Question 1

What risk type is prevalent regardless of the level of portfolio diversification or hedging?

Options :

A : Market

B : Default

C : Unique

D : Inflation

Answer: A

Question 2

Megan purchases a treasury bill for $98,200. When it matures for $100,000, how does Megan treat the $1,800 difference?

Options :

A : as interest income

B : as a capital gain

C : as a dividend

D : as return of capital

Answer: A

Question 3

Ian is 25, employed, and has no dependents. He has no current financial or family obligations. He has askedfor your recommendation for investing a $50,000 inheritance. What asset allocation would typically suit aninvestor with Ian’s characteristics?

Options :

A : 10% in a bond fund, 80% in equity funds, 10% in a money market fund

B : 10% in equity funds, 70% in a bond fund, 20% in a money market fund

C : 35% in equity, 25% in a money market fund, 60% in a bond fund

D : 50% in equity funds, 20% in a bond fund, and 30% in a money market fund

Answer: A

Question 4

What is a key difference between marketable government bonds and treasury bills?

Options :

A : Treasury bills do not pay any coupon interest, while marketable bonds do

B : Marketable government bonds may be sold at a discount while Treasury bills are sold at a premium

C : Treasury bills trade in the over-the-counter market, while marketable bonds trade on the exchange

D : Marketable government bonds actively trade in the secondary market while Treasury bills can only bebought from and sold to the government

Answer: A

Question 5

You are concerned about upcoming weakness in the Canadian dollar. Which type of fund should you invest in?

Options :

A : A specialty fund that uses derivatives to hedge the value of its portfolio

B : An international fund that hedges its foreign currency risk

C : A global fund that hedges its foreign currency risk

D : A global fund that does not hedge its foreign currency risk

Answer: D

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