Q. Bonds are:

1. real assets.
2. equity securities.
3. fixed-income securities.

Q. Analysts who build statistical models to identify stocks that are likely to outperform are best described as:

1. technical analysts.
2. quantitative analysts. correct
3. fundamental analysts.

Q. An objective of risk management is to:

1. maximise returns for shareholders.
2. eliminate risk associated with investments.
3. identify potential threats facing a company. correct

Q. The risk, also known as Herstatt risk, that the counterparty fails to complete its side of the deal as agreed is commonly referred to as:

1. liquidity risk.
2. settlement risk. correct
3. compliance risk.

Q. An investor buys equity in a company with a major portion of its operations in the exploration, production, and processing of oil. The investor is purchasing:

1. an oil derivative.
2. a physical commodity.
3. a commodity-related stock.

Q. Using a value at risk (VaR) model based on historical data to forecast future expected losses works well:

1. all the time.
2. during times of normal market conditions.
3. during times of increased market volatility.

Q. A company is operating below capacity. What is the most likely result when production rises?

1. The fixed cost per unit will decrease.
2. The variable cost per unit will increase.
3. The total cost per unit remains constant.

Q. An investor who needs to execute a trade in a large capitalisation stock by the end of the day would most likely use a:

1. limit order.
2. stop order.
3. market order.

Q. If an investor exercises warrants, the number of shares outstanding of the issuing company most likely:

1. decreases.
2. remains the same.
3. increases.

Q. All else being equal, as investors' time horizon increases, their risk tolerance will:

1. decrease.
2. be unchanged.
3. increase.

Q. Documentation that conveys ideas, concepts, or information is meeting which of the following objectives?

1. Measuring
2. Authorising
3. Communicating

Q. Company voting rights are most likely exercised by:

1. common shareholders.
2. preferred and common shareholders.
3. debt holders and equity shareholders.

Q. Investment industry participants have been able to reduce operating costs over the years because of:

1. regulation.
2. globalisation.
3. computerisation.

Q. A trading venue that functions like an exchange but does not exercise regulatory authority over its subscribers is known as:

1. a primary market.
2. a private placement.
3. an alternative trading system.