CFC Investment Planning 2

Question 1

A CFC client wants income with low credit risk. Which bond type is most appropriate?

Accepted Answer

U.S. Treasury bonds

Answer

High-yield corporate bonds

Answer

Convertible bonds

Answer

Revenue municipal bonds

Question 2

The price-to-earnings (P/E) ratio is most useful for comparing companies within the same:

Accepted Answer

Industry

Answer

Country

Answer

Asset class

Answer

Time period

Question 3

Which investment vehicle allows a CFC client to gain diversified exposure to real estate without directly owning property?

Accepted Answer

Real Estate Investment Trust (REIT)

Answer

Exchange-traded fund tracking gold

Answer

Variable annuity

Answer

Covered call strategy

Question 4

Dollar-cost averaging benefits investors primarily by:

Accepted Answer

Reducing the average cost per share when prices fluctuate

Answer

Guaranteeing positive returns over time

Answer

Eliminating all market risk

Answer

Maximizing returns in bull markets

Question 5

Which measure best captures the total variability of returns around the mean for a portfolio?

Accepted Answer

Standard deviation

Answer

Beta

Answer

Alpha

Answer

Treynor ratio

Question 6

An investor who sells a security and immediately repurchases a substantially identical one to claim a tax loss may trigger:

Accepted Answer

Wash-sale rule

Answer

Capital gain

Answer

Alternative minimum tax

Answer

Step-up in basis