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

Related Articles
  1. Personal Finance

    Risk Management Framework (RMF): An Overview

    A company must identify the type of risks it is taking, as well as measure, report on, and set systems in place to manage and limit, those risks.
  2. Managing Wealth

    Why Companies Need Risk Management

    Implementing risk management strategies can save an entire organization from failure. Is yours up to snuff?
  3. Financial Advisor

    Impact Investing Funds: What are the Risks?

    Impact investing funds can carry risks unique to this asset class, including political risk, currency risk and exit risk.
  4. Investing

    Bond Funds Boost Income, Reduce Risk

    These funds can provide stable returns for those who depend on their investment income.
  5. Investing

    Six Biggest Bond Risks

    Don't assume that you can't lose money in this market - you can. Find out how.
  6. Investing

    5 Investing Risk Factors And How To Avoid Them

    Each investment product has specific risks that come with it, while some risks are inherent in every investment.
  7. Tech

    The Importance of Healthcare Risk Management

    Risk management is especially important in healthcare because human lives might be on the line. Here are some strategies to map out a plan.
  8. Investing

    The Risks Of Sovereign Bonds

    Sovereign debt can play an important role in providing international diversification to individual investors.
  9. Financial Advisor

    7 Questions to Consider Before Investing in Bonds

    There is a significant number of questions every investor, private or institutional, should consider before investing in bonds.
Frequently Asked Questions
  1. What is the formula for calculating compound annual growth rate (CAGR) in Excel?

    The concept of CAGR is relatively straightforward and requires only three primary inputs: an investments beginning value, ...
  2. How do you calculate return on equity (ROE)?

    Return on equity (ROE) is a ratio that provides investors with insight into how efficiently a company (or more specifically, ...
  3. What is the difference between Communism and Socialism?

    Learn how some countries are incorporating socialist methods into capitalism.
  4. What's the difference between a stop and a limit order?

    A limit order is an order that sets the maximum or minimum at which you are willing to buy or sell a particular stock. With ...
Trading Center