1. Jesus Pimental is opening an UTMA account for his grandnephew Dillon who is seven years old. The account objective is to accumulate money towards a college education. As a fiduciary, Pimental should be most concerned with:
    1. Loss of principal
    2. Short term volatility
    3. Inflation risk
    4. Liability mismatching
  2. Diversifiable risk includes all of the following except:
    1. Political risk
    2. Market risk
    3. Business risk
    4. Default risk
    5. Industry risk
  3. Recapitalizations, management or leveraged buyouts and restructurings are all events that could impact the quality of a company's debt. This sort of risk is referred to as:
    1. Reinvestment risk
    2. Capital risk
    3. Purchasing power risk
    4. Event risk
  4. All of the following investments and strategies would be unsuitable for seniors, EXCEPT:
    1. Bear market funds
    2. A laddered bond portfolio
    3. A money market fund
    4. A blue chip growth stock
    5. A managed futures strategy
  5. All of the following are subject to sovereign risk, EXCEPT
    1. GKOs (intermediate term Russian government debt)
    2. Bunds (German treasury bonds)
    3. STRIPS
    4. Brady bonds


Practice Questions 10 - 13

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