Question 1

Which of the following is a primary characteristic that differentiates asset-backed commercial paper (ABCP) from standard ABS?

Options :

A : ABCP has a maturity of less than one year, whereas standard ABS has longer maturities.

B : ABCP offers higher yields due to its longer maturity compared to standard ABS.

C : ABCP is typically backed by fixed-rate assets, while standard ABS is backed by variable-rate assets.

D : ABCP is secured by long-term investments, unlike standard ABS which is secured by short-term investments.

Answer: A

Question 2

Which of the following best describes the relationship between liquidity and flexibility in managed products?

Options :

A : Low liquidity is directly correlated with high flexibility.

B : There is no relationship between liquidity and flexibility.

C : High liquidity always equals high flexibility.

D : High flexibility can sometimes lead to lower liquidity.

Answer: D

Question 3

Which factors tends to increase when inflation increases?

Options :

A : Corporation price-earnings multiples.

B : Labour costs for manufactures.

C : Common share prices.

D : Corporate bond prices.

Answer: B

Question 4

Linda is considering investing in split shares. Which of the following statements best describes the capital shares’ role in this investment structure?

Options :

A : Capital shares receive the majority of dividends from the underlying portfolio.

B : Capital shares are primarily responsible for receiving the principal repayment at maturity.

C : Capital shares are redeemed at the end of the term, reflecting their portion of capital gains.

D : Capital shares guarantee a fixed income and lower risk compared to preferred shares.

Answer: C

Question 5

John invested $20,000 in an equity fund with a management fee of 2.5%. After a year, the fund's NAV increased from $12 to $15. What is the amount of management fees John will pay if fees are calculated based on the average NAV for the year?

Options :

A : $500.

B : $750.

C : $562.

D : $625.

Answer: C

Confidently Practice Online with Free CSC2 Exam Cram

Buying Options: