Series 66 Domain 1 (Quiz 3): Economic Factors and Business Information

Which of the following statements best represents a bond's present value?

In general, one would prefer to purchase a bond when its current market price is

Bond X has an internal rate of return (IRR) of 7%. Bond Y has an IRR of 9%. Both bonds pay interest semiannually. If the required rate of return is

You have determined that the net present value (NPV) of your client's investment is positive. If your client's required rate of return is 8%, which of the following is most likely the investment's internal rate of return (IRR)?

Twelve years ago, an investor placed $2,500 into an account. The account is now worth $10,000. Using the Rule of 72, you can determine that the approximate annual return was

Which of the following statements regarding the time value of money is NOT correct?

Selmer Jones has just inherited some money and wants to set some of it aside for a vacation in Hawaii one year from today. His bank will pay him 5% interest on any funds he deposits. In order to determine how much of the money must be set aside now and held for the trip, he should use the 5% as a

Present value is a computation frequently used to determine the amount of deposit needed now to meet a future need, such as a college education. If an investor uses an expected return of 8%, but the actual return over the period is 6%,

There are several measures of central tendency used by investment analysts. Included would be all of the following EXCEPT

The terms mean, median, and mode are all measures of

If an investor wished to compute the mean return of her portfolio, she is going to

Over the past 5 years, a stock has had returns of +16%, + 5%, −4%, +12% and +8%. This results in an arithmetic mean of

Here are the past seven years of returns for XYZ common stock, 17%, 3%, 13%, 3%, 5%, 9%, 8%. As a measure of central tendency, the value 8 is most accurately described as

An analyst has been charting previous 9 year's returns for a stock and displays the following results: 5%, 5%, 8%, −3%, 10%, 12%, 5%, 17% and 22%. If you were asked the mode of these returns, you would reply

When it comes to computing market returns, it is TRUE to state that

An investor has $100,000 to invest. If the account's estimated annual return is 8% and the investor plans to withdraw $20,000 at the end of each year, approximately how long will the money last?

A wealthy client wishes to endow her favorite charity with a lump-sum gift that, with an assumed rate of return of 4% per annum, will provide $2,500 per month in perpetuity. What amount does the client need to deposit?

A client wishes to endow an annual scholarship of $40,000 at her alma mater. If the investment can provide a perpetual return of 4.2% per annum, the lump sum deposit required to provide this income is

Which of the following rates of return is used by investment professionals as the risk-free rate?

Which of the following statements is NOT true?

A stock's beta coefficient is a measure of the stock's

Which of the following statements is correct?

XYZ Corporation has a beta of 1.0, and ABC has a beta of 1.4. XYZ has returned 12% and ABC 14.8%. Based on this information, ABC had alpha of

Which of the following statements best describes the risk-free rate of interest?

Cecil has a discretionarily-managed account with Pelf Reliable Advisors (PRA), an investment adviser registered in States C, D, and G. Over the past year, the portfolio produced a 12% return with a beta of 1.05. The risk-free rate is 3.5%, and the overall market returned 10.85%. Based on this information, calculate alpha and determine if PRA added any value to the portfolio.