Q. To prevent the transfer of non-public information about future underwritings, a firm will most likely limit the contact between its research department and:

1. brokerage services.
2. proprietary trading.
3. investment banking.

Q. A current account surplus most likely indicates a country with:

1. balanced capital flows.
2. net imports of services.
3. net exports of merchandise.

Q. Dealers are proprietary traders who:

1. fill orders for their clients by trading with them.
2. route their clients orders to exchanges or to brokers.
3. search for traders who are willing to take the other side of their clients orders.

Q. A provider of an index fund most likely uses a sampling replication procedure to track the index in order to:

1. reduce transaction costs.
2. select the constituent securities expected to provide the highest returns.
3. produce a portfolio that will include other securities besides those in the index.

Q. Purchase of a hotel property would most likely take place in:

1. brokered markets.
2. order-driven markets.
3. quote-driven markets.

Q. The market for a liquid stock is quoted at 25 bid, 26 offered. An order to sell is most likely to execute if the order submitted is:

1. sell limit 25.
2. sell limit 25.5.
3. sell limit 26.

Q. After issue, floating-rate bond coupons are affected by the:

1. credit spread.
2. reference rate.
3. conversion provision.

Q. The distinctive characteristic of enterprise risk management (ERM) is the:

1. independence of the risk management function.
2. support given to strategic and business planning.
3. consolidation and management of risks at the firm level.

Q. A downgrade of a bond reflects an increase in its:

1. credit risk.
2. liquidity risk.
3. interest rate risk.

Q. The expansion phase of the business cycle can be characterised by:

1. corporations declining stock values.
2. consumers reducing outstanding debt.
3. employees demanding higher wages.

Q. Bonds are:

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

Q. The key difference between a broker and a dealer is that:

1. dealers act as principals.
2. brokers act as market makers.
3. brokers trade directly with other market participants.

Q. Which real estate investment vehicle is typically chosen for public market investors?

1. Real estate equity funds
2. Real estate investment trusts
3. Real estate limited partnerships

Q. A country that increases its international trade would most likely see a decrease in:

1. prices of domestic goods and services.
2. quality of domestic goods and services.
3. demand for domestic goods and services.

Q. One of the direct roles of supervisors in an investment management firm is to:

1. prevent financial contagion.
2. inform regulators promptly of violations of the firm's internal compliance policies.
3. ensure that employees are aware of the firm's compliance policies and procedures.

Q. Macroeconomics would most likely include analysis of the:

1. effect of a country's inflation rate on the economy.
2. profitability of a company under different economic scenarios.
3. demand for a good coupled with the ability and willingness to pay a given price for it.

Q. Which of the following contracts trade only on exchanges?

1. Options
2. Futures
3. Forwards

Q. Under a floating exchange rate system, if a country has a persistent capital and financial account deficit it most likely indicates that:

1. it runs a trade deficit.
2. it is a net lender to the rest of the world.
3. the domestic currency should depreciate.

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.