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| Section | Weight | Objectives |
|---|---|---|
| Fixed Income | Approximately 8.3% | - Government and corporate bonds - Credit risk - Interest rate risk - Yield and pricing |
| Investment Recommendations | Approximately 11.7% | - Client communication - Product selection - Recommendation development |
| Managed Products and Other Investments | Approximately 13.3% | - Alternative investments - Mutual funds - Exchange-traded funds (ETFs) - Structured products |
| Securities Analysis | Approximately 11.7% | - Financial statement interpretation - Technical analysis - Fundamental analysis |
| Equities | Approximately 10% | - Common and preferred shares - Equity markets - Valuation concepts |
| Know-Your-Client (KYC) and Suitability | Approximately 22.5% | - Suitability assessment - Regulatory obligations - Investment objectives and risk tolerance - Client profile collection and maintenance - Know-Your-Product (KYP) |
| Portfolio Construction | Approximately 10.8% | - Diversification - Asset allocation - Portfolio risk management |
| Execution and Market Integrity | Approximately 5.8% | - Market integrity rules - Order handling - Best execution |
| Monitoring, Reporting and Maintaining Client Relationships | Approximately 5.8% | - Account monitoring - Performance reporting - Ongoing suitability review - Client relationship management |
1. Which feature gives a bondholder the right to require the issuer to redeem the bond at a specified price on specified dates?
A) Convertible feature
B) Sinking-fund feature
C) Puttable feature
D) Callable feature
2. A portfolio earns 11%. The risk-free rate is 3%, the market return is 8%, and the portfolio beta is 1.2. What is the portfolio's Jensen alpha?
A) 5%
B) 2%
C) #2%
D) 0%
3. Why is investment time horizon a key factor in portfolio construction?
A) It determines the client's ability to withstand market fluctuations
B) It eliminates the need for periodic portfolio reviews
C) It ensures that all clients invest in long-term bonds
D) It restricts clients from investing in certain asset classes
4. During the year, a company issues $5 million of new bonds and repays $1 million of existing debt principal.
Ignoring all other financing transactions, what net cash flow from financing activities should be reported?
A) $5 million inflow
B) $6 million inflow
C) $1 million inflow
D) $4 million inflow
5. A retail client is 25-year-old with a stable income, a high risk profile and has a good understanding of the securities and the securities market. They wish to open an account that allows them to take responsibility for their own investment decisions and allow them to seek growth opportunities in the securities markets. Under account appropriateness rules, which seems most appropriate?
A) Order execution only (OEO) account
B) An aggressive growth mutual fund to maximize potential returns
C) Direct electronic access (DEA) account
D) A balanced mutual fund account composed of a mix of equities and bonds
Solutions:
| Question # 1 Answer: C | Question # 2 Answer: B | Question # 3 Answer: A | Question # 4 Answer: D | Question # 5 Answer: A |
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