FREE Certified Trust and Financial Advisor Question and Answers
Which of the following is the difference between an investment's actual return and its predicted return?
Explanation:
The portion of a stock's return that can be explained by a particular pricing model is known as an anomalous return. So, a theoretical model meets the realities of the market: The anticipated return that your pricing model generates is referred to as "expected return." The abnormal return may be positive or negative, so take note of this.
Which of the following stocks is typically an unusually risky investment?
Explanation:
Investing in penny stocks is frequently quite dangerous because they frequently fluctuate sharply up and down.
The largest possible risk to investors in _______ is overall market risk.
Explanation:
Depending on the assets included in its portfolio, mutual funds may be subject to different kinds of market risk. Equity risk refers to the possibility that shifting stock market prices could make a specific investment less valuable when the owner wants to sell it. Equity risk is specific to investments made in the stock market. Stock funds are doubly subject to this kind of risk.
Which of the following industries is susceptible to price and business cycle changes?
Explanation:
A cyclical industry is a category of the industry that is responsive to the business cycle, with revenues typically being higher during times of economic expansion and prosperity and lower during times of recession and contraction.
There are several investing options, with the exception of:
Explanation:
These assets can be used to secure a loan, such as in what is known as margin trading, the term "collateral securities" may be used to describe financial market securities like stocks and bonds. In the world of finance, any kind of collateral security can be used to support any kind of loan. For instance, mortgage loans are frequently secured by real estate.
Bond price percentages are expressed as:
Explanation:
A bond quote is the most recent price at which a bond traded, converted to a point scale and expressed as a percentage of par value. Par value is often fixed at 100, or 100% of a bond's $1,000 face value
A temporary ban on program trading in a certain security or market is known as a _________, and it is typically used to prevent sharp price fluctuations.
Explanation:
The relevant stock exchange organization implements a trade curb, also referred to as a circuit breaker in Wall Street lingo, which is a financial regulation tool used to prevent stock market crashes. Circuit breakers have undergone numerous modifications since they were first developed to stop both speculative gains and sharp losses that occur quickly.