Question 1

Rank the following funds in order of their relative risk, from highest to lowest: I. growth fund II. high-yield bond fund III. high-grade bond fund IV. international fund

Options :

A : IV, I, II, III

B : I, IV, III, II

C : II, IV, I, III

D : IV, II, I, III

Answer: A

Question 2

stion No: 159 In 2004, your Uncle Oscar purchased 300 shares of Hasbro, Inc. for $19 a share. Uncle Oscar died earlier year and left his Hasbro stock to you. The stock was selling for $44 on the day he died, but by the time you learned that you were the beneficiary of the stock, the price was $47. What is your cost basis in Hasbro?

Options :

A : $19

B : $44

C : $47

D : $28

Answer: B

Question 3

Ms. Mix always assures her clients that she will be calling them with quarterly recommendations for rebalancing their portfolios if there are any changes that she feels are appropriate. This has worked out well for her pocketbook since she has always been able to tweak each of her clients’ investment portfolios a little each quarter by recommending that they redeem their shares in one fund that hasn’t performed as well in the last quarter and use the proceeds to invest in another that has. Her clients feel cared for since she is in such regular contact with them. Is Ms. Mix violating any securities regulations with this policy of hers?

Options :

A : No. Ms. Mix is merely providing good service to her customers.

B : Yes. Mutual funds are not designed to be short-term investments.

C : It depends. There is no violation as long as her clients’ portfolios are increasing in value.

D : Yes. Any recommendation that benefits a registered representative is deemed to be in violation of FINRA’s rules regarding fair dealing.

Answer: B

Question 4

By investing in a diversified portfolio, an investor will:

Options :

A : lower both his risk and his expected return.

B : lower his risk without affecting his expected return.

C : lower his risk and increase his expected return.

D : eliminate all the market risk associated with his investment portfolio.

Answer: B

Question 5

Giant Investments filed a registration statement with the SEC for a new fund it wanted to introduce and has received word that the registration statement is now effective. Based on this, Jack, a registered representative with Giant Investments, can tell a client that:

Options :

A : because the SEC has recently announced the fund’s registration statement effective, the client can rest assured that it is a sound long-term investment.

B : the SEC pronouncement on the effectiveness of the registration statement means only that the SEC has deemed that enough information has been provided in the registration statement for the client to judge the quality of the investment for himself.

C : the SEC warrants that there have been no misstatements of fact in the registration statement.

D : because the SEC has recently approved the fund, it is likely to be a much safer investment than other, older funds in the same fund category.

Answer: B

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