Question 1

What best describes why mortgage funds generally have less sensitivity to changes in interest rates than bond funds?

Options :

A : Many mortgage funds also hold T-bills and mortgage-backed securities, which are less volatile

B : Interest on mortgages is usually paid monthly, while interest on bonds is typically paid semi-annually

C : Mortgage funds are highly diversified, often holding over 10,000 individual mortgages

D : Most mortgages held in mortgage funds are either NHA-insured or privately insured

Answer: B

Question 2

What term describes the range of possible future outcomes on the price of a security?

Options :

A : Beta

B : Risk

C : Fluctuation

D : Return

Answer: B

Question 3

When reviewing a company's balance sheets, what ratio best determines whether their borrowing is excessive?

Options :

A : The cash flow from operations / total debt ratio.

B : The debt / equity ratio.

C : The interest coverage ratio.

D : The price / earnings ratio.

Answer: B

Question 4

Ken is a member of his employer’s Defined Benefit Pension Plan (DBPP). Which of the following statementsabout Ken’s plan is CORRECT?

Options :

A : Contributions to the plan do not result in a Pension Adjustment (PA) for Ken.

B : The amount Ken receives in retirement depends on the performance of the investments he has selectedwithin the plan.

C : The amount that Ken will receive at retirement is not guaranteed.

D : Income received from the plan is eligible for pension income splitting even if Ken retires before 65.

Answer: D

Question 5

What is the maximum yearly CESG available to a family earning $150,000 annually?

Options :

A : $500

B : $600

C : $550

D : $100

Answer: A

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