Ch 2 practice question

Question 1

purchase payments are invested in what type of account within an equity indexed annuity

Answer 1

general

Question 2

purchase payments are invested in what type of account within variable annuity

Answer 2

separate

Question 3

% of underlying index’s increase credited each year to the equity indexed annuity contract is called participation rate or annual cap?

Answer 3

participation rate

Question 4

individuals concerned about protecting purchasing power typically choose to invest in what type of annuities

Answer 4

variable

Question 5

largest monthly check is received with what type of settlement option: straight lift or period certain

Answer 5

straight life

Question 6

of these two money market securities which is backed by collateral — comm paper or banker’s acceptance

Answer 6

banker’s acceptance

Question 7

what is issued at discount to face value — comm paper or negotiable CDs

Answer 7

commerical paper

Question 8

which has higher nominal yeild to investors — debentures or subordinated debentures?

Answer 8

subordinated debentures

Question 9

which has higher nominal yeild to investors — growth or value firm?

Answer 9

growth firms

Question 10

all open end funds have what type of fee

Answer 10

operating expense fee

Question 11

not all open end fund impose what type of fee

Answer 11

sales charges

Question 12

where can you see the dollar amount paid by a mutual fund to the investment advisor of the fund— prospectus or Statement of Addition information

Answer 12

Statement of Addition information

Question 13

use of leverage is common in closed fund or open fund

Answer 13

close end fund

Question 14

an investment comp with no investment advisor or board of directors is what

Answer 14

unit investment trust

Question 15

warrants are issued with a bond offering are short term or long term

Answer 15

long term

Question 16

warrant allows the holder to buy common stock at a stated price that is above or below the stock’s market price at the time of issuance?

Answer 16

above

Question 17

bullish option investor will pick what type of option

Answer 17

buy a call

Question 18

bearish option investor will pick what type of option

Answer 18

buy a put

Question 19

seller of a put option is

Answer 19

neural and bearish

Question 20

seller of a call option is

Answer 20

neural and bullish

Question 21

example of a systematic risk is business or market risk?

Answer 21

market risk

Question 22

an example of unsystematic risk is legative or inflation

Answer 22

legislative

Question 23

interest rate risk when buying a bond is

Answer 23

interest rate will rise

Question 24

call and reinvestment risk is when interest rate

Answer 24

drop

Question 25

the main risk of buying a T-bond and holding to maturity is

Answer 25

purchasing power risk