs after she was deemed
to have lost her mental capacity?

Select one of the following:

  • She was over retirement age when her poor state of mind was first diagnosed

  • He was her adopted son

  • She only granted him health and welfare powers

  • He was operating a power of attorney for his father at the same time

Explanation

Question 78 of 96

1

In which country can shareholders be assured that listed companies will comply with the OECD
Principles for Corporate Governance?

Select one of the following:

  • France

  • Germany

  • UK

  • USA

Explanation

Question 79 of 96

1

The regulations state that Money Laundering Reporting Officers appointed by financial services
firms must:

Select one of the following:

  • hold the status of employee

  • hold a recognised law or accountancy qualification

  • register with the country's central bank

  • register with the country's data protection agency

Explanation

Question 80 of 96

1

The Undertakings for Collective Investment in Transferable Securities Directives (UCITS) cover
investment funds established in which location(s)?

Select one of the following:

  • England and Wales only

  • UK only

  • UK and France only

  • All European Union countries

Explanation

Question 81 of 96

1

How does asset allocation help meet a client's needs?

Select one of the following:

  • It enables clients to invest wholly in one of the MAIN asset classes to maximise returns

  • It reduces the investor's risk by investing across a range of asset classes, sectors and individual stocks

  • It provides a benchmark for a client to assess how well his investments have performed

  • It enables investors to pool their investments with others and reduce the risk of direct
    investment in shares

Explanation

Question 82 of 96

1

In technical analysis, the term, 'primary movement' refers to which of the following?

Select one of the following:

  • Short-term share price trend

  • Long-term share price trend

  • Short-term dividend policy

  • Long-term dividend policy

Explanation

Question 83 of 96

1

John is taking out a life insurance policy on Mary, his wife, and one for himself. Which of the
following statements is TRUE once the policy is in force?

Select one of the following:

  • John is the life assured

  • Mary is the life assured

  • Mary is the proposer

  • They are both the life assured

Explanation

Question 84 of 96

1

An investor has a requirement for an 8% return and is considering choosing Stock X to satisfy
this need. Based on the Capital Asset Pricing Model, if the beta value of this stock is
recalibrated from 1.2 to 1.3, this would:

Select one of the following:

  • increase the likelihood that the stock would be suitable

  • decrease the likelihood that the stock would be suitable

  • automatically trigger an increase in the investor's required rate

  • automatically trigger a decrease in the investor's required rate

Explanation

Question 85 of 96

1

One of the fundamental aims of a traditional hedge fund is to minimise which type of
investment-related risk?

Select one of the following:

  • Inflation risk

  • Issuer risk

  • Market risk

  • Liquidity risk

Explanation

Question 86 of 96

1

Which of the following is a factor that must be considered when constructing a portfolio?

Select one of the following:

  • Verification of the client's identity

  • The client's risk tolerance

  • The category of investment service required

  • Performance measurement

Explanation

Question 87 of 96

1

The difference between a nominal rate of return and a real rate of return relates solely to the
effects of

Select one of the following:

  • taxation

  • charges

  • inflation

  • compounding

Explanation

Question 88 of 96

1

Using Modern Portfolio Theory to create a two stock portfolio, which of the following is TRUE?

Select one of the following:

  • The lower the correlation of stock returns, the greater the portfolio's diversification

  • The higher the correlation of stock returns, the greater the portfolio's diversification

  • The higher the correlation of stock returns, the lower the level of total risk associated with
    any given level of expected return

  • The lower the correlation of stock returns, the higher the level of total risk associated with
    any given level of expected return

Explanation

Question 89 of 96

1

A private equity fund is MOST likely to use a structure similar to that of which of the following?

Select one of the following:

  • Investment Trust

  • Limited Partnership

  • OEIC

  • SICAV

Explanation

Question 90 of 96

1

If clients approach a firm knowing exactly which product they wish to purchase, and ask the
firm simply to arrange the purchase, this type of transaction is normally described as:

Select one of the following:

  • best advice

  • instruction processing

  • nominal dealing

  • execution only

Explanation

Question 91 of 96

1

Which of the following is NOT counted as part of the Current Account Balance?

Select one of the following:

  • Imported and exported goods

  • Dividends on UK holdings of overseas assets

  • Long-term capital flows

  • Interest on UK holdings of overseas assets

Explanation

Question 92 of 96

1

Which of the following does a passive investment manager principally invest in?

Select one of the following:

  • Equities

  • An index

  • Fixed income

  • Other institutional funds

Explanation

Question 93 of 96

1

If a collective investment scheme is unauthorised, this means that it is specifically banned
from:

Select one of the following:

  • operating a bid/offer spread

  • holding some of the fund assets in cash

  • being marketed to the general public

  • paying out dividends

Explanation

Question 94 of 96

1

Which mix of investments is most appropriate for a risk averse investor?

Select one of the following:

  • 50% commodities and 50% equities

  • 50% cash and 50% gilts

  • 50% foreign exchange and 50% CFD's

  • 50% property and 50% PIBS

Explanation

Question 95 of 96

1

If $2,200 is invested for four years with interest at the rate of 6% p.a., compounded half-yearly,
what will be the value at the end of this period?

Select one of the following:

  • $2,696.55

  • $2,777.45

  • $2,786.89

  • $2,860.77

Explanation

Question 96 of 96

1

The relationship between an adviser and a client means that the adviser has a duty to:

Select one of the following:

  • ensure suitable compensation is available if the client suffers a loss

  • check with a third party before providing advice to the client

  • report any wrong-doings to the authorities

  • always act in the best interests of the client

Explanation

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