CTFA

CTFA practice questions, page 23 of 35, with answer review and explanations.

Question 111

Carrie has a "certainty equivalent" to a risky gamble's expected value that is less than the gamble's expected value. Carrie shows:

  1. Risk aversion
  2. Risk preference
  3. Risk indifference
  4. A strange outlook on life

Question 112

Specially coded plastic cards used to transfer funds from a customer's bank account to the recipient's account to pay for goods or services.

  1. Credit cards
  2. Debit cards
  3. Automated Teller machine
  4. None of these

Question 113

A measure of "risk per unit of expected return."

  1. Standard deviation
  2. Coefficient of variation
  3. Correlation coefficient
  4. Beta

Question 114

Plaid Pants, Inc. common stock has a beta of 0.90, while Acme Dynamite Company common stock has a beta of 1.80. The expected return on the market is 10 percent, and the risk-free rate is 6 percent. According to the capital-asset pricing model (CAPM) and making use of the information above, the required return on Plaid Pants' common stock should be , and the required return on Acme's common stock should be .

  1. 3.6 percent; 7.2 percent
  2. 9.6 percent; 13.2 percent
  3. 9.0 percent; 18.0 percent
  4. 14.0 percent; 23.0 percent

Question 115

Two people wishing to open a checking account may do so in which one of the following ways:

  1. They can each open individual checking accounts (on which the other cannot write checks)
  2. They can open a joint account that requires both signatures on all checks
  3. They can open joint account that allows either one to write checks (the most common type of joint account)
  4. All of the above