Question 1

Which scenario best illustrates the time lag problem in fiscal policy?

Options :

A : A government increases corporate taxes, leading to an immediate drop in stock prices.

B : A government lowers taxes, and consumer spending increases immediately.

C : A government reduces the budget deficit, and the stock market reacts positively.

D : A government increases spending on infrastructure, but the economy enters a recession before the projects start.

Answer: D

Question 2

In a market where the yield curve is steeply upward sloping, what strategy might a fixed-income manager employ to maximize returns?

Options :

A : Maintain a balanced allocation between short-term and long-term bonds.

B : Invest only in high-yield bonds.

C : Invest heavily in long-term bonds.

D : Invest heavily in short-term bonds.

Answer: C

Question 3

Which of the following is a key assumption of technical analysis regarding price movements?

Options :

A : Price movements are unrelated to historical trends.

B : Future price movements are primarily influenced by fundamental factors.

C : All market influences are reflected in price movements.

D : Prices move in unpredictable and random patterns.

Answer: C

Question 4

Which of the following is a primary function of the prime brokerage unit in an investment dealer firm?

Options :

A : Portfolio Accounting.

B : Equity Trading Services.

C : Structured Finance.

D : Market Making.

Answer: A

Question 5

Jerry sells Company As regular bond because the thinks it is overvalued. Using the proceeds from the sale, jerry then busy Company As convertible bond because the thinks that the equity component is undervalued and that he convertible bonds coupon rate is relatively attractive given his forecast of falling interest rates. What fixed-come management style is jerry most likely using?

Options :

A : Market timing.

B : Interest rate anticipation.

C : Bond swap

D : Immunization

Answer: C

Free CSC2 Mock Exam – Practice Online Confidently

Buying Options: