HESI A2: Grammar (Quiz 5) Welcome to your Series 65 Practice Quizzes. Note: We designed four (4) parts of practice quizzes for each Domain. Each part has 25 questions. Domain 2 (part 1): Investment Vehicle Characteristics​​​​​​​​​​​​​​. (25 questions) Please click NEXT to start your Free Series 65 Practice Quizzes right away. Best of Luck! 1. Series 65, Investment Vehicle Characteristics,Series 65 Which of the following statements about equity securities is NOT true? A. A) Preferred stock pays a fixed dividend. B. B) Preferred stock is an equity security while common stock is a hybrid. C. C) Common stock is less sensitive to interest rate risk than preferred stock. D. D) Preferred stock is usually nonvoting. None 2. Series 65, Investment Vehicle Characteristics,Series 65 Which of the following statements concerning equity securities is not correct? A. A) Preferred stock is an equity security with an intermediate claim (between the bondholders and the common stockholders) on a firm's assets and earnings. B. B) Equity securities represent a lending interest in a corporation. C. C) Common stock is an equity security representing an ownership interest in a corporation. D. D) Equity securities provide a residual claim, after payment of all obligations to fixed-income claims, on the income and assets of a corporation. None 3. Series 65, Investment Vehicle Characteristics,Series 65 The primary defining characteristic of an equity security is A. A) it represents ownership in a corporation. B. B) the ability to keep pace with inflation. C. C) it pays dividends, usually quarterly. D. D) voting rights. None 4. Series 65, Investment Vehicle Characteristics,Series 65 An investor in an equity security A. A) has a say in the day-to-day operations of the business. B. B) acquires an ownership interest in the companyq C. C) is assured of a minimum rate of return. D. D) becomes a creditor of the company. None 5. Series 65, Investment Vehicle Characteristics,Series 65 All of the following represent ownership in corporation except A. A) mortgage bonds. B. B) common stock. C. C) convertible preferred stock. D. D) preferred stock. None 6. Series 65, Investment Vehicle Characteristics,Series 65 Which of the following statements regarding international investing is NOT correct? A. A) One method to engage in international investing is through American depositary receipts. B. B) An international investor faces the additional risks of foreign currency risk and country risk. C. C) International investing offers diversification and potentially higher returns. D. D) An emerging market is a market in a highly developed foreign economy with stable political and social institutions. None 7. Series 65, Investment Vehicle Characteristics,Series 65 An ADR is used to A. A) facilitate trading in foreign securities in U.S. markets by U.S. citizens living in the United States B. B) reduce currency risk when investing in foreign securities C. C) finance foreign trade in which U.S. citizens are engaged D. D) facilitate trading in U.S. securities in foreign markets by U.S. citizens living abroad None 8. Series 65, Investment Vehicle Characteristics,Series 65 A client is considering the purchase of American depositary receipts (ADRs). The client is looking to further diversify her portfolio. Which of the following is not a feature of this type of investment vehicle? A. A) ADRs are denominated and pay dividends in U.S. dollars. B. B) They are not subject to exchange rate, or currency, risk. C. C) ADRs are both liquid and marketable. D. D) Information regarding the foreign company is more easily attainable than if directly purchased. None 9. Series 65, Investment Vehicle Characteristics,Series 65 Which of the following statements concerning international investing is correct? A. A) The rates of return on foreign securities are generally less than those available from U.S. markets. B. B) Information is not as readily available on foreign investments as on domestic ones. C. C) The addition of foreign securities to a portfolio may result in increased portfolio risk due to the different movements of foreign markets and U.S. markets. D. D) Foreign markets are usually mature and offer no growth advantages. None 10. Series 65, Investment Vehicle Characteristics,Series 65 A technical analyst would be most interested in which of the following? A. A) Working capital B. B) 200-day moving averages C. C) Capitalization ratios D. "D) Price-to-earnings ratios None 11. Series 65, Investment Vehicle Characteristics,Series 65 An investor may expect to receive dividends from A. A) a put option B. B) an ADR C. C) a call option D. D) a warrant None 12. Series 65, Investment Vehicle Characteristics,Series 65 A technical analyst would be least concerned with A. A) advance/decline B. B) short interest C. C) book value per share D. D) S&P 500 index None 13. Series 65, Investment Vehicle Characteristics,Series 65 A risk-averse investor, who had only invested funds in bank certificates of deposits, was informed by his investment adviser representative that higher returns with safety could be achieved by investing in U. S. Treasury notes with a 10-year maturity. The adviser representative assured his client that investment in federal government-backed securities is riskless. In this situation, the representative acted A. A) unethically, because the agent failed to disclose that the customer retains interest rate risk B. B) unethically, because Treasury notes are unsuitable for a risk-averse customer C. C) properly, because Treasury notes carry no risk of principal default D. D) properly because Treasury notes are suitable for a risk-averse customer None 14. Series 65, Investment Vehicle Characteristics,Series 65 Which of the following debt instruments does not make periodic interest payments? A. A) T-bonds B. B) TIPS C. C) T-bills D. D) T-notes None 15. Series 65, Investment Vehicle Characteristics,Series 65 An investor interested in monthly interest income should invest in A. A) utility company stock B. B) GNMAs C. C) Treasury bonds D. D) corporate bonds None 16. Series 65, Investment Vehicle Characteristics,Series 65 An investor purchases a Treasury note and the confirmation shows a price of $102.25. Rounded to the nearest cent, the investor's cost, excluding commissions, is A. A) $1,022.50. B. B) $1,027.81. C. C) $102.25. D. D) $1,020.25. None 17. Series 65, Investment Vehicle Characteristics,Series 65 Your client in the 28% federal income tax bracket currently owns some U.S. government bonds with a coupon yield of 6%. In order to receive the same income after taxes, she would need to buy municipal bonds with a coupon of A. A) 7.68% B. B) 1.68% C. C) 4.32% D. D) 6.00% None 18. Series 65, Investment Vehicle Characteristics,Series 65 A client is trying to decide between a par value corporate bond carrying a coupon rate of 6.25% per year and a par value municipal bond that pays an annual coupon rate of 4.75%. Assuming all other factors are equal and your client is in a 28% marginal income tax bracket, which bond do you tell the client to purchase and why? A. A) The municipal bond because its equivalent taxable yield is 6.3% B. B) The municipal bond because its equivalent taxable yield is 6.6% C. C) The corporate bond because the after-tax yield is 4.5% D. D) The corporate bond because the after-tax yield is 6.25% None 19. Series 65, Investment Vehicle Characteristics,Series 65 A client is in the 28% marginal federal income tax bracket, and the 3% state income tax bracket. Which of the following investments would produce the highest after-tax yield for the client? A. A) A U. S. Treasury note yielding 7% B. B) An A-rated corporate mortgage bond yielding 8.0% C. C) A triple-A-rated debenture yielding 7.75% D. D) A public purpose municipal bond yielding 6% None 20. Series 65, Investment Vehicle Characteristics,Series 65 An analyst uses the dividend growth model to assist in determining appropriate stocks to recommend. This analyst would consider all of the following factors EXCEPT A. A) required rate of return B. B) growth of the dividend C. C) market capitalization D. D) current dividend None 21. Series 65, Investment Vehicle Characteristics,Series 65 All of the following statements regarding technical analysis are correct except A. A) technical analysts rely heavily on financial ratios in their analysis of stocks. B. B) technical analysts attempt to predict the future movement of stock prices based on past trends. C. C) technical analysts use terms such as trendline, support, and resistance in analyzing stocks. D. D) technical analysts rely on charts to predict the future prices of stocks. None 22. Series 65, Investment Vehicle Characteristics,Series 65 Your client in the 25% federal income tax bracket lives in a state where his earnings place him in the 6% bracket for state income tax purposes. If he were to purchase a 4% bond issued by a political subdivision of another state, his total tax-equivalent yield would be A. A) 4% B. B) slightly more than 5.33% C. C) approximately 12.90% D. D) slightly less than 5.33% None 23. Series 65, Investment Vehicle Characteristics,Series 65 When an investor divides the coupon rate of a municipal bond by the complement of her tax rate, she is computing the bond's A. A) discounted cash flow. B. B) inflation-adjusted return. C. C) after-tax rate of return. D. D) tax-equivalent yield. None 24. Series 65, Investment Vehicle Characteristics,Series 65 Sortel Industries has preferred stock outstanding that pays annual dividends of $3.75 a share. If an investor wants to earn a rate of return of 8.5%, how much should she be willing to pay for a share of Sortel preferred stock? A. A) $31.88 B. B) $44.12 C. C) $42.10 D. D) $33.89 None 25. Series 65, Investment Vehicle Characteristics,Series 65 Securities issued by which of the following agencies offer direct government backing? A. A) Federal Home Loan Mortgage Corporation (Freddie Mac) B. B) Federal National Mortgage Association C. C) Government National Mortgage Association D. D) Federal Intermediate Credit Bank None 1 out of 25 Time is Up! Time's up
