CTFA

CTFA practice questions, page 22 of 35, with answer review and explanations.

Question 106

Money market deposit account is a federally insured savings account, offered by banks and other depository institutions, that competes with money market mutual funds. Depositors can check-writing privileges or ATM to access MMDA accounts. A major problem with the growing popularity of interest-paying checking accounts has been:

  1. A slump in monthly bank charges, which can easily amount to more than the interest earned on all but the highest account balances
  2. A fall in monthly bank charges, which can easily amount to more than the interest earned on all but the highest account balances
  3. A rise in monthly bank charges, which can easily amount to more than the interest earned on all but the highest account balances
  4. A rise in monthly bank charges, which can easily amount less than the interest earned on all but the highest account balances

Question 107

This type of risk is avoidable through proper diversification:

  1. Portfolio risk
  2. Systematic risk
  3. Unsystematic risk
  4. Total risk

Question 108

A statistical measure of the degree to which two variables (e.g., securities' returns) move together is:

  1. Coefficient of variation
  2. Variance
  3. Co-variance
  4. Certainty equivalent

Question 109

According to the capital-asset pricing model (CAPM), a security's expected (required) return is equal to the risk-free rate plus a premium:

  1. Equal to the security's beta
  2. Based on the unsystematic risk of the security
  3. Based on the total risk of the security
  4. Based on the systematic risk of the security

Question 110

The risk-free security has a beta equal to, while the market portfolio's beta is equal to:

  1. One more than one
  2. One less than one
  3. Zero; one
  4. less than zero; more than zero