Section 2 Practice Quiz

1. Which of the following is an example of systemic risk?

2. Which of the following is a characteristic of exchange-traded funds (ETFs)?

3. Which type of fund primarily invests in stock securities?

4. Representatives who sell mutual fund shares are often compensated through sales charges levied upon purchasers of the shares. However, the fees paid to the professional managers hired by the fund to make the day-to-day investment decisions are referred to as:

5. How can an investor mitigate the impact of market volatility on their portfolio?

6. What is the main benefit of diversifying an investment portfolio?

7. What type of risk involves the possibility that a bond issuer will default on payments?

8. A business enterprise that offers its shares to the public and invests those dollars in a variety of real estate investments is most commonly referred to as a:

9. Which of the following is a characteristic of a closed-end fund?

10. The dangers of having all your money in one investment or in one sector of the economy is referred to as:

11. A bond issued to fund a new toll road, which will be paid off by users of the toll road through payment of tolls and not by taxes levied on the general population, is known as a:

12. When FINRA refers to ETPs in their rulebook, they are referring to each of the following except:

13. Which of the following best describes a derivative?

14. Systematic risk, the risk that the broad stock market will suffer a substantial decline in value, is also commonly called:

15. What type of risk is associated with changes in interest rates affecting bond prices?

16. When a bond is described as ‘convertible,’ this term refers to:

17. Which investment is typically associated with the highest level of risk?

18. Generally speaking, when control persons of a publicly traded corporation, such as Officers and Directors, wish to sell shares they own in that corporation, these sales are subject to the oversight of the SEC and are done in accordance with the following:

19. Which of the following is an example of a derivative security?

20. In the event a corporation goes bankrupt, which of the following statements is true?

21. Moody’s and Standard & Poor’s are two of the most well-known statistical rating organizations that, among other things, rate the investment quality of bond issues. Ratings in the AAA, AA and A categories are referred to as:

22. Which of the following investments typically offers the highest potential for growth?

23. Which of the following statements about corporate equity is true?

24. Which investment is known for having limited liquidity?

25. With respect to the relationship between interest rates and bond prices, the general rule of thumb in the bond market is:

26. What are the best strategies to mitigate the business risk?

27. Which of the following is considered a debt security?

28. The value of the dollar declines due to inflation. This exposes fixed-income investments, whose annual income does not rise to keep pace with the rate of inflation, to a risk commonly referred to by investment professionals as:

29. Which of the following statements regarding options contracts is true?

30. The term ‘money market’ is frequently used in financial discussions. Which of the following best defines a money market instrument?

31. Bonds initially offered for sale are typically sold at their:

32. Which of the following best describes a mutual fund?

33. The ability of an investor to readily sell their investment at a fair market price is called:

34. Which of the following investments is considered the least risky?

35. Which investment vehicle offers tax-free growth on investments if used for qualified education expenses?