liquidity needs to meet repayment of deposits, sufficient income is needed to cover operational expenses and pay interests on deposits. A) True B) False 52) The higher the diversification ratio, the higher is the risk reduction benefit of a protfolio. A) False B) True 53) During financial turmoil correlation increases and benefit of diversification decreases. A) False B) True 54) The analysis of investment needs of investors is undertaken from the perspective of time horizon, risk tolerance, income needs and liquidity needs. In regard to commercial banks, we can say that banks, as a rule, have short-term time horizon (due to high level of short -term liabilities), quite low risk tolerance, high 55) Wrap account does not allow for individual shares to be held directly by the investor, and in return for annual fees, an individual can receive personalized investment advice. A) True B) False - 56) The addition of a risk-free asset creates portfolios that are dominant to portfolios of risky assets in all cases except for the optimal risky portfolio. A) True B) False - 57) A client exhibits an above-average willingness to take risk but a below-average ability to take risk. When assigning an overall risk tolerance, the investment adviser is most likely to assess the client's overall risk tolerance as: A) average. B) above average. C) below average. D) none of the above 58) A stock is selling at $50. An investor's valuation model estimates its intrinsic value to be $40. Based on her estimate, she would most likely place a: A) market order to buy. B) stop order to buy. C) short-sale order. D) none of the above 59) An analyst estimates that a stock will pay a $2 dividend next year and that it will sell for $40 at year-end. If the required rate of return is 15%, what is the value of the stock? A) $43.95 B) $36.52. C) $33.54, D) Not enough information provided. liquidity needs to meet repayment of deposits, sufficient income is needed to cover operational expenses and pay interests on deposits. A) True B) False 52) The higher the diversification ratio, the higher is the risk reduction benefit of a protfolio. A) False B) True 53) During financial turmoil correlation increases and benefit of diversification decreases. A) False B) True 54) The analysis of investment needs of investors is undertaken from the perspective of time horizon, risk tolerance, income needs and liquidity needs. In regard to commercial banks, we can say that banks, as a rule, have short-term time horizon (due to high level of short -term liabilities), quite low risk tolerance, high 55) Wrap account does not allow for individual shares to be held directly by the investor, and in return for annual fees, an individual can receive personalized investment advice. A) True B) False - 56) The addition of a risk-free asset creates portfolios that are dominant to portfolios of risky assets in all cases except for the optimal risky portfolio. A) True B) False - 57) A client exhibits an above-average willingness to take risk but a below-average ability to take risk. When assigning an overall risk tolerance, the investment adviser is most likely to assess the client's overall risk tolerance as: A) average. B) above average. C) below average. D) none of the above 58) A stock is selling at $50. An investor's valuation model estimates its intrinsic value to be $40. Based on her estimate, she would most likely place a: A) market order to buy. B) stop order to buy. C) short-sale order. D) none of the above 59) An analyst estimates that a stock will pay a $2 dividend next year and that it will sell for $40 at year-end. If the required rate of return is 15%, what is the value of the stock? A) $43.95 B) $36.52. C) $33.54, D) Not enough information provided
