Series 6

Series 6 practice questions, page 12 of 13, with answer review and explanations.

Question 56

Which of the following is not a money market security?

  1. commercial paper
  2. negotiable certificates of deposit
  3. common stock
  4. Treasury bills

Question 57

Which of the following is true about a hedge fund?

  1. It is designed to help investors hedge their risk and, as such, is a low risk alternative to a mutual fund.
  2. It is closed to all but sophisticated, wealthy investors.
  3. It is more liquid than almost any investment other than a money market mutual fund.
  4. It has very low management fees since it is passively managed.

Question 58

Which of the following is not an advantage that an exchange traded fund (ETF) has over a traditional mutual fund?

  1. There are no fees (i.e., loads, commissions) associated with buying and selling ETFs.
  2. ETFs trade continuously throughout the day.
  3. Investors can use limit and stop orders when trading ETFs.
  4. All of the above are advantages that an ETF has over a traditional mutual fund.

Question 59

Commercial paper is:

  1. long-term debt issued by commercial banks.
  2. short-term, unsecured debt issued by large corporations.
  3. issued with maturities of 1 to 2 years.
  4. short-term debt that is backed by stocks and bonds that the issuing firm owns.

Question 60

A general decrease in price levels in the economy is referred to as:

  1. disinflation.
  2. stagflation.
  3. recession.
  4. deflation.