CFC Investment Planning 3

Question 1

Which option strategy provides income while capping upside potential on a stock already owned?

Accepted Answer

Covered call

Answer

Protective put

Answer

Long straddle

Answer

Bull call spread

Question 2

A CFC is evaluating a mutual fund's performance using the Treynor ratio. The denominator used is:

Accepted Answer

Beta

Answer

Standard deviation

Answer

Total return

Answer

Net asset value

Question 3

Which portfolio construction approach assigns weights to asset classes based on their market capitalizations?

Accepted Answer

Market-cap-weighted (passive) allocation

Answer

Equal-weight allocation

Answer

Risk-parity allocation

Answer

Factor-based allocation

Question 4

In a rising interest rate environment, which bond characteristic minimizes price decline?

Accepted Answer

Short duration and high coupon

Answer

Long duration and low coupon

Answer

Long maturity and zero coupon

Answer

High yield and long duration

Question 5

The Capital Asset Pricing Model (CAPM) calculates expected return using which inputs?

Accepted Answer

Risk-free rate, market risk premium, and beta

Answer

Alpha, Sharpe ratio, and standard deviation

Answer

Dividend yield, P/E ratio, and growth rate

Answer

Inflation rate, GDP growth, and default spread

Question 6

A client holds a concentrated stock position with large unrealized gains. Which strategy transfers appreciation to heirs while retaining some income?

Accepted Answer

Charitable remainder trust (CRT)

Answer

Roth conversion

Answer

Tax-loss harvesting

Answer

Margin loan against the position