1. Your client, Geoffrey Harrow, inquires about the appropriateness of a municipal bond for his portfolio. You would tell him that:
    1. The inclusion of a municipal bond would make little sense for a taxpayer in a high marginal tax bracket.
    2. Municipal bonds are typically exempt from all manner of income tax.
    3. A revenue bond's debt is serviced by an income generating facility and bears less risk than a general obligation bond.
    4. Municipal bonds contain implicit federal backing.
  2. Calculate the after-tax yield for an investor in the 35% marginal tax bracket. The investment yielded 17.3% with 14% coming from capital appreciation and the remaining 3.3% coming from dividends.
    1. 11.2%
    2. 16.15%
    3. Between 15% and 17.3%
    4. Both b & c.
  3. The difference between beta and alpha is:
    1. Beta measures systematic risk, whereas alpha measure total risk.
    2. Beta measures total risk, where as alpha measures excess over market risk.
    3. Alpha measures the incremental return that a manager adds over the benchmark, while beta measures risk in the market for a portfolio of securities.
    4. Beta measures market risk, whereas alpha measures excess return.
  4. Measures of central tendency include all of the following, EXCEPT:
    1. Time-weighted return.
    2. Dollar-weighted return.
    3. Standard deviation.
    4. Coefficient of variation.
    5. R2
  5. Semivariance may be defined as:
    1. A simplified version of standard deviation.
    2. A measure of skew.
    3. The average squared deviation below the mean.
    4. A measure of value at risk.


Sample Questions 16 - 20

Related Articles
  1. Investing

    Alpha and Beta for Beginners

    An in-depth look at what alpha and beta are and what they measure.
  2. Investing

    Evaluating Alpha and Beta

    Alpha and beta are risk ratios that investors use to calculate, compare and predict returns.
  3. Trading

    Bettering Your Portfolio With Alpha And Beta

    Increase your returns by creating the right balance of both these risk measures.
  4. Investing

    5 Ways To Measure Mutual Fund Risk

    These statistical measurements highlight how to mitigate risk and increase rewards.
  5. Investing

    How Investment Risk Is Quantified

    FInancial advisors and wealth management firms use a variety of tools based in Modern portfolio theory to quantify investment risk.
  6. Investing

    Beta: Know The Risk

    Beta says something about price risk, but how much does it say about fundamental risk factors? Find out here.
  7. Financial Advisor

    A Deeper Look At Alpha

    The Jensen index helps investors compare realized returns to what should've been achieved.
  8. Investing

    Understanding Beta

    Beta is a measure of volatility. Find out what this means and how it affects your portfolio.
  9. Financial Advisor

    Measure Your Portfolio's Performance

    Learn three ratios that will help you evaluate your investment returns.
Frequently Asked Questions
  1. Depreciation Can Shield Taxes, Bolster Cash Flow

    Depreciation can be used as a tax-deductible expense to reduce tax costs, bolstering cash flow
  2. What schools did Warren Buffett attend on his way to getting his science and economics degrees?

    Learn how Warren Buffett became so successful through his attendance at multiple prestigious schools and his real-world experiences.
  3. How many attempts at each CFA exam is a candidate permitted?

    The CFA Institute allows an individual an unlimited amount of attempts at each examination.Although you can attempt the examination ...
  4. What's the average salary of a market research analyst?

    Learn about average stock market analyst salaries in the U.S. and different factors that affect salaries and overall levels ...
Trading Center